<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 30, 1994 Commission File Number 1-4083
THE WALT DISNEY COMPANY
Incorporated in Delaware I.R.S. Employer Identification No.
500 South Buena Vista Street 95-0684440
Burbank, California 91521
(818) 560-1000
Securities Registered Pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
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Common Stock, $.025 par value New York Stock Exchange
Pacific Stock Exchange
Swiss Stock Exchange
Tokyo Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes..X.. No....
Indicate by check mark if disclosure of delinquent filers pursuant to Rule
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. .....
As of November 30, 1994, the aggregate market value of registrant's common
stock held by non-affiliates (based on the closing price on such date as
reported on the New York Stock Exchange-Composite Transactions) was
$20.7 billion. All executive officers and directors of registrant and all
persons filing a Schedule 13D with the Securities and Exchange Commission in
respect to registrant's common stock have been deemed, solely for the purpose
of the foregoing calculation, to be "affiliates" of the registrant.
There were 517,054,527 shares of common stock outstanding as of December 9,
1994.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 1995 Annual Meeting of Stockholders
are incorporated by reference into Part III.
<PAGE>
PART I
ITEM 1. BUSINESS
The Walt Disney Company, together with its subsidiaries (the "Company"), is a
diversified international entertainment company with operations in three
business segments: Filmed Entertainment, Theme Parks and Resorts and Consumer
Products. Information on revenues, operating income, identifiable assets and
supplemental revenue data of the Company's business segments appears in the
Consolidated Statement of Income and in Note 12 of Notes to Consolidated
Financial Statements included in Item 8 hereof. The Company employs
approximately 65,000 people.
FILMED ENTERTAINMENT
The Company produces and acquires live-action and animated motion pictures
for distribution to the theatrical, television and home video markets. The
Company also produces original television programming for the network and first-
run syndication markets. In addition, the Company provides programming for and
operates The Disney Channel, a pay television programming service, and KCAL-TV,
a Los Angeles, California television station.
The success of all the Company's theatrical motion pictures and television
programming is heavily dependent upon public taste, which is unpredictable and
subject to change without warning. In addition, filmed entertainment operating
results fluctuate due to the timing of theatrical and home video releases.
Release dates are determined by several factors, including timing of vacation
and holiday periods and competition in the market.
THEATRICAL FILMS
Walt Disney Pictures and Television, a wholly-owned subsidiary of the
Company, produces and acquires live-action motion pictures that are distributed
under the names Walt Disney Pictures, Touchstone Pictures, Hollywood Pictures
and Caravan Pictures. The Company's Miramax Film Corp. subsidiary distributes
films under its own banner. In addition, the Company distributes films produced
or acquired by the independent production companies Cinergi Pictures
Entertainment, Interscope Communications and Merchant-Ivory Productions. The
Company also produces animated motion pictures under the name Walt Disney
Pictures.
The Company plans to distribute approximately 20 to 30 feature films each
year under the total Walt Disney Company banners, including several live-action
family feature films each year and one to two full-length animated films every
eighteen months under the Walt Disney Pictures name, together with a total of
between fifteen and twenty-five teenage and adult films each year under the
various motion picture banners. The Company also expects that Miramax will
independently acquire and produce up to 25 films per year. In addition, the
Company periodically reissues previously released animated films. As of
September 30, 1994, the Company had released 285 full-length live-action
(primarily color) features, 32 full-length animated color features and
approximately 536 cartoon shorts.
The Company distributes its filmed products through its own distribution and
marketing companies in the United States and most foreign markets.
HOME VIDEO
The Company distributes directly home video releases from each of its studios
in the domestic market. In the international market, the Company distributes
both directly and through foreign distribution companies. In addition, the
Company acquires and produces original programming for direct-to-video release.
As of September 30, 1994, approximately 591 titles, including 143 feature films
and 207 cartoon shorts and features were available to the domestic marketplace.
Approximately 498 titles, including 191 feature films and 237 cartoon and
animated features were available to the international home entertainment market.
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NETWORK TELEVISION
The Company's network television operation develops, produces and distributes
television programming to network and other broadcasters, under the Touchstone
Television and Walt Disney Television labels. Program development is carried
out in collaboration with a number of independent writers, producers and
creative teams under exclusive development arrangements. Since 1991, the
Company has focused on the development, production and distribution of half-hour
comedies for network prime-time broadcast, including such series as HOME
IMPROVEMENT, EMPTY NEST, BLOSSOM, BOY MEETS WORLD and ELLEN. The Company seeks
to syndicate in the domestic market those series that produce enough programs to
permit syndicated "strip" broadcasting on a five-days-per-week basis.
The Company licenses television series developed for United States networks
in a number of foreign markets, including Canada, Italy, the United Kingdom,
Spain, Germany and Australia.
Walt Disney Television currently distributes two animated cartoon series for
Saturday morning: ALADDIN and THE LITTLE MERMAID. The Company also offers a
variety of prime-time specials for exhibition on network television.
The Company believes that its television programs complement the marketing
and distribution of its theatrical motion pictures, the Walt Disney World
destination resort, Disneyland and other businesses.
PAY TELEVISION AND TELEVISION SYNDICATION
The Company licenses a number of feature films to pay television services,
including its wholly-owned subsidiary, The Disney Channel.
The Company's Buena Vista Television subsidiary licenses the theatrical and
television film library to the domestic television syndication market. Major
packages of the Company's feature films and television programming have been
licensed for broadcast and basic cable continuing over several years.
The Company currently licenses its feature films for pay television on an
output basis in several geographic markets, including the United Kingdom and
Scandinavia, and has an arrangement with Showtime through 1996 for the United
States. In 1993, the Company entered into an agreement to license to the Encore
pay television service, over a multi-year period, exclusive domestic pay
television rights to Miramax films beginning in 1994 and Touchstone Pictures and
Hollywood Pictures films starting in 1997.
The Company also produces first-run animated and live-action syndicated
programming. The Disney Afternoon is a two-hour block of cartoons airing five
days per week including DARKWING DUCK, GOOF TROOP, BONKERS, and the recently
added ALADDIN and GARGOYLES series. TALE SPIN, DUCK TALES and CHIP 'N DALE are
also syndicated nationally. Live action programming includes: LIVE WITH REGIS
AND KATHIE LEE, MIKE & MATY and JUDGE FOR YOURSELF, one-hour daily talk shows;
SISKEL & EBERT, a weekly half-hour motion picture review program; BILL NYE THE
SCIENCE GUY, a weekly half-hour educational program for children; and THE
CRUSADERS, a weekly one-hour investigative news show. The Company also has two
off-network programs in syndication, GOLDEN GIRLS and EMPTY NEST.
Certain of the Company's television programs are also syndicated by the
Company abroad, including THE DISNEY CLUB, a weekly series that the Company
produces for foreign markets. The Company's television programs are telecast
regularly in many countries, including Australia, Brazil, Canada, China, France,
Germany, Italy, Japan, Mexico, Spain and the United Kingdom. The Company has
also teamed with Compagnie Luxembourgeoise de Telediffusion to develop a new
family-oriented channel in Germany.
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THE DISNEY CHANNEL
The Disney Channel, which has more than eight million subscribers, is the
Company's nationwide premium television service. New shows developed for
original use by The Disney Channel include dramatic, adventure, comedy and
educational series, as well as documentaries and first-run television movies.
In addition, entertainment specials include shows originating from both the Walt
Disney World destination resort and Disneyland. The balance of the programming
consists of products acquired from third parties and products from the Company's
theatrical film and television programming library.
KCAL-TV
The Company operates KCAL-TV, an independent commercial station on VHF
channel 9 in the Los Angeles area. Its revenues are derived from the sale of
advertising time to local, regional and national advertisers.
WALT DISNEY THEATRICAL PRODUCTIONS
In 1994, the Company produced a Broadway-style stage musical based on the
animated feature film BEAUTY AND THE BEAST. The stage adaptation, currently
playing in New York City, is scheduled to open in additional cities around the
world beginning in 1995.
COMPETITIVE POSITION
The Company's filmed entertainment businesses (including theatrical films,
product distributed through the network, syndication and pay television and home
video markets, and The Disney Channel) compete with all forms of entertainment.
The Company also competes to obtain creative talents, story properties,
advertiser support, broadcast rights and market share, which are essential to
the success of all of the Company's filmed entertainment businesses.
A significant number of companies produce and/or distribute theatrical and
television films, exploit products in the home video market and provide pay
television programming service. The Company produces and distributes films
designed for family audiences and believes that it is a significant source of
such films.
THEME PARKS AND RESORTS
The Company operates the Walt Disney World [REGISTERED TRADEMARK] destination
resort in Florida and the Disneyland Park [REGISTERED TRADEMARK] and the
Disneyland Hotel in California. The Company earns royalties on revenues
generated by the Tokyo Disneyland theme park.
All of the theme parks and most of the associated resort facilities are
operated on a year-round basis. Historically, the theme parks and resorts
business experiences fluctuations in park attendance and resort occupancy
resulting from the nature of vacation travel. Peak attendance and resort
occupancy generally occur during the summer months when school vacations occur
and during early-winter and spring holiday periods.
WALT DISNEY WORLD DESTINATION RESORT
The Walt Disney World destination resort is located on approximately 29,900
acres of land owned by the Company 15 miles southwest of Orlando, Florida. The
resort includes three theme parks (the Magic Kingdom, Epcot and the Disney-MGM
Studios Theme Park), hotels and villas, an entertainment complex, a shopping
village, conference centers, campgrounds, golf courses, water parks and other
recreational facilities designed to attract visitors for an extended stay. The
Company markets the entire Walt Disney World destination resort through a
variety of national, international and local advertising and promotional
activities. A number of attractions in each of the theme parks are sponsored by
corporate participants through long-term participation agreements.
MAGIC KINGDOM -- The Magic Kingdom, which opened in 1971, consists of seven
principal areas: Main Street, Liberty Square, Frontierland, Tomorrowland,
Fantasyland, Adventureland and Mickey's Starland. These areas feature themed
rides and attractions, restaurants, refreshment stands and merchandise shops.
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EPCOT -- Epcot, which opened in 1982, consists of two major themed areas:
Future World and World Showcase. Future World dramatizes certain historical
developments and addresses the challenges facing the world today through major
pavilions, displaying high-tech products of the future ("Innoventions"),
communication and technological exhibitions ("Spaceship Earth"), energy,
transportation, imagination, life and health, the land and seas. World Showcase
presents a community of nations focusing on the culture, traditions and
accomplishments of people around the world. World Showcase includes as a
central showpiece the American Adventure pavilion, which highlights the history
of the American people. Other nations represented are Canada, Mexico, Japan,
China, France, the United Kingdom, Germany, Italy, Morocco and Norway. Both
areas feature themed rides and attractions, restaurants, refreshment stands and
merchandise shops.
DISNEY-MGM STUDIOS THEME PARK -- The Disney-MGM Studios Theme Park, which
opened in 1989, consists of a theme park and a production facility. The theme
park centers around Hollywood as it was during the 1930's and 1940's and
features a backstage tour of the production facilities in addition to themed
food service and merchandise facilities and other attractions. The production
facility consists of three sound stages, merchandise shops and a back lot area
and currently hosts both feature film and television productions.
RESORT FACILITIES -- As of September 30, 1994, the Company owned and operated
10 resort hotels and a complex of villas and suites at the Walt Disney World
destination resort, with a total of approximately 12,400 rooms. An additional
resort hotel, Disney's All-Star Music Resort, is expected to open in 1995 with a
capacity of more than 1,900 rooms. In addition, Disney's Fort Wilderness
camping and recreational area offers approximately 1,200 campsites and
wilderness homes. Several of the resort hotels also contain conference centers
and related facilities.
Recreational activities available at the resort facilities include five
championship golf courses, a zoological park, tennis, sailing, water skiing,
swimming, horseback riding and a number of noncompetitive sports and leisure
time activities. The Company also operates two water parks, River Country and
Typhoon Lagoon. An additional themed water park, Blizzard Beach, is expected to
open in 1995.
The Company has also developed a shopping facility known as the Disney
Village Marketplace. Pleasure Island, an evening entertainment center which
opened in 1989, is adjacent to Disney Village Marketplace and includes
restaurants, night clubs and shopping facilities. Currently under development
are Celebration, a 5,000-acre town; Disney's Boardwalk, a major new mixed-use
resort built around a turn-of-the-century Atlantic boardwalk theme; and the
Disney Institute, a resort community offering participatory programs and
enriching experiences.
At the Disney Village Marketplace Hotel Plaza, seven independently operated
hotels are situated on property leased from the Company. These hotels have a
capacity of approximately 3,700 rooms. Additionally, two hotels--the Walt
Disney World Swan and the Walt Disney World Dolphin, with an aggregate capacity
of approximately 2,300 rooms--are independently operated on property leased from
the Company near Epcot. Another hotel, the 290-room Shades of Green on Walt
Disney World Resort, is leased from the Company and operated by a non-profit
organization as an armed forces recreation center.
DISNEY VACATION CLUB
In 1994, Disney Vacation Development, Inc., a wholly-owned subsidiary of the
Company, neared completion of its 531-unit Disney Vacation Club at the Walt
Disney World Resort. In addition, sales have commenced and construction has
begun on a 436-unit Disney Vacation Club in Vero Beach, Florida. Both
facilities are intended to be sold under a vacation ownership plan and operated
partially as rental property until the units are completely sold. Disney
Vacation Development, Inc. has begun development of a resort site on Hilton Head
Island, South Carolina and an additional property at Walt Disney World. Plans
have also been announced to build a resort in Newport Beach, California.
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DISNEYLAND
The Company owns 330 acres and has under long-term lease an additional 39
acres of land in Anaheim, California. Disneyland, which opened in 1955,
consists of eight principal areas: Toontown, Fantasyland, Adventureland,
Frontierland, Tomorrowland, New Orleans Square, Main Street and Critter Country.
These areas feature themed rides and attractions, restaurants, refreshment
stands and merchandise shops. A number of the Disneyland attractions are
sponsored by corporate participants. The Company markets Disneyland through
national and local advertising and promotional activities. The Company also
owns and operates the 1,100-room Disneyland Hotel near Disneyland.
TOKYO DISNEYLAND
The Company earns royalties on revenues generated by the Tokyo Disneyland
theme park, which is owned and operated by Oriental Land Co., Ltd., an unrelated
Japanese corporation. The park, which opened in 1983, is similar in size and
concept to Disneyland and is located approximately six miles from downtown
Tokyo, Japan.
DISNEY DESIGN AND DEVELOPMENT
Disney Design and Development, encompassing the Company's two major design
and development organizations, Walt Disney Imagineering and Disney Development
Company, provides master planning, real estate development, attraction and show
design, engineering support, production support, project management and other
development services for the Company's operations.
COMPETITIVE POSITION
The Company's theme parks and resorts compete with all other forms of
entertainment, lodging, tourism and recreational activities. The profitability
of the leisure-time industry is influenced by various factors which are not
directly controllable, such as economic conditions, amount of available leisure
time, oil and transportation prices and weather patterns. The Company believes
its theme parks and resorts benefit substantially from the Company's reputation
in the entertainment industry for excellent quality and from synergy with
activities in other business segments of the Company.
CONSUMER PRODUCTS
The Company licenses the name Walt Disney, as well as the Company's
characters, visual and literary properties and songs and music, to various
consumer manufacturers, retailers, show promoters and publishers throughout the
world. The Company also engages in direct retail distribution through The
Disney Stores and consumer catalogs, and is a publisher of books, magazines and
comics in the United States and Europe. In addition, the Company produces audio
and computer software for all markets, as well as film and video products for
the educational marketplace. Operating results for the consumer products
business are influenced by seasonal consumer purchasing behavior and by the
timing of animated theatrical releases.
CHARACTER MERCHANDISE AND PUBLICATIONS LICENSING
The Company's domestic and foreign licensing activities generate royalties
which are usually based on a fixed percentage of the wholesale or retail selling
price of the licensee's products. The Company licenses characters based upon
both traditional and newly-created film properties. Character merchandise
categories which have been licensed include apparel, watches, toys, gifts,
housewares, stationery, sporting goods and domestic items such as sheets and
towels. Publication categories which have been licensed include continuity-
series books, book sets, art and picture books, magazines and newspaper comic
strips.
In addition to receiving licensing fees, the Company is actively involved in
the development and approval of licensed merchandise and in the
conceptualization, development, writing and illustration of licensed
publications. The Company continually seeks to create new characters to be used
in licensed products.
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PUBLISHING
The Company has book imprints in the United States offering trade books for
children (Mouse Works, Disney Press and Hyperion Books for Children) and adults
(Hyperion Press). In addition, the Company is a joint venture partner in Disney
Hachette Editions, which produces children's books, and Disney Hachette Presse,
which produces children's magazines and computer software magazines in France.
In the United States, Italy and France, the Company publishes comic magazines
for children. The Company also publishes the children's magazine DISNEY
ADVENTURES, the general science magazine DISCOVER and the family entertainment
and informational magazines FAMILYFUN and FAMILY PC.
THE DISNEY STORES
The Company markets Disney-related products directly through its retail
facilities operated under "The Disney Store" name. These facilities are
generally located in leading shopping malls and similar retail complexes. The
stores carry a wide variety of Disney merchandise and promote other businesses
of the Company. During fiscal 1994, the Company opened 59 new Disney Stores in
the United States and Canada, 18 in Europe and 8 in Japan, bringing the total
number to 324 as of September 30, 1994. The Company expects to open additional
stores in the future in selected markets throughout the country, as well as in
Japan and other Asian, European, and Latin American countries.
AUDIO PRODUCTS AND MUSIC PUBLISHING
Walt Disney Records, a division of the Company, produces and distributes
records, audio cassettes and compact discs primarily directed at the children's
market in the United States and France, consisting primarily of soundtracks for
animated films and read-along products, and licenses the creation of similar
products throughout the rest of the world. In addition, the Company commissions
new music for its motion pictures, television programs and records and exploits
the song copyrights created for the Company by means of printed music, records,
audiovisual devices and public performances.
Domestic retail sales of records, compact discs, audio cassettes and related
materials are the largest source of revenues, while direct marketing, which
utilizes catalogs, coupon packages and television, is a secondary means of
distribution for the Company. In both the United States and abroad, the Company
signs, produces and promotes entertainers primarily for the children's market.
OTHER ACTIVITIES
The Company produces audiovisual materials for the educational market,
including videocassettes and film strips. It also licenses the manufacture and
sale of posters and other teaching aids. The Company markets and distributes,
through various channels, animation cel art and other animation-related artwork.
In addition, the Company licenses the manufacture of software products for video
game machines and publishes its own software programs for personal computers in
the areas of entertainment, creativity and children's programs.
The Company is a direct marketer of children's educational toys, play
equipment, classroom furniture and activewear apparel through THE DISNEY
CATALOG, CHILDCRAFT, JUST FOR KIDS and PLAYCLOTHES.
COMPETITIVE POSITION
The Company competes in its character merchandising and other licensing,
publishing and retail activities with other licensors, publishers and retailers
of character, brand and celebrity names. In the record and music publishing
business the Company competes with several other companies. Although public
information is limited, the Company believes it is the largest worldwide
licensor of character-based merchandise and producer/distributor of children's
audio products.
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OTHER OPERATIONS
HOLLYWOOD RECORDS
Hollywood Records seeks to develop and market recordings from new talent
across the spectrum of popular music, as well as soundtracks from the Company's
live-action motion pictures. Domestic and foreign distribution is handled by
PolyGram Group Distribution.
DISNEY SPORTS ENTERPRISES
Disney Sports Enterprises provides management and development services for
the Company's National Hockey League franchise, the Mighty Ducks of Anaheim.
DISNEYLAND PARIS
Disneyland Paris (formerly referred to as the Euro Disney Resort) is located
on a 4,800-acre site at Marne-la-Vallee, approximately 20 miles east of Paris,
France. The project has been developed pursuant to a 1987 master agreement with
French governmental authorities by Euro Disney S.C.A., a publicly held French
company in which the Company holds a 39% equity interest and which is managed by
a subsidiary of the Company.
The Disneyland Paris theme park, which opened in April 1992, draws on a
number of European traditions in its five themed lands. Six themed hotels, with
a total of approximately 5,200 rooms, are part of the resort complex, together
with an entertainment center offering a variety of retail, dining and show
facilities and a 595-space camping area. The complex is served by direct rail
transport to Paris and by high-speed TGV train service.
In connection with the project, the Company has licensed various intellectual
property rights to Euro Disney, for which the Company is entitled to royalties
on certain revenues generated by Disneyland Paris. In addition, the subsidiary
of the Company that manages Euro Disney is entitled to management fees based on
the revenues and incentive fees based on cash flows of Euro Disney. In 1992,
the Company agreed to defer receipt of its base management fees for 1992 and
1993 until Disneyland Paris achieved profitability. In 1994, the Company, Euro
Disney, Euro Disney's principal creditors and Euro Disney's shareholders
approved a financial restructuring that included an offering of new shares, to
which the Company subscribed 49%, and various other contributions and
concessions by and from the Company and Euro Disney's creditors. In connection
with the restructuring, the Company agreed to waive its royalties and base
management fees through September 30, 1998. (See Note 2 of Notes to
Consolidated Financial Statements and Management's Discussion and Analysis on
page 15 for further information.)
ITEM 2. PROPERTIES
The Walt Disney World destination resort, Disneyland Park and other
California and Florida properties are described in Item 1 under the caption
THEME PARKS AND RESORTS. Film library properties are described in Item 1 under
the caption FILMED ENTERTAINMENT.
The Company owns approximately 51 acres of land in Burbank, California on
which are located its studios and executive offices. The studio facilities are
used for the production of both live-action and animated motion pictures and
television products. In addition, the Company leases office and warehouse space
for certain of its studio and corporate activities. The Company's KCAL-TV
facilities are located in Hollywood, California.
It is the Company's practice to obtain United States and foreign legal
protection for its theatrical and television product and its other original
works, including the various names and designs of the animated characters and
the publications and music which have been created in connection with the
Company's filmed products. The Company owns all rights to the name, likeness
and portrait of Walt Disney.
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ITEM 3. LEGAL PROCEEDINGS
The Company, together with, in some instances, certain of its directors and
officers, is a defendant or co-defendant in various legal actions involving
copyright, breach of contract and various other claims incident to the conduct
of its businesses. Management does not expect the Company to suffer any
material liability by reason of such actions.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of stockholders during the fourth quarter
of the fiscal year covered by this report.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are elected each year at the
organizational meeting of the Board of Directors which follows the annual
meeting of the stockholders and at such other meetings as appropriate. Each of
the executive officers has been employed by the Company in the position or
positions indicated in the list and pertinent notes below. Messrs. Eisner,
Disney, Murphy and Shapiro have been employed by the Company as executive
officers for more than five years.
At September 30, 1994, the executive officers were as follows:
<TABLE>
<CAPTION>
Executive
Officer
Name Age Title Since
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<S> <C> <C> <C>
Michael D. Eisner 52 Chairman of the Board, Chief Executive Officer 1984
and President (1)
Roy E. Disney 64 Vice Chairman of the Board 1984
Sanford M. Litvack 58 Senior Executive Vice President and Chief of Corporate 1991
Operations (2)
Lawrence P. Murphy 42 Executive Vice President-Strategic Planning 1985
and Development
Richard D. Nanula 34 Executive Vice President and Chief Financial Officer (3) 1990
Joe Shapiro 48 Executive Vice President (4) 1985
John J. Garand 47 Vice President-Planning and Control (5) 1992
<FN>
____________________
(1) Frank G. Wells served as President and Chief Operating Officer of the
Company until his death in April 1994.
(2) Mr. Litvack joined the Company as Senior Vice President-General Counsel in
1991. He was named Executive Vice President-Law and Human Resources in
1992 and was named Senior Executive Vice President and Chief of Corporate
Operations in August 1994. Mr. Litvack was previously a member of the
executive committee and chairman of the litigation department of the law
firm of Dewey Ballantine, of which he was a partner from January 1987 until
April 1991.
(3) Mr. Nanula joined the Company's strategic planning operation in 1986 and
was named Vice President-Treasurer of the Company in January 1990. He was
named Senior Vice President and Chief Financial Officer in August 1991 and
was named Executive Vice President in February 1994.
(4) Mr. Shapiro retired from the Company effective October 1, 1994.
(5) Mr. Garand was previously Senior Vice President and Chief Financial Officer
for Morse Shoe, Inc. from April 1990 until March 1992. Prior to that, Mr.
Garand served in various positions at the corporate and subsidiary offices
of PepsiCo, Inc. from 1981 until March 1990.
</TABLE>
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PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's common stock is listed on the New York, Pacific, Swiss and
Tokyo stock exchanges (NYSE symbol DIS). The following sets forth the high and
low composite sale prices for the fiscal periods indicated.
<TABLE>
<CAPTION>
Sales Price
---------------------------
High Low
------------ ------------
<S> <C> <C>
1994
1st Quarter..................................... $ 45 3/8 $ 37 1/8
2nd Quarter..................................... 48 5/8 40 7/8
3rd Quarter..................................... 45 1/8 39 5/8
4th Quarter..................................... 44 1/4 38 3/4
1993
1st Quarter..................................... $ 45 1/4 $ 33 1/4
2nd Quarter..................................... 47 7/8 41 3/4
3rd Quarter..................................... 45 1/8 38 1/4
4th Quarter..................................... 41 3/8 36
</TABLE>
The Company declared one quarterly dividend of $.0625 per share and three
quarterly dividends of $.075 per share in 1994, and in 1993 declared one
quarterly dividend of $.0525 per share and three quarterly dividends of $.0625.
As of September 30, 1994, the approximate number of record holders of the
Company's common stock was 458,900.
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ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
(In millions, except per share data)
1994 1993 * 1992 1991 1990
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Statement of Income
Revenues $ 10,055.1 $ 8,529.2 $ 7,504.0 $ 6,112.0 $ 5,757.3
Operating income 1,965.7 1,724.5 1,435.3 1,094.5 1,339.1
Income before cumulative effect
of accounting changes 1,110.4 671.3 816.7 636.6 824.0
Cumulative effect of accounting
changes (371.5)
Net income 1,110.4 299.8 816.7 636.6 824.0
Per Share
Earnings before cumulative effect
of accounting changes $ 2.04 $ 1.23 $ 1.52 $ 1.20 $ 1.50
Cumulative effect of accounting
changes (.68)
Earnings 2.04 .55 1.52 1.20 1.50
Cash dividends .29 .24 .20 .17 .14
Balance Sheet
Total assets $ 12,826.3 $11,751.1 $10,861.7 $ 9,428.5 $ 8,022.3
Borrowings 2,936.9 2,385.8 2,222.4 2,213.8 1,584.6
Stockholders' equity 5,508.3 5,030.5 4,704.6 3,871.3 3,488.6
Statement of Cash Flows
Cash flow from operations $ 2,807.3 $ 2,145.2 $ 1,838.1 $ 1,496.7 $ 1,358.9
Investing activities (2,886.7) (2,659.7) (1,923.7) (1,726.3) (1,181.9)
Financing activities (96.7) 112.7 (35.7) 295.9 262.0
<FN>
* See Notes 1, 6, 7, and 11 of Notes to Consolidated Financial Statements for
description of accounting changes adopted in the third quarter of 1993,
retroactive to October 1, 1992.
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
1994 VS. 1993
Revenues increased 18% or $1.53 billion to a record $10.06 billion in 1994,
driven by $1.12 billion of growth in Filmed Entertainment, primarily due to the
success of home video releases worldwide, the theatrical release of THE LION
KING worldwide, except for Europe, and growth in the number of titles available
for theatrical and television distribution, and $383.1 million of growth in
Consumer Products, reflecting continued expansion of the Disney Stores and the
strength of character merchandise licensing worldwide. Revenues of $2.36 billion
from foreign operations in all business segments increased 30% or $539.1 million
in 1994 and represented 23% of total revenues, an increase of two percentage
points over 1993.
Operating income rose 14% or $241.2 million to a record $1.97 billion in
1994, driven by increases in Filmed Entertainment and Consumer Products
operating income of $233.9 million and $70.1 million, respectively, partially
offset by Theme Parks and Resorts results, which declined $62.8 million. Filmed
Entertainment growth was generated primarily by the success of home video
activities, including the worldwide release of ALADDIN, the domestic releases of
THE FOX AND THE HOUND and THE RETURN OF JAFAR, and the international releases of
THE JUNGLE BOOK and BAMBI. The strong performance of THE LION KING (excluding
Europe) also contributed to growth. Increased Consumer Products operating income
was driven by worldwide character merchandise licensing growth generated by
traditional Disney characters and new animated film properties, including
ALADDIN and THE LION KING. Theme Parks and Resorts operating income reflected
lower attendance at Florida and California theme parks, partially offset by
higher guest spending and increased occupied rooms in Florida.
Costs and expenses increased 19% or $1.28 billion in 1994, reflecting higher
film cost amortization, increased distribution and selling costs related to home
video and theatrical product, increased operating costs related to expansion of
the Disney Stores, and increased operating costs associated with the expansion
of theme park attractions and resorts in Florida.
Income increased 65% to a record $1.11 billion and earnings per share
increased 66% to a record $2.04 from $671.3 million and $1.23, respectively,
before the cumulative effect of accounting changes in 1993. Excluding Euro
Disney reserves, which negatively impacted 1993 results, income and earnings per
share grew 25%.
1993 VS. 1992
Revenues increased 14% or $1.03 billion to $8.53 billion in 1993, driven by
$558.2 million of growth in Filmed Entertainment, resulting primarily from
successful home video releases and increased international theatrical
distribution activities, and $333.2 million of growth in Consumer Products,
reflecting continued expansion of the Disney Stores worldwide and increased
character merchandise licensing activities. Revenues of $1.82 billion from
foreign operations in all business segments increased 25% or $362.1 million in
1993 and represented 21% of total revenues, an increase of two percentage points
over 1992.
Operating income increased 20% or $289.2 million to $1.72 billion in 1993,
reflecting Filmed Entertainment growth of $113.9 million, Theme Parks and
Resorts growth of $102.9 million, and Consumer Products growth of $72.4 million.
Higher Filmed Entertainment operating income was due to the successful worldwide
home video and international theatrical release of BEAUTY AND THE BEAST, the
strong theatrical release of ALADDIN worldwide, except for Europe, the domestic
home video release of PINOCCHIO, and greater product availabilities in pay
television and worldwide television syndication. Theme Parks and Resorts
operating income grew as a result of increased theme park per capita spending
and higher occupied rooms at Florida resorts together with increased sales at
the Disney Vacation Club and higher royalties from Tokyo Disneyland. Consumer
Products results primarily reflected increased demand for Disney licensed
products in worldwide markets.
Costs and expenses increased 12% or $736.0 million in 1993, reflecting
higher film cost amortization, distribution and selling costs related to
increased product availabilities in Filmed Entertainment, increased costs
associated with the expansion of resort properties in Florida, and increased
operating and start-up costs related to expansion of the Disney Stores and new
business ventures in Consumer Products.
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<PAGE>
Income and earnings per share before the cumulative effect of accounting
changes in 1993 (described below) decreased 18% to $671.3 million and 19% to
$1.23, respectively, from $816.7 million and $1.52 in 1992. The decrease
reflected the impact of a $350.0 million charge to fully reserve the Company's
current receivables and funding commitment to Euro Disney and the Company's
equity share of Euro Disney's operating loss. (See Note 2 of Notes to
Consolidated Financial Statements.) The Company's 1993 net income and earnings
per share were significantly impacted by the change in accounting method for
pre-opening costs and the impact of adopting two new required Statements of
Financial Accounting Standards, EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT
BENEFITS OTHER THAN PENSIONS (SFAS 106) and ACCOUNTING FOR INCOME TAXES (SFAS
109).
The cumulative effect of the change in accounting method for pre-opening
costs resulted in a charge of $271.2 million or $.50 per share. In addition, the
cumulative effect of adopting SFAS 106 was a charge of $130.3 million or $.24
per share, partially offset by the $30.0 million or $.06 per share benefit from
adopting SFAS 109. (See Notes 1, 6, 7 and 11 of Notes to Consolidated Financial
Statements.)
Net income after the cumulative effect of accounting changes in 1993
decreased 63% to $299.8 million from $816.7 million in 1992 and earnings per
share fell 64% to $.55 from $1.52.
FILMED ENTERTAINMENT
1994 VS. 1993
Revenues increased 30% or $1.12 billion to $4.79 billion in 1994, driven by
growth of $731 million in worldwide home video revenues, $224 million in
worldwide theatrical revenues, and $99 million in television revenues. Domestic
home video revenues were driven by ALADDIN, THE FOX AND THE HOUND and THE RETURN
OF JAFAR compared to BEAUTY AND THE BEAST and PINOCCHIO in 1993, while
international home video revenues were driven by THE JUNGLE BOOK, ALADDIN and
BAMBI compared to BEAUTY AND THE BEAST and CINDERELLA in the prior year.
Theatrical revenues increased due to the worldwide release of THE LION KING,
except for Europe, ALADDIN in Europe, and continued expansion of theatrical
productions, including full-year operations of Miramax, which was acquired in
June 1993. Television revenues grew due to increased title availabilities
worldwide.
Operating income increased 38% or $233.9 million to $856.1 million in 1994,
driven by growth in worldwide home video activity and television, partially
offset by lower worldwide theatrical operating income, reflecting lower results
per film in 1994. Theatrical results in 1993 were driven by the worldwide
release of ALADDIN, except for Europe, and international releases of BEAUTY AND
THE BEAST, SISTER ACT and THE JUNGLE BOOK compared to the current year's release
of THE LION KING, the European release of ALADDIN, and the international release
of COOL RUNNINGS. Costs and expenses increased 29% or $886.0 million,
principally due to higher film cost amortization, and increased distribution and
selling costs, resulting from increased home video and theatrical activities.
1993 VS. 1992
Revenues grew 18% or $558.2 million to $3.67 billion in 1993, driven by
growth of $283 million in worldwide home video revenues, $137 million in
international theatrical revenues, and $107 million in television revenues.
Worldwide home video growth was driven by BEAUTY AND THE BEAST and PINOCCHIO
domestically and BEAUTY AND THE BEAST and CINDERELLA internationally. Higher
theatrical revenues reflected the release of ALADDIN and the international
releases of BEAUTY AND THE BEAST, SISTER ACT and THE JUNGLE BOOK, offset by the
disappointing performances of certain domestic live-action releases. Television
revenues increased primarily as a result of growth in pay television and
worldwide syndication, reflecting increased activity as more product was made
available to those markets.
Operating income rose 22% or $113.9 million to $622.2 million in 1993,
primarily due to growth in worldwide home video and television distribution.
Results also reflected the positive impact of continued growth in The Disney
Channel subscriber base. Strong international theatrical performances were
offset by lower domestic theatrical results. Costs and expenses increased 17% or
$444.3 million, principally due to higher film cost amortization and increased
distribution and selling costs, resulting from increased home video and
theatrical activities.
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<PAGE>
THEME PARKS AND RESORTS
1994 VS. 1993
Revenues of $3.46 billion in 1994 were substantially unchanged from the
prior year, as $86 million of growth in guest spending at Florida theme parks
and resorts and $47 million of growth from increased occupied rooms at Florida
resorts offset the $114 million impact of lower attendance at Florida and
California theme parks. Guest spending rose, primarily due to expanded product
offerings and certain price increases, while the increase in occupied rooms
reflected absorption of additional capacity from the third quarter openings of
Disney's Wilderness Lodge and Disney's All-Star Sports Resort, and expansion at
the Disney Vacation Club. Lower attendance was driven by reduced international
tourism.
Operating income decreased 8% or $62.8 million to $684.1 million in 1994,
reflecting the impact of reduced revenues from lower theme park attendance.
Costs and expenses, which consist principally of labor, costs of merchandise,
food and beverages sold, depreciation, repairs and maintenance, entertainment
and marketing, increased 3% or $85.7 million, primarily due to expansion of
theme park attractions and resorts in Florida and a charge recorded in the
fourth quarter to write off certain development costs associated with Disney's
America, as a result of the Company's decision to seek a new site for the theme
park.
1993 VS. 1992
Revenues rose 4% or $133.8 million to $3.44 billion in 1993, primarily due
to $40 million of growth in per capita spending at the theme parks, $25 million
of growth from increased occupied rooms at Florida resorts, and $52 million of
growth from sales of ownership interests at the Disney Vacation Club and
increased royalties from Tokyo Disneyland. Per capita spending was higher
primarily due to price increases. The increase in occupied rooms resulted from
the absorption of additional capacity from the Dixie Landings Resort. Total
attendance was flat with the prior year, as the impact of the opening of
Mickey's Toontown at Disneyland and the Splash Mountain attraction at Tokyo
Disneyland was offset by weakness in the international tourism market at Walt
Disney World, due to the poor European economy.
Operating income increased 16% or $102.9 million to $746.9 million in 1993,
driven by increased per capita spending at the parks, increased occupied rooms
and higher room rates at Florida resorts, continued development and sales of
ownership interests at the Disney Vacation Club, and increased royalties from
Tokyo Disneyland. Costs and expenses increased 1% or $30.9 million, reflecting
increased costs related primarily to resort expansion in Florida, partially
offset by decreased current year development spending at Walt Disney
Imagineering. In addition, year-over-year comparisons were positively impacted
by the prior-year charge relating to the termination of the lease on the Queen
Mary hotel and attraction.
CONSUMER PRODUCTS
1994 VS. 1993
Revenues increased 27% or $383.1 million to $1.80 billion in 1994, driven by
growth of $166 million from the Disney Stores, $109 million from worldwide
character merchandise licensing, and $87 million from publications, catalogs,
and records and audio entertainment. Full-year operations at 62 stores opened in
1993 and 7% higher sales at 177 existing stores generated 58% of Disney Stores'
revenue growth; sales from 85 new stores worldwide contributed the remaining
42%. Worldwide merchandise licensing growth was generated by increased demand
for traditional Disney characters and new animated film properties, including
ALADDIN and THE LION KING.
Operating income increased 20% or $70.1 million to $425.5 million in 1994,
primarily due to the worldwide success of character merchandise licensing and
expansion of the Disney Stores, partially offset by higher costs and expenses.
Costs and expenses, which consist principally of costs of goods sold, labor and
publicity and promotion, increased 30% or $313.0 million, primarily reflecting
expansion and revenue growth of the Disney Stores and higher expenses in catalog
businesses.
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<PAGE>
1993 VS. 1992
Revenues increased 31% or $333.2 million to $1.42 billion in 1993,
reflecting growth of $161 million from worldwide expansion of the Disney Stores,
$78 million from worldwide character merchandise licensing activities, and $87
million from publications, catalogs and records and audio entertainment.
Full-year operations at 64 stores opened in 1992 and 11% higher sales at 113
existing stores generated 60% of Disney Stores' revenue growth; sales from 62
new stores worldwide contributed the remaining 40%.
Operating income increased 26% or $72.4 million to $355.4 million in 1993,
driven by strong sales of ALADDIN and BEAUTY AND THE BEAST character merchandise
in domestic publications, records and audio entertainment and in the Disney
Stores domestically. Additionally, increased sales of both film and standard
character properties contributed to the favorable results in domestic and
international licensing. Costs and expenses increased 33% or $260.8 million,
primarily due to domestic expansion and start-up costs associated with
international expansion of the Disney Stores. Growth in domestic publications
and catalog businesses also resulted in higher expenses.
CORPORATE ACTIVITIES
GENERAL AND ADMINISTRATIVE EXPENSES
1994 VS. 1993
General and administrative expenses decreased 1% or $2.0 million to $162.2
million in 1994, reflecting operating income from Disney Sports Enterprises (The
Mighty Ducks of Anaheim) and lower losses incurred by Hollywood Records,
partially offset by higher corporate general and administrative expenses
incurred to support growth in the Company's operations and performance-related
incentive programs.
1993 VS. 1992
General and administrative expenses rose 11% or $16.0 million to $164.2
million in 1993. While corporate general and administrative expenses remained
virtually flat, the increase reflected higher operating losses at Hollywood
Records in contrast to the prior year, which reflected the success of the QUEEN
catalog.
INVESTMENT AND INTEREST INCOME AND INTEREST EXPENSE
1994 VS. 1993
Total investment and interest income decreased 30% or $56.2 million to
$129.9 million in 1994. The decrease reflected both lower average investment
balances and yields.
Interest expense decreased 24% or $37.8 million to $119.9 million in 1994,
primarily due to the 1993 write-off of unamortized issuance costs related to
subordinated notes redeemed by the Company, and increased capitalized interest,
resulting from higher capital expenditures in the current year.
1993 VS. 1992
Total investment and interest income increased 43% or $55.8 million to
$186.1 million in 1993. The increase reflected higher average investment
balances, gains on termination of interest rate swap agreements and the
favorable impact of leveraged leasing activities.
Interest expense increased 24% or $30.9 million to $157.7 million in 1993,
primarily due to the write-off of unamortized issuance costs on subordinated
notes, which were redeemed during the year, and higher average borrowing
balances, partially offset by the impact of lower average rates. The average
borrowing rate decreased from 7.2% in 1992 to 6.9% in 1993. Capitalized interest
was flat compared to the prior year.
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<PAGE>
INVESTMENT IN EURO DISNEY
1994 VS. 1993
The Company's investment in Euro Disney resulted in a loss of $110.4 million
in 1994. The loss consisted of a $52.8 million charge recognized in the third
quarter as a result of the Company's participation in the Euro Disney financial
restructuring, and the Company's equity share of fourth quarter operating
results. The prior year loss reflected the Company's equity share of Euro
Disney's operating results and a $350.0 million charge to fully reserve
receivables from and a funding commitment to Euro Disney, partially offset by
royalties and gain amortization related to the investment. The funding
commitment was intended to help support Euro Disney for a limited period, while
Euro Disney pursued a financial restructuring.
A proposed restructuring plan for Euro Disney was announced in March 1994.
During the third quarter of 1994, the Company entered into agreements with Euro
Disney and the Euro Disney lenders participating in the restructuring (the
"Lenders"), to provide certain debt, equity and lease financing to Euro Disney.
Under the restructuring agreements, which specify amounts denominated in
French francs, the Company committed to increase its equity investment in Euro
Disney by subscribing for 49% of a $1.1 billion rights offering of new shares;
to provide long-term lease financing at a 1% interest rate for approximately
$255 million of theme park assets; and to subscribe, in part through an offset
against fully-reserved advances previously made to Euro Disney under the
Company's funding commitment, for securities reimbursable in shares with a face
value of approximately $180 million and a 1% coupon. In addition, the Company
agreed to cancel fully-reserved receivables from Euro Disney of approximately
$210 million, to waive royalties and base management fees for a period of five
years and to reduce such amounts for specified periods thereafter, and to modify
the method by which management incentive fees will be calculated. During the
fourth quarter of 1994, the financial restructuring was completed and the
Company funded its commitments.
In addition to the commitments described above, the Company agreed to
arrange for the provision of a 10-year unsecured standby credit facility of
approximately $210 million, upon request, bearing interest at PIBOR. As of
September 30, 1994, Euro Disney had not requested the Company to establish this
facility.
As part of the restructuring, the Company received 10-year warrants for the
purchase of up to 27.8 million shares of Euro Disney at a price of FF 40 per
share. The terms of the restructuring also provide that, in the event that Euro
Disney decides to launch the second phase of the development of its theme park
and resort complex, and commitments for the necessary financing have been
obtained, the Company will be entitled to a development fee of approximately
$225 million. Upon receipt of the development fee, the Company's entitlement to
purchase Euro Disney shares by exercise of the warrants described above will be
reduced to 15 million shares.
In connection with the restructuring, Euro Disney Associes S.N.C. ("Disney
SNC"), an indirect wholly-owned affiliate of the Company, entered into a lease
arrangement (the "Lease") with the entity (the "Park Financing Company") which
financed substantially all of the Disneyland Paris theme park assets, and then
entered into a sublease agreement (the "Sublease") with Euro Disney. Under the
Lease, which replaced an existing lease between Euro Disney and the Park
Financing Company, Disney SNC leased the theme park assets of the Park Financing
Company for a noncancelable term of 12 years. Aggregate lease rentals of FF 10.5
billion ($2.0 billion) receivable from Euro Disney under the Sublease, which has
a 12-year term, will approximate the amounts payable by Disney SNC under the
Lease.
At the conclusion of the Sublease term, Euro Disney will have the option to
assume Disney SNC's rights and obligations under the Lease. If Euro Disney does
not exercise its option, Disney SNC may continue to lease the assets, with an
ongoing option to purchase them for an amount approximating the balance of the
Park Financing Company's outstanding debt. Alternatively, Disney SNC may
terminate the Lease, in which case Disney SNC would pay the Park Financing
Company an amount equal to 75% of its then-outstanding debt, estimated to be
$1.4 billion; Disney SNC could then sell or lease the assets on behalf of the
Park Financing Company in order to satisfy the remaining debt, with any excess
proceeds payable to Disney SNC.
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<PAGE>
As part of the overall restructuring, the Lenders agreed to underwrite 51%
of the Euro Disney rights offering, to forgive certain interest charges for the
period from April 1, 1994 to September 30, 2003, having a present value of
approximately $300 million, and to defer all principal payments until three
years later than originally scheduled. As consideration for their participation
in the financial restructuring, Euro Disney issued to the Lenders 10-year
warrants for the purchase of up to 40 million shares of Euro Disney stock at a
price of FF 40 per share.
Euro Disney has reported that it expects to incur a loss in 1995, which will
have a negative impact on the Company's results. The impact on the Company's
earnings, however, will be reduced as a result of the sale by the Company in
October 1994 of approximately 75 million shares, or 20% of its investment in
Euro Disney, to Prince Alwaleed Bin Talal Bin Abdulaziz Al Saud. The sale will
reduce the Company's ownership interest in Euro Disney to approximately 39%.
Beginning in 1995, the Company will record its equity share of Euro Disney's
operating results based upon its reduced ownership interest. The Company has
agreed, so long as any obligations to the Lenders are outstanding, to maintain
ownership of at least 34% of the outstanding common stock of Euro Disney until
June 1999, at least 25% for the subsequent five years and at least 16.67% for an
additional term thereafter.
1993 VS. 1992
The Company's investment in Euro Disney resulted in a loss of $514.7 million
in 1993, including the charge referred to below, after being partially offset by
royalties and gain amortization related to the investment. The operating results
of Euro Disney were lower than expected, due in part to the European recession
affecting Euro Disney's largest markets.
During 1993, Euro Disney, its principal lenders and the Company began
exploring a financial restructuring for Euro Disney. The Company agreed to help
fund Euro Disney for a limited period, to afford Euro Disney time to pursue the
financial restructuring. The operating results for the fourth quarter and the
year, and the need for a financial restructuring, created uncertainty regarding
the Company's ability to collect its current receivables and the funding
commitment to Euro Disney. Consequently, the Company recorded a charge of $350.0
million in the fourth quarter to fully reserve its current receivables and
funding commitment.
In 1992, the Company's investment in Euro Disney contributed income of $11.2
million. Although Euro Disney incurred a loss for 1992, the Company's 49% share
of the net loss was offset by royalties and gain amortization related to the
investment.
LIQUIDITY AND CAPITAL RESOURCES
The Company generates significant cash from operations and has substantial
borrowing capacity to meet its operating and discretionary cash requirements.
Cash provided by operations increased 31% or $662.1 million to $2.81 billion
in 1994, primarily due to the success of home video releases in Filmed
Entertainment and expanded character merchandise licensing activities worldwide
in Consumer Products.
Net borrowings (the Company's borrowings less cash and liquid investments)
increased $1.32 billion to $1.73 billion, reflecting incremental financing
activity during the year and the sale of investments to fund cash requirements.
New borrowings during the year included $475 million of senior participating
notes (described further below), $285 million of Japanese yen bonds, and $164
million of medium-term notes.
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<PAGE>
In 1994, the Company invested $1.43 billion to develop and produce film and
television properties and $1.03 billion to design and develop new theme park
attractions and resort properties, including Sunset Boulevard and the Twilight
Zone Tower of Terror at the Disney-MGM Studios Theme Park, Disney's Wilderness
Lodge and initial phases of Disney's All-Star Resorts in Florida, and the
Indiana Jones Adventure at Disneyland. The Company also participated in the
financial restructuring completed by Euro Disney in 1994, pursuant to which the
Company provided $971.1 million of equity capital and long-term financing to
Euro Disney, and agreed to arrange for, upon Euro Disney's request, a 10-year FF
1.1 billion ($210 million) unsecured standby credit facility. In addition,
pursuant to agreements executed in connection with the restructuring, the
Company sold approximately 75 million (20%) of its Euro Disney shares to Prince
Alwaleed Bin Talal Bin Abdulaziz Al Saud for approximately $145 million in
October 1994.
The Company repurchased 13.8 million shares of its common stock for $570.7
million in 1994, and has repurchased an additional 8.9 million shares for $348.7
million through November 1994. Under its share repurchase program, the Company
is authorized to purchase up to an additional 104 million shares, including 90
million shares authorized by the Board of Directors in November 1994. The
Company evaluates share repurchase decisions on an ongoing basis, taking into
account borrowing capacity, management's target capital structure, and other
investment opportunities. The Company also used $153 million to fund dividend
payments during the year.
The Company currently maintains significant borrowing capacity to take
advantage of growth and investment opportunities. The Company focuses on net
borrowings, which take into account its cash and investment balances, when
monitoring borrowing capacity. The Company's borrowing capacity includes a $525
million line of credit which is available for general corporate purposes and to
support commercial paper issuance.
The Company's financial condition remains strong. The Company believes that
its cash, other liquid assets, operating cash flows, access to equity capital
markets and borrowing capacity taken together provide more than adequate
resources to fund ongoing operating requirements and future capital expenditures
related to the expansion of existing businesses and development of new projects.
Expansion of existing businesses includes the design and development of theme
park attractions, resort properties, and other real estate developments,
expansion of the Disney Stores worldwide, and continued film and television
production. Theme park and resort projects currently under development include
Blizzard Beach, Celebration, Disney's Boardwalk Resort, the Disney Institute,
and additional Disney Vacation Club sites. In addition, the Company continually
evaluates discretionary investments in new projects which complement its
existing businesses.
RISK MANAGEMENT STRATEGIES
The Company employs a variety of on-and off-balance-sheet financial
instruments to manage its business and financial market risks.
During 1994 and 1993, the Company raised $475 million and $400 million,
respectively, from the issuance of senior participating notes. The notes, due
2001 with a minimum yield of 4.2% and due 2000 with a minimum yield of 1.5%,
respectively, are unique in that a portion of the interest paid is contingent
upon the performance of a portfolio of live-action films from Walt Disney
Pictures, Hollywood Pictures, Touchstone Pictures, Caravan Pictures, and
Miramax. In the future, the Company will continue to seek partners that will
share the risks and rewards of its live-action film business.
The Company's foreign currency revenues continue to grow and management
believes it is prudent to reduce the risk associated with fluctuations in the
value of the U.S. dollar in the foreign exchange markets. The Company uses
foreign currency forward contracts, purchased options and option combinations to
reduce the impact of changes in the value of its existing foreign currency
assets and liabilities and its anticipated future foreign currency revenues
denominated in Japanese yen, French francs, German marks, British pounds, and
other currencies. The primary focus of the Company's foreign exchange risk
management program is to reduce earnings volatility. By policy, the Company
maintains hedge coverages between minimum and maximum percentages of its
anticipated foreign exchange exposures for each of the next five fiscal years.
-17-
<PAGE>
The Company is exposed to interest rate risk related to its investments and
borrowings. The Company monitors the net interest rate sensitivity of its
portfolio of investments and borrowings and uses interest rate swaps,
exchange-traded futures, forwards and purchased options to manage the net
interest exposure and to lower overall borrowing costs. The Company's objective
is to manage the impact of interest rate changes on earnings and on the market
value of its investments and borrowings. The Company does not expect interest
rate movements to significantly affect its liquidity or operating results in the
foreseeable future. For 1994 and 1993, a 1% increase or decrease in interest
rates would not have had a material impact on the Company's liquidity or
operating results.
The Company continually monitors its positions with, and the credit quality
of, the financial institutions which are counterparties to its off-balance-sheet
financial instruments, and does not anticipate failure to perform by such
institutions. The Company enters into off-balance-sheet transactions only with
financial institution counterparties which have a credit rating of single A-or
better. The Company's current policy in agreements with financial institution
counterparties is generally to require collateral in the event credit ratings
fall below single A-. With respect to certain contracts, the Company has the
right to offset amounts payable to the counterparties to the extent of amounts
receivable, further reducing the risk associated with counterparty
nonperformance.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Supplemental Data on page 24.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Information regarding directors appearing under the caption ELECTION OF
DIRECTORS in the Company's Proxy Statement for the 1995 Annual Meeting of
Stockholders (the "1995 Proxy Statement") is hereby incorporated by reference.
Information regarding executive officers is included in Part I of this
Form 10-K as permitted by General Instruction G(3).
ITEM 11. EXECUTIVE COMPENSATION
Information appearing under the captions DIRECTORS' REMUNERATION; ATTENDANCE
and EXECUTIVE COMPENSATION in the 1995 Proxy Statement is hereby incorporated by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information setting forth the security ownership of certain beneficial owners
and management appearing under the caption STOCK OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS and STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS in the 1995 Proxy
Statement is hereby incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain related transactions appearing under the
caption RELATED TRANSACTIONS in the 1995 Proxy Statement is hereby incorporated
by reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Exhibits and Financial Statements and Schedules
(1) Financial Statements and Schedules
See Index to Financial Statements and Supplemental Data at page 24.
(2) Exhibits
3(a) Restated Certificate of Incorporation of the Company, filed as
Exhibit 3(a) to the Company's Annual Report on Form 10-K for
the year ended September 30, 1992, is hereby incorporated by
reference.
3(b) Bylaws of the Company, as amended, are filed herewith as
Exhibit 3(b).
4(a) Rights Agreement, dated as of June 21, 1989, between the
Company and Security Pacific National Bank, as Rights Agent
(including the form of Certificate of Designation of the Series
R Preferred Stock attached as Exhibit A thereto and the form of
Rights Certificate attached as Exhibit B thereto), filed as
Exhibit 1 to the Company's Current Report on Form 8-K, dated
June 21, 1989, is hereby incorporated by reference.
4(b) Indenture, dated as of November 30, 1990, between the Company
and Bankers Trust Company, as Trustee, with respect to certain
senior debt securities of the Company, filed as Exhibit 2 to
the Company's Current Report on Form 8-K, dated January 14,
1991, is hereby incorporated by reference.
4(c) Amended and Restated Credit Agreement, dated as of October 3,
1994, among the Company, Citicorp USA, Inc., as Agent, and
certain financial institutions is filed herewith as Exhibit
4(c).
4(d) Other long-term borrowing instruments issued by the Company are
omitted pursuant to Item 601(b) (4) (iii) of Regulation S-K.
The Company undertakes to furnish copies of such instruments to
the Commission upon request.
10(a) (i) Agreement on the Creation and the Operation of Euro
Disneyland en France, dated March 25, 1987, and (ii) Letter
relating thereto of Michael D. Eisner, Chairman of the Company,
dated March 24, 1987, filed as Exhibits 10(b) and 10(a),
respectively, to the Company's Current Report on Form 8-K filed
April 24, 1987, are hereby incorporated by reference.
10(b) Limited Recourse Financing Facility Agreement, dated as of
April 27, 1988, among the Company, Citibank Channel Island
Limited and Citicorp International, filed as Exhibit (10a) to
the Company's Current Report on Form 8-K filed April 29, 1988,
is hereby incorporated by reference.
10(c) (i) Employment Agreement, dated as of January 10, 1989, between
the Company and Michael D. Eisner, filed as Exhibit 10(a) to
the Company's Quarterly Report on Form 10-Q for the period
ended March 31, 1989; (ii) Agreement, dated March 1, 1985,
between the Company and Michael D. Eisner, filed as Exhibit 2
to the Company's Quarterly Report on Form 10-Q for the period
ended June 30, 1985; and (iii) description of action by the
Compensation Committee taken on November 30, 1990, filed as
Exhibit 10(c) to the Company's Annual Report on Form 10-K for
the year ended September 30, 1990, are hereby incorporated by
reference.
-20-
<PAGE>
10(d) (i) Employment Agreement, dated January 10, 1989, between the
Company and Frank G. Wells, filed as Exhibit 10(a) to the
Company's Quarterly Report on Form 10-Q for the period ended
March 31, 1989; (ii) Agreement, dated March 1, 1985, between
the Company and Frank G. Wells, filed as Exhibit 3 to the
Company's Quarterly Report on Form 10-Q for the period ended
June 30, 1985; and (iii) description of action by the
Compensation Committee taken on November 30, 1990, filed as
Exhibit 10(c) to the Company's Annual Report on Form 10-K for
the year ended September 30, 1990, are hereby incorporated by
reference.
10(e) Amended and Restated Employment Agreement, dated as of February
1, 1991, between the Company and Joe Shapiro, filed as Exhibit
1 to the Company's Quarterly Report on Form 10-Q for the period
ended June 30, 1991, is hereby incorporated by reference.
10(f) (i) Contract, dated December 14, 1979, with E. Cardon Walker,
to purchase a 2% interest in certain motion pictures to be
produced by the Company and to acquire an additional 2% profit
participation; and (ii) Amendment thereto, dated August 8,
1980, filed as Exhibits 1 and 3, respectively, to the Company's
Annual Report on Form 10-K for the year ended September 30,
1980, are hereby incorporated by reference.
10(g) Form of Indemnification Agreement entered into or to be entered
into by certain officers and directors of the Company as
determined from time to time by the Board of Directors,
included as Annex C to the Proxy Statement for the Company's
1988 Annual Meeting of Stockholders, is hereby incorporated by
reference.
10(h) Loan Plan for Corporate Officers, filed as Exhibit 10(u) to the
Company's Annual Report on Form 10-K for the year ended
September 30, 1986, is hereby incorporated by reference.
10(i) 1990 Stock Incentive Plan and the Rules relating to Stock
Options and Stock Appreciation Rights thereunder, filed as
Exhibits 28(a) and 28(b), respectively, to the Company's
Registration Statement on Form S-8 (No. 33-39770), dated April
5, 1991, are hereby incorporated by reference.
10(j) (i) 1987 Stock Incentive Plan and the Rules relating to Stock
Options and Stock Appreciation Rights thereunder, (ii) 1984
Stock Incentive Plan and the Rules relating to Stock Options
and Stock Appreciation Rights thereunder, (iii) 1981 Incentive
Plan and the Rules relating to Stock Options and Stock
Appreciation Rights thereunder and (iv) 1980 Stock Option Plan,
all as set forth as Exhibits 1(a), 1(b), 2(a), 2(b), 3(a), 3(b)
and 4, respectively, to the Prospectus contained in Part I of
the Company's Registration Statement on Form S-8 (No. 33-
26106), dated December 20, 1988, are hereby incorporated by
reference.
10(k) Contingent Stock Award Rules under the Company's 1984 Stock
Incentive Plan, filed as Exhibit 10(t) to the Company's Annual
Report on Form 10-K for the year ended September 30, 1986, is
hereby incorporated by reference.
10(l) Disney Salaried Retirement Plan, as amended through March 1,
1994, is filed herewith as Exhibit 10(l).
10(m) The Walt Disney Company and Associated Companies Key Employees
Deferred Compensation and Retirement Plan, filed as Exhibit
10(u) to the Company's Annual Report on Form 10-K for the year
ended September 30, 1985, is hereby incorporated by reference.
10(n) Supplemental Medical and Group Term Life Insurance Plan
(summary plan description), filed as Exhibit 10(x) to the
Company's Annual Report on Form 10-K for the year ended
September 30, 1985, is hereby incorporated by reference.
10(o) Group Personal Excess Liability Insurance Plan (summary plan
description), filed as Exhibit 10(z) to the Company's Annual
Report on Form 10-K for the year ended September 30, 1986, is
hereby incorporated by reference.
10(p) Family Income Assurance Plan (summary plan description), filed
as Exhibit 10(aa) to the Annual Report on Form 10-K for the
year ended September 30, 1986, is hereby incorporated by
reference.
-21-
<PAGE>
10(q) Disney Salaried Savings and Investment Plan, as amended and
restated through June 1, 1990, filed as Exhibit 28 (a) to the
Company's Registration Statement on Form S-8 (No. 33-35405),
filed June 14, 1990, is hereby incorporated by reference.
10(r) Disney Salaried Savings and Investment Plan Trust Agreement,
dated June 30, 1992, filed as Exhibit 10 to the Company's
Quarterly Report on Form 10-Q for the period ended June 30,
1992, is hereby incorporated by reference.
10(s) Master Trust Agreement for Employees Savings and Retirement
Plans, as amended and restated through June 1, 1990, between
the Company and Bankers Trust Company, as Trustee, filed as
Exhibit 28 (b) to the Company's Registration Statement on Form
S-8 (No. 33-35405), filed June 14, 1990, is hereby incorporated
by reference.
18 Letter from the Company's independent auditors, dated August 9,
1993, regarding preferability of the change in accounting
method for project-related pre-opening costs, filed as Exhibit
1 to the Company's Quarterly Report on Form 10-Q for the period
ended June 30, 1993, is hereby incorporated by reference.
21 Subsidiaries of The Walt Disney Company.
23 Consent of Price Waterhouse LLP, the Company's independent
accountants, is included herein at page 25.
27 Financial Data Schedule (filed electronically only)
28 Financial statements required by Form 11-K with respect to the
Disney Salaried Savings and Investment Plan for the year ended
December 31, 1993, filed as Exhibit 28 to the Annual Report on
Form 10-K for the year ended September 30, 1993, as amended by
Amendment No. 1 on Form 10-K/A dated June 30, 1994, are hereby
incorporated by reference.
(b) Reports on Form 8-K
(1) The Company filed a Current Report on Form 8-K, dated March 14, 1994,
with respect to a joint press release, dated March 14, 1994, by the
Company, Euro Disney S.C.A. and the Steering Committee for the lenders
to Euro Disney S.C.A.
-22-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE WALT DISNEY COMPANY
-------------------------------------------------
(Registrant)
Date: December 14, 1994 By: MICHAEL D. EISNER
-------------------------------------------------
(Michael D. Eisner, Chairman, Chief Executive
Officer and President)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICERS
MICHAEL D. EISNER Chairman of the Board,
- ---------------------------------------------- Chief Executive Officer and
(Michael D. Eisner) President December 14, 1994
SANFORD M. LITVACK Senior Executive Vice
- ---------------------------------------------- President and Chief of
(Sanford M. Litvack) Corporate Operations December 14, 1994
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICERS
RICHARD D. NANULA Executive Vice President
- ---------------------------------------------- and Chief Financial Officer December 14, 1994
(Richard D. Nanula)
JOHN J. GARAND Vice President -
- ---------------------------------------------- Planning and Control December 14, 1994
(John J. Garand)
DIRECTORS
REVETA F. BOWERS Director December 14, 1994
- ----------------------------------------------
(Reveta F. Bowers)
ROY E. DISNEY Director December 14, 1994
- ----------------------------------------------
(Roy E. Disney)
MICHAEL D. EISNER Director December 14, 1994
- ----------------------------------------------
(Michael D. Eisner)
STANLEY P. GOLD Director December 14, 1994
- ----------------------------------------------
(Stanley P. Gold)
IGNACIO E. LOZANO, JR. Director December 14, 1994
- ----------------------------------------------
(Ignacio E. Lozano, Jr.)
RICHARD A. NUNIS Director December 14, 1994
- ----------------------------------------------
(Richard A. Nunis)
IRWIN E. RUSSELL Director December 14, 1994
- ----------------------------------------------
(Irwin E. Russell)
ROBERT A.M. STERN Director December 14, 1994
- ----------------------------------------------
(Robert A.M. Stern)
E. CARDON WALKER Director December 14, 1994
- ----------------------------------------------
(E. Cardon Walker)
RAYMOND L. WATSON Director December 14, 1994
- ----------------------------------------------
(Raymond L. Watson)
GARY L. WILSON Director December 14, 1994
- ----------------------------------------------
(Gary L. Wilson)
</TABLE>
-23-
<PAGE>
THE WALT DISNEY COMPANY AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants and Consent of Independent Accountants . . . . . . . . . . . . . . . . 25
Consolidated Financial Statements of The Walt Disney Company and Subsidiaries
Consolidated Statement of Income for the Years Ended September 30, 1994, 1993 and 1992. . . . . . . . 26
Consolidated Balance Sheet as of September 30, 1994 and 1993. . . . . . . . . . . . . . . . . . . . . 27
Consolidated Statement of Cash Flows for the Years Ended September 30, 1994, 1993 and 1992. . . . . . 28
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Quarterly Financial Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Financial Statement Schedules
II. Amounts Receivable from Related Parties and Underwriters, Promoters and
Employees Other than Related Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
V. Property, Plant and Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
VI. Accumulated Depreciation of Property, Plant and Equipment. . . . . . . . . . . . . . . . . . 49
IX. Short-term Borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
X. Supplementary Income Statement Information . . . . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
Schedules other than those listed above are omitted for the reason that they are
not applicable or the required information is included in the financial
statements or related notes.
-24-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of The Walt Disney Company
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of The Walt Disney Company and its subsidiaries (the "Company") at
September 30, 1994 and 1993, and the results of their operations and their cash
flows for each of the three years in the period ended September 30, 1994, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Notes 1, 6, 7 and 11 to the consolidated financial
statements, the Company adopted the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards ("SFAS") No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions," and
SFAS No. 109, "Accounting for Income Taxes," and changed its method of
accounting for pre-opening costs in fiscal 1993.
PRICE WATERHOUSE LLP
Los Angeles, California
November 21, 1994
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the prospectuses
constituting part of the Registration Statements on Form S-8 (Nos. 33-26106,
33-35405 and 33-39770) and Form S-3 (No. 33-49891) of The Walt Disney Company of
our report dated November 21, 1994 which appears above.
PRICE WATERHOUSE LLP
Los Angeles, California
December 14, 1994
-25-
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share data)
<TABLE>
<CAPTION>
Year ended September 30 1994 1993 1992
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
REVENUES
Filmed entertainment $ 4,793.3 $ 3,673.4 $ 3,115.2
Theme parks and resorts 3,463.6 3,440.7 3,306.9
Consumer products 1,798.2 1,415.1 1,081.9
--------- --------- ---------
10,055.1 8,529.2 7,504.0
--------- --------- ---------
COSTS AND EXPENSES
Filmed entertainment 3,937.2 3,051.2 2,606.9
Theme parks and resorts 2,779.5 2,693.8 2,662.9
Consumer products 1,372.7 1,059.7 798.9
--------- --------- ---------
8,089.4 6,804.7 6,068.7
--------- --------- ---------
OPERATING INCOME
Filmed entertainment 856.1 622.2 508.3
Theme parks and resorts 684.1 746.9 644.0
Consumer products 425.5 355.4 283.0
--------- --------- ---------
1,965.7 1,724.5 1,435.3
--------- --------- ---------
CORPORATE ACTIVITIES
General and administrative expenses 162.2 164.2 148.2
Interest expense 119.9 157.7 126.8
Investment and interest income (129.9) (186.1) (130.3)
--------- --------- ---------
152.2 135.8 144.7
--------- --------- ---------
INCOME (LOSS) FROM INVESTMENT IN EURO DISNEY (110.4) (514.7) 11.2
--------- --------- ---------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGES 1,703.1 1,074.0 1,301.8
Income taxes 592.7 402.7 485.1
--------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES 1,110.4 671.3 816.7
CUMULATIVE EFFECT OF ACCOUNTING CHANGES
Pre-opening costs - (271.2) -
Postretirement benefits - (130.3) -
Income taxes - 30.0 -
--------- --------- ---------
NET INCOME $ 1,110.4 $ 299.8 $ 816.7
--------- --------- ---------
--------- --------- ---------
AMOUNTS PER COMMON SHARE
EARNINGS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES $ 2.04 $ 1.23 $ 1.52
CUMULATIVE EFFECT OF ACCOUNTING CHANGES
Pre-opening costs - (.50) -
Postretirement benefits - (.24) -
Income taxes - .06 -
--------- --------- ---------
EARNINGS PER SHARE $ 2.04 $ .55 $ 1.52
--------- --------- ---------
--------- --------- ---------
AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 545.2 544.5 536.8
--------- --------- ---------
--------- --------- ---------
PRO FORMA AMOUNTS ASSUMING THE NEW ACCOUNTING METHOD FOR
PRE-OPENING COSTS IS APPLIED RETROACTIVELY
NET INCOME $ 571.0 $ 672.7
--------- ---------
--------- ---------
EARNINGS PER SHARE $ 1.05 $ 1.25
--------- ---------
--------- ---------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-26-
<PAGE>
CONSOLIDATED BALANCE SHEET
(In millions)
<TABLE>
<CAPTION>
September 30 1994 1993
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 186.9 $ 363.0
Investments 1,323.2 1,888.5
Receivables 1,670.5 1,390.3
Merchandise inventories 668.3 608.9
Film and television costs 1,596.2 1,360.9
Theme parks, resorts and other property, at cost
Attractions, buildings and equipment 7,450.4 6,732.1
Accumulated depreciation (2,627.1) (2,286.4)
--------- ---------
4,823.3 4,445.7
Projects in progress 879.1 688.2
Land 112.1 94.3
--------- ---------
5,814.5 5,228.2
Investment in Euro Disney 629.9 -
Other assets 936.8 911.3
--------- ---------
$12,826.3 $11,751.1
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and other accrued liabilities $ 2,474.8 $ 2,530.1
Income taxes payable 267.4 291.0
Borrowings 2,936.9 2,385.8
Unearned royalty and other advances 699.9 840.7
Deferred income taxes 939.0 673.0
Stockholders' equity
Preferred stock, $.10 par value
Authorized - 100.0 million shares
Issued - none
Common stock, $.025 par value
Authorized - 1.2 billion shares
Issued - 567.0 million shares and 564.6 million shares 945.3 876.4
Retained earnings 5,790.3 4,833.1
Cumulative translation adjustments 59.1 36.7
--------- ---------
6,794.7 5,746.2
Less treasury stock, at cost - 42.9 million shares and
29.1 million shares 1,286.4 715.7
--------- ---------
5,508.3 5,030.5
--------- ---------
$12,826.3 $11,751.1
--------- ---------
--------- ---------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-27-
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
<TABLE>
<CAPTION>
Year ended September 30 1994 1993 1992
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Cash Provided by Operations Before Income Taxes $ 3,127.7 $ 2,453.9 $ 2,132.0
Income taxes paid (320.4) (308.7) (293.9)
--------- --------- ---------
2,807.3 2,145.2 1,838.1
--------- --------- ---------
INVESTING ACTIVITIES
Film and television costs (1,433.9) (1,264.6) (606.0)
Investments in theme parks, resorts and other property (1,026.1) (813.9) (599.1)
Euro Disney investment (971.1) (140.1) (68.3)
Purchases of investments (952.7) (1,313.5) (1,008.5)
Proceeds from sales of investments 1,494.1 841.0 409.0
Other 3.0 31.4 (50.8)
--------- --------- ---------
(2,886.7) (2,659.7) (1,923.7)
--------- --------- ---------
FINANCING ACTIVITIES
Borrowings 1,866.4 1,256.0 182.8
Reduction of borrowings (1,315.3) (1,119.2) (184.6)
Repurchases of common stock (570.7) (31.6) -
Dividends (153.2) (128.6) (105.3)
Other 76.1 136.1 71.4
--------- --------- ---------
(96.7) 112.7 (35.7)
--------- --------- ---------
Decrease in Cash and Cash Equivalents (176.1) (401.8) (121.3)
Cash and Cash Equivalents, Beginning of Year 363.0 764.8 886.1
--------- --------- ---------
Cash and Cash Equivalents, End of Year $ 186.9 $ 363.0 $ 764.8
--------- --------- ---------
--------- --------- ---------
</TABLE>
The difference between Income Before Income Taxes and Cumulative Effect of
Accounting Changes as shown on the Consolidated Statement of Income and Cash
Provided by Operations Before Income Taxes is explained as follows.
<TABLE>
<S> <C> <C> <C> <C>
Income Before Income Taxes and Cumulative Effect of
Accounting Changes $ 1,703.1 $ 1,074.0 $ 1,301.8
--------- --------- ---------
Cumulative effect of accounting changes - (514.2) -
CHARGES TO INCOME NOT REQUIRING CASH OUTLAYS
Depreciation 409.7 364.2 317.3
Amortization of film and television costs 1,198.6 664.2 442.3
Euro Disney 110.4 350.0 -
Other 121.1 163.5 155.4
CHANGES IN
Receivables (280.2) (211.0) (161.5)
Merchandise inventories (59.4) (146.1) (151.2)
Other assets (81.5) 197.0 (121.3)
Accounts payable and other accrued liabilities 146.7 544.4 335.9
Unearned royalty and other advances (140.8) (32.1) 13.3
--------- --------- ---------
1,424.6 1,379.9 830.2
--------- --------- ---------
Cash Provided by Operations Before Income Taxes $ 3,127.7 $ 2,453.9 $ 2,132.0
--------- --------- ---------
--------- --------- ---------
Supplemental Cash Flow Information:
Interest paid $ 99.3 $ 77.3 $ 62.5
--------- --------- ---------
--------- --------- ---------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-28-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in millions, except per share data)
1 Description of the Business and Summary of Significant Accounting Policies
The Walt Disney Company, together with its subsidiaries (the "Company"), is
a diversified international entertainment company with operations or investments
in the following businesses.
FILMED ENTERTAINMENT
The Company produces and acquires live-action and animated motion pictures
for distribution to the theatrical, television and home video markets. The
Company also produces original television programming for the network and
first-run syndication markets. The Company distributes its filmed product
through its own distribution and marketing companies in the United States and
most foreign markets. The Company provides programming for and operates The
Disney Channel, a pay television programming service, and a Los Angeles,
California television station.
THEME PARKS AND RESORTS
The Company operates the Walt Disney World-R- destination resort in Florida
and the Disneyland Park-R- and Disneyland Hotel in California. The Walt Disney
World destination resort includes the Magic Kingdom, Epcot and the Disney-MGM
Studios Theme Park, ten resort hotels and a complex of villas and suites, a
nighttime entertainment complex, a shopping village, conference centers,
campgrounds, golf courses, water parks and other recreational facilities. The
Company earns royalties on revenues generated by the Tokyo Disneyland theme park
near Tokyo, Japan, which is owned and operated by an unrelated Japanese
corporation. The Company's Disney Design and Development unit designs and
develops new theme park concepts and attractions, as well as resort properties.
The Company also manages and markets vacation ownership interests in the Disney
Vacation Club.
CONSUMER PRODUCTS
The Company licenses the name Walt Disney, as well as the Company's
characters, visual and literary properties and songs and music, to various
consumer manufacturers, retailers, show promoters and publishers throughout the
world. The Company also engages in direct retail distribution through the Disney
Stores and consumer catalogs, and is a publisher of books, magazines and comics
in the United States and Europe. In addition, the Company produces audio and
computer software for all markets, as well as film and video products for the
educational marketplace.
INVESTMENT IN EURO DISNEY
The Company is an equity investor in Euro Disney S.C.A. ("Euro Disney"), the
operator of the Disneyland Paris Resort (see Note 2).
SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of the Company include the accounts of
The Walt Disney Company and its subsidiaries after elimination of intercompany
accounts and transactions. Investments in affiliated companies are accounted for
using the equity method.
REVENUE RECOGNITION
Revenues from the theatrical distribution of motion pictures are recognized
when motion pictures are exhibited. Television licensing revenues are recorded
when the program material is available for telecasting by the licensee and when
certain other conditions are met. Revenues from video sales are recognized on
the date that video units are made widely available for sale by retailers.
Revenues from participants and sponsors at the theme parks are generally
recorded over the period of the applicable agreements commencing with the
opening of the related attraction.
-29-
<PAGE>
CASH, CASH EQUIVALENTS AND INVESTMENTS
Cash and cash equivalents consist of cash on hand and marketable securities
with original maturities of three months or less.
Debt securities are carried at cost, adjusted for unamortized premium or
discount. Marketable equity securities are carried at the lower of aggregate
cost or market. Realized gains and losses are determined on an average cost
basis.
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") 115 ACCOUNTING FOR CERTAIN INVESTMENTS
IN DEBT AND EQUITY SECURITIES. The Company will adopt the new standard in the
first quarter of 1995, and does not expect the impact to be material to its
financial condition or results of operations.
MERCHANDISE INVENTORIES
Carrying amounts of merchandise, materials and supplies inventories are
generally determined on a moving average cost basis and are stated at the lower
of cost or market.
FILM AND TELEVISION COSTS
Film and television production and participation costs are expensed based on
the ratio of the current period's gross revenues to estimated total gross
revenues from all sources on an individual production basis. Estimates of total
gross revenues are reviewed periodically and amortization is adjusted
accordingly.
Television broadcast rights are amortized principally on an accelerated
basis over the estimated useful lives of the programs.
THEME PARKS, RESORTS AND OTHER PROPERTY
Theme parks, resorts and other property are carried at cost. Depreciation is
computed on the straight-line method based upon estimated useful lives ranging
from three to fifty years.
OTHER ASSETS
Rights to the name, likeness and portrait of Walt Disney, goodwill and other
intangible assets are amortized over periods ranging from two to forty years.
RISK MANAGEMENT CONTRACTS
In the normal course of business, the Company employs a variety of
off-balance-sheet financial instruments to manage its exposure to fluctuations
in interest and foreign currency exchange rates, including interest rate swap
agreements, futures, forwards and purchased options, and foreign currency
forward contracts, purchased options and option combinations. The Company
designates interest rate swaps as hedges of investments and debt, and accrues
the differential to be paid or received under the agreements as interest rates
change over the lives of the contracts. Gains and losses arising from interest
rate futures, forwards and options, and foreign currency forward contracts and
options are recognized in income as offsets of gains and losses resulting from
the underlying hedged transactions.
Cash flows from interest rate and foreign exchange risk management
activities are classified in the same category as the cash flows from the
related investment, borrowing or foreign exchange activity.
EARNINGS PER SHARE
Earnings per share amounts are based upon the weighted average number of
common and common equivalent shares outstanding during the year. Common
equivalent shares are excluded from the computation in periods in which they
have an anti-dilutive effect.
-30-
<PAGE>
ACCOUNTING CHANGES
During the quarter ended June 30, 1993, the Company adopted SFAS 106
EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (see Note
7) and SFAS 109 ACCOUNTING FOR INCOME TAXES (see Note 6) and changed its method
of accounting for pre-opening costs (see Note 11). These changes, adopted
retroactive to October 1, 1992, had no cash impact.
The pro forma amounts reflect the effect of retroactive application of
expensing pre-opening costs on 1992 results.
RECLASSIFICATIONS
Certain reclassifications have been made in the 1993 and 1992 financial
statements to conform to the 1994 presentation.
2 Investment in Euro Disney
Euro Disney, a publicly traded French company, operates the Disneyland Paris
theme park and resort complex on a 4,800-acre site near Paris, France. Euro
Disney commenced operations on April 12, 1992. The Company has accounted for its
49% ownership interest in Euro Disney using the equity method of accounting.
In 1993, Euro Disney, its principal lenders and the Company began exploring
a financial restructuring for Euro Disney. The Company agreed to help fund Euro
Disney for a limited period, to afford Euro Disney time to attempt a financial
restructuring by spring 1994. Euro Disney's 1993 operating results and the need
for a financial restructuring created uncertainty regarding the Company's
ability to collect its current receivables and the funding commitment to Euro
Disney. Consequently, the Company recorded a $350.0 million charge to income in
the fourth quarter of 1993 to fully reserve its outstanding receivables and
funding commitment.
During the third quarter of 1994, the Company entered into agreements with
Euro Disney and the lenders participating in its restructuring plan (the
"Lenders") to provide certain debt, equity and lease financing to Euro Disney as
part of its commitments under the restructuring plan, and recorded a charge of
$52.8 million to reflect its participation in the restructuring. In the fourth
quarter, the Company recorded a charge of $57.6 million to reflect its equity
share of Euro Disney's operating results for that period.
Under the restructuring agreements, which specify amounts denominated in
French francs, the Company committed to increase its equity investment in Euro
Disney by subscribing for 49% of a $1.1 billion rights offering of new shares;
to provide long-term lease financing at a 1% interest rate for approximately
$255 million of Disneyland Paris theme park assets; and to subscribe, in part
through an offset against fully-reserved advances previously made to Euro Disney
under the Company's funding commitment, for securities reimbursable in shares
with a face value of approximately $180 million and a 1% coupon. In addition,
the Company agreed to cancel fully-reserved receivables from Euro Disney of
approximately $210 million, to waive royalties and base management fees for a
period of five years and to reduce such amounts for specified periods
thereafter, and to modify the method by which management incentive fees will be
calculated. During the fourth quarter of 1994, the financial restructuring was
completed and the Company funded its commitments.
In addition to the commitments described above, the Company agreed to
arrange for the provision of a 10-year unsecured standby credit facility of
approximately $210 million, upon request, bearing interest at PIBOR. As of
September 30, 1994, Euro Disney had not requested the Company to establish this
facility.
-31-
<PAGE>
As part of the restructuring, the Company received 10-year warrants for the
purchase of up to 27.8 million shares of Euro Disney at a price of FF 40 per
share. The terms of the restructuring also provide that, in the event that Euro
Disney decides to launch the second phase of the development of its theme park
and resort complex, and commitments for the necessary financing have been
obtained, the Company will be entitled to a development fee of approximately
$225 million. Upon receipt of the development fee, the Company's entitlement to
purchase Euro Disney shares by exercise of the warrants described above will be
reduced to 15 million shares.
The Company also agreed, so long as any obligations to the Lenders are
outstanding, to maintain ownership of at least 34% of the outstanding common
stock of Euro Disney until June 1999, at least 25% for the subsequent five years
and at least 16.67% for an additional term thereafter.
In connection with the restructuring, Euro Disney Associes S.N.C. ("Disney
SNC"), an indirect wholly-owned affiliate of the Company, entered into a lease
arrangement (the "Lease") with the entity (the "Park Financing Company") which
financed substantially all of the Disneyland Paris theme park assets, and then
entered into a sublease agreement (the "Sublease") with Euro Disney. Under the
Lease, which replaced an existing lease between Euro Disney and the Park
Financing Company, Disney SNC leased the theme park assets of the Park Financing
Company for a noncancelable term of 12 years. Aggregate lease rentals of FF 10.5
billion ($2.0 billion) receivable from Euro Disney under the Sublease, which has
a 12-year term, will approximate the amounts payable by Disney SNC under the
Lease. At the conclusion of the Sublease term, Euro Disney will have the option
to assume Disney SNC's rights and obligations under the Lease. If Euro Disney
does not exercise its option, Disney SNC may continue to lease the assets, with
an ongoing option to purchase them for an amount approximating the balance of
the Park Financing Company's outstanding debt. Alternatively, Disney SNC may
terminate the Lease, in which case Disney SNC would pay the Park Financing
Company an amount equal to 75% of its then-outstanding debt, estimated to be
$1.4 billion; Disney SNC could then sell or lease the assets on behalf of the
Park Financing Company in order to satisfy the remaining debt, with any excess
proceeds payable to Disney SNC.
As part of the overall restructuring, the Lenders agreed to underwrite 51%
of the Euro Disney rights offering, to forgive certain interest charges for the
period from April 1, 1994 to September 30, 2003, having a present value of
approximately $300 million, and to defer all principal payments until three
years later than originally scheduled. As consideration for their participation
in the financial restructuring, Euro Disney issued to the Lenders 10-year
warrants for the purchase of up to 40 million shares of Euro Disney stock at a
price of FF 40 per share.
Pursuant to agreements executed in May 1994 with Prince Alwaleed Bin Talal
Bin Abdulaziz Al Saud, Chairman of United Saudi Commercial Bank, the Company
sold Prince Alwaleed approximately 75 million Euro Disney shares for
approximately $145 million, in October 1994. As a result of the sale, the
Company's equity ownership in Euro Disney was reduced from 49% at September 30,
1994 to approximately 39%. Beginning in 1995, the Company will record its equity
share of Euro Disney's operating results based upon its reduced ownership
interest. The quoted market value of the Company's Euro Disney shares at
September 30, 1994 was approximately $566 million.
In October 1989, Euro Disney completed its initial public equity offering of
approximately $1 billion. As a result of the offering, the Company's share of
the net assets of Euro Disney exceeded its investment by approximately $375
million. Through 1993, the Company recognized this gain ratably using an eight-
year amortization period, which represented the Company's contractual obligation
to manage the development and operation of the complex and maintain an ownership
interest of at least 17%. Subsequent to the Company fully reserving its
outstanding receivables and funding commitment during the fourth quarter of
1993, the Company discontinued recognition of gain amortization. As a result of
the Company's participation in the Euro Disney financial restructuring, no
further gain amortization will be recognized by the Company.
-32-
<PAGE>
In addition to recording its equity share of Euro Disney's operating results
and amortization of the gain, the Company earned $36.3 and $32.9 million of
royalties in 1993 and 1992, respectively, under agreements with Euro Disney. The
Company agreed to defer its base management fees for 1993 and 1992. As part of
the Euro Disney financial restructuring, the Company permanently waived receipt
of deferred base management fees.
Euro Disney's consolidated financial statements are prepared in accordance
with accounting principles generally accepted in France ("French GAAP"). Under
French GAAP, Euro Disney incurred a 1994 net loss of FF 1.8 billion, a net loss
of FF 5.3 billion in 1993 (FF 2.1 billion before the cumulative effect of an
accounting change) and a net loss of FF 188 million in 1992. During 1993, Euro
Disney changed its method of accounting for project-related pre-opening costs.
Under the new method, such costs are expensed as incurred. The cumulative effect
of the change in method on prior years was a charge against income of FF 3.2
billion. The effect of the change in 1993 was to decrease the loss before the
cumulative effect of accounting change by FF 338 million.
U.S. generally accepted accounting principles ("U.S. GAAP") differ in
certain significant respects from French GAAP applied by Euro Disney,
principally as they relate to accounting for leases and the calculation of
interest expense relating to the debt affected by Euro Disney's financial
restructuring. In addition, the U.S. GAAP treatment of receivables due from Euro
Disney and canceled by the Company in connection with Euro Disney's financial
restructuring differs significantly from French GAAP applied by Euro Disney. The
summarized consolidated financial statements for Euro Disney set forth below are
stated in U.S. dollars in accordance with U.S. GAAP.
<TABLE>
<CAPTION>
Balance Sheet 1994 1993
<S> <C> <C> <C>
- ------------------------------------------------------------------------------
Cash and investments $ 289 $ 211
Receivables 227 268
Fixed assets, net 3,791 3,704
Other assets 137 214
--------- ---------
Total Assets $ 4,444 $ 4,397
--------- ---------
--------- ---------
Accounts payable and other liabilities $ 560 $ 647
Borrowings 3,051 3,683
Stockholders' equity 833 67
--------- ---------
Total Liabilities and Stockholders' Equity $ 4,444 $ 4,397
--------- ---------
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations 1994 1993 1992
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
Revenues $ 751 $ 873 $ 738
Costs and expenses 1,198 1,114 808
Net interest expense 280 287 95
--------- --------- ---------
Loss before income taxes and cumulative
effect of accounting change (727) (528) (165)
Income tax benefit - - 30
--------- --------- ---------
Loss before cumulative effect of accounting
change (727) (528) (135)
Cumulative effect of change in accounting for
pre-opening costs - (578) -
--------- --------- ---------
Net Loss $ (727) $ (1,106) $ (135)
--------- --------- ---------
--------- --------- ---------
Pro forma amount assuming the change in
accounting method is applied retroactively $ (528) $ (418)
--------- ---------
--------- ---------
</TABLE>
-33-
<PAGE>
3 Film and Television Costs
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Theatrical Film Costs
Released, less amortization $ 436.7 $ 329.0
In process 627.1 548.5
--------- ---------
1,063.8 877.5
--------- ---------
Television Costs
Released, less amortization 281.9 230.0
In process 124.7 130.1
--------- ---------
406.6 360.1
--------- ---------
Television Broadcast Rights 125.8 123.3
--------- ---------
$ 1,596.2 $ 1,360.9
--------- ---------
--------- ---------
</TABLE>
Based on management's total gross revenue estimates as of September 30,
1994, approximately 88% of unamortized production costs applicable to released
theatrical and television productions are expected to be amortized during the
next three years.
4 Borrowings
<TABLE>
<CAPTION>
Fiscal
Effective Year
Interest Rate Maturity 1994 1993
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Medium-term notes (a) 5.9% 1995-2093 $ 948.0 $ 783.7
Senior participating notes (a) (b) 6.0 2000-2001 722.8 312.5
Commercial paper (c) 4.9 1995 609.1 520.0
Japanese yen bonds (d) 4.8 1998 285.4 -
Securities sold under agreements to
repurchase (e) 7.0 1995 57.5 437.5
Other (d) 8.4 1995-2013 314.1 332.1
--------- ---------
5.9% $ 2,936.9 $ 2,385.8
--------- ---------
--------- ---------
<FN>
(a) The effective interest rate reflects the effect of interest rate swaps
entered into with respect to certain of these borrowings.
(b) The average coupon rate is 3% on $875 million face value amount of notes.
Additional interest may be paid based on the performance of designated
portfolios of films.
(c) The Company has available through 2000 an unsecured revolving line of bank
credit of up to $525 million for general corporate purposes, including the
support of commercial paper borrowings. The Company has the option to
borrow at various interest rates.
(d) The effective interest rate reflects the effect of cross-currency swaps
entered into with respect to certain of these borrowings.
(e) Securities sold under agreements to repurchase are collateralized by
certain marketable securities.
</TABLE>
Borrowings, excluding commercial paper and securities sold under agreements
to repurchase, have the following scheduled maturities.
<TABLE>
<S> <C>
1995 $163.1
1996 116.1
1997 108.0
1998 411.1
1999 0.4
</TABLE>
-34-
<PAGE>
The Company capitalizes interest on assets constructed for its theme parks,
resorts and other property, and on theatrical and television productions in
process. In 1994, 1993 and 1992, respectively, total interest costs incurred
were $171.9, $183.7 and $152.1 million, of which $52.0, $26.0 and $25.3 million
were capitalized.
5 Unearned Royalty and Other Advances
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Tokyo Disneyland royalty advances $ 466.6 $ 490.9
Other 233.3 349.8
--------- ---------
$ 699.9 $ 840.7
--------- ---------
--------- ---------
</TABLE>
In 1988, the Company monetized a substantial portion of its royalties
through 2008 from certain Tokyo Disneyland operations. The Company has certain
ongoing obligations under its contract with the owner and operator of Tokyo
Disneyland, and accordingly, royalty advances are being amortized through 2008.
The maximum amount the Company may be required to fund under certain recourse
provisions of the monetization agreement is $145 million. The Company does not
anticipate funding any significant amount under this agreement.
6 Income Taxes
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGES
Domestic (including U.S. exports) $ 1,514.5 $ 931.4 $ 1,178.9
Foreign subsidiaries 188.6 142.6 122.9
--------- --------- ---------
$ 1,703.1 $ 1,074.0 $ 1,301.8
--------- --------- ---------
--------- --------- ---------
INCOME TAX PROVISION
Current
Federal $ 117.3 $ 217.3 $ 225.8
State 29.9 47.1 40.3
Foreign subsidiaries 84.1 63.3 46.1
Other foreign 78.7 65.1 48.3
--------- --------- ---------
310.0 392.8 360.5
--------- --------- ---------
Deferred
Federal 259.6 17.0 109.9
State 23.1 (7.1) 14.7
--------- --------- ---------
282.7 9.9 124.6
--------- --------- ---------
$ 592.7 $ 402.7 $ 485.1
--------- --------- ---------
--------- --------- ---------
</TABLE>
-35-
<PAGE>
<TABLE>
<CAPTION>
COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES 1994 1993
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Deferred tax assets:
Accrued liabilities $ (221.3) $ (142.3)
Investment in Euro Disney (133.3) (204.6)
State income taxes (72.9) (71.4)
Pension and other benefit programs (26.2) (27.0)
--------- ---------
Total deferred tax assets (453.7) (445.3)
--------- ---------
Deferred tax liabilities:
Theme parks, resorts and other property 954.8 753.6
Licensing revenues capitalized 66.1 65.7
Interest and property taxes 73.8 52.8
Purchase accounting adjustments 49.6 51.0
Leveraged leases 175.1 111.5
Other 23.5 33.9
--------- ---------
Total deferred tax liabilities 1,342.9 1,068.5
--------- ---------
Net deferred tax liability before valuation allowance 889.2 623.2
Valuation allowance 49.8 49.8
--------- ---------
Net deferred tax liability $ 939.0 $ 673.0
--------- ---------
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
RECONCILIATION OF EFFECTIVE INCOME TAX RATE 1994 1993 1992
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Federal income tax rate 35.0% 34.8% 34.0%
State income taxes, net of Federal income tax benefit 2.1 2.2 2.8
Effect of increase in statutory tax rate on deferred taxes - 1.6 -
Other (2.3) (1.1) 0.5
--- --- ---
34.8% 37.5% 37.3%
--- --- ---
--- --- ---
</TABLE>
As discussed in Note 1, the Company adopted SFAS 109 during the quarter
ended June 30, 1993, retroactive to October 1, 1992. The adoption of SFAS 109
changed the Company's method of accounting for income taxes from the deferred
method to the asset and liability method. SFAS 109 requires recognition of
deferred tax assets and liabilities for the expected future tax consequences of
events that have been recognized in the financial statements or tax returns.
Under this method, deferred tax assets and liabilities are determined based on
the difference between the financial statement carrying amounts and tax bases of
assets and liabilities using enacted tax rates in effect in the years in which
the differences are expected to reverse. Differences between financial reporting
and tax bases arise most frequently from differences in timing of income and
expense recognition and as a result of business acquisitions. Prior year
financial statements have not been restated to apply the provisions of SFAS 109.
-36-
<PAGE>
As a result of adoption, the Company recognized a benefit in 1993 of $30.0
million, or $.06 per share, representing the cumulative effect of the change on
results for years prior to October 1, 1992. The cumulative effect represented
the adjustment of previously recorded deferred tax assets and liabilities to
reflect the lower prevailing tax rates and the establishment of previously
unrecorded deferred tax liabilities. The adoption had no effect on pre-tax
income in 1993.
In 1994 and 1993, income tax benefits of $12.6 and $144.7 million,
respectively, were allocated to stockholders' equity. Such benefits were
attributable to employee stock option transactions.
7 Pension and Other Benefit Programs
The Company contributes to various pension plans under union and
industry-wide agreements. Contributions are based upon the hours worked or gross
wages paid to covered employees. In 1994, 1993 and 1992, the costs recognized
under these plans were $13.1, $16.1 and $14.7 million, respectively. The
Company's share of the unfunded liability, if any, related to these
multi-employer plans is not material.
The Company also maintains pension plans covering most of its domestic
salaried and hourly employees not covered by union or industry-wide pension
plans and a non-qualified, unfunded retirement plan for key employees.
With respect to its qualified defined benefit pension plans, the Company's
policy is to fund, at a minimum, the amount necessary on an actuarial basis to
provide for benefits in accordance with the requirements of ERISA. Benefits are
generally based on years of service and/or compensation.
Net pension cost is summarized as follows.
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Service cost of current period $ 35.1 $ 29.5 $ 23.1
Interest cost on projected benefit obligations 35.5 31.0 25.9
Gain on plan assets (12.1) (54.7) (43.3)
Net amortization and deferral of unrecognized gain
on plan assets (22.0) 26.2 19.1
--------- --------- ---------
Net pension cost $ 36.5 $ 32.0 $ 24.8
--------- --------- ---------
--------- --------- ---------
</TABLE>
The weighted average discount rate was 8.5% for 1994 and 1993 and 9.5% for
1992, and the expected long-term rate of return on plan assets was 9.5% for
1994, 1993 and 1992. The assumed rate of increase in compensation for the
salaried plans was 6.3% for 1994, 6.8% for 1993 and 7.0% for 1992. The mortality
table used is the 1983 Group Annuity Mortality Table for Males and Females.
-37-
<PAGE>
The funded status of the plans and the amounts included in the Company's
consolidated balance sheet are as follows.
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Plan assets at fair value, primarily publicly traded stocks and
bonds $ 484.8 $ 428.9
Actuarial present value of projected benefit obligations
Accumulated benefit obligations
Vested (383.2) (344.6)
Non-vested (20.3) (23.0)
Provision for future salary increases (72.2) (65.1)
--------- ---------
Excess (deficiency) of plan assets versus projected benefit
obligations 9.1 (3.8)
Unrecognized net loss 82.3 53.8
Unrecognized prior service cost (benefit) (10.6) 3.2
Unrecognized net obligation 3.7 4.0
--------- ---------
Prepaid pension cost $ 84.5 $ 57.2
--------- ---------
--------- ---------
</TABLE>
The Company sponsors a plan to provide postretirement medical benefits to
most of its domestic salaried and hourly employees, and contributes to
multi-employer welfare plans to provide similar benefits to certain employees
under collective bargaining agreements. In 1993, employees who had 20 years of
service and attained the age of 62 were eligible to participate in the
postretirement benefit plan. Effective March 1, 1994, benefits commence at age
65 for employees who have completed 20 qualifying years of service, worked until
age 55, and who have commenced receiving monthly retirement benefits.
The Company funds its postretirement health benefit liability on a
discretionary basis.
As discussed in Note 1, the Company adopted SFAS 106 during the quarter
ended June 30, 1993, retroactive to October 1, 1992. SFAS 106 required accrual
of postretirement benefit costs to actuarially allocate such costs to the years
during which employees render qualifying service. Previously, such costs were
expensed as actual claims were paid. SFAS 106 also required recognition of the
unfunded and previously unrecognized accumulated postretirement benefit
obligation ("transition obligation") for all participants in the
Company-sponsored plan. The Company elected to immediately recognize the
transition obligation, which resulted in a charge against income of $130.3
million, or $.24 per share, after related income tax benefit of $71.7 million,
which represented the cumulative effect of the change in accounting on results
prior to October 1, 1992. Under the provisions of SFAS 106, postretirement
benefit expense in 1993 exceeded the amount under the previous accounting method
by $17.0 million after-tax, or $.03 per share.
Net postretirement benefit cost is summarized as follows.
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Service cost of current period $ 13.5 $ 13.9
Interest cost on accumulated postretirement benefit obligation 17.0 20.5
Actual return on plan assets (1.1) (8.5)
Net amortization and deferral of unrecognized gain or loss on plan
assets (15.5) 3.9
--------- ---------
Net postretirement benefit cost $ 13.9 $ 29.8
--------- ---------
--------- ---------
</TABLE>
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 8.5% for 1994 and 1993. The expected long
term rate of return on plan assets was 9.5% for 1994 and 1993.
-38-
<PAGE>
The annual rate of increase in the per capita cost of covered health care
benefits was assumed to be 7% in 1994 and 1993. The health care cost trend rate
has a significant effect on the amounts reported. An increase in the assumed
health care cost trend rate of 1% for each year would increase the
postretirement benefit obligation as of September 30, 1994 and 1993 by $39.2 and
$53.3 million, respectively, and the net service and interest cost components of
net postretirement benefit cost for 1994 and 1993 by $7.1 and $8.1 million,
respectively.
The funded status of the plan and the amounts included in the Company's
consolidated balance sheet are as follows.
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Actuarial present value of accumulated postretirement benefit
obligation
Retirees $ 46.9 $ 40.4
Fully eligible active plan participants 57.8 75.7
Other active plan participants 77.7 132.0
--------- ---------
182.4 248.1
Plan assets at fair value, primarily publicly traded stocks and
bonds (78.1) (66.8)
Unrecognized net (gain) loss (23.1) 30.2
Unrecognized prior service cost 129.0 -
--------- ---------
Accrued postretirement benefit cost $ 210.2 $ 211.5
--------- ---------
--------- ---------
</TABLE>
In November 1992, the Financial Accounting Standards Board issued SFAS 112
EMPLOYERS' ACCOUNTING FOR POSTEMPLOYMENT BENEFITS. The Company currently plans
to adopt SFAS 112 in 1995 and does not anticipate that the impact will be
material to its financial condition or results of operations.
8 Stockholders' Equity
<TABLE>
<CAPTION>
Common Paid-in Retained
(Shares in millions) Shares Stock Capital Earnings
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
Balance at September 30, 1991 548.6 $ 13.7 $ 536.0 $ 3,950.5
Exercise of stock options, net 3.6 0.1 70.1 -
Dividends ($.20125 per share) - - - (105.3)
Net income - - - 816.7
----- ----- ----------- -----------
Balance at September 30, 1992 552.2 13.8 606.1 4,661.9
Exercise of stock options, net 12.4 0.3 256.2 -
Dividends ($.24 per share) - - - (128.6)
Net income - - - 299.8
----- ----- ----------- -----------
Balance at September 30, 1993 564.6 14.1 862.3 4,833.1
Exercise of stock options, net 2.4 0.1 68.8 -
Dividends ($.2875 per share) - - - (153.2)
Net income - - - 1,110.4
----- ----- ----------- -----------
Balance at September 30, 1994 567.0 $ 14.2 $ 931.1 $ 5,790.3
----- ----- ----------- -----------
----- ----- ----------- -----------
</TABLE>
On February 18, 1992, the Board of Directors approved a four-for-one stock
split of the Company's common stock, which was approved by the Company's
stockholders and became effective on April 20, 1992. All share and per share
data have been restated for all periods presented to reflect the stock split.
-39-
<PAGE>
In June 1989, the Company adopted a stockholders' rights plan. The plan
becomes operative in certain events involving the acquisition of 25% or more of
the Company's common stock by any person or group in a transaction not approved
by the Company's Board of Directors. Upon the occurrence of such an event, each
right, unless redeemed by the Board, entitles its holder to purchase for $350 an
amount of common stock of the Company, or in certain circumstances the acquiror,
having a market value of twice the purchase price. In connection with the rights
plan, 7.2 million shares of preferred stock were reserved.
At September 30, 1994, and 1993, the Company's cumulative foreign currency
translation adjustments were $59.1 and $36.7 million, net of deferred taxes of
$27.5 and $25.0 million, respectively.
Treasury stock activity for the three years ended September 30, 1994 was as
follows.
<TABLE>
<CAPTION>
Treasury
(Shares in millions) Shares Stock
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------
Balance at September 30, 1991 and 1992 27.8 $ 664.1
Common stock repurchases 0.9 31.6
Common stock trade-ins on exercised options 0.4 20.0
--- -----------
Balance at September 30, 1993 29.1 715.7
Common stock repurchases 13.8 570.7
--- -----------
Balance at September 30, 1994 42.9 $ 1,286.4
--- -----------
--- -----------
</TABLE>
In November 1984, the Company adopted a program to repurchase up to 56
million shares. In December 1990, the Company increased the authorized share
repurchase amount to 90 million shares. Under this program, the Company
purchased 13.8 million shares during the year ended September 30, 1994, and
repurchased an additional 8.9 million shares through November 21, 1994. Since
adoption of the program, a total of 75.5 million shares have been repurchased at
prevailing market prices. On November 21, 1994, the Company increased the
authorized share repurchase amount by 90 million.
9 Stock Incentive Plans
Under various plans, the Company may grant stock option and other awards to
key executive, management and creative personnel. Transactions under the various
stock option and incentive plans for the periods indicated were as follows.
<TABLE>
<CAPTION>
(Shares in millions) 1994 1993 1992
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
Outstanding at beginning of year 36.4 44.3 44.8
Awards cancelled (1.6) (1.1) (1.2)
Awards granted 6.5 5.6 4.3
Awards exercised (2.5) (12.4) (3.6)
--- --------- ---
Outstanding at September 30 38.8 36.4 44.3
--- --------- ---
--- --------- ---
Exercisable at September 30 17.5 13.4 18.8
--- --------- ---
--- --------- ---
</TABLE>
-40-
<PAGE>
Stock option awards are granted at prices equal to at least market price on
the date of grant. Options outstanding at September 30, 1994 and 1993 ranged in
price from $3.61 to $47.31 and $3.23 to $44.06 per share, respectively. Options
exercised ranged in price from $3.23 to $41.00 per share in 1994, from $3.23 to
$33.35 per share in 1993, and from $3.23 to $32.66 per share in 1992. Shares
available for future option grants at September 30, 1994 were 18.8 million.
10 Detail of Certain Balance Sheet Accounts
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
RECEIVABLES
Trade, net of allowances $ 1,328.4 $ 1,180.7
Other 342.1 209.6
--------- ---------
$ 1,670.5 $ 1,390.3
--------- ---------
--------- ---------
OTHER ASSETS
Intangibles $ 311.0 $ 380.3
Other 625.8 531.0
--------- ---------
$ 936.8 $ 911.3
--------- ---------
--------- ---------
ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES
Accounts payable $ 1,771.8 $ 1,755.4
Payroll and employee benefits 638.6 661.9
Other 64.4 112.8
--------- ---------
$ 2,474.8 $ 2,530.1
--------- ---------
--------- ---------
</TABLE>
11 Pre-Opening Costs
As discussed in Note 1, during 1993 the Company changed its method of
accounting for pre-opening costs. In years prior to 1993, project-related
pre-opening costs were capitalized and amortized on a straight-line basis over
periods of up to five years. Under the new method, project-related pre-opening
costs are expensed as incurred. The cumulative effect of the change in method on
prior years was a charge against income of $271.2 million, or $.50 per share,
after related income tax benefit of $71.0 million, of which $233.0 million
related to the impact of the accounting change on the Company's investment in
Euro Disney. The effect of the change was to increase income in 1993 by $40.2
million after-tax, or $.07 per share.
-41-
<PAGE>
12 Segments
<TABLE>
<CAPTION>
BUSINESS SEGMENTS 1994 1993 1992
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
CAPITAL EXPENDITURES
Filmed entertainment $ 100.7 $ 130.2 $ 76.7
Theme parks and resorts 846.4 593.4 393.6
Consumer products 61.1 36.3 80.6
Corporate 17.9 54.0 48.2
--------- --------- ---------
$ 1,026.1 $ 813.9 $ 599.1
--------- --------- ---------
--------- --------- ---------
DEPRECIATION EXPENSE
Filmed entertainment $ 49.1 $ 38.5 $ 29.5
Theme parks and resorts 289.2 269.2 249.8
Consumer products 38.3 26.2 16.8
Corporate 33.1 30.3 21.2
--------- --------- ---------
$ 409.7 $ 364.2 $ 317.3
--------- --------- ---------
--------- --------- ---------
IDENTIFIABLE ASSETS
Filmed entertainment $ 3,791.5 $ 3,417.5
Theme parks and resorts 5,706.9 5,216.0
Consumer products 845.3 707.5
Corporate 1,852.7 2,410.1
Investment in Euro Disney 629.9 -
--------- ---------
$12,826.3 $11,751.1
--------- ---------
--------- ---------
SUPPLEMENTAL REVENUE DATA
Filmed entertainment
Theatrical product $ 3,734.2 $ 2,764.4 $ 2,251.7
Theme parks and resorts
Admissions 1,179.6 1,215.6 1,193.3
Merchandise, food and beverage 1,238.1 1,232.7 1,223.1
</TABLE>
-42-
<PAGE>
<TABLE>
<CAPTION>
GEOGRAPHIC SEGMENTS 1994 1993 1992
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
DOMESTIC REVENUES
United States $ 7,697.6 $ 6,710.8 $ 6,047.7
United States export 458.0 399.8 406.0
INTERNATIONAL REVENUES
Europe 1,344.8 984.6 763.1
Rest of world 554.7 434.0 287.2
--------- --------- ---------
$10,055.1 $ 8,529.2 $ 7,504.0
--------- --------- ---------
--------- --------- ---------
OPERATING INCOME
United States $ 1,392.7 $ 1,591.7 $ 1,402.7
Europe 405.0 121.8 39.1
Rest of world 226.0 82.5 48.4
Unallocated expenses (58.0) (71.5) (54.9)
--------- --------- ---------
$ 1,965.7 $ 1,724.5 $ 1,435.3
--------- --------- ---------
--------- --------- ---------
IDENTIFIABLE ASSETS
United States $11,306.1 $11,084.5
Europe 1,237.8 519.7
Rest of world 282.4 146.9
--------- ---------
$12,826.3 $11,751.1
--------- ---------
--------- ---------
</TABLE>
13 Financial Instruments
INTEREST RATE RISK MANAGEMENT
The Company uses interest rate swaps and other instruments to manage net
exposure to interest rate changes related to its portfolio of investments and
borrowings and to lower its overall borrowing costs. The Company's objective is
to manage the impact of interest rate changes on earnings and on the market
value of its investments and borrowings. Significant interest rate risk
management instruments held by the Company at September 30, 1994 and 1993 are
described below.
INTEREST RATE RISK MANAGEMENT TRANSACTIONS - INVESTMENTS
At September 30, 1994 and 1993, the Company had outstanding interest rate
swaps on its investments with notional amounts totaling $131.3 and $456.5
million, respectively, which effectively converted certain fixed rate securities
to variable rate instruments. Under these swap agreements, which expire in two
to ten years, the Company received interest at LIBOR-based rates and paid
interest at a weighted average fixed rate of 7.4% at September 30, 1994.
At September 30, 1993, the Company had outstanding interest rate swaps on
its U.S. dollar investments with notional amounts totaling $350.0 million, which
effectively converted variable rate securities to fixed rate instruments. These
swap agreements were terminated during 1994.
At September 30, 1994 and 1993, the Company had outstanding spreadlock
contracts with notional amounts totaling $250.0 and $50.0 million, respectively.
Under these interest rate contracts, which expire within one year, the Company
will receive payments if interest rate swap spreads rise above certain levels
and will make payments if interest rate swap spreads fall below certain levels.
-43-
<PAGE>
At September 30, 1994 and 1993, the Company held positions in certain
investment securities through the use of futures and forward contracts, which it
hedged with interest rate swaps. The aggregate notional amounts of such futures,
forwards, and interest rate swaps were $263.5 and $273.2 million, respectively.
The contracts expire in one to eight years.
INTEREST RATE RISK MANAGEMENT TRANSACTIONS - BORROWINGS
At September 30, 1994 and 1993, the Company had outstanding interest rate
swaps on its borrowings with notional amounts totaling $985.0 and $1,058.7
million, respectively, which effectively converted medium-term notes and senior
participating notes to commercial paper or LIBOR-based variable rate
instruments. These swap agreements expire in one to 15 years.
SUMMARY OF INTEREST RATE RISK MANAGEMENT TRANSACTIONS
Following is a reconciliation of the notional or contractual amounts of the
Company's interest rate contracts.
<TABLE>
<CAPTION>
Balance at Balance at
September 30, Maturities/ September 30,
1993 Additions Expirations Terminations 1994
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
Pay floating swaps $ 1,431.7 $ 1,047.4 $ (590.7) $ (851.0) $ 1,037.4
Pay fixed swaps 717.6 141.8 - (646.3) 213.1
Spreadlock contracts 50.0 300.0 - (100.0) 250.0
Forward contracts 212.1 96.5 - (207.9) 100.7
Futures contracts 18.7 824.3 (5.3) (571.3) 266.4
Option contracts 65.8 727.6 (147.6) (551.4) 94.4
------------- ----------- ----------- ------------ -------------
$ 2,495.9 $ 3,137.6 $ (743.6) $ (2,927.9) $ 1,962.0
------------- ----------- ----------- ------------ -------------
------------- ----------- ----------- ------------ -------------
</TABLE>
The notional amounts above reflect incremental changes in the Company's
investments in each class of financial instrument. Rollforward activity, which
represented renewal of existing positions, is excluded.
FOREIGN EXCHANGE RISK MANAGEMENT
The Company enters into foreign exchange hedging contracts to protect
against changes in the value of its existing foreign currency assets and
liabilities and its future foreign currency revenues. The primary focus of the
Company's foreign exchange risk management program is to reduce earnings
volatility. By policy, the Company maintains hedge coverages between minimum and
maximum percentages of its anticipated foreign exchange exposures for each of
the next five years. Most foreign exchange hedging contracts are option
strategies providing for the sale of foreign currencies which hedge probable,
but not firmly committed, revenues. The principal hedge currencies are Japanese
yen, French francs, German marks and British pounds.
FOREIGN EXCHANGE RISK MANAGEMENT TRANSACTIONS
At September 30, 1994 and 1993, the Company had foreign currency hedging
contracts with notional amounts of $7.4 and $4.0 billion, respectively, net of
notional amounts of contracts with counterparties against which the Company has
a legal right of offset, which effectively hedged $3.3 and $2.0 billion,
respectively, of the Company's foreign exchange exposure. Foreign exchange
contracts mature over one to five years.
At September 30, 1994 and 1993, the Company had $334.6 and $49.2 million,
respectively, of borrowings denominated in yen, and $77.2 and $119.5 million,
respectively, of borrowings converted to yen borrowings through cross-currency
swaps. Cross-currency swaps, which expire in one to four years, effectively
converted $297.9 and $54.8 million, respectively, of yen borrowings to U.S.
dollar LIBOR-based variable rate instruments. The remaining yen borrowings are
hedged by certain of the Company's yen royalty receipts.
-44-
<PAGE>
IMPACT OF RISK MANAGEMENT TRANSACTIONS
The impact of risk management activities on income in 1994, 1993 and 1992
and the amount of deferred gains and losses from interest rate and foreign
currency risk management as of September 30, 1994 and 1993 were not material.
FAIR VALUE OF FINANCIAL INSTRUMENTS
At September 30, 1994 and 1993, the Company's financial instruments included
cash, cash equivalents, investments, borrowings, interest rate swap agreements
and other interest rate contracts, cross currency swap agreements, and foreign
exchange forward contracts and options. The fair values of cash and cash
equivalents, commercial paper, and securities sold under agreements to
repurchase approximated carrying values because of the short maturities of these
instruments.
The fair values of the Company's marketable equity securities, other
investments, and other borrowings approximated carrying values and the fair
value of each class of hedging instruments was not material, based on broker
quotes or quoted market prices or rates for the same or similar instruments.
CREDIT CONCENTRATIONS
The Company continually monitors its positions with, and the credit quality
of, the financial institutions which are counterparties to its off-balance-sheet
financial instruments and does not anticipate nonperformance by the
counterparties. The Company would not realize a material loss in the event of
nonperformance by counterparties. The Company enters into off-balance-sheet
transactions only with financial institution counterparties which have a credit
rating of single A-or better. The Company's current policy in agreements with
financial institution counterparties is generally to require collateral in the
event credit ratings fall below single A-. At September 30, 1994, neither the
Company nor the counterparties were required to collateralize their respective
obligations under these off-balance-sheet financial instruments.
The Company's trade receivables and investments do not represent significant
concentrations of credit risk at September 30, 1994, due to the wide variety of
customers and markets into which the Company's products are sold, as well as
their dispersion across many geographic areas, and due to the diversification of
the Company's portfolio among instruments and issuers. (See Note 2 for a
discussion of the Company's investment in Euro Disney.)
14 Commitments and Contingencies
The Company, together with, in some instances, certain of its directors and
officers, is a defendant or co-defendant in various legal actions involving
copyright, breach of contract and various other claims incident to the conduct
of its businesses. Management does not expect the Company to suffer any material
liability by reason of such actions, nor does it expect that such actions will
have a material effect on the Company's liquidity or operating results as of
September 30, 1994.
-45-
<PAGE>
QUARTERLY FINANCIAL SUMMARY
(In millions, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
December 31 March 31 June 30 September 30
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------
1994
Revenues $ 2,727.3 $ 2,275.8 $ 2,353.6 $ 2,698.4
Operating income 624.4 410.0 492.6 438.7
Net income 368.6 248.4 267.5 225.9
Earnings per share .68 .45 .49 .42
1993
Revenues $ 2,391.4 $ 2,026.4 $ 1,936.8 $ 2,174.6
Operating income 496.5 401.4 469.9 356.7
Income (loss) before cumulative
effect of accounting changes 275.1 214.8 259.1 (77.7)
Net income (loss) (96.4) 214.8 259.1 (77.7)
Earnings (loss) per share before
cumulative effect of accounting
changes .50 .39 .48 (.15)
Earnings (loss) per share (.18) .39 .48 (.15)
</TABLE>
-46-
<PAGE>
SCHEDULE II - AMOUNTS RECEIVABLE FROM
RELATED PARTIES AND UNDERWRITERS,
PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(In millions)
<TABLE>
<CAPTION>
Balance at
beginning of Balance at
year Additions Deductions end of year
------------- ------------- --------------- -----------
<S> <C> <C> <C> <C>
1994
H. Weinstein(1) $ 4.8 $ 0.2 $ 5.0
R. Weinstein(1) 4.8 0.2 5.0
P. Sissman(2) 0.2 0.2
J. Rizzo(3) 0.1 0.1
--- --- -----
Total............................... $ 9.6 $ 0.7 $ 10.3
--- --- -----
--- --- -----
1993
H. Weinstein(1) $ 4.8 $ 4.8
R. Weinstein(1) 4.8 4.8
J. Forsgren(4) $ 0.5 $ 0.5
--- --- --- -----
Total............................... $ 0.5 $ 9.6 $ 0.5 $ 9.6
--- --- --- -----
--- --- --- -----
1992
J. Forsgren(4).......................... $ 0.5 $ 0.5
--- -----
--- -----
- --------
<FN>
(1) Two unsecured notes: $2.5 million, interest payable at 6%, principal and
interest payable monthly commencing October 1994, due January 1997; $2.3
million, non-interest bearing, payable monthly beginning January 1997, due not
later than October 1998.
(2) Unsecured loan; interest payable at 5%, with annual payments of interest only
for two years, and annual payments of principal and interest thereafter, due
October 2001.
(3) Non-interest bearing demand loan, secured by real property.
(4) Loan secured by a pledge of shares acquired pursuant to the exercise of stock
options; interest payable at 6% on $0.3 million, with principal and interest
due upon sale of the shares.
</TABLE>
-47-
<PAGE>
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(In millions)
<TABLE>
<CAPTION>
Balance at Balance
beginning Retirements at end
of year Additions or sales Transfers of year
------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1994
Rides and attractions. . . . . . . . . . . . . . $ 2,084.9 $ (33.8) $ 213.6 $ 2,264.7
Buildings. . . . . . . . . . . . . . . . . . . . 1,935.3 $ 0.2 (2.6) 180.5 2,113.4
Equipment, furniture and fixtures. . . . . . . . 1,854.1 129.5 (53.4) 178.1 2,108.3
Land improvements. . . . . . . . . . . . . . . . 720.0 0.1 (2.0) 77.1 795.2
Leasehold improvements . . . . . . . . . . . . . 137.8 11.2 (3.7) 23.5 168.8
-------- -------- ----- ------ --------
6,732.1 141.0 (95.5) 672.8 7,450.4
Projects in progress . . . . . . . . . . . . . . 688.2 863.7 (672.8) 879.1
Land . . . . . . . . . . . . . . . . . . . . . . 94.3 21.4 (3.6) 112.1
-------- -------- ----- ------ --------
$ 7,514.6 $ 1,026.1 $ (99.1) $ -- $ 8,441.6
-------- -------- ----- ------ --------
-------- -------- ----- ------ --------
1993
Rides and attractions. . . . . . . . . . . . . . $ 2,013.8 $ 13.2 $ 84.3 $ 2,084.9
Buildings. . . . . . . . . . . . . . . . . . . . 1,784.1 $ 99.2 2.7 54.7 1,935.3
Equipment, furniture and fixtures. . . . . . . . 1,656.6 90.7 45.2 152.0 1,854.1
Land improvements. . . . . . . . . . . . . . . . 693.9 2.8 0.6 23.9 720.0
Leasehold improvements . . . . . . . . . . . . . 136.9 14.1 30.1 16.9 137.8
-------- -------- ----- ------ --------
6,285.3 206.8 91.8 331.8 6,732.1
Projects in progress . . . . . . . . . . . . . . 440.1 579.9 (331.8) 688.2
Land . . . . . . . . . . . . . . . . . . . . . . 72.9 27.2 5.8 94.3
-------- -------- ----- ------ --------
$ 6,798.3 $ 813.9 $ 97.6 $ -- $ 7,514.6
-------- -------- ----- ------ --------
-------- -------- ----- ------ --------
1992
Rides and attractions. . . . . . . . . . . . . . $ 1,902.9 $ 8.4 $ 119.3 $ 2,013.8
Buildings. . . . . . . . . . . . . . . . . . . . 1,624.1 $ 2.8 2.3 159.5 1,784.1
Equipment, furniture and fixtures. . . . . . . . 1,385.7 71.4 26.8 226.3 1,656.6
Land improvements. . . . . . . . . . . . . . . . 608.1 0.2 85.6 693.9
Leasehold improvements . . . . . . . . . . . . . 107.3 15.8 2.7 16.5 136.9
-------- -------- ----- ------ --------
5,628.1 90.2 40.2 607.2 6,285.3
Projects in progress . . . . . . . . . . . . . . 540.9 506.4 (607.2) 440.1
Land . . . . . . . . . . . . . . . . . . . . . . 70.4 2.5 72.9
-------- -------- ----- ------ --------
$ 6,239.4 $ 599.1 $ 40.2 $ -- $ 6,798.3
-------- -------- ----- ------ --------
-------- -------- ----- ------ --------
</TABLE>
-48-
<PAGE>
SCHEDULE VI - ACCUMULATED DEPRECIATION
OF PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(In millions)
<TABLE>
<CAPTION>
Balance at Balance
beginning Retirements Other at end
of year Additions or sales changes(1) of year
------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1994
Rides and attractions. . . . . . . . . . . . . . $ 763.1 $ 87.3 $ 22.0 $ 828.4
Buildings. . . . . . . . . . . . . . . . . . . . 363.5 73.8 0.9 436.4
Equipment, furniture and fixtures. . . . . . . . 858.4 218.4 42.5 1,034.3
Land improvements. . . . . . . . . . . . . . . . 237.2 29.6 1.3 265.5
Leasehold improvements . . . . . . . . . . . . . 64.2 0.6 2.3 62.5
---------- ---------- ---------- ----------
$ 2,286.4 $ 409.7 $ 69.0 $ 2,627.1
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
1993
Rides and attractions. . . . . . . . . . . . . . $ 695.7 $ 79.6 $ 12.2 $ 763.1
Buildings. . . . . . . . . . . . . . . . . . . . 311.1 59.6 7.2 363.5
Equipment, furniture and fixtures. . . . . . . . 731.9 181.7 55.2 858.4
Land improvements. . . . . . . . . . . . . . . . 209.3 28.2 0.3 237.2
Leasehold improvements . . . . . . . . . . . . . 51.6 15.1 2.5 64.2
---------- ---------- ---------- ----------
$ 1,999.6 $ 364.2 $ 77.4 $ 2,286.4
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
1992
Rides and attractions. . . . . . . . . . . . . . $ 634.0 $ 66.4 $ 4.7 $ 695.7
Buildings. . . . . . . . . . . . . . . . . . . . 272.2 51.1 12.2 311.1
Equipment, furniture and fixtures. . . . . . . . 542.7 159.1 10.4 $ 40.5 731.9
Land improvements. . . . . . . . . . . . . . . . 182.3 27.1 0.1 209.3
Leasehold improvements . . . . . . . . . . . . . 36.6 13.6 1.4 51.6
---------- ---------- ---------- ----------
$ 1,667.8 $ 317.3 $ 27.4 $ 41.9 $ 1,999.6
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
<FN>
- -------
(1) Amounts reclassified to conform to presentation of related assets.
</TABLE>
-49-
<PAGE>
SCHEDULE IX - SHORT-TERM BORROWINGS
YEARS ENDED SEPTEMBER 30, 1994, 1993 and 1992
(In millions)
<TABLE>
<CAPTION>
At end of period
---------------------------
Weighted
Maximum Average average
Weighted amount amount interest
average outstanding outstanding rate
interest during during during
Balance rate the period(1) the period(2) the period(3)
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1994
Commercial paper . . . . . . . . . . . . . . . . $ 609.1 4.9% $ 609.1 $ 263.9 3.5%
-------- -------- --------
-------- -------- --------
Securities sold under
agreements to
repurchase . . . . . . . . . . . . . . . . . . $ 57.5 7.0% $ 640.5 $ 385.8 7.3%
-------- -------- --------
-------- -------- --------
1993
Commercial paper . . . . . . . . . . . . . . . . $ 520.0 3.4% $ 897.0 $ 473.2 3.1%
-------- -------- --------
-------- -------- --------
Securities sold under
agreements to
repurchase . . . . . . . . . . . . . . . . . . $ 437.5 8.1% $ 473.3 $ 363.9 10.7%
-------- -------- --------
-------- -------- --------
1992
Commercial paper . . . . . . . . . . . . . . . . $ 181.4 3.2% $ 198.6 $ 115.5 4.0%
-------- -------- --------
-------- -------- --------
Securities sold under
agreements to
repurchase . . . . . . . . . . . . . . . . . . $ 231.2 15.6% $ 272.0 $ 244.5 11.7%
-------- -------- --------
-------- -------- --------
<FN>
- -----------
(1) Maximum amount outstanding at any month-end during the period.
(2) Average amount outstanding during the period is computed by dividing the total outstanding at
each month-end by the number of months outstanding during the year.
(3) Weighted average interest rate during the period is computed by dividing interest expense by the
average amount outstanding.
</TABLE>
-50-
<PAGE>
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(In millions)
<TABLE>
<CAPTION>
1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Maintenance and repairs $ 228.4 $ 227.3 $ 220.2
Taxes, other than payroll and income taxes:
Property 92.0 87.0 79.4
Advertising costs 1,273.5 963.7 859.6
</TABLE>
-51-
<PAGE>
EXHIBIT 3(b)
AS AMENDED, EFFECTIVE
APRIL 25, 1994
BYLAWS
OF
THE WALT DISNEY COMPANY
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the
Corporation shall be in the City of Wilmington, County of New Castle, Delaware.
SECTION 2. PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the Corporation is hereby fixed and located at 500 South Buena Vista
Street, Burbank, California 91521.
SECTION 3. OTHER OFFICES. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware, as shall be designated
from time to time by the Board of Directors (and in the case of a special
meeting, by the Board of Directors or the person calling the special meeting as
authorized by Section 3 of this Article II) and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
SECTION 2. ANNUAL MEETINGS. The Annual Meetings of Stockholders
shall be held on such date and at such time and place as may be fixed by the
Board of Directors and stated in the notice of the meeting, for the purpose of
electing directors and for the transaction of such other business as is properly
brought before the meeting in accordance with these Bylaws.
<PAGE>
To be properly brought before the Annual Meeting, business must be
either (i) specified in the notice of Annual Meeting (or any supplement or
amendment thereto) given by or at the direction of the Board of Directors, (ii)
otherwise brought before the Annual Meeting by or at the direction of the Board
of Directors, or (iii) otherwise properly brought before the Annual Meeting by a
stockholder. In addition to any other applicable requirements, for business to
be properly brought before an Annual Meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at 500 South Buena Vista Street, Burbank, California 91521,
not less than 50 days nor more than 75 days prior to the meeting; provided,
however, that in the event that less than 65 days' notice or prior public
disclosure of the date of the Annual Meeting is given or made to stockholders,
notice by a stockholder to be timely must be so received not later than the
close of business on the fifteenth day following the day on which such notice of
the date of the Annual Meeting was mailed or such public disclosure was made,
whichever first occurs. A stockholder's notice to the Secretary shall set forth
as to each matter the stockholder proposes to bring before the Annual Meeting
(i) a brief description of the business desired to be brought before the Annual
Meeting and the reasons for conducting such business at the Annual Meeting, (ii)
the name and record address of the stockholder proposing such business, (iii)
the class, series and number of shares of the Corporation which are beneficially
owned by the stockholder, and (iv) any material interest of the stockholder in
such business. Notwithstanding anything in the Bylaws to the contrary, no
business shall be conducted at the Annual Meeting except in accordance with the
procedures set forth in this Article II, Section 2. The person presiding at an
Annual Meeting shall, if the facts warrant, determine and declare to the Annual
Meeting that business was not properly brought before the Annual Meeting in
accordance with the provisions of this Article II, Section 2, and if he should
so determine, he shall so declare to the Annual Meeting and any such business
not properly brought before the meeting shall not be transacted. Written notice
of the Annual Meeting stating the place, date and hour of the Annual Meeting
shall be given to each stockholder entitled to vote at such meeting not less
than ten nor more than sixty days before the date of the meeting.
SECTION 3. SPECIAL MEETINGS. Special meetings of stockholders, for
any purpose or purposes, may be called by the Board of Directors, the Chairman
of the Board of Directors, or the President. Special meetings of stockholders
may not be called by any other person or persons. Written notice of a special
meeting stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called shall be given not less than ten nor
more than sixty days before the date of the meeting to each stockholder entitled
to vote at such meeting, and only such business as is stated in such notice
shall be acted upon thereat.
-2-
<PAGE>
SECTION 4. QUORUM. Except as may be otherwise provided by law or by
the Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
entitled to vote at the meeting.
SECTION 5. VOTING. Unless otherwise required by law, the Certificate
of Incorporation or these Bylaws, any question brought before any meeting of
stockholders shall be decided by the vote of the holders of a majority of the
stock represented and entitled to vote thereon. Unless otherwise provided in
the Certificate of Incorporation, each stockholder represented at a meeting of
stockholders shall be entitled to cast one vote for each share of the capital
stock entitled to vote thereat held by such stockholder. The Board of
Directors, in its discretion, or the officer of the Corporation presiding at a
meeting of stockholders, in his discretion, may require that any votes cast at
such meeting shall be cast by written ballot.
SECTION 6. ORGANIZATION. All meetings of the stockholders shall be
presided over by the Chairman of the Board of Directors or, if he is not
present, by the Vice Chairman of the Board of Directors, and if he is not
present, by such officer or director as is designated by the Board of Directors.
The Secretary of the Corporation or, if he is not present, any Assistant
Secretary or other person designated by the presiding officer shall act as
secretary of the meeting.
SECTION 7. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not
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so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder of the Corporation who is
present.
SECTION 8. STOCK LEDGER. The stock ledger of the Corporation shall
be the only evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by Section 7 of this Article II or the books of
the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
SECTION 9. INSPECTORS OF ELECTION. Before any meeting of
stockholders, the Board of Directors shall appoint one or more inspectors to act
at the meeting and make a written report thereof. The Board of Directors may
designate one or more persons as alternate inspectors to replace any inspector
who fails to act. If no inspector or alternate is able to act at a meeting of
stockholders, the person presiding at the meeting shall appoint one or more
inspectors to act at the meeting. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector with strict impartiality and according to the best of his
ability.
The inspectors shall:
(a) ascertain the number of shares outstanding and the voting
power of each;
(b) determine the shares represented at the meeting and the
validity of proxies and ballots;
(c) count all votes and ballots;
(d) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination made by the inspectors;
and
(e) certify their determination of the number of
shares represented at the meeting, and their count of all votes and ballots.
The inspectors may appoint or retain other persons or entities to
assist the inspectors in the performance of the duties of the inspectors.
In determining the validity and counting of proxies and ballots, the
inspectors shall act in accordance with applicable law.
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ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND ELECTION OF DIRECTORS. Subject to the rights,
if any, of holders of preferred stock of the Corporation to elect directors of
the Corporation, the Board of Directors shall consist of not less than nine nor
more than fifteen members with the exact number of directors to be determined
from time to time by resolution duly adopted by the Board of Directors.
Directors shall be elected by a plurality of the votes cast at Annual Meetings
of stockholders, and each director so elected shall hold office as provided by
Article FIFTH of the Certificate of Incorporation. A director may be removed
from office only as provided by Article SIXTH of the Certificate of
Incorporation. Any director may resign at any time effective upon giving
written notice to the Corporation, unless the notice specifies a later time for
the effectiveness of such resignation. Directors need not be stockholders.
SECTION 2. NOMINATION OF DIRECTORS. Only persons who are nominated
in accordance with the following procedures shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of the
Corporation at the Annual Meeting may be made at such meeting by or at the
direction of the Board of Directors, by any committee or persons appointed by
the Board of Directors or by any stockholder of the Corporation entitled to vote
for the election of directors at the meeting who complies with the notice
procedures set forth in this Article III, Section 2. Such nominations by any
stockholder shall be made pursuant to timely notice in writing to the Secretary
of the Corporation. To be timely, a stockholder's notice shall be delivered to
or mailed and received at the principal executive offices of the Corporation not
less than 50 days nor more than 75 days prior to the meeting; provided, however,
that in the event that less than 65 days' notice or prior public disclosure of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the fifteenth day following the day on which such notice of the date
of the meeting was mailed or such public disclosure was made, whichever first
occurs. Such stockholder's notice to the Secretary shall set forth (i) as to
each person whom the stockholder proposes to nominate for election or reelection
as a director, (a) the name, age, business address and residence address of the
person, (b) the principal occupation or employment of the person, (c) the class
and number of shares of capital stock of the Corporation which are beneficially
owned by the person, and (d) any other information relating to the person that
is required to be disclosed in solicitations for proxies for election of
directors pursuant to the Rules and Regulations of the Securities and Exchange
Commission under Section 14 of the Securities Exchange Act of 1934, as amended;
and (ii) as to the stockholder giving the notice (a) the name and record address
of the stockholder and (b) the class and number of shares of capital stock of
the Corporation which are beneficially owned by the stockholder. The
Corporation may require any proposed nominee to furnish such other information
as may reasonably be required by
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the Corporation to determine the eligibility of such proposed nominee to serve
as a director of the Corporation. No person shall be eligible for election as a
director of the Corporation unless nominated in accordance with the procedures
set forth herein. The officer of the Corporation presiding at an Annual Meeting
shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the foregoing procedure, and if he
should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
SECTION 3. VACANCIES. Any vacancy on the Board of Directors,
howsoever resulting, may be filled by a majority of the directors then in
office, even if less than a quorum, or by a sole remaining director. Any
director elected to fill a vacancy shall hold office for a term that shall
coincide with the term of the class to which such director shall have been
elected.
SECTION 4. DUTIES AND POWERS. The business of the Corporation shall
be managed by or under the direction of the Board of Directors which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation or by these
Bylaws directed or required to be exercised or done by the stockholders.
SECTION 5. MEETINGS. The Board of Directors of the Corporation may
hold meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without notice
at such time and at such place as may from time to time be determined by the
Board of Directors. Special meetings of the Board of Directors may be called by
the Chairman of the Board of Directors, the President, or by a majority of the
Board of Directors. Notice thereof, stating the place, date and hour of the
meeting, shall be given to each director either by mail not less than four (4)
days before the date of the meeting, or personally or by telephone, telegram,
telex or similar means of communication on twelve (12) hours' notice, or on such
shorter notice as the person or persons calling such meeting may deem necessary
or appropriate in the circumstances.
SECTION 6. QUORUM; ACTION OF BOARD OF DIRECTORS. Except as may be
otherwise specifically provided by law, the Certificate of Incorporation or
these Bylaws, at all meetings of the Board of Directors, a majority of the
entire Board of Directors shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors. If a quorum
shall not be present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
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SECTION 7. ACTION BY WRITTEN CONSENT. Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all the members of the
Board of Directors or committee, as the case may be, consent thereto in writing,
and the writing or writings are filed with the minutes of proceedings of the
Board of Directors or committee.
SECTION 8. MEETINGS BY MEANS OF CONFERENCE TELEPHONE. Members of the
Board of Directors of the Corporation, or any committee designated by the Board
of Directors, may participate in a meeting of the Board of Directors or such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this Section 8 shall constitute
presence in person at such meeting.
SECTION 9. COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the whole Board of Directors, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of any such committee. In the absence or disqualification
of a member of a committee, and in the absence of a designation by the Board of
Directors of an alternate member to replace the absent or disqualified member,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any absent or disqualified member. Any committee, to the extent allowed by law
and provided in the resolution establishing such committee, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation. The Board of
Directors shall appoint a committee designated the Executive Committee and the
Board of Directors shall have the power to appoint the Chairman of the Executive
Committee. The Board of Directors shall have the power to prescribe the manner
in which proceedings of any such committee shall be conducted. In the absence
of any such prescription, such committee shall have the power to prescribe the
manner in which its proceedings shall be conducted. Unless the Board of
Directors or such committee shall otherwise provide, regular and special
meetings and other actions of any such committee shall be governed by the
provisions of this Article III applicable to meetings and actions of the Board
of Directors. Each committee shall keep regular minutes and report to the Board
of Directors when required.
SECTION 10. FEES AND COMPENSATION. Directors and members of
committees may receive such compensation, if any, for their services, and such
reimbursement for expenses, as may be fixed or determined by the Board of
Directors.
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ARTICLE IV
OFFICERS
SECTION 1. GENERAL. The officers of the Corporation shall be chosen
by the Board of Directors and shall be a Chairman of the Board of Directors (who
must be a director), a President, a Secretary and a Treasurer. The Board of
Directors, in its sole discretion, may also choose a Vice Chairman of the Board
of Directors (who must be a director), one or more Executive Vice Presidents,
Senior Vice Presidents, Vice Presidents, Assistant Secretaries, Assistant
Treasurers and other officers. Any number of offices may be held by the same
person, unless otherwise prohibited by law, the Certificate of Incorporation or
these Bylaws.
SECTION 2. ELECTION. The Board of Directors at its first meeting
held after each Annual Meeting of stockholders shall elect the officers of the
Corporation who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time solely
by the Board of Directors, which determination may be by resolution of the Board
of Directors or in any bylaw provision duly adopted or approved by the Board of
Directors; and all officers of the Corporation shall hold office until their
successors are chosen and qualified, or until their earlier resignation or
removal. Any officer elected by the Board of Directors may be removed at any
time by the Board of Directors with or without cause. Any vacancy occurring in
any office of the Corporation may be filled only by the Board of Directors.
SECTION 3. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
Board of Directors shall be the Chief Executive Officer of the Corporation,
shall preside at all meetings of the Board of Directors and of stockholders and
shall, subject to the provisions of the Bylaws and the control of the Board of
Directors, have general and active management, direction, and supervision over
the business of the Corporation and over its officers. He shall be a member EX
OFFICIO of all committees created by the Board of Directors, excluding the Audit
Review Committee and any committee to which he has been designated a regular
member by the Board of Directors. He shall perform all duties incident to the
office of chief executive and such other duties as from time to time may be
assigned to him by the Board of Directors. He shall have the right to delegate
any of his powers to any other officer or employee.
SECTION 4. PRESIDENT. The President shall be the Chief Operating
Officer of the Corporation and shall report and be responsible to the Chairman
of the Board. His primary responsibility shall be to supervise the conduct of
the operations of the Corporation to achieve the Corporation's objectives and to
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ensure that the activities of the various subsidiaries, divisions and other
operating units of the Corporation are properly coordinated. The President
shall perform all duties incident to the office of the Chief Operating Officer
and such other duties as from time to time may be assigned or delegated to him
by the Board of Directors.
The President shall be a member EX OFFICIO of all committees created
by the Board of Directors, excluding the Audit Review Committee and any
committee to which he has been designated a regular member by the Board of
Directors. He shall have the right to delegate any of his powers to any other
officer or employee.
During the absence, disability, or at the request of the Chairman of
the Board of Directors, the President shall perform the duties and exercise the
powers of the Chairman of the Board of Directors. In the absence or disability
of both the President and the Chairman of the Board of Directors, the person
designated by the Board of Directors shall perform the duties and exercise the
powers of the President, and unless otherwise determined by the Board, the
duties and powers of the Chairman.
SECTION 5. EXECUTIVE VICE PRESIDENTS. The Executive Vice Presidents
shall have such powers and perform such duties as from time to time may be
prescribed for them respectively by the Board of Directors or are incident to
the office of Executive Vice President.
SECTION 6. SENIOR VICE PRESIDENTS. The Senior Vice Presidents shall
have such powers and perform such duties as from time to time may be prescribed
for them respectively by the Board of Directors or are incident to the office of
Senior Vice President.
SECTION 7. VICE PRESIDENTS. The Vice Presidents shall have such
powers and perform such duties as from time to time may be prescribed for them
respectively by the Board of Directors or are incident to the office of Vice
President.
SECTION 8. SECRETARY. The Secretary shall keep or cause to be kept,
at the principal executive office or such other place as the Board of Directors
may order, a book of minutes of all meetings of stockholders, the Board of
Directors and its committees, with the time and place of holding, whether
regular or special, and if special, how authorized, the notice thereof given,
the names of those present at Board of Directors and committee meetings, the
number of shares present or represented at stockholders' meetings, and the
proceedings thereof. The Secretary shall keep, or cause to be kept, a copy of
the Bylaws of the Corporation at the principal executive office or business
office of the Corporation.
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The Secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the Corporation's transfer agent or
registrar, if one be appointed, a stock register, or a duplicate stock register,
showing the names of the stockholders and their addresses, the number and
classes of shares held by each, the number and date of certificates issued for
the same, and the number and date of cancellation of every certificate
surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the Board of Directors and any committees thereof
required by these Bylaws or by law to be given, shall keep the seal of the
Corporation in safe custody, and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors.
SECTION 9. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities of the Corporation and shall keep and maintain,
or cause to be kept and maintained, adequate and correct accounts of the
properties and business transactions of the Corporation, and shall send or cause
to be sent to the stockholders of the Corporation such financial statements and
reports as are by law or these Bylaws required to be sent to them.
The Treasurer shall deposit all moneys and valuables in the name and
to the credit of the Corporation with such depositaries as may be designated by
the Board of Directors. The Treasurer shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, shall render to the
President and directors, whenever they request it, an account of all
transactions and of the financial condition of the Corporation, and shall have
such other powers and perform such other duties as may be prescribed by the
Board of Directors.
SECTION 10. OTHER OFFICERS. Such other officers or assistant
officers as the Board of Directors may choose shall perform such duties and have
such powers as from time to time may be assigned to them by the Board of
Directors. The Board of Directors may delegate to any other officer of the
Corporation the power to choose such other officers and to prescribe their
respective duties and powers.
SECTION 11. EXECUTION OF CONTRACTS AND OTHER DOCUMENTS. Each officer
of the Corporation may execute, affix the corporate seal and/or deliver, in the
name and on behalf of the Corporation, deeds, mortgages, notes, bonds,
contracts, agreements, powers of attorney, guarantees, settlements, releases,
evidences of indebtedness, conveyances, or any other document or instrument
which is authorized by the Board of Directors or is required to be executed in
the ordinary course of business, except in cases where the execution, affixation
of the corporate seal and/or delivery thereof shall be expressly and exclusively
delegated by the Board of Directors to some other officer or agent of the
Corporation.
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ARTICLE V
STOCK
SECTION 1. FORM OF CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman or Vice Chairman of the Board of Directors, the
President or any Executive Vice President, Senior Vice President or Vice
President and (ii) by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the Corporation, certifying the number of shares
owned by him in the Corporation.
SECTION 2. SIGNATURES. Where a certificate is countersigned by (i) a
transfer agent or (ii) a registrar, any other signature on the certificate may
be a facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the Corporation with the same effect as if he
were such officer, transfer agent or registrar at the date of issue.
SECTION 3. LOST CERTIFICATES. The Board of Directors may direct a
new certificate to be issued in place of any certificate theretofore issued by
the Corporation alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming the certificate of stock to
be lost, stolen or destroyed. When authorizing such issue of a new certificate,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise the same in such manner
as the Board of Directors shall require and/or to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
SECTION 4. TRANSFERS. Transfers of shares of capital stock of the
Corporation shall be made only on the stock record of the Corporation by the
holder of record thereof or by his attorney thereunto authorized by the power of
attorney duly executed and filed with the Secretary of the Corporation or the
transfer agent thereof, and only on surrender of the certificate or certificates
representing such shares, properly endorsed or accompanied by a duly executed
stock transfer power. The Board of Directors may make such additional rules and
regulations as it may deem expedient concerning the issue and transfer of
certificates representing shares of the capital stock of the Corporation.
SECTION 5. RECORD DATE. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at
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any meeting of stockholders or any adjournment thereof, or entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than sixty days nor
less than ten days before the date of such meeting, nor more than sixty days
prior to any other action. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
SECTION 6. BENEFICIAL OWNERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law.
ARTICLE VI
NOTICES
SECTION 1. NOTICES. Whenever written notice is required by law, the
Certificate of Incorporation or these Bylaws, to be given to any director or
stockholder, such notice may be given by mail, addressed to such director or
stockholder, at his address as it appears on the records of the Corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Written notice
may also be given personally or by telegram, telex, cable or facsimile
transmission followed, if required by law, by deposit in the United States mail,
with postage prepaid.
SECTION 2. WAIVERS OF NOTICE. Whenever any notice is required by
law, the Certificate of Incorporation or these Bylaws, to be given to any
director or stockholder, a waiver thereof in writing, signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DISBURSEMENTS. All checks or demands for money and notes
of the Corporation shall be signed by such officer
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or officers or such other person or persons as the Board of Directors may from
time to time designate.
SECTION 2. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
SECTION 3. VOTING SECURITIES OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the Chairman of the Board of Directors or
the President or any other officer or officers authorized by the Board of
Directors, the Chairman of the Board of Directors or the President, and any such
officer may, in the name of and on behalf of the Corporation, vote, represent
and exercise on behalf of the Corporation all rights incident to any and all
shares of any other corporation or corporations standing in the name of the
Corporation and take all such action as any such officer may deem advisable to
vote in person or by proxy at any meeting of security holders of any corporation
in which the Corporation may own securities and at any such meeting shall
possess and may exercise any and all rights and power incident to the ownership
of such securities and which, as the owner thereof, the Corporation might have
exercised and possessed if present. The Board of Directors may, by resolution,
from time to time confer like powers upon any other person or persons.
ARTICLE VIII
INDEMNIFICATION
SECTION 1. GENERAL. The Corporation shall indemnify to the full
extent authorized or permitted by law (as now or hereafter in effect) any person
made, or threatened to be made, a defendant or witness to any action, suit or
proceeding (whether civil or criminal or otherwise) by reason of the fact that
he, his testator or intestate, is or was a director or officer of the
Corporation or by reason of the fact that such director or officer, at the
request of the Corporation, is or was serving any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise, in
any capacity. Nothing contained herein shall affect any rights to
indemnification to which employees other than directors and officers may be
entitled by law. No amendment or repeal of this Section 1 shall apply to or
have any effect on any right to indemnification provided hereunder with respect
to any acts or omissions occurring prior to such amendment or repeal.
SECTION 2. FURTHER ASSURANCE. In furtherance and not in limitation
of the powers conferred by statute:
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(a) the Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to indemnify
him against such liability under the provisions of law; and
(b) the Corporation may create a trust fund, grant a security
interest and/or use other means (including, without limitation, letters of
credit, surety bonds and/or other similar arrangements), as well as enter into
contracts providing indemnification to the full extent authorized or permitted
by law and including as part thereof provisions with respect to any or all of
the foregoing to ensure the payment of such amounts as may become necessary to
effect indemnification as provided therein, or elsewhere.
ARTICLE IX
AMENDMENTS
SECTION 1. GENERAL. These Bylaws may be altered, amended or
repealed, in whole or in part, or new Bylaws may be adopted by either the
holders of sixty-six and two-thirds percent (66-2/3%) of the outstanding capital
stock entitled to vote thereon or by the Board of Directors.
ARTICLE X
EMERGENCY PROVISIONS
SECTION 1. GENERAL. The provisions of this Article X shall be
operative only during a national emergency declared by the President of the
United States or the person performing the President's functions, or in the
event of a nuclear, atomic or other attack on the United States or a disaster
making it impossible or impracticable for the Corporation to conduct its
business without recourse to the provisions of this Article X. Said provisions
in such event shall override all other Bylaws of the Corporation in conflict
with any provisions of this Article X, and shall remain operative so long as it
remains impossible or impracticable to continue the business of the Corporation
otherwise, but thereafter shall be inoperative; provided that all actions taken
in good faith pursuant to such provisions shall thereafter remain in full force
and effect unless and until revoked by action taken pursuant to the provisions
of the Bylaws other than those contained in this Article X.
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SECTION 2. UNAVAILABLE DIRECTORS. All directors of the Corporation
who are not available to perform their duties as directors by reason of physical
or mental incapacity or for any other reason or who are unwilling to perform
their duties or whose whereabouts are unknown shall automatically cease to be
directors, with like effect as if such persons had resigned as directors, so
long as such unavailability continues.
SECTION 3. AUTHORIZED NUMBER OF DIRECTORS. The authorized number of
directors shall be the number of directors remaining after eliminating those who
have ceased to be directors pursuant to Section 2 of this Article X, or the
minimum number required by law, whichever number is greater.
SECTION 4. QUORUM. The number of directors necessary to constitute a
quorum shall be one-third of the authorized number of directors as specified in
Section 3 of this Article X, or such other minimum number as, pursuant to the
law or lawful decree then in force, it is possible for the Bylaws of a
Corporation to specify.
SECTION 5. CREATION OF EMERGENCY COMMITTEE. In the event the number
of directors remaining after eliminating those who have ceased to be directors
pursuant to Section 2 of this Article X is less than the minimum number of
authorized directors required by law, then until the appointment of additional
directors to make up such required minimum, all the powers and authorities which
the Board of Directors could by law delegate including all powers and
authorities which the Board of Directors could delegate to a committee, shall be
automatically vested in an emergency committee, and the emergency committee
shall thereafter manage the affairs of the Corporation pursuant to such powers
and authorities and shall have all other powers and authorities as may by law or
lawful decree be conferred on any person or body of persons during a period of
emergency.
SECTION 6. CONSTITUTION OF EMERGENCY COMMITTEE. The emergency
committee shall consist of all the directors remaining after eliminating those
who have ceased to be directors pursuant to Section 2 of this Article X,
provided that such remaining directors are not less than three in number. In
the event such remaining directors are less than three in number, the emergency
committee shall consist of three persons, who shall be the remaining director or
directors and either one or two officers or employees of the Corporation, as the
remaining director or directors may in writing designate. If there is no
remaining director, the emergency committee shall consist of the three most
senior officers of the Corporation who are available to serve, and if and to the
extent that officers are not available, the most senior employees of the
Corporation. Seniority shall be determined in accordance with any designation
of seniority in the minutes of the proceedings of the Board, and in the absence
of such designation, shall be determined by rate of remuneration. In the event
that there are no remaining directors and no officers or
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employees of the Corporation available, the emergency committee shall consist of
three persons designated in writing by the stockholder owning the largest number
of shares of record as of the date of the last record date.
SECTION 7. POWERS OF EMERGENCY COMMITTEE. The emergency committee,
once appointed, shall govern its own procedures and shall have power to increase
the number of members thereof beyond the original number, and in the event of a
vacancy or vacancies therein, arising at any time, the remaining member or
members of the emergency committee shall have the power to fill such vacancy or
vacancies. In the event at any time after its appointment all members of the
emergency committee shall die or resign or become unavailable to act for any
reason whatsoever, a new emergency committee shall be appointed in accordance
with the foregoing provisions of this Article X.
SECTION 8. DIRECTORS BECOMING AVAILABLE. Any person who has ceased
to be a director pursuant to the provisions of Section 2 of this Article X and
who thereafter becomes available to serve as a director shall automatically
become a member of the emergency committee.
SECTION 9. ELECTION OF BOARD OF DIRECTORS. The emergency committee
shall, as soon after its appointment as is practicable, take all requisite
action to secure the election of a board of directors, and upon such election
all the powers and authorities of the emergency committee shall cease.
SECTION 10. TERMINATION OF EMERGENCY COMMITTEE. In the event, after
the appointment of an emergency committee, a sufficient number of persons who
ceased to be directors pursuant to Section 2 of this Article X become available
to serve as directors, so that if they had not ceased to be directors as
aforesaid, there would be enough directors to constitute the minimum number of
directors required by law, then all such persons shall automatically be deemed
to be reappointed as directors and the powers and authorities of the emergency
committee shall be at an end.
-16-
<PAGE>
$525,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of October 3, 1994
Among
THE WALT DISNEY COMPANY
AS BORROWER
and
THE FINANCIAL INSTITUTIONS NAMED HEREIN
AS LENDERS
and
CITICORP USA, INC.
AS AGENT
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01 Certain Defined Terms 1
1.02 Computation of Time Periods 8
1.03 Accounting Terms 8
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
2.01 The Advances 8
2.02 Making the Advances 9
2.03 Facility Fee 10
2.04 Reduction of the Commitments 10
2.05 Repayment of Advances 10
2.06 Interest on Advances 10
2.07 Additional Interest on Eurodollar Rate
Advances 10
2.08 Interest Rate Determination 11
2.09 Voluntary Conversion of Advances 11
2.10 Prepayments of Advances 12
2.11 Increased Costs 12
2.12 Illegality 13
2.13 Payments and Computations 13
2.14 Taxes 14
2.15 Sharing of Payments, Etc. 15
2.16 Mandatory Assignment by a Lender; Mitigation 16
2.17 Evidence of Debt 16
2.18 Use of Proceeds 17
2.19 Extension of Termination Date 17
2.20 Withdrawing Lenders 17
ARTICLE III
CONDITIONS OF EFFECTIVENESS AND LENDING
3.01 Conditions Precedent to Effectiveness
of this Agreement 17
3.02 Conditions Precedent to Each Borrowing 18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01 Representations and Warranties of the
Borrower 18
4.02 Additional Representation and Warranty
of the Borrower 19
- i -
<PAGE>
SECTION PAGE
- ------- ----
ARTICLE V
COVENANTS OF THE BORROWER
5.01 Affirmative Covenants 19
5.02 Negative Covenants 21
ARTICLE VI
EVENTS OF DEFAULT
6.01 Events of Default 21
ARTICLE VII
THE AGENT
7.01 Authorization and Action 22
7.02 Agent's Reliance, Etc 22
7.03 CUSA and Affiliates 23
7.04 Lender Credit Decision 23
7.05 Indemnification 23
7.06 Successor Agent 23
ARTICLE VIII
MISCELLANEOUS
8.01 Amendments, Etc. 24
8.02 Notices, Etc. 24
8.03 No Waiver; Remedies 25
8.04 Costs and Expenses 25
8.05 Right of Set-off 25
8.06 Binding Effect 25
8.07 Assignments and Participations 25
8.08 Indemnification 27
8.09 Confidentiality 28
8.10 Consent to Jurisdiction and Service of Process 28
8.11 Governing Law 28
8.12 Execution in Counterparts 28
SCHEDULES AND EXHIBITS
Schedule I - List of Applicable Lending Offices
Exhibit A - Notice of Borrowing
Exhibit B - Assignment and Acceptance
Exhibit C - Form of Opinion of Counsel for the Borrower
Exhibit D-1 - Form of Foreign Lender Certificate
Exhibit D-2 - Form of Foreign Lender Certificate
Exhibit E - Form of Withdrawal Agreement
-ii-
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF OCTOBER 3, 1994
THE WALT DISNEY COMPANY, a Delaware corporation (the "Borrower"), the
financial institutions (the "Initial Lenders") listed on the signature pages
hereof under the heading "Initial Lenders", and CITICORP USA, INC., a Delaware
corporation ("CUSA"), as agent (the "Agent") for the Lenders hereunder, agree as
follows:
PRELIMINARY STATEMENTS
The parties hereto are parties to a Credit Agreement dated as of
November 22, 1991. The parties hereto now wish to amend and restate such Credit
Agreement in its entirety as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ADVANCE" means an advance by a Lender to the Borrower as part of a
Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance,
each of which shall be a "Type" of Advance.
"AFFILIATE" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with
such Person or is a director or officer of such Person.
"ANNIVERSARY DATE" means February 15, 1996 and February 15 in each
succeeding calendar year occurring during the term of this Agreement.
"APPLICABLE LENDING OFFICE" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of a Base Rate Advance and
such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
Advance.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by the Agent, in
substantially the form of Exhibit B hereto.
"BASE RATE" means, for each day in any period, a fluctuating interest
rate per annum as shall be in effect from time to time which rate per annum
shall at all times for such day during such period be equal to the highest
of:
(a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time, as Citibank's base rate as in
effect for such day; or
(b) The sum (adjusted to the nearest 1/4 of one percent or, if
there is no nearest 1/4 of one percent, to the next higher 1/4 of one
percent) of (i) 1/2 of one percent per annum, PLUS (ii) the rate
obtained by dividing (A) the latest three-week moving average of
secondary market morning offering rates in the United States for
three-month certificates of deposit of major United States money
market banks, such three-week moving average (adjusted to the basis of
a year of 365 or 366 days, as the case may be) being determined weekly
on each Monday (or, if any such day is not a Business Day, on the next
succeeding Business Day) for the three-week period ending on the
previous Friday by Citibank on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve
Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by
Citibank from three New York certificate of deposit dealers of
recognized standing selected by Citibank, by (B) a percentage equal to
100% minus the average of the daily percentages specified during such
three-week period by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement (including, but not limited to, any emergency,
<PAGE>
supplemental or other marginal reserve requirement) for Citibank in
respect of liabilities consisting of or including (among other
liabilities) three-month U.S. dollar nonpersonal time deposits in the
United States, PLUS (iii) the average during such three-week period of
the annual assessment rates estimated by Citibank for determining the
then current annual assessment payable by Citibank to the Federal
Deposit Insurance Corporation (or any successor) for insuring U.S.
dollar deposits of Citibank in the United States; or
(c) 0.50% per annum above the Federal Funds Rate for such day.
"BASE RATE ADVANCE" means an Advance which bears interest as provided
in Section 2.06(a)(i).
"BORROWING" means a borrowing consisting of simultaneous Advances of
the same Type made by each of the Lenders pursuant to Section 2.01.
"BUSINESS DAY" means a day of the year on which banks are not required
or authorized to close in Los Angeles, California, or New York City, New
York, or San Francisco, California, or, if the applicable Business Day
relates to any Eurodollar Rate Advances, on which dealings are carried on
in the London interbank market.
"CITIBANK" means Citibank, N.A., a national banking association.
"COMMITMENT" has the meaning specified in Section 2.01.
"CONSOLIDATED ADJUSTED INDEBTEDNESS" means, as of any date of
determination, all indebtedness of the Borrower and its subsidiaries on a
consolidated basis which would, in accordance with GAAP be classified as a
liability of the Borrower and its subsidiaries, excluding, however (i) all
deferred income taxes and unearned deposits and advances, (ii) subordinated
indebtedness represented by the Borrower's Liquid Yield Option Notes due
2005, (iii) other indebtedness of the Borrower for borrowed money which is
subordinated upon and otherwise containing terms and conditions no less
favorable to the Lenders than the provisions contained in the Borrower's
Liquid Option Yield Notes due 2005, and (iv) indebtedness for borrowed
money which is secured by any Lien upon any asset of the Borrower or its
subsidiaries which asset is not included in Consolidated Unencumbered
Assets.
"CONSOLIDATED EBIT" means, for any accounting period, net income (or
net loss, as the case may be) of the Borrower and its subsidiaries on a
consolidated basis for such period, as determined in accordance with GAAP,
PLUS amounts which, in the determination of such consolidated net income
(or net loss, as the case may be) for such period, have been deducted for
(i) Consolidated Interest Expense and (ii) consolidated income tax expense.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest
expense of the Borrower and its subsidiaries on a consolidated basis for
such period with respect to all outstanding Debt of the Borrower and its
subsidiaries, all as determined in conformity with GAAP.
"CONSOLIDATED UNENCUMBERED ASSETS" means, as of any date of
determination, the sum of all amounts which are, in accordance with GAAP,
included under "assets" on the consolidated balance sheet of the Borrower
and its subsidiaries, PROVIDED, HOWEVER, that such amounts shall be net of
all amounts attributable to (without duplication) (i) accumulated
depreciation, (ii) any asset or group of assets that is subject to Liens
securing obligations in aggregate amount equal to more than 33 1/3% of the
aggregate net book value of such asset or group of assets, (iii) any asset
that is included under the consolidated captions "Film Production Costs -
In process" and "Projects in Progress" (or alternative similar captions) on
the consolidated balance sheet of the Borrower and its subsidiaries, (iv)
goodwill, trademarks, tradenames, and all other similar items which are
treated as intangibles in conformity with GAAP, (v) all prepaid expenses,
deferred or capitalized costs, unamortized debt discount and progress
payments, and work in process on the date hereof, and (vi) any items not
included in clauses (ii) through (v) which are treated as intangibles in
conformity with GAAP.
"CONVERT", "CONVERSION" and "CONVERTED" each refers to a conversion of
Advances of one Type into Advances of another Type pursuant to Section 2.08
or 2.09.
2
<PAGE>
"DEBT" means (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations to pay the deferred purchase price of property or services
(other than trade payables incurred in the ordinary course of business),
(iv) obligations as lessee under leases which shall have been or should be,
in accordance with GAAP, recorded as capital leases, and (v) obligations
under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or obligations
of others of the kinds referred to in clauses (i) through (iv) above.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant
to which it became a Lender, or such other office of such Lender as such
Lender may from time to time specify to the Borrower and the Agent.
"EFFECTIVE DATE" means October 3, 1994.
"ELIGIBLE ASSIGNEE" means (i) any Initial Lender or any Affiliate of
any Initial Lender and (ii) any bank or other financial institution, or any
other Person, which has been approved in writing by the Borrower and the
Agent as an Eligible Assignee for purposes of this Agreement; PROVIDED,
HOWEVER, that neither the Borrower's approval nor the Agent's approval
shall be unreasonably withheld; and PROVIDED, FURTHER, HOWEVER, that
Borrower may withhold its approval if Borrower reasonably believes that an
assignment to such Eligible Assignee pursuant to Section 8.07 will result
in the incurrence of increased costs payable by the Borrower pursuant to
Sections 2.11 or 2.14.
"ENVIRONMENTAL CLAIM" means any administrative, regulatory or judicial
action, suit, demand, claim, lien, notice or proceeding relating to any
Environmental Law or any Environmental Permit.
"ENVIRONMENTAL LAW" means any federal, state or local statute, law,
rule, regulation, ordinance, code, duly promulgated policy or rule of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any order,
consent decree or judgment, relating to the environment, health, safety or
any Hazardous Material.
"ENVIRONMENTAL PERMIT" means any permit, approval, identification
number, license or other authorization required under any applicable
Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA AFFILIATE" means any Person who for purposes of Title IV of
ERISA is a member of the Borrower's controlled group, or under common
control with the Borrower, within the meaning of Section 414 of the
Internal Revenue Code of 1986, as amended.
"ERISA EVENT" means (a) the occurrence with respect to a Plan of a
reportable event, within the meaning of Section 4043 of ERISA, unless the
30-day notice requirement with respect thereto has been waived by the
Pension Benefit Guaranty Corporation; (b) the provision by the
administrator of any Plan of a notice of intent to terminate such Plan,
pursuant to Section 4041(a) (2) of ERISA (including any such notice with
respect to a plan amendment referred to in Section 4041(e) of ERISA); (c)
the cessation of operations by the Borrower or any ERISA Affiliate at a
facility in the circumstances described in Section 4062(e) of ERISA; (d)
the withdrawal by the Borrower or any ERISA Affiliate from a Multiple
Employer Plan during a plan year for which it was a substantial employer,
as defined in Section 4001(a)(2) of ERISA; (e) the failure by the Borrower
or any ERISA Affiliate to make a payment to a Plan described in Section
302(f)(1)(A) of ERISA; (f) the adoption of an amendment to a Plan requiring
the provision of security to such Plan, pursuant to Section 307 of ERISA;
or (g) the institution by the Pension Benefit Guaranty Corporation of
proceedings to terminate a Plan, pursuant to Section 4042 of ERISA, or the
occurrence of any event or condition which is reasonably likely to
constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, a Plan.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
3
<PAGE>
"EURODOLLAR LENDING OFFICE" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant
to which it became a Lender (or, if no such office is specified, its
Domestic Lending Office), or such other office of such Lender as such
Lender may from time to time specify to the Borrower and the Agent.
"EURODOLLAR RATE" means, for any Interest Period for each Eurodollar
Rate Advance comprising part of the same Borrowing, an interest rate per
annum equal to the average (rounded upward to the nearest whole multiple of
1/16 of 1% per annum, if such average is not such a multiple) of the rate
per annum at which deposits in U.S. dollars are offered by the principal
office of each of the Reference Banks in London, England to prime banks in
the London interbank market at 11:00 A.M. (London time) two Business Days
before the first day of such Interest Period for a period equal to such
Interest Period. The Eurodollar Rate for any Interest Period for each
Eurodollar Rate Advance comprising part of the same Borrowing shall be
determined by the Agent on the basis of applicable rates furnished to and
received by the Agent from the Reference Banks two Business Days before the
first day of such Interest Period, SUBJECT, HOWEVER, to the provisions of
Section 2.08.
"EURODOLLAR RATE ADVANCE" means an Advance which bears interest as
provided in Section 2.06(a)(ii).
"EURODOLLAR RATE MARGIN" means, for any day, the rate per annum
opposite the higher of the ratings of the Borrower's long-term public
senior debt securities as most recently announced by S&P and Moody's :
RATING RATE PER ANNUM
------------------------------------ --------------------------
S&P MOODY'S
--- -------
A+ or higher A1 or higher 0.125%
A/A- A2/A3 0.200%
BBB+/BBB Baa1/Baa2 0.250%
BBB- or lower Baa3 or lower 0.500%
or no rating or no rating
"EURODOLLAR RATE RESERVE PERCENTAGE" of any Lender for any Interest
Period for any Eurodollar Rate Advance means the reserve percentage
applicable during such Interest Period (or if more than one such percentage
shall be so applicable, the daily average of such percentages for those
days in such Interest Period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for such
Lender with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities having a term equal to such Interest Period.
"EVENTS OF DEFAULT" has the meaning specified in Section 6.01.
"EXISTING CREDIT AGREEMENT" means the Credit Agreement dated as of
November 22, 1991 among the Borrower, the financial institutions party
thereto and Citicorp USA, Inc. as Agent, as amended to the date hereof.
"FACILITY FEE PERCENTAGE" means, for any day, the rate per annum
opposite the higher of the ratings of the Borrower's long-term public
senior debt securities as most recently announced by S&P and Moody's:
4
<PAGE>
RATING RATE PER ANNUM
---------------------------------- --------------------------
S&P MOODY'S
--- -------
A+ or higher A1 or higher 0.070%
A/A- A2/A3 0.100%
BBB+/BBB Baa1/Baa2 0.150%
BBB- or lower Baa3 or lower 0.250%
or no rating or no rating
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by
the Agent.
"GAAP" means generally accepted accounting principles consistent with
those applied in the preparation of the financial statements referred to in
Section 4.01(c) dated September 30, 1993, subject, however, to the
provisions of Section 1.03.
"HAZARDOUS MATERIAL" means (i) any petroleum or petroleum product,
natural or synthetic gas, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, or radon gas; or (ii) any
substance defined as or included in the definition of "hazardous
substances," hazardous wastes," hazardous materials," "toxic substances,"
"contaminants" or "pollutants," or words of similar import, under any
applicable Environmental Law; or (iii) any other substance to which
exposure is regulated by any governmental activity.
"INTEREST PERIOD" means, for each Eurodollar Rate Advance comprising
part of the same Borrowing, the period commencing on the date of such
Eurodollar Rate Advance or the date of the Conversion of any Base Rate
Advance into such a Eurodollar Rate Advance and ending on the last day of
the period selected by the Borrower pursuant to the provisions below and,
thereafter, each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the last day of the
period selected by the Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be one, two, three, six or, if
generally available, twelve months as the Borrower may, upon notice
received by the Agent not later than 1:00 P.M. (New York City time) on the
third Business Day prior to the first day of such Interest Period, select;
PROVIDED, HOWEVER, that:
(i) Interest Periods commencing on the same date for
Eurodollar Rate Advances comprising part of the same Borrowing shall
be of the same duration;
(ii) Whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, PROVIDED, that if such extension would cause the last
day of such Interest Period to occur in the next following calendar
month, the last day of such Interest Period shall occur on the next
preceding Business Day; and
(iii) The Borrower may not select for any Advance any Interest
Period which ends after the Termination Date.
"LENDERS" means the Initial Lenders listed on the signature pages
hereof and each Eligible Assignee that shall become a party hereto
pursuant to Section 8.07.
"LIEN" means any lien, security interest, or other charge or
encumbrance of any kind, or any other type of preferential arrangement
which has the same effect as a lien or security interest, including,
without limitation, any conditional sale or title retention agreement,
any capitalized lease, and the filing of, or agreement to give, any
financing statement under the Uniform Commercial Code or comparable
law of any jurisdiction, but excluding, however, (i) materialmen's,
suppliers', tax and other similar liens arising in the ordinary course
of business and securing obligations which are not overdue or are
being contested in good faith by appropriate proceedings, (ii) liens
arising in connection with workmen's compensation,
5
<PAGE>
unemployment insurance, and appeal and release bonds, and (iii) liens
incurred in the ordinary course of business securing obligations or
claims aggregating at any time less than $50,000,000.
"MAJORITY LENDERS" means at any time Lenders owed at least
66 2/3% of the then aggregate unpaid principal amount of the Advances
owing to Lenders, or, if no such principal amount is then outstanding,
Lenders having at least 66 2/3% of the Commitments (PROVIDED that, for
purposes of this definition, neither the Borrower, nor any of its
Affiliates, if a Lender, shall be included in the Majority Lenders).
"MATERIAL SUBSIDIARY" means a subsidiary of the Borrower whose
total assets exceed $50,000,000.
"MOODY'S" means Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA
Affiliate is making or accruing an obligation to make contributions,
or has within any of the preceding five plan years made or accrued an
obligation to make contributions.
"MULTIPLE EMPLOYER PLAN" means a single employer plan, as defined
in Section 4001(a)(15) of ERISA, that (i) is maintained for employees
of the Borrower or any ERISA Affiliate and at least one Person other
than the Borrower and its ERISA Affiliates or (ii) was so maintained
and in respect of which the Borrower or an ERISA Affiliate could have
liability under Section 4064 or 4069 of ERISA in the event such plan
has been or were to be terminated.
"NOTICE OF BORROWING" has the meaning specified in Section
2.02(a).
"PERSON" means an individual, partnership, corporation (including
a business trust), joint stock company, trust, unincorporated
association, joint venture or other entity, or a government or any
political subdivision or agency thereof.
"PLAN" means a Single Employer Plan or a Multiple Employer Plan.
"REFERENCE BANKS" means Bank of America NT & SA, Bankers Trust
Company, Citibank and Morgan Guaranty Trust Company of New York.
"REGISTER" has the meaning specified in Section 8.07(c).
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc.
"SINGLE EMPLOYER PLAN" means a single employer plan, as defined
in Section 4001(a)(15) of ERISA, that (i) is maintained for employees
of the Borrower or an ERISA Affiliate and no Person other than the
Borrower and its ERISA Affiliates or (ii) was so maintained and in
respect of which the Borrower or an ERISA Affiliate could have
liability under Section 4069 of ERISA in the event such plan has been
or were to be terminated.
"TERMINATION DATE" means, subject to Section 2.19, February 15,
2000 or the earlier date of termination in whole of the Commitments
pursuant to Section 2.04 or 6.01.
"UNITED STATES" or "U.S." each mean United States of America.
"WITHDRAWAL AGREEMENT" means an agreement in substantially the
form of Exhibit E hereto.
"WITHDRAWING LENDER" means each financial institution which was a
party to the Existing Credit Agreement immediately prior to the
effectiveness of this Agreement but is not a party to this Agreement,
as identified in Exhibit E hereto.
SECTION 1.02. COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".
6
<PAGE>
SECTION 1.03. ACCOUNTING TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(c) dated September 30,
1993; PROVIDED, HOWEVER, that if any changes in accounting principles from those
used in the preparation of such financial statements hereafter occur by reason
of the promulgation of rules, regulations, pronouncements, opinions or other
requirements by the Financial Accounting Standards Board or the American
Institute of Certified Public Accountants (or successors thereto or agencies
with similar functions) and result in a change in the method of calculation of
financial covenants or the terms related thereto contained in this Agreement,
the Borrower shall, at Borrower's option, (i) furnish to the Agent, together
with each delivery of the consolidated, financial statements of the Borrower and
its subsidiaries required to be delivered pursuant to Section 5.01(f), a written
reconciliation setting forth the differences that would have resulted if such
financial statements had been prepared utilizing accounting principles and
policies in conformity with those used to prepare the financial statements
referred to in Section 4.01(c) dated September 30, 1993 or (ii) enter into
negotiations with the Agent and the Lenders to amend such financial covenants or
terms equitably to reflect such changes so that the criteria for evaluating the
financial condition of the Borrower and its subsidiaries shall be the same after
such changes as if such changes had not been made; PROVIDED, HOWEVER, that at
all times in the case of clause (i) above, and in the case of clause (ii) above
until the amendment referred to in such clause (ii) becomes effective, all
covenants and related calculations under this Agreement shall be performed,
observed and determined as though no such changes in accounting principles had
been made.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. THE ADVANCES. Each Lender severally agrees, on the terms
and conditions hereinafter set forth, to make Advances to the Borrower from time
to time on any Business Day during the period from the date hereof until the
Termination Date in an aggregate amount not to exceed at any time outstanding
the amount set opposite such Lender's name on the signature pages hereof or, if
such Lender has entered into any Assignment and Acceptance, set forth for such
Lender in the Register maintained by the Agent pursuant to Section 8.07(c), as
such amount may be reduced pursuant to Section 2.04 (such Lender's
"Commitment"). Each Borrowing shall be in an aggregate amount not less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof and shall
consist of Advances of the same Type made on the same day by the Lenders ratably
according to their respective Commitments. Within the limits of each Lender's
Commitment, the Borrower may from time to time borrow, prepay pursuant to
Section 2.10 and reborrow under this Section 2.01.
SECTION 2.02. MAKING THE ADVANCES. (a) Each Borrowing shall be made on
notice, given not later than 1:00 p.m. (New York City time) on the Business Day
prior to the date of a proposed Borrowing comprised of Base Rate Advances and on
the third Business Day prior to the date of a proposed Borrowing comprised of
Eurodollar Rate Advances, by the Borrower to the Agent, which shall give to each
Lender prompt notice thereof by telecopier, telex or cable. Each such notice of
a Borrowing (a "Notice of Borrowing") shall be by telecopier, telex or cable, or
by telephone, confirmed immediately by telecopier, telex or cable, in
substantially the form of Exhibit A hereto, specifying therein the requested (i)
date of such Borrowing, (ii) Type of Advances comprising such Borrowing, (iii)
aggregate amount of such Borrowing, and (iv) in the case of a Borrowing
comprised of Eurodollar Rate Advances, initial Interest Period for each such
Advance. Each Lender shall, before 1:00 p.m. (New York City time) on the date
of such Borrowing, make available for the account of its Applicable Lending
Office to the Agent at its address referred to in Section 8.02, in same day
funds, such Lender's ratable portion of such Borrowing. After the Agent's
receipt of such funds and upon fulfillment of the applicable conditions set
forth in Article III, the Agent will make such funds available to the Borrower
at the Agent's aforesaid address.
(b) Anything in subsection (a) above or Section 2.01 to the contrary
notwithstanding, the Borrower may not select Eurodollar Rate Advances for any
Borrowing if the aggregate amount of such Borrowing is less than $20,000,000.
(c) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower. In the case of any Borrowing which the related Notice of Borrowing
specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall
indemnify each Lender against any loss, cost or expense incurred by such Lender
as a result of any failure to fulfill on or before the date specified in such
Notice of Borrowing for such Borrowing the applicable conditions set forth in
Article III, including, without limitation, any loss, cost or expense incurred
by reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to fund the Advance to be made by such Lender as part of such
Borrowing when such Advance, as a result of such failure, is not made on such
date.
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(d) Unless the Agent shall have received notice from a Lender prior to the
date of any Borrowing that such Lender will not make available to the Agent such
Lender's ratable portion of such Borrowing, the Agent may assume that such
Lender has made such portion available to the Agent on the date of such
Borrowing in accordance with subsection (a) of this Section 2.02 and the Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that such Lender shall not
have so made such ratable portion available to the Agent, such Lender agrees to
pay to the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is paid to the Agent, at the Federal
Funds Rate; PROVIDED, HOWEVER, that (i) within two Business Days after any
Lender shall fail to make such ratable portion available to the Agent, the Agent
shall notify the Borrower of such failure and (ii) if such Lender shall not pay
such corresponding amount to the Agent within two Business Days after such
demand by the Agent, the Borrower agrees to repay to the Agent forthwith, upon
demand by the Agent to the Borrower, such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Agent, at the interest
rate applicable at the time to Advances comprising such Borrowing. If and to
the extent such corresponding amount shall be paid by such Lender to the Agent
in accordance with this Section 2.02(d), such amount so paid shall constitute
such Lender's Advance as part of such Borrowing for purposes of this Agreement.
(e) The failure of any Lender to make the Advance to be made by it as part
of any Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Advance on the date of such Borrowing, but no Lender shall
be responsible for the failure of any other Lender to make the Advance to be
made by such other Lender on the date of any Borrowing.
SECTION 2.03. FACILITY FEE. The Borrower agrees to pay to each Lender a
facility fee on the amount (whether used or unused) of such Lender's Commitment
from the Effective Date in the case of each Initial Lender and from the
effective date specified in the Assignment and Acceptance pursuant to which it
became a Lender in the case of each other Lender until the Termination Date,
payable quarterly in arrears on the first Business Day of each January, April,
July and October during the term of such Lender's Commitment, commencing on
January 2, 1995, and on the Termination Date, at the rate per annum equal to the
Facility Fee Percentage in effect from time to time.
SECTION 2.04. REDUCTION OF THE COMMITMENTS. The Borrower shall have the
right, upon at least three Business Days' notice to the Agent, to terminate in
whole or reduce ratably in part the unused portions of the respective
Commitments of the Lenders, PROVIDED that each partial reduction shall be in the
aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess
thereof.
SECTION 2.05. REPAYMENT OF ADVANCES. The Borrower shall repay to each
Lender on the Termination Date the aggregate principal amount of the Advances
then owing to such Lender.
SECTION 2.06. INTEREST ON ADVANCES. (a) ORDINARY INTEREST. The Borrower
shall pay to each Lender interest on the unpaid principal amount of each Advance
owing to such Lender from the date of such Advance until such principal amount
shall be paid in full, at the following rates per annum:
(i) BASE RATE ADVANCES. During such periods as such Advance is a
Base Rate Advance, a rate per annum equal at all times to the remainder of
(A) the Base Rate in effect from time to time minus (B) the Facility Fee
Percentage in effect from time to time, payable quarterly in arrears on the
first Business Day of each January, April, July, and October during such
periods and on the date such Base Rate Advance shall be Converted or paid
in full.
(ii) EURODOLLAR RATE ADVANCES. During such periods as such Advance is
a Eurodollar Rate Advance, a rate per annum equal at all times during each
Interest Period for such Advance to the sum of the Eurodollar Rate for such
Interest Period plus the Eurodollar Rate Margin in effect from time to
time, payable in arrears on the last day of such Interest Period and, if
such Interest Period has a duration of more than three months, on the date
which occurs three months and, if applicable, six months and nine months
after the first day of such Interest Period.
(b) DEFAULT INTEREST. The Borrower shall pay interest on the unpaid
principal amount of each Advance that is not paid when due and on the unpaid
amount of all interest, fees and other amounts payable hereunder that is not
paid when due, payable on demand, at a rate per annum equal at all times to (i)
in the case of any amount of principal, the greater of (x) 2% per annum above
the rate per annum required to be paid on such Advance immediately prior to the
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date on which such amount became due and (y) 2% per annum above the Base Rate in
effect from time to time and (ii) in the case of all other amounts, 2% per annum
above the Base Rate in effect from time to time.
SECTION 2.07. ADDITIONAL INTEREST ON EURODOLLAR RATE ADVANCES. The
Borrower shall pay to each Lender, so long as such Lender shall be required
under regulations of the Board of Governors of the Federal Reserve System to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities, additional interest on the unpaid principal
amount of each Eurodollar Rate Advance of such Lender, from the date of such
Advance until such principal amount is paid in full, at an interest rate per
annum equal at all times to the remainder obtained by subtracting (i) the
Eurodollar Rate for the Interest Period for such Advance from (ii) the rate
obtained by dividing such Eurodollar Rate by a percentage equal to 100% minus
the Eurodollar Rate Reserve Percentage of such Lender for such Interest Period,
payable on each date on which interest is payable on such Advance. Such
additional interest shall be determined by such Lender and notified in
reasonable detail to the Borrower through the Agent.
SECTION 2.08. INTEREST RATE DETERMINATION. (a) Each Reference Bank agrees
to furnish to the Agent timely information for the purpose of determining each
Eurodollar Rate. If any one or more of the Reference Banks shall not furnish
such timely information to the Agent for the purpose of determining such
interest rate, the Agent shall determine such interest rate on the basis of
timely information furnished by the remaining Reference Banks.
(b) The Agent shall give prompt notice to the Borrower and the Lenders of
the applicable interest rate determined by the Agent for purposes of Section
2.06(a)(i) or (ii), and the applicable rate, if any, furnished by each Reference
Bank for the purpose of determining the applicable interest rate under Section
2.06(a)(ii).
(c) If fewer than two Reference Banks furnish timely information to the
Agent for determining the Eurodollar Rate for any Eurodollar Rate Advances, (i)
the Agent shall forthwith notify the Borrower and the Lenders that the interest
rate cannot be determined for such Eurodollar Rate Advances, (ii) each such
Advance will automatically, on the last day of the then existing Interest Period
therefor, Convert into a Base Rate Advance (or if such Advance is then a Base
Rate Advance, will continue as a Base Rate Advance), and (iii) the obligation of
the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall
be suspended until the Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist.
(d) If, with respect to any Eurodollar Rate Advances, the Majority Lenders
notify the Agent that the Eurodollar Rate for any Interest Period for such
Advances will not adequately reflect the cost to such Majority Lenders (which
cost each such Majority Lender reasonably determines in good faith is material)
of making, funding or maintaining their respective Eurodollar Rate Advances for
such Interest Period, the Agent shall forthwith so notify the Borrower and the
Lenders, whereupon, unless the Eurodollar Rate Margin shall be increased to
reflect such costs as determined by such Majority Lenders and as agreed by the
Borrower, (i) each Eurodollar Rate Advance will automatically, on the last day
of the then existing Interest Period therefor, Convert into a Base Rate Advance,
and (ii) the obligation of the Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended until the Majority Lenders shall
notify the Agent, and the Agent shall notify the Borrower and the Lenders, that
the circumstances causing such suspension no longer exist. The Agent shall use
reasonable efforts to determine from time to time whether the circumstances
causing such suspension no longer exist and, promptly after the Agent knows that
the circumstances causing such suspension no longer exist, the Agent shall so
notify the Borrower and the Lenders.
(e) If the Borrower shall fail to select the duration of any Interest
Period for any Eurodollar Rate Advances in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01, the Agent will
forthwith so notify the Borrower and the Lenders and such Advances will
automatically, on the last day of the then existing Interest Period therefor,
Convert into Base Rate Advances.
(f) On the date on which the aggregate unpaid principal amount of
Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment
or prepayment or otherwise, to less than $20,000,000, such Eurodollar Rate
Advances shall automatically Convert into Base Rate Advances, and on and after
such date the right of the Borrower to Convert such Advances into Eurodollar
Rate Advances shall terminate; PROVIDED, HOWEVER, that if and so long as each
such Eurodollar Rate Advance shall have the same Interest Period as Eurodollar
Rate Advances comprising another Borrowing or Borrowings, and the aggregate
unpaid principal amount of all such Eurodollar Rate Advances shall equal or
exceed $20,000,000, the Borrower shall have the right to continue all such
Eurodollar Rate Advances as, or to Convert all such Advances into, Eurodollar
Rate Advances having such Interest Period.
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SECTION 2.09. VOLUNTARY CONVERSION OF ADVANCES. The Borrower may on any
Business Day, upon notice given to the Agent not later than 1:00 P.M. (New York
City time) on the Business Day prior to the date of the proposed Conversion in
the case of a Conversion of Eurodollar Rate Advances to Base Rate Advances, and
not later than 1:00 P.M. (New York City time) on the third Business Day prior to
the date of the proposed Conversion in the case of a Conversion of Base Rate
Advances to Eurodollar Rate Advances, and subject to the provisions of Sections
2.08 and 2.12, Convert all Advances of one Type comprising the same Borrowing
into Advances of another Type; PROVIDED, HOWEVER, that any Conversion of any
Eurodollar Rate Advances into Base Rate Advances shall be made on, and only on,
the last day of an Interest Period for such Eurodollar Rate Advances. Promptly
upon receipt from the Borrower of a notice of a proposed Conversion hereunder,
the Agent shall give notice of such proposed Conversion to each Lender. Each
such notice of a Conversion shall, within the restrictions specified above,
specify (i) the date of such Conversion, (ii) the Advances to be Converted, and
(iii) if such Conversion is into Eurodollar Rate Advances, the duration of the
Interest Period for each such Advance. The Borrower may Convert all Eurodollar
Rate Advances of any one Lender into Base Rate Advances of such Lender in
accordance with the provisions of Section 2.12 by complying with the procedures
set forth in this Section 2.09 as though each reference in this Section 2.09 to
Advances of any Type was to such Advances of such Lender.
SECTION 2.10. PREPAYMENTS OF ADVANCES. The Borrower may, upon at least
one Business Day's notice to the Agent in the case of Borrowings consisting of
Base Rate Advances and upon at least three Business Days' notice to the Agent in
the case of Borrowings consisting of Eurodollar Rate Advances, stating the
proposed date and aggregate principal amount of the prepayment, and if such
notice is given the Borrower shall, prepay the outstanding principal amounts of
the Advances constituting part of the same Borrowing in whole or ratably in
part, together with accrued interest to the date of such prepayment on the
principal amount prepaid; PROVIDED, HOWEVER, that (x) each partial prepayment
shall be in an aggregate principal amount not less than $1,000,000 or an
integral multiple of $1,000,000 in excess thereof, and (y) in the case of any
such prepayment of a Eurodollar Rate Advance, the Borrower shall be obligated to
reimburse the Lenders in respect thereof pursuant to Section 8.04(b).
SECTION 2.11. INCREASED COSTS. (a) If after the date hereof, due to
either (i) the introduction of or any change (other than any change by way of
imposition or increase of reserve requirements included in the Eurodollar Rate
Reserve Percentage) in or in the interpretation of any law or regulation or (ii)
the compliance with any hereafter promulgated guideline or request from any
central bank or other governmental authority (whether or not having the force of
law), there shall be any increase in the cost (excluding any allocation of
corporate overhead) to any Lender (which cost such Lender reasonably determines
in good faith is material) of agreeing to make or making, funding or maintaining
Eurodollar Rate Advances, then such Lender shall so notify the Borrower promptly
after such Lender knows of such increased cost and determines that such cost is
material and the Borrower shall from time to time, upon demand by such Lender
(with a copy of such demand to the Agent), pay to the Agent for the account of
such Lender additional amounts sufficient to compensate such Lender for such
increased cost. A certificate of such Lender as to the amount of such increased
cost in reasonable detail and stating the basis upon which such amount has been
calculated and certifying that such Lender's method of allocating such costs is
fair and reasonable and that such Lender's demand for payment of such costs
hereunder is not inconsistent with its treatment of other borrowers which, as a
credit matter, are substantially similar to the Borrower and which are subject
to similar provisions, submitted to the Borrower and the Agent by such Lender,
shall be conclusive and binding for all purposes, absent manifest error.
(b) If, after the date hereof, either (i) the introduction of or change in
or in the interpretation of any law or regulation or (ii) the compliance by any
Lender with any hereafter promulgated guideline or request from any central bank
or other governmental authority (whether or not having the force of law) affects
or would affect the amount of capital required or expected to be maintained by
such Lender or any corporation controlling such Lender and the amount of such
capital is materially increased by or based upon the existence of such Lender's
commitment to lend hereunder and other commitments of this type, then, such
Lender shall so notify the Borrower promptly after such Lender makes such
determination and, upon demand by such Lender (with a copy of such demand to the
Agent), the Borrower shall pay to such Lender within five days from the date of
such demand, from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender or such corporation in the light of such
circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender's commitment
to lend hereunder. A certificate of such Lender as to such amount in reasonable
detail and stating the basis upon which such amount has been calculated and
certifying that such Lender's method of allocating such increase of capital is
fair and reasonable and that such Lender's demand for payment of such increase
of capital hereunder is not inconsistent with its treatment of other borrowers
which, as a credit matter, are substantially similar to the Borrower and which
are subject to similar provisions, submitted to the Borrower and the Agent by
such Lender, shall be conclusive and binding for all purposes, absent manifest
error.
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(c) The Borrower shall not be obligated to pay under this Section 2.11 any
amounts which relate to costs or increases of capital incurred prior to 12
months preceding the date of demand for payment, unless the applicable law,
regulation, guideline or request resulting in such costs or increases of capital
is imposed retroactively. In the case of any law, regulation, guideline or
request which is imposed retroactively, the Lender making demand for payment of
any amount under this Section 2.11 shall notify the Borrower not later than 12
months from the date that such Lender should reasonably have known of such law,
regulation, guideline or request and the Borrower's obligation to compensate
such Lender for such amount is contingent upon such Lender's so notifying the
Borrower, PROVIDED, HOWEVER, that any failure by such Lender to provide such
notice shall not affect the Borrower's obligations under this Section 2.11 with
respect to amounts resulting from costs or increases of capital incurred after
the date which occurs 12 months before the date on which such Lender did notify
the Borrower of such law, regulation, guideline or request.
(d) If any Lender shall subsequently recoup costs (other than from the
Borrower) for which such Lender has theretofore been compensated by the Borrower
under this Section 2.11, such Lender shall remit to the Borrower the amounts of
such recoupment. Amounts required to be paid by the Borrower pursuant to this
Section 2.11 shall be paid in addition to, and without duplication of, any
amounts required to be paid pursuant to Section 2.14.
SECTION 2.12. ILLEGALITY. Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation after the date
hereof makes it unlawful, or any central bank or other governmental authority
asserts that it is unlawful, for any Lender or its Eurodollar Lending Office to
perform its obligations hereunder to make Eurodollar Rate Advances or to fund or
maintain Eurodollar Rate Advances hereunder, (i) the obligation of such Lender
to make, or to Convert Base Rate Advances into, Eurodollar Rate Advances shall
be suspended until such Lender shall notify the Agent, and the Agent shall
notify the Borrower and the other Lenders (which notice shall be given promptly
after the Agent knows that the circumstances causing such suspension no longer
exist), that the circumstances causing such suspension no longer exist and (ii)
the Borrower shall forthwith prepay in full all Eurodollar Rate Advances of such
Lender then outstanding, together with interest accrued thereon, unless the
Borrower, within five Business Days of notice from the Agent or, if permitted by
law, on and as of the last day of the then existing Interest Period for such
Eurodollar Rate Advances, Converts all Eurodollar Rate Advances of such Lender
then outstanding into Base Rate Advances in accordance with Section 2.09.
SECTION 2.13. PAYMENTS AND COMPUTATIONS. (a) The Borrower shall make each
payment hereunder not later than 11:00 A.M. (New York City time) on the day when
due in U.S. dollars to the Agent at its address referred to in Section 8.02 in
same day funds. The Agent will promptly thereafter cause to be distributed like
funds relating to the payment of principal or interest or facility fees ratably
(other than amounts payable pursuant to Section 2.07, 2.11 or 2.14) to the
Lenders for the account of their respective Applicable Lending Offices, and like
funds relating to the payment of any other amount payable to any Lender to such
Lender for the account of its Applicable Lending Office, in each case to be
applied in accordance with the terms of this Agreement. Upon its acceptance of
an Assignment and Acceptance and recording of the information contained therein
in the Register pursuant to Section 8.07(d), from and after the effective date
specified in such Assignment and Acceptance, the Agent shall make all payments
hereunder in respect of the interest assigned thereby to the Lender assignee
thereunder, and the parties to such Assignment and Acceptance shall make all
appropriate adjustments in such payments for periods prior to such effective
date directly between themselves.
(b) All computations of interest based on the Base Rate shall be made by
the Agent on the basis of a year of 365 or 366 days, as the case may be, and all
computations of interest based on the Eurodollar Rate or the Federal Funds Rate
and of facility fees shall be made by the Agent, and all computations of
interest pursuant to Section 2.07 shall be made by a Lender, on the basis of a
year of 360 days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or facility fees are payable. Each determination by the Agent (or, in
the case of Section 2.07, by a Lender) of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.
(c) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of payment of interest or facility fee, as the case may be;
PROVIDED, HOWEVER, if such extension would cause payment of interest on or
principal of Eurodollar Rate Advances to be made in the next following calendar
month, such payment shall be made on the next preceding Business Day.
(d) Unless the Agent shall have received notice from the Borrower prior to
the date on which any payment is due to the Lenders hereunder that the Borrower
will not make such payment in full, the Agent may
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assume that the Borrower has made such payment in full to the Agent on such date
and the Agent may, in reliance upon such assumption, cause to distributed to
each Lender on such due date an amount equal to the amount then due such Lender.
If and to the extent that the Borrower shall not have so made such payment in
full to the Agent, each Lender shall repay to the Agent forthwith on demand such
amount distributed to such Lender together with interest thereon, for each day
from the date such amount is distributed to such Lender until the date such
Lender repays such amount to the Agent, at the Federal Funds Rate.
SECTION 2.14. TAXES. (a) Any and all payments by the Borrower hereunder
shall be made, in accordance with Section 2.13, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, EXCLUDING, in
the case of each Lender and the Agent, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which such
Lender or the Agent (as the case may be) is organized or any political
subdivision thereof and, in the case of each Lender, taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction of such Lender's
Applicable Lending Office or any political subdivision thereof or by any other
jurisdiction in which such Lender or the Agent is doing business that is
unrelated to this Agreement (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder to any Lender or the Agent, (i) the
sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.14) such Lender or the Agent (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall
pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
(hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender and the Agent for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
2.14) paid by such Lender or the Agent (as the case may be) and any liability
(including penalties to the extent not imposed as a result of such Lender's or
the Agent's (as the case may be) gross negligence or willful misconduct,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within 30 days from the date such Lender or the
Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the Borrower
will furnish to the Agent, at its address referred to in Section 8.02, the
original or a certified copy of a receipt evidencing payment thereof.
(e) Each Lender that is not created or organized under the laws of the
United States or a political subdivision thereof shall deliver to the Borrower
and the Agent, on or prior to the date of its execution and delivery of this
Agreement, or in the case of each Lender that is not a party hereto on the date
hereof, the date on which such Lender becomes a Lender pursuant to Section 8.07
hereof, a true and accurate certificate executed in duplicate by a duly
authorized officer of such Lender in substantially the form set out in Exhibit
D-1 or D-2, as applicable, to the effect that such Lender is eligible under the
provisions of an applicable tax treaty concluded by the United States (in which
case the certificate shall be accompanied by two executed copies of Form 1001
(or any successor or substitute form or forms) of the Internal Revenue Service
((the "IRS") of the United States), or under Section 1441(c) or 1442 of the
Internal Revenue Code (in which case the certificate shall be accompanied by two
copies of Form 4224 (or any successor or substitute form or forms) of the IRS)
to receive, as of the date hereof or as of the date such party becomes a Lender
hereto pursuant to Section 8.07, as appropriate, payments hereunder without
deduction or withholding of United States federal income tax. Each Lender
further agrees to deliver to the Borrower and the Agent from time to time, as
reasonably requested by the Borrower or the Agent, and in any case before or
promptly upon the occurrence of any events requiring a change in the most recent
certificate previously delivered pursuant to this Section 2.14(e), a true and
accurate certificate executed in duplicate by a duly authorized officer of such
Lender in substantially the form set out in Exhibit D-1 or D-2, as applicable.
Further, each Lender which delivers Exhibit D-1 agrees, to the extent permitted
by law, to deliver to the Borrower and the Agent within 15 days prior to every
third anniversary of the date of delivery of the initial Form 1001 by such
Lender (or more often if required by law) on which this Agreement is still in
effect, two accurate and complete original signed copies of Form 1001 (or any
successor or substitute form or forms required under the Code or the applicable
regulations promulgated thereunder) and such Exhibit D-1 and each Lender that
delivers such Exhibit D-2 agrees to deliver to the Borrower and the Agent,
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to the extent permitted by law, within 15 days prior to the beginning of each
subsequent taxable year of such Lender (or more often if required by law) during
which this Agreement is still in effect, two accurate and complete original
signed copies of IRS Form 4224 (or any successor or substitute form or forms
required under the Internal Revenue Code or the applicable regulations
promulgated thereunder) and such Exhibit D-2. Each such certificate shall
certify as to one of the following:
(i) that such Lender is eligible to receive payments hereunder
without deduction or withholding of United States federal income tax;
(ii) that such Lender is not eligible to receive payments hereunder
without deduction or withholding of United States federal income tax as
specified therein but does not require additional payments therefor
pursuant to Section 2.14(a) or (c) because it is eligible and able to
recover the full amount of any such deduction or withholding from a source
other than the Borrower; or
(iii) that such Lender is not eligible to receive payments hereunder
without deduction or withholding of United States federal income tax as
specified therein and that it is not eligible and able to recover the full
amount of the same from a source other than the Borrower.
If any form or document referred to in this subsection (e) requires the
disclosure of information, other than information necessary to compute the tax
payable and information required on the date hereof by IRS Form 1001 or 4224,
that any Lender reasonably considers to be confidential, such Lender promptly
shall give notice thereof to the Borrower and the Agent and shall not be
obligated to include in such form or document such confidential information,
PROVIDED that such Lender certifies to the Borrower that the failure to disclose
such confidential information does not increase the obligations of the Borrower
under this Section 2.14.
(f) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.14 shall survive the payment in full of principal and interest
until such date that all applicable statutes of limitations (including any
extensions thereof) have expired with respect to such agreements and obligations
of the Borrower contained in this Section 2.14.
SECTION 2.15. SHARING OF PAYMENTS ETC. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Advances made by it (other than
pursuant to Section 2.07, 2.11 or 2.14) in excess of its ratable share of
payments on account of the Advances obtained by all the Lenders, such Lender
shall forthwith purchase from the other Lenders such participations in the
Advances made by them as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of them, PROVIDED, HOWEVER, that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded and such
Lender shall repay to the purchasing Lender the purchase price to the extent of
such recovery together with an amount equal to such Lender's ratable share
(according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 2.15
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.
SECTION 2.16. MANDATORY ASSIGNMENT BY A LENDER; MITIGATION. If any Lender
requests from the Borrower either payment of additional interest on Eurodollar
Rate Advances pursuant to Section 2.07, or reimbursement for increased costs
pursuant to Section 2.11, or payment of or reimbursement for Taxes pursuant to
Section 2.14, or if any Lender notifies the Agent that it is unlawful for such
Lender or its Eurodollar Lending Office to perform its obligations hereunder
pursuant to Section 2.12, (i) such Lender will, upon three Business Days' notice
by the Borrower to such Lender and the Agent, to the extent not inconsistent
with such Lender's internal policies, use reasonable efforts to make, fund or
maintain its Eurodollar Rate Advances through another Eurodollar Lending Office
of such Lender if (A) as a result thereof the additional amounts required to be
paid pursuant to Section 2.07, 2.11 or 2.14, as applicable, in respect of such
Eurodollar Rate Advances would be materially reduced or the provisions of
Section 2.12 would not apply to such Lender, as applicable) and (B) as
determined by such Lender in good faith but in its sole discretion, the making
or maintaining of such Eurodollar Rate Advances through such other Eurodollar
Lending Office would not otherwise materially adversely affect such Eurodollar
Rate Advances or such Lender and (ii) unless such Lender has theretofore taken
steps to remove or cure, and has removed or cured, the conditions creating such
obligation to pay such additional amounts or the circumstances described in
Section 2.12, the Borrower may designate an Eligible Assignee to purchase for
cash (pursuant to an Assignment and Acceptance)
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all, but not less than all, of the Advances then owing to such Lender and such
Lender's rights and obligations hereunder related to such Advances, without
recourse to or warranty by, or expense to, such Lender, for a purchase price
equal to the outstanding principal amount of each such Advance then owing to
such Lender plus any accrued but unpaid interest thereon, and a proportionate
part of accrued but unpaid facility fee, expense reimbursements and indemnities
in respect of that Lender's Commitment hereunder.
SECTION 2.17. EVIDENCE OF DEBT. (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Advance owing to
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder. The Borrower
agrees that upon notice by any Lender to the Borrower (with a copy of such
notice to the Agent) to the effect that a promissory note or other evidence of
indebtedness is required or appropriate in order for such Lender to evidence
(whether for purposes of pledge, enforcement or otherwise) the Advances owing
to, or to be made by, such Lender, the Borrower shall promptly execute and
deliver to such Lender a promissory note or other evidence of indebtedness, in
form and substance reasonably satisfactory to the Borrower and such Lender,
payable to the order of such Lender in a principal amount equal to the aggregate
principal amount of the Advances then owing to such Lender; PROVIDED, HOWEVER,
that the execution and delivery of such promissory note or other evidence of
indebtedness shall not be a condition precedent to the making of any Advance
under this Agreement.
(b) The Register maintained by the Agent pursuant to Section 8.07(c) shall
include a control account, and a subsidiary account for each Lender, in which
accounts (taken together) shall be recorded (i) the date and amount of each
Borrowing made hereunder, the Type of Advances comprising such Borrowing and the
Interest Period applicable thereto, (ii) the terms of each Assignment and
Acceptance delivered to and accepted by it, (iii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder, and (iv) the amount of any sum received by the Agent from the
Borrower hereunder and each Lender's share thereof.
(c) Entries made in good faith by the Agent in the Register pursuant to
subsection (b) above, and by each Lender in its account or accounts pursuant to
subsection (a) above, shall be PRIMA FACIE evidence of the amount of principal
and interest due and payable or to become due and payable from the Borrower to,
in the case of the Register, each Lender and, in the case of such account or
accounts, such Lender, under this Agreement, absent manifest error; PROVIDED,
HOWEVER, that the failure of the Agent or such Lender to make an entry, or any
finding that an entry is incorrect, in the Register or such account or accounts
shall not limit or otherwise affect the obligations of the Borrower under this
Agreement.
SECTION 2.18. USE OF PROCEEDS. The proceeds of the Advances shall be
available (and the Borrower agrees that it shall use such proceeds) (i) to
support the obligations of the Borrower in respect of commercial paper issued by
the Borrower and (ii) for general corporate purposes of the Borrower.
SECTION 2.19. EXTENSION OF TERMINATION DATE. (a) At least 45 but not
more than 75 days prior to the next Anniversary Date, the Borrower, by written
notice to the Agent, may request that the Termination Date be extended one
calendar year from its then current scheduled expiration. The Agent shall
promptly notify each Lender of such request, and each Lender shall in turn, not
later than 15 days prior to such next Anniversary Date, notify the Borrower and
the Agent in writing as to whether such Lender will consent to such extension.
(b) If any Lender shall fail to notify the Agent and the Borrower in
writing of its consent to such request at least 15 days prior to the next
Anniversary Date, such Lender shall be deemed to have not consented to such
request. Any nonconsenting Lender will, upon not less than three Business Days'
prior written notice by the Borrower to such Lender and the Agent, assign to an
Eligible Assignee which shall have been designated by the Borrower in such
notice and which shall have agreed to accept such assignment and to consent to
the requested extension of the Termination Date, all of such Lender's rights and
obligations hereunder, without recourse to or warranty by, or expense to, such
Lender, for a cash purchase price equal to the outstanding principal amount of
each Advance then owing to such Lender plus any accrued but unpaid interest
thereon, plus a proportionate part of any accrued but unpaid facility fee,
expense reimbursements and indemnities in respect of that Lender's Commitment
hereunder and any other amounts then due and payable to such Lender hereunder.
(c) If all of the Lenders (after giving effect to any assignments pursuant
to subsection (b) above) consent in writing to a requested extension not later
than the Business Day immediately preceding such Anniversary Date, the Agent
shall so advise the Borrower and the Lenders, the Termination Date shall be so
extended for such one calendar year, and all references herein, and in any
promissory note executed and delivered by the Borrower pursuant to Section 2.17
hereof, to the "Termination Date" shall refer to the Termination Date as so
extended. If any Lender (after giving
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effect to any assignments pursuant to subsection (b) above) shall not so consent
in writing, such Lender shall be deemed not to have consented to such requested
extension and the Termination Date shall not be so extended.
SECTION 2.20. WITHDRAWING LENDERS. Each Initial Lender consents to the
effectiveness of the Withdrawal Agreement in accordance with the terms thereof.
ARTICLE III
CONDITIONS OF EFFECTIVENESS AND LENDING
SECTION 3.01. CONDITION PRECEDENT TO EFFECTIVENESS OF THIS AGREEMENT.
This Agreement shall become effective as of the Effective Date, subject to the
satisfaction on or before such date of the following conditions precedent:
(a) the Agent shall have received the following: (i) counterparts of this
Agreement executed by the Borrower and each Lender (or, as to any of the
Lenders, advice satisfactory to the Agent that such Lenders have executed this
Agreement); (ii) certified copies of the resolutions of the Executive Committee
of the Board of Directors of the Borrower authorizing the execution and delivery
of this Agreement; (iii) a certificate of the Secretary or an Assistant
Secretary of the Borrower certifying the name and true signature of the officer
of the Borrower executing this Agreement on its behalf; and (iv) an opinion of
counsel to the Borrower in substantially the form of Exhibit C hereto;
(b) the Agent shall have received counterparts of the Withdrawal Agreement
executed by the Borrower and each Withdrawing Lender;
(c) the Borrower shall have paid or prepaid any Advances outstanding on
the Effective Date under the Existing Credit Agreement, together with accrued
interest thereon and any amounts payable in connection with such prepayment
under Section 8.04(b) thereof;
(d) the Borrower shall have paid all facility fees under Section 2.03 of
the Existing Credit Agreement to the extent accrued and unpaid through the
Effective Date.
SECTION 3.02. CONDITIONS PRECEDENT TO EACH BORROWING. The obligation of
each Lender to make an Advance on the occasion of each Borrowing (including the
initial Borrowing) shall be subject to the further conditions precedent that on
the date of such Borrowing the following statements shall be true (and each of
the giving of the applicable Notice of Borrowing and the acceptance by the
Borrower of the proceeds of such Borrowing shall constitute a representation and
warranty by the Borrower that on the date of such Borrowing such statements are
true):
(a) The representations and warranties contained in Section 4.01 are
correct in all material respects on and as of the date of such Borrowing, before
and after giving effect to such Borrowing and to the application of the proceeds
therefrom, as though made on and as of such date (except to the extent that such
representations and warranties relate to an earlier date, which representations
and warranties were correct in all material respects on and as of such earlier
date), and
(b) No event has occurred and is continuing, or would result from such
Borrowing or from the application of the proceeds therefrom, which constitutes
an Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time elapse or both.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The
Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is duly qualified and
in good standing as a foreign corporation authorized to do business in each
jurisdiction (other than the jurisdiction of its incorporation) in which the
nature of its activities or the character of the properties it owns or leases
makes such qualification necessary and in which the failure so to qualify
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would have a material adverse effect on the financial condition or operations of
the Borrower and its subsidiaries taken as a whole.
(b) The execution, delivery and performance by the Borrower of this
Agreement are within the Borrower's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene (i) the Borrower's
charter or by-laws or (ii) any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or any contractual restriction
binding on or affecting the Borrower; no authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
the Borrower of this Agreement; and this Agreement is the legal, valid and
binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights generally and
general principles of equity.
(c) The Borrower's most recent annual report on Form 10-K containing the
consolidated balance sheet of the Borrower and its subsidiaries, and the related
consolidated statements of income and of cash flows of the Borrower and its
subsidiaries, copies of which have been furnished to each Lender prior to the
date hereof or pursuant to Section 5.01(f), fairly present the consolidated
financial condition of the Borrower and its subsidiaries as at the date of such
balance sheet and the consolidated results of operations of the Borrower and its
subsidiaries for the fiscal year ended on such date, all in accordance with
generally accepted accounting principles consistently applied.
(d) There is no pending or to the Borrower's knowledge, threatened claim,
action or proceeding affecting the Borrower or any of its subsidiaries, which
could reasonably be expected to adversely affect the financial condition or
operations of the Borrower and its subsidiaries taken as a whole or which could
reasonably be expected to affect the legality, validity or enforceability of
this Agreement; and to the Borrower's knowledge, the Borrower and each of its
subsidiaries have complied, and are in compliance, with all applicable laws,
rules, regulations, permits, orders, consent decrees and judgments, except for
matters which have not, and would not reasonably be expected to have, a material
adverse effect on the financial condition or operations of the Borrower and its
subsidiaries taken as a whole.
(e) The Borrower and its ERISA Affiliates have not incurred and are not
reasonably expected to incur any material liability in connection with their
Single Employer or Multiple Employer Plans, other than ordinary liabilities for
benefits; neither the Borrower nor any ERISA Affiliate has incurred or is
reasonably expected to incur any material withdrawal liability (as defined in
Part I of Subtitle E of Title IV of ERISA) to any Multiemployer Plan; and no
Multiemployer Plan of the Borrower or any ERISA Affiliate is reasonably expected
to be in reorganization or to be terminated, within the meaning of Title IV of
ERISA.
SECTION 4.02. ADDITIONAL REPRESENTATION AND WARRANTY OF THE BORROWER. The
Borrower represents and warrants solely on the date of this Agreement (and at no
subsequent time) that as of the date of this Agreement, except as disclosed in
periodic and other reports filed by the Borrower and its subsidiaries during the
period from June 30, 1994 to and including the date hereof pursuant to Section
13 of the Securities Exchange Act of 1934, as amended, copies of which have been
furnished to the Agent, there has been no material adverse change in the
business, financial condition, or operations of the Borrower since June 30,
1994.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. AFFIRMATIVE COVENANTS. So long as any Advance shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower will,
unless the Majority Lenders shall otherwise consent in writing:
(a) COMPLIANCE WITH LAWS ETC. Comply, and cause each of its subsidiaries
to comply, in all material respects with all applicable laws, rules,
regulations, permits, orders, consent decrees and judgments binding on the
Borrower and its subsidiaries the failure with which to comply would have a
material adverse effect on the financial condition or operations of the Borrower
and its subsidiaries taken as a whole.
(b) PAYMENT OF TAXES ETC. Pay and discharge, and cause each of its
subsidiaries to pay and discharge, before the same shall become delinquent, if
the failure to so pay and discharge would have a material adverse effect on the
financial condition or operations of the Borrower and its subsidiaries taken as
a whole (i) all taxes, assessments and governmental charges or levies imposed
upon it or upon its property, and (ii) all lawful claims which, if unpaid,
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will by law become a Lien upon its property; PROVIDED, HOWEVER, that neither the
Borrower nor any subsidiary shall be required to pay or discharge any such tax,
assessment, charge or claim which is being contested in good faith and by proper
proceedings and as to which appropriate reserves
are being maintained as may be required by GAAP.
(c) PRESERVATION OF CORPORATE EXISTENCE, ETC. Subject to Section 5.02(a),
preserve and maintain its corporate existence, rights (charter and statutory)
and franchises; PROVIDED, HOWEVER, that the Borrower shall not be required to
preserve any right or franchise if the loss thereof does not have a material
adverse effect on the financial condition or operations of the Borrower and its
subsidiaries taken as a whole.
(d) MAINTENANCE OF INTEREST COVERAGE RATIO. Maintain as of the last day
of each fiscal quarter of the Borrower a ratio of (i) Consolidated EBIT for the
period of four consecutive fiscal quarters of the Borrower ending with such
fiscal quarter to (ii) Consolidated Interest Expense for such period, of not
less than 3.0 to 1.0.
(e) MAINTENANCE OF UNENCUMBERED ASSETS COVERAGE RATIO. Maintain a ratio
of Consolidated Unencumbered Assets to Consolidated Adjusted Indebtedness of not
less than 1.3 to 1.0.
(f) REPORTING REQUIREMENTS. Furnish to the Agent, which shall furnish to
the Lenders:
(i) as soon as available and in any event within 50 days after the
end of each of the first three quarters of each fiscal year of the
Borrower, the Borrower's quarterly report to shareholders on Form 10-Q as
filed with the Securities and Exchange Commission (the "SEC") containing a
consolidated balance sheet of the Borrower and its subsidiaries as of the
end of such quarter and consolidated statements of income and of cash flows
of the Borrower and its subsidiaries for the period commencing at the end
of the previous fiscal year and ending with the end of such quarter, and a
certificate of any of the Borrower's Chairman of the Board of Directors,
President, Chief Financial Officer, Treasurer, Assistant Treasurer or
Controller (i) stating that no Event of Default, or event which, with
notice or lapse of time, or both, would constitute an Event of Default, has
occurred and is continuing and (ii) containing a schedule which shall set
forth the computations used by the Borrower in determining compliance with
the covenants contained in Sections 5.01(d) and 5.01(e);
(ii) as soon as soon as available and in any event within 100 days
after the end of each fiscal year of the Borrower, a copy of the Borrower's
annual report to shareholders on Form 10-K as filed with the SEC,
containing consolidated financial statements for such year and a
certificate of any of the Borrower's Chairman of the Board of Directors,
President, Chief Financial Officer, Treasurer, Assistant Treasurer or
Controller (i) stating that no Event of default, or event which, with
notice or lapse of time, or both, would constitute an Event of Default, has
occurred and is continuing and (ii) containing a schedule which shall set
forth the computations used by the Borrower in determining compliance with
the covenants contained in Sections 5.01(d) and 5.01(e);
(iii) promptly after the Borrower obtains actual knowledge of the
occurrence of each Event of Default, and each event which with the giving
of notice or lapse of time or both would constitute an Event of Default, a
statement of any of the Borrower's Chairman of the Board of Directors,
President, Chief Financial Officer, Treasurer, Assistant Treasurer or
Controller setting forth details of such Event of Default or event
continuing on the date of such statement, and the action which the Borrower
has taken and proposes to take with respect thereto;
(iv) promptly after the commencement thereof, notice of any
actions, suits and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting the Borrower or any subsidiary of the type described in Section
4.01(d);
(v) promptly after the Borrower obtains actual knowledge thereof,
written notice of any pending or threatened Environmental Claim against the
Borrower or any of its subsidiaries or any of their respective properties
which could reasonably be expected to materially adversely affect the
financial condition or operations of the Borrower and its subsidiaries
taken as a whole;
(vi) promptly after the Borrower obtains actual knowledge of the
occurrence of any ERISA Event which could reasonably be expected to
materially adversely affect the financial condition or operations of the
Borrower and its subsidiaries taken as a whole, a statement of any of the
Borrower's Chairman of the
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Board of Directors, President, Chief Financial Officer, Treasurer,
Assistant Treasurer or Controller describing such ERISA Event and the
action, if any, which the Borrower has taken and proposes to take with
respect thereto;
(vii) promptly after receipt thereof by the Borrower or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, a copy of each notice
received by the Borrower or any ERISA Affiliate concerning (A) the
imposition of withdrawal liability (as defined in Part I of Subtitle E of
Title IV of ERISA) by a Multiemployer Plan, which withdrawal liability
could reasonably be expected to materially adversely affect the financial
condition or operations of the Borrower and its subsidiaries taken as a
whole, (B) the reorganization or termination, within the meaning of Title
IV of ERISA, of any Multiemployer Plan, which reorganization or termination
could reasonably be expected to materially adversely affect the financial
condition or operations of the Borrower and its subsidiaries taken as a
whole or (C) the amount of liability incurred, or which may be incurred, by
the Borrower or any ERISA Affiliate in connection with any event described
in clause (A) or (B) above; and
(viii) such other material information reasonably related to any
Lender's credit analysis of the Borrower or any of its subsidiaries as any
Lender through the Agent may from time to time reasonably request.
SECTION 5.02. NEGATIVE COVENANT. So long as any Advance shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower will not,
without the written consent of the Majority Lenders:
(a) MERGERS, ETC. Merge or consolidate with or into, or convey, transfer,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of the assets of the Borrower and its
subsidiaries taken as a whole (whether now owned or hereafter acquired) to, any
Person, or permit any of its subsidiaries to do so, unless immediately after
giving effect to such proposed transaction, no Event of Default or event which,
with the giving of notice or lapse of time, or both, would constitute an Event
of Default would exist and in the case of any such merger to which the Borrower
is a party, the Borrower is the surviving corporation or the Person into which
the Borrower shall be merged or formed by any such consolidation shall be a
corporation organized and existing under the laws of the United States or any
State thereof and shall assume the Borrower's obligations hereunder in an
agreement or instrument reasonably satisfactory in form and substance to the
Majority Lenders.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. EVENTS OF DEFAULT. If any of the following events ("Events
of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Advance when the
same becomes due and payable; or the Borrower shall fail to pay any interest on
any Advance or any fee or other amount payable under this Agreement, in each
case within three Business Days after such interest, fee or other amount becomes
due and payable; or
(b) Any representation or warranty made by the Borrower herein or by the
Borrower (or any of its officers) delivered in writing and identified as
delivered in connection with this Agreement shall prove to have been incorrect
in any material respect when made; or
(c) The Borrower shall fail to perform or observe any covenant contained
in Section 5.01(d) or Section 5.01(e) or Section 5.01(f)(iii) or Section 5.02;
or
(d) The Borrower shall fail to perform or observe any other term, covenant
or agreement contained in this Agreement on its part to be performed or observed
if the failure to perform or observe such other term, covenant or agreement
shall remain unremedied for 30 days after written notice thereof shall have been
given to the Borrower by the Agent or any Lender; or
(e) The Borrower or any of its subsidiaries shall fail to pay any
principal of or premium or interest on any Debt which is outstanding in a
principal amount of at least $100,000,000 in the aggregate (but excluding Debt
arising hereunder) of the Borrower or such subsidiary (as the case may be), when
the same becomes due and payable
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(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure (i) shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such Debt
and (ii) shall not have been cured or waived; or any other event shall occur or
condition shall exist under any agreement or instrument relating to any such
Debt and shall continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), redeemed, purchased
or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall
be required to be made, in each case prior to the stated maturity thereof; or
(f) The Borrower or any of its Material Subsidiaries shall generally not
pay its debts as such debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general assignment for the benefit
of creditors; or any proceeding shall be instituted by or against the Borrower
or any of its Material Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for substantially all of
its property and, in the case of any such proceeding instituted against it (but
not instituted by it), either such proceeding shall remain undismissed or
unstayed for a period of 60 days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property) shall occur; or
the Borrower or any of its Material Subsidiaries shall take any corporate action
to authorize any of the actions set forth above in this subsection (f); or
(g) Any money judgment, writ or warrant of attachment or similar process
against the Borrower, any of its Material Subsidiaries or any of their
respective assets involving in any case an amount in excess of $50,000,000 is
entered and shall remain undischarged, unvacated, unbonded or unstayed for a
period of 30 days or in any case within five days of any pending sale or
disposition of any asset pursuant to any such process; then, and in any such
event, the Agent (i) shall at the request, or may with the consent, of the
Majority Lenders, by notice to the Borrower, declare the obligation of each
Lender to make Advances to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
Majority Lenders, by notice to the Borrower, declare the Advances, all interest
thereon and all other amounts payable under this Agreement to be forthwith due
and payable, whereupon the Advances, all such interest and all such amounts
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower; PROVIDED, HOWEVER, that in the event of an actual or deemed
entry of an order for relief with respect to the Borrower under the Federal
Bankruptcy Code, (A) the obligation of each Lender to make Advances shall
automatically be terminated and (B) the Advances, all such interest and all such
amounts shall automatically become and be due and payable, without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived
by the Borrower.
ARTICLE VII
THE AGENT
SECTION 7.01. AUTHORIZATION AND ACTION. Each Lender hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. As to
any matters not expressly provided for by this Agreement (including, without
limitation, enforcement of this Agreement or collection of the Advances), the
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of the Majority
Lenders, and such instructions shall be binding upon all Lenders; PROVIDED,
HOWEVER, that the Agent shall not be required to take any action which exposes
the Agent to personal liability or which is contrary to this Agreement or
applicable law. The Agent agrees to give to each Lender prompt notice of each
notice given to it by the Borrower pursuant to the terms of this Agreement.
SECTION 7.02. AGENT'S RELIANCE ETC. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to any Lender for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the Agent:
(i) may treat the Lender which made any Advance as the holder of the Debt
resulting therefrom until the Agent receives and accepts an Assignment and
Acceptance entered into by such Lender, as assignor, and an Eligible Assignee,
as assignee, as provided in Section 8.07; (ii) may
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consult with legal counsel (including counsel for the Borrower), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (iii) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations (whether written or oral) made in or
in connection with this Agreement; (iv) shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement on the part of the Borrower or to inspect the
property (including the books and records) of the Borrower; (v) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
instrument or document furnished pursuant hereto; and (vi) shall incur no
liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier,
telegram, cable or telex) believed by it to be genuine and signed or sent by the
proper party or parties.
SECTION 7.03. CUSA AND AFFILIATES. With respect to its Commitment and the
Advances made by it, CUSA shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly
indicated, include CUSA in its individual capacity. CUSA and its Affiliates may
accept deposits from, lend money to, act as trustee under indentures of, and
generally engage in any kind of business with, the Borrower, any of its
subsidiaries and any Person who may do business with or own securities of the
Borrower or any such subsidiary, all as if CUSA were not the Agent and without
any duty to account therefor to the Lenders.
SECTION 7.04. LENDER CREDIT DECISION. Each Lender acknowledges that it
has, independently and without reliance upon the Agent or any other Lender and
based on the financial statements referred to in Section 4.01(c) and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 7.05. INDEMNIFICATION. The Lenders agree to indemnify the Agent
(to the extent not reimbursed by the Borrower), ratably according to the
respective principal amounts of Advances then owing to each of them (or if no
Advances are at the time outstanding or if any Advances are then owing to
Persons which are not Lenders, ratably according to the respective amounts of
their Commitments), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by the Agent under this Agreement,
PROVIDED that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender agrees to reimburse
the Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including reasonable counsel fees) incurred by the Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal or bankruptcy
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, to the extent that the Agent is not
reimbursed for such expenses by the Borrower.
SECTION 7.06. SUCCESSOR AGENT. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower and such resignation
shall be effective upon the appointment of a successor Agent as provided herein.
Upon any such resignation, the Majority Lenders shall have the right to appoint
a successor Agent. If no successor Agent shall have been so appointed by the
Majority Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation, then the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent. Any successor Agent
appointed hereunder shall be a commercial bank organized or licensed under the
laws of the United States or of any State thereof, or an Affiliate of such bank,
having a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
20
<PAGE>
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement, nor consent to any departure by the Borrower therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Majority Lenders, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; PROVIDED,
HOWEVER, that no amendment, waiver or consent shall, unless in writing and
signed by all the Lenders, do any of the following: (a) waive any of the
conditions specified in Section 3.01 or 3.02, (b) increase the Commitments of
the Lenders or subject the Lenders to any additional obligations, (c) reduce the
principal of, or interest on, the Advances or the facility fees payable
hereunder, (d) postpone any date fixed for any payment of principal of, or
interest on, the Advances, (e) change the percentage of the Commitments or of
the aggregate unpaid principal amount of Advances, or the number of Lenders,
which shall be required for the Lenders or any of them to take any action
hereunder or (f) amend this Section 8.01; and PROVIDED, FURTHER, that no
amendment, waiver or consent shall, unless in writing and signed by the Agent in
addition to the Lenders required above to take such action, affect the rights or
duties of the Agent under this Agreement.
SECTION 8.02. NOTICES, ETC. All notices and other communications provided
for hereunder shall be in writing (including telecopier, telegraphic, telex or
cable communication) and mailed, telecopied, telegraphed, telexed, cabled or
delivered, if to the Borrower, at its address at:
The Walt Disney Company
500 South Buena Vista Street
Burbank, California 91521
Attention: Mr. Edward Philip
Telecopy Number: (818) 563-1682
if to any Initial Lender, at its Domestic Lending Office specified opposite its
name on Schedule I hereto; if to any other Lender, at its Domestic Lending
Office specified in the Assignment and Acceptance pursuant to which it became a
Lender; if to the Agent, at its address at:
Citicorp USA, Inc.
One Court Square
Long Island City, New York 11120
Attention: Jeff Stern
Telecopy Number: (718) 248-4844
with a copy to:
Citicorp Securities, Inc.
One Sansome Street
San Francisco, CA 94104
Attention: Mark Wilson
Telecopy Number: (415) 433-0344
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other parties. All such notices and communications
shall, when mailed, telecopied, telegraphed, telexed or cabled, be effective
when deposited in the mails, telecopied, delivered to the telegraph company,
confirmed by telex answerback or delivered to the cable company, respectively,
except that notices and communications to the Agent pursuant to Article II or
VII shall not be effective until received by the Agent.
SECTION 8.03. NO WAIVER; REMEDIES. No failure on the part of any Lender
or the Agent to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
SECTION 8.04. COSTS AND EXPENSES. (a) The Borrower agrees to pay within
five Business Days of demand all actual and reasonable costs and expenses, if
any (including, without limitation, actual and reasonable counsel fees and
expenses), of the Agent and each Lender in connection with the enforcement
(whether through legal proceedings or otherwise) of this Agreement and the other
instruments and documents to be delivered hereunder, including, without
limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section 8.04(a).
21
<PAGE>
(b) If any payment of principal of, or Conversion of, any Eurodollar Rate
Advance is made other than on the last day of the Interest Period for such
Advance, as a result of a payment or Conversion pursuant to Section 2.08(f) or
acceleration of the maturity of the Advances pursuant to Section 6.01 or for any
other reason (other than by reason of a payment pursuant to Section 2.12), the
Borrower shall, within five Business Days of demand by any Lender (with a copy
of such demand to the Agent), pay to such Lender any amounts required to
compensate such Lender for any additional losses, costs or expenses which it may
reasonably incur as a result of such payment or Conversion, including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund or
maintain such Advance.
SECTION 8.05. RIGHT OF SET-OFF. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Advances due and payable pursuant to the provisions of Section 6.01,
each Lender (and, in the case of CUSA, Citibank) is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final, but excluding trust accounts) at any time held and other indebtedness
at any time owing by such Lender (and, in the case of CUSA, Citibank) to or for
the credit or the account of the Borrower against any and all of the obligations
of the Borrower now or hereafter existing under this Agreement, whether or not
such Lender shall have made any demand under this Agreement. Each Lender agrees
promptly to notify the Borrower after any such set-off and application made by
such Lender, PROVIDED that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which such Lender may have.
SECTION 8.06. BINDING EFFECT. This Agreement shall become effective in
accordance with the provisions of Section 3.01, and thereafter shall be binding
upon and inure to the benefit of the Borrower, the Agent and each Lender and
their respective successors and permitted assigns, except that the Borrower
shall not have the right to assign its rights hereunder or any interest herein
without the prior written consent of the Lenders.
SECTION 8.07. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender may and, if
requested by the Borrower upon notice by the Borrower delivered to such Lender
and the Agent pursuant to clause (ii) of Section 2.16, will, assign to one or
more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment and the Advances owing to it); PROVIDED, HOWEVER, that (i) each such
assignment shall be of a constant, and not a varying, percentage of all rights
and obligations under this Agreement, (ii) the amount of the Commitment of the
assigning Lender being assigned pursuant to each such assignment (determined as
of the date of the Assignment and Acceptance with respect to such assignment)
shall in no event be less than $5,000,000, (iii) each such assignment shall be
to an Eligible Assignee, and (iv) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with a processing and
recordation fee of $2,000. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, (x) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder and (y) the Lender assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (other than any rights such
Lender assignor may have under Sections 2.14 and 8.08) and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
(b) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any instrument or document furnished pursuant hereto;
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under this
Agreement or any instrument or document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Agreement, together with
copies of the financial statements referred to in Section 4.01(c) and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this
22
<PAGE>
Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such
assignee appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(c) The Agent shall maintain at its address referred to in Section 8.02 a
copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Advances owing to, each Lender from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the Agent
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
the Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit B hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower.
(e) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment and
the Advances owing to it); PROVIDED, HOWEVER, that (i) such Lender's obligations
under this Agreement (including, without limitation, its Commitment to the
Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the Borrower, the Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and (iv) such Lender shall not agree in any
participation agreement with any participant or proposed participant to obtain
the consent of such participant before agreeing to the amendment, modification
or waiver of any of the terms of this Agreement, consenting to any action or
failure to act by the Borrower or any other party, or exercising any rights it
may have in respect thereof, unless such amendment, modification, waiver,
consent or exercise would (i) increase the amount of such participant's portion
of such Lender's Commitment, (ii) reduce the principal amount of or rate of
interest on the Advances or any fee or other amounts payable hereunder to which
such participant would be entitled to receive a share under such participation
agreement, or (iii) postpone any date fixed for any payment of principal of or
interest on the Advances or any fee or other amounts payable hereunder to which
such participant would be entitled to receive a share under such participation
agreement payable under this Agreement.
(f) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 8.07, disclose to
the assignee or participant or proposed assignee or participant, any information
relating to the Borrower furnished to such Lender by or on behalf of the
Borrower in writing and directly related to the transactions contemplated
hereunder; PROVIDED that, prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree to preserve the
confidentiality of any confidential information relating to the Borrower
received by it from such Lender.
(g) No participation or assignment hereunder shall be made in violation of
the Securities Act of 1933, as amended from time to time, or any applicable
state securities laws, and each Lender hereby represents that it will make any
Advance for its own account in the ordinary course of its business and not with
a view to the public distribution or sale thereof.
(h) Anything in this Agreement to the contrary notwithstanding, any Lender
may at any time create a security interest in all or any portion of its rights
under this Agreement (including, without limitation, the Advances owing to it)
and any promissory notes or other evidences of indebtedness issued to such
Lender hereunder in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board of Governors of the Federal Reserve System (or any
successor regulation) and the applicable operating circular of such Federal
Reserve Bank.
SECTION 8.08. INDEMNIFICATION. The Borrower agrees to indemnify and hold
harmless the Agent and each Lender and each of their Affiliates and their
respective officers, directors, employees, agents and advisors (each, an
"Indemnified Party") from and against any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
expenses of counsel) that may be incurred by or asserted against any Indemnified
Party, in each case arising out of or in connection with or by reason of, or in
connection with the preparation for a defense of, any investigation, litigation
or proceeding (whether or not an Indemnified Party is a
23
<PAGE>
party thereto) arising out of, related to or in connection with the Commitments
hereunder or the Advances made pursuant hereto or any transactions done in
connection herewith, including, without limitation, any transaction in which any
proceeds of the Advances are, or are proposed, to be applied (collectively, the
"Indemnified Matters"); PROVIDED that the Borrower shall have no obligation to
any Indemnified Party under this Section 8.08 with respect to (i) matters for
which such Indemnified Party has been compensated pursuant to any other
provision of this Agreement or (ii) Indemnified Matters caused by or resulting
from the intentional wrongful act or gross negligence of such Indemnified Party.
If any action is brought against any Indemnified Party, such Indemnified Party
shall promptly notify the Borrower in writing of the institution of such action
and the Borrower shall thereupon have the right, at its option, to elect to
assume the defense of such action. If the Borrower so elects, it shall promptly
assume the defense of such action, including the employment of counsel
(reasonably satisfactory to such Indemnified Party) and payment of expenses.
Such Indemnified Party shall have the right to employ its or their own counsel
in any such case, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (i) the employment of such counsel
shall have been authorized in writing by the Borrower in connection with the
defense of such action or (ii) the Borrower shall not have properly employed
counsel reasonably satisfactory to such Indemnified Party to have charge of the
defense of such action, in which case such fees and expenses shall be paid by
the Borrower. If such Indemnified Party shall have reasonably concluded (based
upon the advice of counsel) that the representation by one counsel of the
Indemnified Party and the Borrower creates a conflict of interest for such
counsel, the reasonable fees and expenses of such counsel shall be borne by the
Borrower and the Borrower shall not have the right to direct the defense of such
action on behalf of the Indemnified Party (but shall retain the right to direct
the defense of such action on behalf of the Borrower). Anything in this Section
8.08 to the contrary notwithstanding, the Borrower shall not be liable for the
fees and expenses of more than one counsel for any Indemnified Party in any
jurisdiction as to any Indemnified Matter or for any settlement of any
Indemnified Matter effected without its written consent. All Obligations of the
Borrower under this Section 8.08 shall survive the making and repayment of the
Advances and the termination of this Agreement.
SECTION 8.09. CONFIDENTIALITY. Subject to the provisions of Section
8.07(f), each Lender shall, and shall instruct its Affiliates, successors,
assigns, advisors, officers, employees, directors, agents, legal counsel or
other professional advisors (the "Informed Parties") to, hold all nonpublic
information obtained pursuant to this Agreement in accordance with its customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by a bona fide transferee or participant in
connection with the contemplated transfer or participation or to an Informed
Party agreeing to hold such nonpublic information as confidential or as required
or requested by law or to any governmental authority or representative thereof
or pursuant to legal process; PROVIDED that unless specifically prohibited by
applicable law or court order, each Lender shall notify the Borrower of any
request by any governmental authority or representative thereof (other than any
such request in connection with an examination of the financial condition of
such Lender by such governmental authority) for disclosure of any such nonpublic
information prior to disclosure of such information; and FURTHER, PROVIDED, that
in no event shall any Lender be obligated or required to return any materials
furnished by the Borrower.
SECTION 8.10. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. All
judicial proceedings brought against the Borrower with respect to this Agreement
or any instrument or other documents delivered hereunder may be brought in any
state or federal court in the Borough of Manhattan in the State of New York, and
by execution and delivery of this Agreement, the Borrower accepts, for itself
and in connection with its properties, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any final judgment rendered thereby in connection with this Agreement
or any instrument or other document delivered hereunder from which no appeal has
been taken or is available. The Borrower agrees to receive service of process
in any such proceeding in any such court at its office at 500 Park Avenue, New
York, New York 10022 (or at such other address in the Borough of Manhattan in
the State of New York as the Borrower shall notify the Agent from time to time)
and, if the Borrower ever ceases to maintain such office in the Borough of
Manhattan, irrevocably designates and appoints CT Corporation System, 1633
Broadway, New York, New York 10019, or any other address in the State of New
York communicated by CT Corporation System to the Agent, as its agent to receive
on its behalf service of all process in any such proceeding in any such court,
such service being hereby acknowledged by the Borrower to be effective and
binding service in every respect.
SECTION 8.11. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 8.12. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
24
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE WALT DISNEY COMPANY
By: /s/ STEVEN J. SCHOCH
-----------------------
Title: Vice President
CITICORP USA, INC., as Agent
By: /s/ BARBARA A. COHEN
-----------------------
Title: Vice President
<TABLE>
<CAPTION>
COMMITMENT LENDERS
---------- -------
<S> <C>
$17,500,000 ABN AMRO BANK, N.V.
By: /s/ PAUL K. STIMPHL
-----------------------
Title: Vice President
By: /s/ DAVID A. STASSEL
-----------------------
Title: Vice President
$17,500,000 BANK OF AMERICA NT & SA
By: /s/ MATTHEW J. KOENIG
-----------------------
Title: Vice President
$17,500,000 THE BANK OF CALIFORNIA, N.A.
By: /s/ ANNA BADGASARIAN
-----------------------
Title: Vice President/Manager
$17,500,000 BANKERS TRUST COMPANY
By: /s/ KATHERINE A. JUDGE
-----------------------
Title: Vice President
$17,500,000 BANQUE NATIONALE DE PARIS
By: /s/ CHRISTIAN MORIO
-----------------------
Title: Senior Vice President and Manager
By: /s/ JANICE S.H. HO
-----------------------
Title: Vice President
$17,500,000 BARCLAYS BANK PLC
By: /s/ JOHN B. ALT
-----------------------
Title: Associate Director
25
<PAGE>
$17,500,000 CHEMICAL BANK
By: /s/ J. HOWE
-----------------------
Title: Vice President
$17,500,000 CITICORP USA, INC.
By: /s/ BARBARA A. COHEN
-----------------------
Title: Vice President
$17,500,000 CREDIT SUISSE
By: /s/ DAVID J. WORTHINGTON
-----------------------
Title: Member of Senior Management
By: /s/ STEPHEN M. FLYNN
-----------------------
Title: Member of Senior Management
$17,500,000 THE DAI-ICHI KANGYO BANK, LTD.
LOS ANGELES AGENCY
By: /s/ TOMOHIRO NOZAKI
-----------------------
Title: Senior Vice President & Joint General
Manager
$17,500,000 DEUTSCHE BANK AG
LOS ANGELES AND CAYMAN ISLAND BRANCHES
By: /s/ STEVEN N. WARDEN
-------------------------
Title: Director
By: /s/ J. SCOTT JESSUP
-----------------------
Title: Vice President
$17,500,000 THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ L. GENE BEUBE
------------------------
Title: Senior Vice President
$17,500,000 FIRST INTERSTATE BANK OF CALIFORNIA
By: /s/ GREGORY P. BROWN
Title: Vice President
By: /s/ DANIEL H. HOM
-----------------------
Title: Vice President
$17,500,000 THE FUJI BANK LIMITED
LOS ANGELES AGENCY
By: /s/ YASUJI IKAWA
-------------------------
Title: Joint General Manager
$17,500,000 THE INDUSTRIAL BANK OF JAPAN, LIMITED LOS ANGELES
AGENCY
By: /s/ KAZUTAKA KIYOTO
-----------------------
Title: Senior Vice President and Senior Manager
26
<PAGE>
$17,500,000 THE LONG-TERM CREDIT BANK OF JAPAN, LTD. LOS
ANGELES AGENCY
By: /s/ CURT M. BIREN
-----------------------
Title: Vice President
$17,500,000 MELLON BANK, N.A.
By: /s/ G. LOUIS ASHLEY
-----------------------
Title: First Vice President-Manager-Media Section
$17,500,000 THE MITSUBISHI TRUST AND BANKING CORPORATION
By: /s/ TAKASHI SUGITA
-----------------------
Title: Senior Vice President and Chief Manager
$17,500,000 THE MITSUI TRUST & BANKING CO., LTD.
By: /s/ KEN TAKAHASHI
-----------------------
Title: General Manager and Agent
$17,500,000 MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By: /s/ DIANA H. IMHOF
-----------------------
Title: Associate
$17,500,000 NATIONAL WESTMINSTER BANK PLC
By: /s/ HAL SADOFF
-----------------------
Title: Vice President
$17,500,000 NATIONSBANK OF TEXAS, N.A.
By: /s/ MICHELLE M. SHAFROTH
-----------------------
Title: Senior Vice President
$17,500,000 THE SAKURA BANK, LTD.
LOS ANGELES AGENCY
By: /s/ FERNANDO BUESA
-----------------------
Title: Vice President
By: /s/ OFUSA SATO
-----------------------
Title: Senior Vice President & Assistant General
Manager
$17,500,000 SOCIETE GENERALE
By: /s/ MAUREEN KELLY
-----------------------
Title: Vice President
$17,500,000 THE SUMITOMO BANK, LIMITED
By: /s/ HIROSHI AMANO
-----------------------
Title: General Manager
$17,500,000 THE SUMITOMO TRUST & BANKING CO., LTD. LOS ANGELES
AGENCY
By: /s/ MASAYUKI IMANAKA
-----------------------
Title: Senior Manager
$17,500,000 SUNBANK, NATIONAL ASSOCIATION
By: /s/ LORRAINE D. MCCULLERS
-----------------------
Title: Vice President-National Banking
27
<PAGE>
$17,500,000 SWISS BANK CORPORATION
SAN FRANCISCO BRANCH
By: /s/ DAVID L. PARROT
-----------------------
Title: Associate Director-Merchant Banking
By: /s/ HANS-UELI SURBER
-----------------------
Title: Executive Director-Merchant Banking
$17,500,000 TORONTO DOMINION (TEXAS), INC.
By: /s/ WARREN FINLAY
-----------------------
Title: Vice President
$17,500,000 THE YASUDA TRUST & BANKING CO., LTD.
LOS ANGELES BRANCH
By: /s/ KIYOSHI TERAO
-----------------------
Title: Joint General Manager
$525,000,000
</TABLE>
28
<PAGE>
SCHEDULE I
The Walt Disney Company
$525,000,000 Credit Agreement
<TABLE>
<CAPTION>
DOMESTIC EURODOLLAR
-------- ----------
NAME OF BANK LENDING OFFICE LENDING OFFICE
- ------------ -------------- --------------
<S> <C> <C>
ABN AMR0 Bank, N.V. ABN AMR0 Bank, N.V. ABN AMR0 Bank, N.V.
Los Angeles/Int'l Branch Los Angeles/Int'l Branch
300 S. Grand Ave., #1115 300 S. Grand Ave., #1115
Los Angeles, CA 90071 Los Angeles, CA 90071
Bank of America Bank of America, NT & SA Bank of America, NT & SA
NT & SA PSO Acct. Admin. #5693 PSO Acct. Admin. #5693
1850 Gateway Bl., 4th fl. 1850 Gateway Bl., 4th Fl.
Concord, CA 94520 Concord, CA 94520
The Bank of California, N.A. The Bank of California, N.A. The Bank of California, N.A.
550 S. Hope St., 5th Fl. 550 S. Hope St., 5th Fl.
Los Angeles, CA 90071 Los Angeles, CA 90071
Bankers Trust Bankers Trust Company Bankers Trust Company
Company 1 Bankers Trust Plaza 1 Bankers Trust Plaza
New York, NY 10006 New York, NY 10006
Banque Nationale de Banque Nationale de Paris Banque Nationale de Paris
Paris 725 S. Figueroa, #2090 725 S. Figueroa, #2090
Los Angeles, CA 90017 Los Angeles, CA 90017
Barclays Bank PLC Barclays Bank PLC Barclays Bank PLC
New York, NY Nassau, Bahamas
Chemical Bank Chemical Bank Chemical Bank
52 Broadway 52 Broadway
New York, NY 10015 New York, NY 10015
Attn: Loan Services Dept. Attn: Loan Services Dept.
Pedro Valentin, A.T. Pedro Valentin, A.T.
Citicorp USA, Inc. Citicorp USA, Inc. Citicorp USA, Inc.
399 Park Avenue 399 Park Avenue
New York, New York 10043 New York, NY 10043
Credit Suisse Credit Suisse Credit Suisse
800 Wilshire Bl., 8th Fl. 800 Wilshire Bl., 8th Fl.
Los Angeles, CA 90017 Los Angeles, CA 90017
Deutsche Bank AG Deutsche Bank AG Deutsche Bank AG
300 S. Grand Avenue Cayman Islands Branch
Los Angeles, CA 90071 c/o New York Branch
31 W. 52nd St.
New York, NY 10019
The Dai-Ichi Kangyo The Dai-Ichi Kangyo Bank, The Dai-Ichi Kangyo Bank,
Bank, Ltd. Ltd., Los Angeles Agency Ltd., Los Angeles Agency
Los Angeles Agency 555 W. 5th Street, 5th Floor 555 W. 5th Street, 5th Floor
Los Angeles, CA 90013 Los Angeles, CA 90013
29
<PAGE>
<CAPTION>
DOMESTIC EURODOLLAR
-------- ----------
NAME OF BANK LENDING OFFICE LENDING OFFICE
- ------------ -------------- --------------
<S> <C> <C>
The First National The First National Bank The First National Bank
Bank of Chicago of Chicago of Chicago
One First National Plaza One First National Plaza
Suite 0324 Suite 0324
Chicago, Illinois 60670 Chicago, Illinois 60670
First Interstate Bank First Interstate Bank of First Interstate Bank of
of California California California
1200 W. 7th Street 1200 W. 7th Street
Los Angeles, CA 90017 Los Angeles, CA 90017
The Fuji Bank, Limited, The Fuji Bank, Limited The Fuji Bank, Limited
Los Angeles Agency Los Angeles Agency Los Angeles Agency
333 South Grand Avenue 333 South Grand Avenue
Suite 2500 Suite 2500
Los Angeles, CA 90071 Los Angeles, CA 90071
The Industrial Bank of The Industrial Bank of The Industrial Bank of
Japan, Limited Japan, Limited Japan, Limited
Los Angeles Agency Los Angeles Agency Los Angeles Agency
350 South Grand Avenue 350 South Grand Avenue
Suite 1500 Suite 1500
Los Angeles, CA 90071 Los Angeles, CA 90071
The Long-Term Credit The Long Term Credit The Long Term Credit
Bank of Japan, Ltd. Bank of Japan, Ltd. Bank of Japan, Ltd.
Los Angeles Agency Los Angeles Agency Los Angeles Agency
444 S. Flower St., #3700 444 S. Flower St., #3700
Los Angeles, CA 90071 Los Angeles, CA 90071
Mellon Bank, N.A. Mellon Bank, N.A. Mellon Bank, N.A.
Mellon Bank Center 1 Mellon Bank Center
Pittsburgh, PA 15258 Pittsburgh, PA 15258
The Mitsubishi Trust The Mitsubishi Trust The Mitsubishi Trust
and Banking Corporation and Banking Corporation and Banking Corporation
911 Wilshire BI., #1650 911 Wilshire BI., #165
Los Angeles, CA 90017 Los Angeles, CA 90017
The Mitsui Trust & The Mitsui Trust & The Mitsui Trust &
Banking Co., Ltd. Banking Co., Ltd. Banking Co., Ltd.
611 West 6th Street 611 West 6th Street
Los Angeles, CA 90017 Los Angeles, CA 90017
Morgan Guaranty Trust Morgan Guaranty Trust Morgan Guaranty Trust
Company of New York Company of New York Company of New York
60 Wall Street Nassau, Bahamas Office
New York, NY 10260-0060 c/o J.P. Morgan
Attention: Loan Department
Services, Inc.
Euro-Loan Servicing
902 Market Street
Wilmington, DE 19801
National Westminster Bank, PLC National Westminster Bank, PLC National Westminster Bank, PLC
New York Branch Nassau Branch
175 Water Street, 19th Floor c/o 175 Water Street, 19th Fl.
New York, NY 10038 New York, NY 10038
NationsBank of Texas, N.A NationsBank of Texas, N.A. NationsBank of Texas, N.A.
901 Main Street, 11th Fl. 901 Main Street, 11th
Dallas, Texas 75206 Dallas, Texas 75206
Attn: Commercial Loans Attn: Commercial Loans
30
<PAGE>
<CAPTION>
DOMESTIC EURODOLLAR
-------- ----------
NAME OF BANK LENDING OFFICE LENDING OFFICE
- ------------ -------------- --------------
<S> <C> <C>
The Sakura Bank, Ltd. The Sakura Bank, Ltd. The Sakura Bank, Ltd.
Los Angeles Agency Los Angeles Agency
515 S. Figueroa Street 515 S. Figueroa Street
Suite 400 Suite 400
Los Angeles, CA 90071 Los Angeles, CA 90071
Societe Generale Societe Generale Societe Generale
2029 Century Park East 2029 Century Park East
Suite 2900 Suite 2900
Los Angeles, CA 90067 Los Angeles, CA 90067
The Sumitomo Bank, The Sumitomo Bank, The Sumitomo Bank,
Limited Limited Limited
611 West 6th Street 611 West 6th Street
Los Angeles, CA 90017 Los Angeles, CA 90017
The Sumitomo Trust & The Sumitomo Trust & The Sumitomo Trust &
Banking Co., Ltd. Banking Co., Ltd. Banking Co., Ltd.
Los Angeles Agency Los Angeles Agency Los Angeles Agency
333 S. Grand Av., #5300 333 S. Grand Av. #5300
Los Angeles, CA 90071 Los Angeles, CA 90071
Sunbank, National Sunbank, National Sunbank, National
Association Association Association
P.0. Box 3833 P.0. Box 3833
200 S. Orange Avenue 200 S. Orange Avenue
Orlando, FL 32802 Orlando, FL 32802
Swiss Bank Corporation Swiss Bank Corporation Swiss Bank Corporation
San Francisco Branch San Francisco Branch San Francisco Branch
101 California Street 101 California Street
Suite 1700 Suite 1700
San Francisco, CA 94111 San Francisco, CA 94111
Toronto Dominion (Texas), Inc. Toronto Dominion (Texas), Inc. Toronto Dominion (Texas), Inc.
909 Fannin, Suite 1700 909 Fannin, Suite 1700
Houston, TX 77010 Houston, TX 77010
The Yasuda Trust & Banking Co., The Yasuda Trust & Banking Co., The Yasuda Trust & Banking Co., Ltd.
Ltd. Los Angeles Branch Los Angeles Branch
Los Angeles Branch Ltd. 725 S. Figueroa Street 725 S. Figueroa Street
Suite 3990 Suite 3990
Los Angeles, CA 90017 Los Angeles, CA 90017
</TABLE>
31
<PAGE>
EXHIBIT A
NOTICE OF BORROWING
[Date]
Citicorp USA, Inc., as Agent
for the Lenders party to the
Amended and Restated Credit Agreement referred to below
399 Park Avenue
New York, New York 10043
Attention: ___________________
Ladies and Gentlemen:
The undersigned, The Walt Disney Company, refers to the Amended and Restated
Credit Agreement, dated as of October 3, 1994 (said Agreement as it may be
amended, modified or supplemented from time to time, being the "Credit
Agreement", the terms defined therein being used herein as therein defined),
among the undersigned, the financial institutions party thereto as Lenders and
Citicorp USA, Inc., as Agent for such Lenders, and hereby gives you notice,
irrevocably, pursuant to Section 2.02 of the Credit Agreement that the
undersigned hereby requests a Borrowing under the Credit Agreement, and in that
connection sets forth below the information relating to such Borrowing (the
"Proposed Borrowing") as required by Section 2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is _____________
19___.
(ii) The Type of Advances comprising the Proposed Borrowing is [Base
Rate Advances] [Eurodollar Rate Advances].
(iii) The aggregate amount of the Proposed Borrowing is $___________.
*[(iv) The initial Interest Period for each Advance made as part of the
Proposed Borrowing is [one] [two] [three] [six] [twelve] months.]
The undersigned hereby certifies that, pursuant to Section 3.02 of the
Credit Agreement, each of the following statements is true, and will be true on
the date of the Proposed Borrowing:
(A) the representations and warranties contained in Section 4.01 of the
Credit Agreement are correct in all material respects on and as of the date of
the Proposed Borrowing, before and after giving effect to the Proposed
Borrowing, and to the application of the proceeds therefrom, as though made on
and as of such date (except to the extent that such representations and
warranties relate to an earlier date), which representations and warranties were
correct in all material respects on and as of such earlier date); and
(B) no event has occurred and is continuing, or would result from such
Proposed Borrowing or from the application of the proceeds therefrom, which
constitutes an Event of Default or would constitute an Event of Default but for
the requirement that notice be given or time elapse or both.
Very truly yours,
THE WALT DISNEY COMPANY
By
Title:
* To be included for a Proposed Borrowing comprised of Eurodollar Rate
Advances.
32
<PAGE>
EXHIBIT B
ASSIGNMENT AND ACCEPTANCE
Dated __________________________, 19
Reference is made to the Amended and Restated Credit Agreement dated as of
October 3, 1994 (said Agreement as it may be amended, modified or supplemented
from time to time, being the "Credit Agreement") among The Walt Disney Company,
a Delaware corporation (the "Borrower"), the financial institutions party
thereto as Lenders, and Citicorp USA, Inc., as Agent for the Lenders (the
"Agent"). Terms defined in the Credit Agreement are used herein with the same
meanings.
_______________________ (the "Assignor") and __________________________
(the "Assignee") agree as follows:
tabs
1. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, that interest in and to all of
the Assignor's rights and obligations under the Credit Agreement as of the date
hereof which represents the percentage interest specified on Schedule 1 of all
outstanding rights and obligations under the Credit Agreement (including,
without limitation, such interest in the Assignor's Commitment and the Advances
owing to the Assignor). After giving effect to such sale and assignment, the
Assignee's Commitment and the amount of the Advances owing to the Assignee will
be as set forth in Section 2 of Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any instrument or document furnished
pursuant thereto; and (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition or operations of the
Borrower or the performance or observance by the Borrower of any of its
obligations under the Credit Agreement or any instrument or document furnished
pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 4.01(c) thereof, and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Agent, the Assignor or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv)
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under the Credit Agreement as are delegated to the Agent
by the terms thereof, together with such powers as are reasonably incidental
thereto; (v) agrees that it will perform in accordance with their terms all of
the obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender; (vi) specifies as its Domestic Lending Office (and
address for notices) and Eurodollar Lending Office the offices set forth beneath
its name on the signature pages hereof; and (vii) if the Assignee is not created
or organized under the laws of the United States or a political subdivision
thereof, attaches hereto the certificates and forms required under Section
2.14(e) of the Credit Agreement and represents that the information contained
therein is accurate and complete.
4. Following the execution of this Assignment and Acceptance by the Assignor
and the Assignee, it will be delivered to the Agent for acceptance and recording
by the Agent. The effective date of this Assignment and Acceptance shall be the
date of acceptance thereof by the Agent, unless otherwise specified on Schedule
l hereto (the "Effective Date").
5. Upon such acceptance and recording by the Agent, as of the Effective
Date, (i) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights (other than
any rights the Assignor may have under Sections 2.14 and 8.08 of the Credit
Agreement) and be released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement in
respect of the interest assigned hereby (including, without limitation, all
payments of principal, interest and facility fees with respect thereto) to the
Assignee. The Assignor
33
<PAGE>
and Assignee shall make all appropriate adjustments in payments under the Credit
Agreement for periods prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the Assignor and Assignee have caused this Assignment
and Acceptance to be executed by the respective officers thereunto duly
authorized, as of the date first above written.
[NAME OF ASSIGNOR]
By:
Title:
[NAME OF ASSIGNEE]
By:
Title:
Domestic Lending Office
address for notices):
------------------------------
Eurodollar Lending Office
------------------------------
Accepted this ____ day
of ______________, 19
CITICORP USA, INC.,
as Agent
By:
Title:
34
<PAGE>
Schedule 1
to Assignment and Acceptance
Dated _____________, 19___ between
________________________, as Assignor, and
________________________, as Assignee
SECTION 1.
Percentage Interest
assigned: __________%
SECTION 2.
Assignee's Commitment: $__________
Aggregate Outstanding Principal
Amount of Advances owing to the
Assignee $__________
SECTION 3.
Effective Date*: ________________, 19___
* This date should be no earlier than the date of acceptance by the
Agent.
35
<PAGE>
EXHIBIT C
FORM OF OPINION OF
COUNSEL TO THE BORROWER
October 3, 1994
To each of the Lenders as defined in and party to the
Amended and Restated Credit Agreement referred to
below and to Citicorp USA, Inc., as Agent
c/o Citicorp USA, Inc.
399 Park Avenue
New York, New York 10043
Re: The Walt Disney Company
-----------------------
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.01(a)(iv) of the
Amended and Restated Credit Agreement dated as of October 3, 1994 (the "Credit
Agreement") among The Walt Disney Company (the "Borrower"), the Lenders party
thereto, and Citicorp USA, Inc., as Agent for such Lenders. Terms defined in
the Credit Agreement and not otherwise defined herein are used herein as therein
defined.
I am Vice President - Assistant General Counsel to the Borrower and in that
capacity I have acted as counsel for the Borrower in connection with the
preparation, execution and delivery of the Credit Agreement.
In that connection, I have examined the Credit Agreement, the documents
furnished by the Borrower pursuant to Section 3.01(a) of the Credit Agreement,
the Certificate of Incorporation of the Borrower and all amendments thereto (the
"Charter"), and the by-laws of the Borrower and all amendments thereto (the "By-
laws"). In addition, I have examined the originals, or copies certified to my
satisfaction, of such other corporate records of the Borrower, certificates of
public officials and of officers of the Borrower, and agreements, instruments
and other documents, as I have deemed necessary as a basis for the opinions
expressed below. As to questions of fact material to such opinions, I have,
when relevant facts were not independently established by me, relied upon
certificates of the Borrower or its officers or of public officials. I have
assumed the due execution and delivery, pursuant to due authorization, of the
Credit Agreement by the Lenders and the Agent.
Based upon the foregoing and upon such investigation as I have deemed
necessary, I am of the following opinion:
1. The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is duly qualified and
in good standing as a foreign corporation authorized to do business in each
jurisdiction (other than the jurisdiction of its incorporation) in which the
nature of its activities or the character of the properties it owns or leases
makes such qualification necessary and in which the failure to so qualify would
have a material adverse effect on the financial condition or operations of the
Borrower and its subsidiaries taken as a whole.
2. The execution, delivery and performance by the Borrower of the Credit
Agreement are within the Borrower's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene (i) the Charter or the
By-laws or (ii) any applicable law, rule or regulation or (iii) to the best of
my knowledge, any contractual or legal restriction contained in any agreement or
instrument, or any order, judgment or decree, binding on or affecting the
Borrower. The Credit Agreement has been duly executed and delivered on behalf
of the Borrower.
3. No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by the Borrower of the Credit Agreement.
4. The Credit Agreement is the legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with its terms.
The opinions set forth in paragraph 4 above are subject to the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally and to the effect of general principles of
equity, including (without limitation) concepts of materiality, reasonableness,
good faith and fair dealing (regardless of whether considered in a proceeding in
equity or at law).
36
<PAGE>
My opinions expressed above are limited to the law of the State of New York
and the Federal law of the United States, and I do not express any opinion
herein concerning any other law. Without limiting the generality of the
foregoing, I express no opinion as to the effect of the law of any jurisdiction
other than the State of New York, wherein any Lender may be located or wherein
enforcement of the Credit Agreement may be sought which limits the rates of
interest legally chargeable or collectible. This opinion is rendered to you in
connection with the execution and delivery of the Credit Agreement; this opinion
is solely for your benefit and is not to be used, circulated, quoted or
otherwise referred to for any other purpose without, in each instance, my prior
written consent.
Very truly yours,
37
<PAGE>
EXHIBIT D-1
FORM OF
FOREIGN LENDER CERTIFICATE
To: The Walt Disney Company
Reference is made to the Amended and Restated Credit Agreement, dated as of
October 3, 1994 (said Agreement, as it may be amended, supplemented or otherwise
modified from time to time being the "Credit Agreement"), among The Walt Disney
Company, as Borrower (the "Borrower"), the financial institutions from time to
time party thereto as Lenders (the "Lenders") and Citicorp USA, Inc., as agent
for the Lenders (the "Agent"). Terms defined in the Credit Agreement and not
otherwise defined herein are used herein as therein defined.
Pursuant to Section 2.14(e) of the Credit Agreement, the undersigned Lender
hereby certifies to the Borrower and the Agent that under the provisions of the
income tax convention between the United States and [Name of Country] the
undersigned Lender
* [is eligible to receive payments under the Credit Agreement without
deduction or withholding of the United States federal income tax]
* [is not eligible to receive payments under the Credit Agreement without
deduction or withholding of United States federal income tax but does not
require additional payments therefor pursuant to Section 2.14(a) or (c) of the
Credit Agreement because it is eligible and able to recover the full amount of
any such deduction or withholding from a source other than the Borrower.]
[or]
* [is not eligible to receive payments under the Agreement without
deduction or withholding of United States federal income tax and is not eligible
and able to recover the full amount of the same from a source other than the
Borrower.]
The undersigned Lender is a corporation organized under the laws of [Name
of Country] and [is not acting through a branch, agency or office in the United
States] [has a branch, agency or office in the United States but its activities
in connection with the Credit Agreement are not connected effectively with such
branch, agency, or office.]
Accompanying this Certificate are two copies of Form 1001 (or any successor
or substitute form) of the United States Internal Revenue Service, properly
completed and duly executed by an appropriate representative of the undersigned
Lender.
Dated: _____________, 19
[NAME OF LENDER]
By:
------------------
Title:
---------------
* Insert applicable statement.
38
<PAGE>
EXHIBIT D-2
FORM OF
FOREIGN LENDER CERTIFICATE
To: The Walt Disney Company
Reference is made to the Amended and Restated Credit Agreement, dated as of
October 3, 1994 (said Agreement, as it may be amended, supplemented or otherwise
modified from time to time, being the "Credit Agreement"), among The Walt Disney
Company, as Borrower (the "Borrower"), the financial institutions from time to
time party thereto as Lenders (the "Lenders") and Citicorp USA, Inc., as agent
for the Lenders (the "Agent"). Terms defined in the Credit Agreement and not
otherwise defined herein are used herein as therein defined.
Pursuant to Section 2.14(e) of the Credit Agreement, the undersigned Lender
hereby certifies to the Borrower and the Agent that under the provisions of
Sections 1441(c) or 1442 of the Internal Revenue Code of 1986 of the United
States, as amended, and Treasury Regulation Section 1.1441-4, as amended, the
undersigned Lender
* [is eligible to receive payments under the Credit Agreement without
deduction or withholding of the United States federal income tax.]
* [is not eligible to receive payments under the Credit Agreement without
deduction or withholding of United States federal income tax as specified
therein but does not require additional payments therefor pursuant to Section
2.14(a) or (c) of the Credit Agreement because it is eligible and able to
recover the full amount of any such deduction or withholding from a source other
than the Borrower.
[or]
* [is not eligible to receive payments under the Credit Agreement without
deduction or withholding of United States federal income tax and is not eligible
and able to recover the full amount of the same from a source other than the
Borrower.]
The undersigned Lender is a corporation organized under the laws of [Name
of Country] and is acting through a branch, agency or office operating in the
United States in respect of the Credit Agreement and any payment received or to
be received by it in connection with the Credit Agreement is effectively
connected with its conduct of a trade or business in the United States.
Accompanying this Certificate are two copies of Form 4224 (or any successor
or substitute form) of the United States Internal Revenue Service, properly
completed and duly executed by an appropriate representative of the undersigned
Lender.
Dated: ,19
----------------
[NAME OF LENDER]
By:
-------------------
Title:
-----------------
* Insert applicable statement.
39
<PAGE>
EXHIBIT E
FORM OF
WITHDRAWAL AGREEMENT
This Agreement is executed by THE BANK OF NOVA SCOTIA, BANQUE INDOSUEZ and
BANK OF AMERICA, ILLINOIS (formerly known as CONTINENTAL BANK N.A.) (each a
"Withdrawing Lender"), THE WALT DISNEY COMPANY (the "Borrower") and CITICORP
USA, INC., as Agent for the financial institutions party to the Existing Credit
Agreement referred to below (in such capacity, the "Agent").
PRELIMINARY STATEMENTS. The Borrower, the Withdrawing Lenders, certain
other financial institutions and the Agent are parties to a Credit Agreement
dated as of November 22, 1991 (as amended, the "Existing Credit Agreement").
The parties hereto wish to terminate the Commitments of the Withdrawing Lenders
as hereinafter set forth in connection with the effectiveness of that certain
Amended and Restated Credit Agreement dated as of October 3, 1994 (the "Amended
and Restated Credit Agreement") among the Borrower, the financial institutions
party thereto and Citicorp USA, Inc. as Agent for such financial institutions.
Terms defined in the Existing Credit Agreement are used in this Agreement as
defined in the Existing Credit Agreement and, except as otherwise indicated, all
references to Sections and Articles refer to the corresponding Sections and
Articles of the Existing Credit Agreement.
The parties hereto therefore agree as follows:
SECTION 1. TERMINATION OF COMMITMENTS OF THE WITHDRAWING LENDERS.
Effective on the Agreement Effective Date (as defined in Section 2 hereof) and
subject to the satisfaction of the conditions precedent set forth in Section 2
hereof, the Commitment of each Withdrawing Lender is reduced to zero, and each
Withdrawing Lender shall relinquish its rights and be released from its
obligations under the Existing Credit Agreement and shall cease to be a party
thereto, PROVIDED that each Withdrawing Lender shall continue to enjoy the
benefits of Sections 2.14 and 8.08 with respect to any period ending on or prior
to the Agreement Effective Date.
SECTION 2. CONDITIONS TO EFFECTIVENESS. This Agreement shall be effective
as of October 3, 1994 (the "Agreement Effective Date") subject to the
satisfaction of the following conditions precedent:
(a) the Borrower shall have paid all facility fees under Section 2.03 to
the extent accrued and unpaid through the Agreement Effective Date;
(b) the Borrower shall have paid or prepaid any Advances outstanding on
the Agreement Effective Date, together with accrued interest thereon and any
amounts payable in connection with such prepayment under Section 8.04(b); and
(c) all other conditions to the effectiveness of the Amended and Restated
Credit Agreement (except for the condition under Section 3.01(b)) shall have
been satisfied or waived.
SECTION 3. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by any combination of the parties hereto in
separate counterparts, each of which counterparts shall be an original and all
of which taken together shall constitute one and the same Agreement.
SECTION 4. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
40
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE WALT DISNEY COMPANY
By
Title
CITICORP USA, INC., as Agent
By
Vice President
WITHDRAWING LENDERS:
THE BANK OF NOVA SCOTIA
By
Title
BANQUE INDOSUEZ
By
Title
BANK OF AMERICA, ILLINOIS (formerly known as
CONTINENTAL BANK N.A.)
By
Title
41
<PAGE>
EXHIBIT 10(L)
DISNEY SALARIED RETIREMENT PLAN
As Amended through
March 1, 1994
<PAGE>
ARTICLE I
PURPOSE OF PLAN
1.01 TYPE OF BENEFITS.
The purpose of the Disney Salaried Retirement Plan is to provide
retirement, health and welfare benefits for retired Participants and
disability benefits for disabled Participants.
1.02 EFFECTIVE DATE.
At the Restatement Date, the Plan amends and merges the Predecessor
Plans, and benefits payable under the Predecessor Plans shall be
payable under the Plan, provided that persons who retired, died or
terminated employment with an Employer prior to January 1, 1988, shall
receive benefits under the terms and conditions of the Predecessor
Plans.
<PAGE>
ARTICLE II
DEFINITIONS
2.01 ACCRUED PENSION. "Accrued Pension" means, as of any Determination
Date, the projected or actual normal retirement Pension, commencing on
the Participant's Normal Retirement Date or immediately if the
Participant has already attained his Normal Retirement Age, computed
under Section 4.01(b).
2.02 ACTUARIAL EQUIVALENT. "Actuarial Equivalent" means the equivalent,
payable in an alternate form, of a benefit payable in a normal form
under the Plan as described in Section 4.01(b). Such equivalent shall
generally be calculated based on the Pension Benefit Guaranty
Corporation's assumptions under Appendix B to 29 C.F.R. Part 2619 for
the preceding December and assuming that all Participants are male and
all Contingent Annuitants and Beneficiaries are female. With respect
to the calculation of lump sum payments in accordance with Section
6.01(c), the interest rate utilized shall be the applicable interest
rate which would be used by the Pension Benefit Guaranty Corporation
for valuing a lump sum distribution under the Plan as if the Plan had
terminated as of the first day of the Plan Year in which the
distribution occurs.
2.03 ADJUSTMENT FACTOR. "Adjustment Factor" means the cost of living
adjustment factor prescribed by the Secretary of the Treasury under
Section 415(d) of the Code applied to such items and in such manner as
the Secretary shall provide.
2.04 AFFILIATED EMPLOYER. "Affiliated Employer" means any company not
participating in the Plan which is a member of a controlled group of
corporations (as defined in Section 414(b) of the Code) or a trade or
business under common control (as defined in Section 414(c) of the
Code) or a member of an affiliated service group (as defined in
Section 414(m) of the Code) or any other entity required to be
aggregated pursuant to regulations under Section 414(o) of the Code,
with an Employer.
2.05 AGE. "Age" means how old a person was on his immediate past birthday.
2.06 ANNUITY STARTING DATE. "Annuity Starting Date" means, with respect to
a Participant, the applicable of:
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(a) The first day of the first period for which an amount is payable
as an annuity under the Plan, or
(b) Where the benefit is not payable in the form of an annuity, the
first day on which all events have occurred which entitle the
Participant to his benefit under the Plan.
2.07 ASSOCIATED PLANS. "Associated Plans" means the Walt Disney
Productions and Associated Companies' Retirement Plan, the Disneyland
and Associated Companies' Retirement Plan, The Walt Disney World Co.
and Associated Companies' Retirement Plan, and the MAPO Retirement
Plan.
2.08 AVERAGE MONTHLY COMPENSATION. "Average Monthly Compensation means
one-sixtieth of the average of a Participant's Compensation over sixty
consecutive calendar months within the one-hundred-twenty-month period
preceding the month in which occurs the earliest of:
(1) he ceases being a Covered Employee; or
(2) for a Participant whose benefits are determined because of Breaks
in Service before Normal Retirement Date, the month in which his
Break in Service begins.
The sixty consecutive months selected must be those that produce the
highest average. If a Participant is an Employee for fewer than one-
hundred twenty months, his sixty-month period for this subsection is
determined within the period in which he was an Employee. If a
Participant is an Employee for fewer than sixty consecutive calendar
months, his Average Monthly Compensation is his actual Compensation
during a period of his completed full consecutive calendar months as
an Employee, divided by the number of those consecutive months.
A Participant's Average Monthly Compensation cannot exceed one-
sixtieth of the average of his compensation over sixty consecutive
calendar months within the one-hundred-twenty-month period preceding
the month in which he ceases being a Covered Employee or, for a
Participant whose benefits are determined because of a Break in
Service, preceding the month in which his Break in Service begins.
The sixty consecutive months selected must be those that produce the
highest
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average. If a Participant is an Employee for fewer than one hundred
twenty months, his sixty-month period for this subsection is
determined within the period in which he was an Employee. If a
Participant is an Employee for fewer than sixty consecutive calendar
months, his Average Monthly Compensation is his actual Compensation
during a period of his completed full consecutive calendar months as
an Employee ending on the last day he was a Covered Employee, divided
by the number of those consecutive months.
2.09 BENEFICIARY. "Beneficiary" means any person, persons or entity, other
than a Contingent Annuitant, named by a Participant by written
designation filed with the Committee to receive benefits payable in
the event of the Participant's death. However, if the Participant is
married, his spouse shall be deemed to be the Beneficiary unless or
until he elects another Beneficiary by a written designation completed
in accordance with rules established by the Committee and filed with
the Committee.
If any Participant is married at the time such designation is
completed or at the death of the Participant, then any such
designation shall not be effective without Spousal Consent. If no
such designation is properly in effect, as determined by the
Committee, at the time of death of the Participant, or if no person,
persons or entity so designated shall survive the Participant, the
person or persons included in the highest priority category among the
following, in order of priority, as determined by the Committee, shall
be deemed to be the Beneficiary:
(a) The Participant's surviving Spouse;
(b) The Participant's surviving children, including adopted children,
in equal shares;
(c) The Participant's surviving parents in equal shares;
(d) The Participant's surviving brothers and sisters, in equal
shares; or
(e) The Participant's estate.
2.10 BOARD OF DIRECTORS. "Board of Directors" means the Board of Directors
of the Company. The Board of Directors may, at its discretion,
appoint the Executive
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Committee or another Committee to take those actions on its behalf
which are the responsibility of the Board of Directors in accordance
with the terms of the Plan.
2.11 BREAK IN SERVICE. "Break in Service" means a Plan Year or other
Eligibility Computation Period during which an Employee has been
credited with less than 501 Hours of Service. Solely for the purpose
of determining whether an Employee has incurred a Break in Service,
Hours of Service shall also include hours granted, on the basis of
forty-five (45) hours per week, for periods during which an Employee
is on an approved Leave of Absence.
If an Employee is absent from work because of such Employee's
pregnancy, the birth of a child, placement of an adopted child, or
caring for an adopted or natural child following birth or placement,
the individual shall not be treated as having incurred a Break in
Service in the Plan Year in which the absence begins or, if the
individual would not otherwise have suffered a Break in Service during
that Plan Year, in the next following Plan Year. The Committee may
require that a Employee file a written request to receive Hours of
Service credit under this paragraph. Unless otherwise determined by
the Committee or an Employer's personnel practices, an Employee who is
absent from work for the reasons described in this paragraph shall be
deemed to have terminated employment for all purposes of this Plan
other than the special Break in Service rule in this paragraph.
2.12 CODE. "Code" means the Internal Revenue Code of 1986, as it may be
amended from time to time.
2.13 COMMITTEE. "Committee" means the Committee appointed to administer
the Plan in accordance with Article 8.
2.14 COMPANY. "Company" means The Walt Disney Company.
2.15 COMPENSATION. "Compensation" means an Employee's base pay (excluding
overtime, bonuses, relocation reimbursement, stock options, or other
extraordinary payments as determined by the Committee) paid during the
calendar year by the Employer in return for the Employee's services.
Compensation does not include:
(a) Employer contributions to any Pension Plan other than
contributions caused by an Employee's salary deferral reduction
pursuant to Section 401(k) of the Code;
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(b) Employer contributions to this Plan or any other plan of deferred
compensation maintained by an Employer;
(c) Fringe benefits not taxable to the Employee;
(d) Payments to or on behalf of an individual after he is no longer
an Employee;
(e) Salary deferral reductions pursuant to a Cafeteria Plan as
described in Section 125 of the Code;
(f) Imputed life insurance and all other forms of imputed income; and
(g) For purposes of determining an Employee's benefits for service
after 1983, Earnings after the Employee ceased being a Covered
Employee.
Effective January 1, 1989 compensation shall not, for Plan purposes,
exceed $200,000 multiplied by the Adjustment Factor for the Plan year.
2.16 CONTINGENT ANNUITANT. "Contingent Annuitant" means a Participant's
spouse, or other person designated in writing by a Participant, with
Spousal Consent if necessary, to receive benefits under the Plan upon
the death of the Participant where such benefit is payable in the form
of an annuity with a remainder interest payable for the life of a
Contingent Annuitant.
2.17 COVERED EMPLOYEE. "Covered Employee" means an Employee who:
(1) Receives Compensation in the form of a salary (as distinguished
from hourly-paid Employees), whether or not such Employee is
exempt for wage-and-hour-law purposes;
(2) Has a job category that does not include the term:
(i) "temporary",
(ii) "casual", or
(iii) "seasonal";
(3) Has a job which requires or yields 1,000 Hours of Service under
the first subsection of the definition of "Hour of Service" in
Article II of the Plan, but without the application of the last
subsection of that definition; and
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(4) Is not a member of a collective-bargaining unit that has a
collective bargaining agent, unless the Board specifically waives
this requirement.
2.18 DETERMINATION DATE. "Determination Date" means the date as of which
an Accrued Pension or other benefit is calculated.
2.19 EARLY RETIREMENT DATE. "Early Retirement Date" means the first day of
the calendar month on or immediately after the later of the
Participant's 55th birthday or his completion of ten Years of Vesting
Service. Effective January 1, 1989 the "ten" in the prior sentence
will be replaced by the word "five".
2.20 EARNINGS. "Earnings" means for any relevant period, means an
individuals wages, salaries for personal services, and other amounts
received from the Employers and their Related Entities for personal
services actually rendered. These Earnings include: but are not
limited to, commissions paid salesmen; compensation for services on
the basis of percentage of profits; commissions on insurance premiums;
tips; bonuses; and other amounts permissibly included according to
Treasury regulations as the base for computing statutory limits on
Maximum Annual Benefits and Maximum Annual Additions. These Earnings
do not include deferred compensation, certain stock options, and other
like distributions that receive special tax benefits and are excluded
from the base for computing those statutory limits. When computed for
any Limitation Year, these Earnings are those paid (or deemed paid if
the Plan operates to provide benefits according to accrued Earnings)
or made available to the Participant within the Limitation Year.
2.21 EFFECTIVE DATE. "Effective Date" means the effective date of the two
Predecessor Plans to this Plan, May 1, 1984.
2.22 ELIGIBILITY COMPUTATION PERIOD. "Eligibility Computation Period"
means, with respect to an Employee, the applicable of (a) or (b) as
follows:
(a) A 12 consecutive month period commencing on the Employee's
Employment Commencement Date in which he has been credited with
at least 1,000 Hours of Service; or
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(b) Plan Year:
In the case of an Employee who is not credited with at least
1,000 Hours of Service in the 12 month period described in
Section 2.22(a) above, a Plan Year, commencing with the Plan Year
beginning immediately following the Employee's Employment
Commencement Date, in which he has been credited with at least
1,000 Hours of Service.
2.23 ELIGIBLE EMPLOYEE. "Eligible Employee" means a Covered Employee who
has attained age eighteen and has completed one Eligibility
Computation Period. If a Covered Employee was hired after Age 60 but
before January 1, 1988, such individual is an Eligible Employee on the
later of (i) January 1, 1988, or (ii) when the individual completed
one Eligibility Computation Period. An Employee is an Eligible
Employee on the day before he satisfies the requirements of Article
III of the Plan.
2.24 EMPLOYEE. "Employee" means any person receiving compensation for
services rendered to an Employer or an Affiliated Employer, which
compensation is subject to withholding of income tax and/or for whom
Social Security contributions are made by an Employer or an Affiliated
Employer, including any Leased Employee but excluding any person who
serves solely as a director or independent contractor.
2.25 EMPLOYER. "Employer" means the Company and any subsidiary or
affiliated company which, with the approval of the Board of Directors
and subject to such conditions as the Board of Directors may impose,
adopts this Plan, and any successor or successors of any of them.
2.26 EMPLOYMENT COMMENCEMENT DATE. "Employment Commencement Date" means
the first date as of which an Employee is credited with an Hour of
Service for an Employer or an Affiliated Employer.
2.27 ERISA. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
2.28 FLAT BENEFIT. "Flat Benefit" means the Accrued Benefit element
described in Section 5.02(b).
2.29 FORMULA BENEFIT. "Formula Benefit" means the Accrued Benefit element
described in Section 5.02(c).
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2.30 HOUR OF SERVICE. "Hour of Service" means, with respect to any
applicable computation period.
(a) An Hour of Service is each hour for which an Employee is paid or
is entitled to payment for the performance of duties for an
Employer or Affiliate during the applicable computation period.
(b) An Hour of Service is each hour for which an Employee is paid, or
is entitled to payment, by an Employer or Affiliate on account of
a period during which no duties are performed (regardless of
whether the employment relationship has terminated) because of
vacation, holiday, illness, incapacity (including disability),
layoff, jury duty, military duty, or leave of absence, but
(1) no more than 501 Hours of Service are to be credited under
this subsection (b) to an Individual for any single
continuous period during which he performs no duties
(whether or not the period occurs in a single computation
period);
(2) an hour is not credited where an individual is directly or
indirectly paid or is entitled to payment because of a
period during which no duties are performed if that payment
is made or is due under a plan maintained solely for the
purpose of complying with applicable worker's compensation
or unemployment compensation or disability insurance laws;
and
(3) Hours of Service will not be credited for a payment that
solely reimburses an individual for medical or medically
related expenses incurred.
For purposes of this subsection (b), a payment is deemed to be
made by or be due from an Employer or Affiliate regardless of
whether it is made by or due from that entity directly or
indirectly through a trust fund or insurers (among others) to
which that entity contributes or pays premiums and regardless of
whether contributions made or due to the trust fund or insurer or
other funding vehicle are for the benefit of particular
individuals or are on behalf of a group of individuals in the
aggregate.
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(c) An Hour of Service is each hour for which back pay, irrespective
of mitigation of damages, is either awarded or agreed to by an
Employer or Affiliate. The same Hours of Service must not be
credited both under subsection (a) or (b) and also under this
subsection (c). Thus, for example, if an individual receives a
back-pay award following a determination that he was paid at an
unlawful rate for Hours of Service previously credited, he is not
entitled to additional credit for the same Hours of Service.
Crediting of Hours of Service for back pay awarded or agreed to
with respect to periods described in subsection (b) is subject to
the limitations set forth in that subsection. For example, no
more than 501 Hours of Service are required to be credited for
payments of back pay, to the extent that the back pay is awarded
or agreed to for a period of time during which an individual did
not or would not have performed duties.
(d) For determining Hours of Service for reasons other than the
performance of duties, the special rule provided in 29 C.F.R.
section 2530.200b-2(b) is incorporated by reference. That rule
provides that Hours of Service are credited on the basis of the
number of hours in the individual's regular work schedule or, in
the case of a payment not calculated by units or time, by
dividing the payment in question by the individual's most recent
hourly rate of pay.
(e) For purposes of crediting Hours of Service to computation
periods, the special rule provided in 29 C.F.R. section
2530.200b-2(c) is incorporated by reference. That rule provides
that Hours of Service are credited to an individual in the
computation periods covered by the individual's regular work
schedule during the period of nonperformance.
(f) The determination of Hours of Service must be made from records
of hours worked and hours for which payment is made or due.
(g) For purpose of determining Hours of Service credited but not for
purposes of determining whether an Employee is a Covered
Employee, each Employee must be credited with at least forty-five
Hours of Service for each week for which he would
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be required to be credited with at least one Hour of Service
under subsection (a).
2.31 KEY PLAN. "Key Plan" means the Walt Disney Productions and Associated
Company's Key Employees Deferred Compensation and Retirement Plan.
2.32 LEASED EMPLOYEE. "Leased Employee" means any person as so defined in
Section 414(n) of the Code.
2.33 LEAVE OF ABSENCE. "Leave of Absence" means an absence authorized by
an Employer under its standard personnel practices as applied in a
uniform and nondiscriminatory manner to all persons similarly
situated, provided that the Employee resumes employment with the
Employer or an Affiliated Employer within the period specified in the
authorization of the Leave of Absence.
2.34 MOTION PICTURE PLAN. "Motion Picture Plan" means the Motion Picture
Industry Pension Plan.
2.35 NORMAL RETIREMENT AGE. "Normal Retirement Age" means an Employee's
65th birthday.
2.36 NORMAL RETIREMENT DATE. "Normal Retirement Date" means the first day
of the calendar month on or immediately after an Employee's Normal
Retirement Age.
2.37 OFFSET VALUE. "Offset Value" means the value of a Participant's
Leveraged Offset Account under the Savings Plan at the time such
account is distributed in a method that does not include periodic
payments. If more than one distribution that is not a periodic payment
is made from the Participant's Leveraged Offset Account under the
Disney Savings and Investment Plan for Salaried Employees, an
additional portion of his Offset Value is determined and added to his
Offset Value as of the time of each such distribution. If the
Participant's Leveraged Offset Account has not been distributed or is
to be distributed in periodic payments, his Offset Value is determined
initially or his Offset Value is determined and added to his Offset
Value on the earlier of the time his Accrued Benefit under this Plan
becomes payable or the time such periodic payments begin. On each
determination date the fair-market value of the Leveraged Offset
Account at that time is converted into an OFFSET VALUE using the
Actuarial Equivalent basis.
A Participant's OFFSET VALUE is an aggregate of all
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Offset Values accumulated for him under this subsection, and it is
possible for his Offset Value to periodically yield a Negative Accrued
Benefit under this Plan.
2.38 PARTICIPANT. "Participant" means any person included for
participation in the Plan as provided in Article III and who continues
to be entitled to benefits under the Plan.
2.39 PAST SERVICE AVERAGE MONTHLY COMPENSATION. "Past Service Average
Monthly Compensation" means one-sixtieth of the sum of his
Compensation over sixty consecutive calendar months within the one-
hundred-twenty-month period preceding May 1, 1984. The sixty
consecutive months selected must be those that produce the highest
average. For purposes of this subsection, if a Participant is an
Employee for fewer than one hundred twenty months before May 1, 1984,
his sixty-month period for this subsection is determined within the
period before May 1, 1984, in which he was an Employee. If a
Participant is an Employee for fewer than sixty consecutive months
before May 1, 1984, his Past Service Average Monthly Compensation is
his actual Compensation before May 1, 1984, during his completed full
consecutive calendar months as an Employee immediately before May 1,
1984, divided by the number of those consecutive months.
2.40 PAST SERVICE MONTH. "Past Service Month" means each month before May
1, 1984, for which an Employee who became a Participant on May 1, 1984
is credited with any Hours of Service during a period uninterrupted by
a Separation from service and in which he was a Covered Employee,
except for:
(1) A Participant who was eligible to participate in the Key Plan and
as of December 31, 1984, or earlier declined or is deemed to have
declined to participate in the Key Plan is not credited with Past
Service Months;
(2) A Participant who was not eligible to participate in the Key Plan
but was eligible to participate in the Associated Plans and
declined or is deemed to have declined to participate in the
Associated Plans is not credited with Past Service Months for
periods before May 1, 1984, in which he was not a participant in
the Motion Picture Plan; or
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(3) Service after attainment of age sixty-five is disregarded.
2.41 PENSION. "Pension" means a Participant's benefit under the Plan,
generally payable in the form of an annuity.
2.42 PLAN. "Plan" means the Disney Salaried Retirement Plan as set forth
in this document, or as amended from time to time.
2.43 PLAN YEAR. "Plan Year" means the calendar year.
2.44 POSTPONED RETIREMENT DATE. "Postponed Retirement Date" means the
first day of the calendar month on or immediately after the date that
a Participant terminates his employment with an Employer or an
Affiliated Employer after his Normal Retirement Date.
2.45 PREDECESSOR EMPLOYER. "Predecessor Employer" means a company merged
into, consolidated with or absorbed by an Employer, or where
substantially all of the assets or business have been acquired by an
Employer.
2.46 PREDECESSOR PLANS. "Predecessor Plans" means the Disney Salaried
Service Pension Plan and the Disney Salaried Supplemental Pension
Plan.
2.47 PRE-MAY 1984 SERVICE BENEFIT. "Pre-May 1984 Service Benefit" means
the Accrued Benefit element described in Section 5.02(d).
2.48 POST-APRIL 1984 SERVICE BENEFIT. "Post-April 1984 Service Benefit"
means the Accrued Benefit element described in Section 5.02(e).
2.49 REEMPLOYMENT COMMENCEMENT DATE. "Reemployment Commencement Date"
means the date an Employee first is credited with an Hour of Service
following a prior Break in Service.
2.50 RESTATEMENT DATE. "Restatement Date" means the effective date of the
merger of the two Predecessor Plans, January 1, 1988.
2.51 RETIREMENT DATE. "Retirement Date" means a Participant's Normal
Retirement Date, Early Retirement Date or Postponed Retirement Date.
2.52 RULE OF PARITY. "Rule of Parity" means a rule pursuant to which a
Participant who incurs a Break in Service
<PAGE>
shall have his Eligibility Computation Periods, Years of Vesting
Service, and/or which occur prior to such Break in Service ignored.
If an Employee or Participant incurs a Break in Service and if he has
no Non-forfeitable Accrued Benefit at the time of his Break in
Service, his Eligibility Computation Periods prior to such Break in
Service shall not be taken into account if the number of consecutive
one year Breaks in Service equals or exceeds the greater of the
Employee's or Participant's Eligibility Computation Periods completed
prior to the first such Break in Service or five. If the preceding
sentence would cause any Eligibility Computation Periods to be
disregarded as of December 31, 1984 if that sentence's reference to
five were ignored, such Eligibility Computation Periods shall continue
to be disregarded. Eligibility Computation Periods previously
eliminated by a prior application of this paragraph shall not be
counted for purposes of the preceding sentences. For purposes of
computing Years of Vesting Service, the Rule of Parity shall be
applied under the preceding sentences by substituting "Years of
Vesting Service" for "Eligibility Computation Period" in each place it
appears. For purposes of computing Years and Benefit Services, the
Rule of Parity shall be applied under the preceding sentences by
substituting "Years of Benefit Services" for "Eligibility Computation
Periods" in each place it appears.
2.53 SAVINGS PLAN. "Savings Plan" means the Disney Savings and Investment
Plan for Salaried Employees.
2.54 SECTION. "Section" means a section in this Plan unless otherwise
designated.
2.55 SOCIAL SECURITY BASE. "Social Security Base" means the annual amount
of wages specified as the maximum amount to be included in the
determination of Employer contributions under the Federal Insurance
Contributions Act at the time in effect.
2.56 SOCIAL SECURITY RETIREMENT AGE. "Social Security Retirement Age"
means, with respect to any Participant, the age used as his retirement
age under Section 216(1) of the Social Security Act, except that said
section of said Act shall be applied without regard to the age
increase factor and as though the early retirement age under Section
216(1) (2) of said Act were 62.
<PAGE>
2.57 SPOUSAL CONSENT. "Spousal Consent" means written consent given by a
Participant's spouse to an election made by the Participant of a
specified form of benefit or a designation by the Participant of a
specified Contingent Annuitant or Beneficiary other than the spouse.
That consent shall be duly witnessed by a Plan representative or
notary public and shall acknowledge the effect on the spouse of the
Participant's election. The requirement for spousal consent may be
waived by the Committee if it is established to its satisfaction that
there is no spouse, or that the spouse cannot be located, or because
of such other circumstances as may be established by applicable law.
2.58 TRANSITIONAL PARTICIPANT. "Transitional Participant" means an
Employee who is a Participant in this Plan for part of this Plan's
Plan Year and who is a participant in the Associated Plans for part of
that same Plan Year, who is credited with 1,000 Hours of Service
during that Plan Year, but who is not credited with a Year of Benefit
Service for that Plan Year because of the exclusion in
Section 2.30(3).
2.59 TRUST AGREEMENT. "Trust Agreement" means the trust agreement or
agreements that may be established from time to time hereunder and as
the same may from time to time be amended and/or restated; provided
that, to the extent the assets of this Plan are held pursuant to an
annuity contract or other contract issued by an insurance company as
provided in Section 401(f) of the Code, then the term "Trust
Agreement" shall include such annuity contract or other contract.
2.60 TRUST FUND. "Trust Fund" means all money or other property which is
held by the Trustee, pursuant to the terms of the Trust Agreement.
2.61 TRUSTEE. "Trustee" means the trustee acting under the Trust
Agreement, or any other Trustee or Trustees designated in any trust
agreement or agreements which may be established to carry out the
purposes of this Plan, including any insurance company which is the
issuer of an annuity or other contract qualifying as a Trust Agreement
as defined in Section 2.44.
2.62 YEAR OF BENEFIT SERVICE. "Year of Benefit Service" means each Plan
Year after December 31, 1983 for which a Participant is credited with
at least 1,000 Hours of Service. In computing, the following are
disregarded:
(1) service before 1984;
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(2) service before becoming a Participant;
(3) service other than as a Covered Employee;
(4) [intentionally left blank];
(5) Hours of Service credited for periods in which no services were
performed for the Employer, except as required by law;
(6) Years of Benefit Service ignored under the Rule of Parity; and
(7) for purposes of determining a Participant's Flat Benefit only,
service during any period in which the participant's
participation in the Motion Picture Plan requires a contribution
from the Employers to that Plan.
If a Participant has a Non-forfeitable Employer Contribution Accrued
Benefit when his Break in Service begins, his Years of Benefit Service
before his Break in Service must be restored when he is reemployed by
an Employer. A Participant who Separates from Service and returns
without a Break in Service loses no Years of Benefit Services credited
before his Separation from Service occurred. If a Participant
Separates from Service and returns after a Break in Service, and if
the Rule of Parity does not apply, his credited Years of Benefit
Services at the time he Separated from Service must be restored when
he is reemployed by an Employer.
2.63 YEAR OF VESTING SERVICE. "Year of Vesting Service" means, with
respect to any Employee, a Plan Year (including calendar years prior
to the Effective Date) in which the Employee has been credited with
1,000 or more Hours of Service, subject to the following:
(a) If his employment is terminated and he is later reemployed by an
Employer or an Affiliated Employer after he has incurred one or
more Breaks in Service, his Years of Vesting Service after
reemployment shall be aggregated with his prior Years of Vesting
Service provided (i) he was previously vested in his Accrued
Pension, or (ii) his years of Break in Service do not equal or
exceed the greater of five or his Years of Vesting Service before
the Break in Service, and he is credited with at least one Year
of Vesting Service
<PAGE>
after his return to employment with an Employer or Affiliated
Employer;
(b) Service with a Predecessor Employer shall count as Years of
Vesting Service hereunder; (i) If an Employer continues to
maintain a qualified plan sponsored by such Predecessor Employer;
or
(i) If an Employer continues to maintain a qualified plan
sponsored by such Predecessor Employer; or
(ii) If, and to the extent, employment with the Predecessor
Employer is required to be treated; or
(iii) If, and to the extent, granted by the Board of Director.
(c) Service with any other company which has been or may later be
acquired by an Employer or an Affiliated Employer shall not count
unless required by law or unless determined by the Board of
Directors;
(d) If the Employee shall have been absent from the service of an
Employer or an Affiliated Employer because of service in the
Armed Forces of the United States and if he shall have returned
to the service of an Employer or Affiliated Employer having
applied to return while his reemployment rights were protected by
law, that absence shall be included in his Years of Vesting
Service; and
(e) If he is on a Leave of Absence, the Company may authorize the
inclusion in his Years of Vesting Service of any portion of that
period of leave which is not included in his Years of Vesting
Service under (d) above.
(f) For purposes of determining non-forfeitability of Participant's
Pension attributable to his service before May 1, 1984, each
Participant's Year of Vesting Service shall not be less than one
Year of Vesting Service for each twelve months during the period
ending on May 1, 1984, in which he was a Covered Employee without
a Separation from Service, nor are they less than his years of
vesting service Associated Plans (as defined in the Associated
Plans) nor are they less than his years of vesting service under
the Motion Picture Plan (as defined in the Motion Picture Plan),
provided he was an Employee of an Employer during such period.
<PAGE>
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01 ELIGIBILITY.
Only Eligible Employees may participate in this Plan.
3.02 PARTICIPATION.
An Employee who was a Participant prior to the Restatement Date shall
remain a Participant thereafter provided that he remains an Eligible
Employee. An Employee who becomes an Eligible Employee in accordance
with Section 2.23 of the Plan shall become a Participant as of the
first day of the month after he meets such eligibility requirements.
3.03 REEMPLOYMENT OF FORMER EMPLOYEES AND FORMER PARTICIPANTS.
Any person reemployed by an Employer as an Eligible Employee who was
previously a Participant shall be immediately eligible to become a
Participant in the Plan.
3.04 TERMINATION OF ELIGIBILITY.
A Participant who remains in the employ of an Employer or an
Affiliated Employer, but ceases to be an Eligible Employee, shall
continue to be a Participant in the Plan, but shall not accrue
benefits under the Plan while his employment status is other than as
an Eligible Employee.
3.05 TERMINATION OF PARTICIPATION.
An Eligible Employee's participation in the Plan shall terminate on
the date he terminates employment with an Employer or an Affiliated
Employer unless the Participant is entitled to benefits under the
Plan, in which event his participation shall terminate when those
benefits have been distributed to him.
<PAGE>
ARTICLE IV
CONTRIBUTIONS
4.01 EMPLOYER CONTRIBUTIONS.
Each Employer shall, make such contributions to the Plan which are
sufficient, on an actuarial basis approved by the Committee, to fund
the cost of the benefits provided hereunder for the Participants.
4.02 PLAN-TO-PLAN TRANSFERS.
Assets may be transferred to this Plan directly from another qualified
plan where authority for such transfer is in accordance with law and-
has been granted by the Board of Directors. Such transferred assets
shall generally be utilized to provide benefits accrued by
Participants under the other qualified plan in accordance with the
terms of this Plan.
4.03 RETURN OF CONTRIBUTIONS.
(a) If all or part of the Employer's deductions under Section 404 of
the Code for contributions to the Plan are disallowed by the
Internal Revenue Service, the portion of the contributions to
which that disallowance applies shall be returned to the
applicable Employer(s) without interest but reduced by any
investment loss attributable to those contributions. The return
shall be made within one year after the disallowance of
deduction.
(b) An Employer may recover without interest the amount of its
contributions to the Plan made on account of a mistake of fact,
reduced by any investment loss attributable to those
contributions, if recovery is made within one year after the date
of those contributions.
<PAGE>
ARTICLE V
RETIREMENT BENEFITS
5.01 ACCRUED BENEFIT.
(a) A Participant's Accrued Benefit is a benefit that begins at his
Normal Retirement Date. It includes benefits accrued under this
Plan attributable to Employer contributions to this Plan (and
certain Employee Contribution Accrued Benefits attributable to
buy-backs as described in Section 5.02(i)) and benefits accrued
before May 1, 1984, under the Associated Plans attributable to
Employer contributions and Employee contributions transferred to
this Plan under Section 7.03(b) of the Predecessor Plans.
(b) The value of a Participant's Accrued Benefit is based on his
Normal Retirement Benefit as defined in Section 5.02(a)
(considering that the Offset Value reduces the benefits that
would otherwise have accrued under this Plan if there was no
offset) computed as accrued under the appropriate accrual rule,
as determined by the Committee, under Code section 411(b)(1).
(c) A Participant's Accrued Benefit (computed as if payable annually
or computed on a twelve-month basis) never exceeds the greatest
amount allowable without exceeding the limitations described in
Section 5.06.
(d) A Participant's Normal Retirement Age is Age sixty-five.
(e) A Participant's normal Retirement Date is on the first day of the
month after he reaches his Normal Retirement Age.
(f) The right of a Participant to his Normal Retirement Benefit shall
be non-forfeitable as of his Normal Retirement Age.
5.02 NORMAL RETIREMENT BENEFIT.
(a) A Participant's Normal Retirement Benefit is his Accrued Benefit
(considering that the Offset Value reduces the benefits that
would otherwise have
<PAGE>
accrued under this Plan if there was no offset) determined as of
his Normal Retirement Age as a monthly income for the
Participant's life equal to the sum of:
(1) the Flat Benefit element described in Section 5.02(b), which
element is subject to the special make-whole rules in
Section 5.02(h), the special withdrawal and buy-back rules
in Section 5.02(i), and is reduced by the Participant's
Offset Value;
(2) the Formula Benefit element described in Section 5.02(c),
which element is reduced by the Participant's Offset Value;
(3) the Pre-May 1984 Service Benefit element (accrued before
May 1, 1984) described in Section 5.02(d); and
(4) the Post-April 1984 Service Benefit element (accrued after
April 30, 1984) described in Section 5.02(e), and which is
reduced by the Participant's Offset Value
Prior to January 1, 1988 a Participant's Normal Retirement
Benefit could not exceed the Accrued Benefit that would be
provided for him if he Separated from Service at Normal
Retirement Age.
(b) The Flat Benefit element is the monthly benefit corresponding to
his Credited Hours of Service and Credited Years of Service
according to the following table:
Credited Credited Monthly
Year of Hours of Benefit
Service Service Amount
----------------------------------------------------------
10 15,000 - 15,749 $200.00
10 15,750 or more 210.75
11 16,500 - 17,240 221.50
11 17,250 or more 232.25
12 18,000 - 18,749 243.00
12 18,750 or more 253.75
13 19,500 - 20,249 264.50
13 20,250 or more 275.25
14 21,000 - 21,749 286.00
14 21,750 or more 296.75
15 22,500 - 23,249 307.50
<PAGE>
15 23,250 or more 318.25
16 24,000 - 24,749 329.00
16 24,750 or more 339.75
17 25,500 - 26,249 350.50
17 26,250 or more 361.25
18 27,000 - 27,749 372.00
18 27,750 or more 382.75
19 28,500 - 29,249 393.50
19 29,250 or more 404.25
20 30,000 - 30,749 415.00
20 30,750 or more 426.75
21 31,500 - 32,249 438.50
21 32,250 or more 450.25
22 33,000 - 33,749 462.00
22 33,750 or more 473.75
23 34,500 - 35,249 485.50
23 35,250 or more 497.25
24 36,000 - 36,749 509.00
24 36,750 or more 520.75
25 37,500 - 38,249 532.50
25 38,250 or more 544.25
26 39,000 - 39,749 556.00
26 39,750 or more 567.75
27 40,500 - 41,249 579.50
27 41,250 or more 591.25
28 42,000 - 42,749 603.00
28 42,750 or more 614.75
29 43,500 - 44,249 626.50
29 44,250 or more 638.25
30 or more 45,000 or more 650.00
(1) For purposes of this Section 5.02(b), a Participant's CREDITED
HOURS OF SERVICE AND CREDITED YEARS OF SERVICE are equal to the
sum of his Credited Hours of Service and Credited Years of
Service before May 1, 1984, under the Associated Plans and his
Credited Hours of Service and Credited Years of Service for Plan
Years after 1983 in which he is credited with a Year of Benefit
Service.
(2) For purposes of this Section 5.02(b) only, a Transitional
Participant for any Plan Year after 1983 is deemed to have a Year
of Benefit Service unless he also is credited with a Year of
Service under the Associated Plans for the Associated Plans' plan
year ending within this Plan's Plan Year in which he is a
Transitional Participant.
(3) For purposes of this Section 5.02(b) only, a Participant who
attained Age sixty-five before May 1, 1984,
<PAGE>
is also deemed to have a Year of Benefit Service as defined in
Section 2.31.
(4) A Participant is not entitled to a Flat Benefit under this Plan
if such Flat Benefit duplicates a benefit to which he is entitled
under the Associated Plans.
(5) A Participant is not entitled to a Flat Benefit under this
subsection to the extent that it duplicates his make-whole
benefit described in Section 5.02(h).
(6) For purposes of this Section 5.02(b) only, a Participant who is
credited with a Year of Benefit Service is also credited with a
Credited Year of Service.
(7) Credited Hours of Service in the above table are Hours of Service
credited for Plan Years in which the Participant is credited with
a Year of Benefit Service.
(8) If a Participant has less than ten Credited Years of Service, his
Flat Benefit is equal to $200.00 multiplied by a fraction (not to
exceed one), the numerator of which is his Credited Hours of
service and the denominator which is 15,000.
(9) If a Participant has at least ten Credited Years of Service and
has less than the lowest number of Credited Hours of Service set
forth opposite his number of Credited Years of Service in the
above table, his Flat Benefit is equal to the lower benefit set
forth opposite his Credited years of Service times a fraction,
the numerator of which is the Participant's Credited Hours of
Service and the denominator of which is that lowest number of
Credited Hours of Service set forth opposite the Participant's
number of Credited Years of Service.
(c) The Formula Benefit element is a monthly benefit calculated by
adding the products of the following formulas:
(i) the Participant's Past Service Months multiplied by one-
twelfth of the value resulting from adding sixty-five
hundredths percent (0.65%) of his Average Monthly
Compensation to twenty-five thousandths percent (0.025%)
of his Average Monthly Compensation that is greater than
$2,500; plus
(ii) the Participant's Future Service Years of Participation
multiplied by the value resulting from adding fifty-
<PAGE>
five hundredths percent (0.55%) of his Average Monthly
Compensation to twenty-five thousandths percent (0.025%)
of his Average Monthly Compensation that is greater than
$2,500.
A Participant's Formula Benefit cannot be greater than the amount that
would yield the maximum percentage in the Special Limitation Table
below, corresponding to twelve times his Average Monthly Compensation
if his Formula Benefit was added to his accrued benefits under the
Associated Plans, Sections 5.02(a) and 5.02(e) of the Plan, the Motion
Picture Plan and this Plan's Flat-Benefit, and related to twelve times
his Average Monthly Compensation. A Participant's Formula Benefit is
zero if his accrued benefits under the Associated Plans, the Plan's
Sections 5.02(d) and 5.02(e), the Motion Picture Plan, and this Plan's
Flat Benefit equal or exceed his maximum percentage in the following
Special Limitation Table:
SPECIAL LIMITATION TABLE
Twelve Times Average Maximum
Monthly Compensation Percentage
-------------------- ----------
Less than $21,000.00 60%
$21,000 - 21,999.99 61
22,000 - 22,999.99 62
23,000 - 23,999.99 63
24,000 - 24,999.99 64
25,000 - 25,999.99 65
26,000 - 26,999.99 66
27,000 - 27,999.99 67
28,000 - 28,999.99 68
29,000 - 29,999.99 69
30,000 - 30,999.99 70
31,000 - 31,999.99 71
32,000 - 32,999.99 72
33,000 - 33,999.99 73
34,000 - 34,999.99 74
35,000 - 35,999.99 75
36,000 - 36,999.99 76
37,000 - 37,999.99 77
38,000 - 38,999.99 78
39,999 - 39,999.99 79
40,000 - 40,999.99 80
41,000 - 41,999.99 81
42,000 - 42,999.99 82
43,000 - 43,999.99 83
44,000 - 44,999.99 84
45,000 and over 85
<PAGE>
(d) The Pre-May 1984 Service Benefits element is the Participant's
Past Service Months multiplied by one-twelfth of the value
resulting from adding one and fifteen hundredths percent (1.15%)
of his Past Service Average Monthly Compensation to thirty-five
hundredths percent (0.35%) of his Past Service Average Monthly
Compensation that is greater than $2,500.
(e) The Post-April 1984 Service Benefits element is the Participant's
Future Service Years of Participation multiplied by the value
resulting from adding one percent of his Future Service Average
Monthly Compensation to thirty-five hundredths percent (0.35%) of
his Average Monthly Compensation that is greater than $2,500.
A Participant's Offset Value is applied first to reduce his
Formula Benefit and last to reduce the applicable portion of his
Flat Benefit. The applicable portion of his Flat Benefit is that
attributable to Credited Years of Service for Plan Years after
1983 in which he is credited with a Year of Benefit Service.
(f) For purposes of this Plan article, a BREAK IN SERVICE is any Plan
Year in which the Participant is credited with fewer than 501
Hours of Service.
(g) The accrual computation period is the calendar month for purposes
of Past Service Months and the Plan Year for purposes of Future
Service Years of Participation. The accrual computation period
is used to measure benefit accruals. The Plan Year is the
accrual computation period used to determine Breaks in Service
and Future Service Years of Participation before Breaks in
Service.
(h) The paragraphs of this Section 5.02(h) define a make-whole
benefit considered to be part of a Participant's Flat Benefit if
it results in a payment from this Plan.
(1) If an Employee's transfer has the effect of requiring him to
become a participant in the Motion Picture Plan and ceasing
to be a Participant in this Plan for purposes of accruing
his Flat Benefit or has the effect of his becoming a
Participant in this Plan and ceasing to be a participant in
the Motion Picture Plan, his total benefits under this Plan,
the Associated Plans, and the Motion Picture Plan must be
not less than those
<PAGE>
that he would have received under this Plan, the Motion
Picture Plan, and all such Associated Plans had he not been
so required to become a participant in the Motion Picture
Plan or a Participant in this Plan, as the case may be. If
the total benefits otherwise payable under such plans are
less than those that the Participant would have received had
he not been required to become a participant in the Motion
Picture Plan or that he would have received had he not been
required to become a Participant in this Plan, his Flat
Benefit under this Plan is the excess of (i) a benefit
calculated under this Plan as though all Hours of Service as
an Employee while he was a participant in the Motion Picture
Plan were Credited Hours of Service, over (ii) the portion
of the benefit under the Motion Picture Plan and other
Associated Plans attributable to service as an Employee. If
a Participant otherwise entitled to the benefits of this
Plan section 5.02(h) either refuses to participate in the
Motion Picture Plan or, having become a participant in that
plan voluntarily withdraws from that plan at a time when he
has a vested interest in that plan, he forfeits his rights
under this Section.
(2) If a Participant in this Plan has transferred from the
Motion Picture Plan pursuant to an open enrollment for that
purpose: (1) solely for the purpose of applying the rule in
Section 5.02(b)(l), he is credited with a Credited Year of
Service for each of the Associated Plans' Plan Years during
which he completed at least 750 Hours of Service for that
year as an Employee while he was a participant in the Motion
Picture Plan; (ii) he is credited with a Vesting Credit for
each vesting computation period during which he completed
Hours of Service as an Employee while he was a Participant
in the Motion Picture Plan; and (iii) solely for the purpose
of determining his eligibility for the benefits described in
Section 5.04 and Section 7.03, his Hours of Service as an
Employee under the Motion Picture Plan are deemed to be
Credited Hours of Service.
(i) A Participant who ceases to be a Covered Employee and who does
not become a Participant in the Associated Plans may elect to
receive a lump-sum payment that is equal to his accumulated
contributions as defined in the Associated Plans. That payment
must be made to the Participant within ninety days after receipt
of his election in writing. A Participant's benefits distributed
from this Plan must always be at least equal to his accumulated
contributions as defined in the Associated Plans and, if
necessary, the
<PAGE>
Administrative Committee must direct a distribution in
satisfaction of that liability. If a Participant does not have
nonforfeitable accumulated contributions as defined in the
Associated Plans and he does not elect to receive his accumulated
contributions as defined in the Associated Plans, the Committee
must direct that he be paid his accumulated contributions as
defined in the Associated Plans following his fifth consecutive
one-year Break in Service. The benefits of a Participant who
receives a distribution under this subsection are based on the
Plan as in effect on the date as of which the distribution is
made to him. A Participant may elect to receive his accumulated
contributions as defined in the Associated Plans and payment must
be made to him within ninety days after receipt of his written
election. A Participant's election to withdraw his accumulated
contributions as defined in the Associated Plans pursuant to this
subsection does not affect his Accrued Benefit attributable to
employer contributions. Notwithstanding the above, for Employees
with an Hour of Service on or after August 23, 1984, the payment
of accumulated contributions must be in the form provided in
Section 6.01 unless a Spousal Consent authorizing a lump sum is
filed with the Committee. For purposes of this subsection,
accumulated contributions shall be defined in accordance with the
Associated Plans.
5.03 EARLY OR LATE RETIREMENT.
(a) A Participant who has not reached his Normal Retirement Date but
who has reached an Early Retirement Date may retire from service
on an Early Retirement Date and commence to receive an early
retirement Pension as of the first day of the calendar month
after he submits to the Committee a written application for
retirement benefits and after he separates from service.
(b) Unless the Participant otherwise elects, the early retirement
Pension shall be a deferred Pension beginning on the
Participant's Normal Retirement Date and, subject to the
provisions of Section 6.01, shall be equal to his Accrued
Pension. However, the Participant may elect to receive an early
retirement Pension beginning on the first day of any calendar
month on or after his Early Retirement Date but before his Normal
Retirement Date. In that case, the Participant's Pension shall
be equal to the deferred Pension reduced by 1/180th for each of
the first 60 months and 1/360th for each of the next 60 months by
which the date the Participants early retirement Pension begins
precedes his Normal Retirement Date.
<PAGE>
(c) If a Participant retires on a Postponed Retirement Date or
otherwise postpones his retirement Pension, he shall commence to
receive a late retirement Pension as of the earlier of the first
day of the calendar month after his actual Retirement Date or the
date that he is required by law to commence receiving payment of
his benefit.
(d) A late retirement Pension which commences following a
Participant's actual Retirement Date shall, subject to provisions
of Section 5.01, be equal to:
(i) The amount determined in accordance with Section 5.02(a)
but, where applicable, based on the Participant's
Compensation, Average Monthly Compensation, Past Service
Average Monthly Compensation, Future Service Years of
Participation and Past Service Months through his
Postponed Retirement Date, or, if greater:
(ii) The amount of Pension to which the Participant would have
been entitled under Section 5.02(a) if he had retired on
his Normal Retirement Date, with such benefit adjusted to
an Actuarial Equivalent to reflect the failure to pay such
portion for each month subsequent to the Participant's
Normal Retirement Date during which he did not receive a
payment of such portion and during which he was not
credited with an Hour of Service in each of eight days.
(e) A late retirement Pension which commences prior to a
Participant's Retirement Date in accordance with the requirements
of Section 6.04(b) shall be calculated in accordance with Section
5.02(b) above, except that the benefit shall be calculated based
on the Participant's Compensation, Earnings, Past Service
Earnings, Years of Benefit Service and Credited Years of Past
Service through the last day of the Plan Year preceding the date
that benefits are to commence to be paid or adjusted rather than
as of his Postponed Retirement Date. In addition, the amount of
Pension to which a Participant is entitled under the Plan shall
be recalculated annually, during the period that the Participant
is still employed by an Employeror an Affiliated Employer, as of
the end of each Plan Year with the amount of benefit being paid
adjusted as of the first day of the following Plan Year.
<PAGE>
5.04 DISABILITY.
(a) An ELIGIBLE DISABLED PARTICIPANT is a Participant who has at
least ten Years of Vesting Service and has attained Age fifty-
five but not Age sixty-five and is determined to have a
Disability. An Eligible Disabled Participant's Disability Date
is the day on which his disability is deemed to have started.
(b) DISABILITY means a total and permanent incapacity by bodily
injury or disease that prevents an Employee from engaging in any
occupation or employment for remuneration or profit, except for
purposes of rehabilitation as determined by the Administrative
Committee, and that entitles the Employee to a disability benefit
under the Social Security Act of the United States.
(c) A Participant who no longer satisfies each requirement in Section
5.04(b) is no longer an Eligible Disabled Participant.
(d) An Eligible Disabled Participant is deemed to receive
Compensation at the same base rate he received for the calendar
month immediately before his Disability Date, and that amount is
credited from his Disability Date to the earliest of: (i) his
death; (ii) the date his Disability ceases; (iii) or his Early or
Normal Retirement Date.
(e) For purposes of determining his Future Service Years of
Participation, an Eligible disabled Participant is credited with
Hours of Service at the rate of forty-five hours for any week
during which he is an Eligible Disabled Participant.
5.05 TERMINATION WITH VESTING.
(a) A Participant shall be 100 percent vested in, and have a non-
forfeitable right to his Accrued Pension upon attainment of
Normal Retirement Age or upon completion of ten Years of Vesting
Service. Effective January 1, 1989, the ten years of Vesting
Service will change to the five years for all terminations on or
after that date. If the Participant's employment with an
Employer or an Affiliated Employer is terminated after he is 100
percent vested in his Accrued Pension for reasons other than
retirement or death, he shall be eligible for a deferred vested
Pension to commence, as of a date described in Section 5.05(b)
below, after the
<PAGE>
Participant has provided written notification to the Committee of
his intention to commence receiving his Pension benefits.
(b) The deferred vested Pension shall generally commence to be paid
as of the Participant's Normal Retirement Date and, subject to
the provisions of Section 6.01, shall be equal to his Accrued
Pension. However, if he had completed 10 Years of Vesting
Service on the date of his termination (five Years of Vesting
Service effective January 1, 1989), the Participant may elect to
have his vested Pension commence as of the first day of any
calendar month after his 55th birthday or his termination date if
later, and before his Normal Retirement Date. In that case, the
Participant's Pension shall be equal to the vested Pension
otherwise payable at his Normal Retirement Date reduced as
provided for Early Retirement in Section 5.03.
5.06 MAXIMUM BENEFIT LIMITATION.
(a) The maximum annual Pension payable to a Participant under the
Plan, when added to any pension attributable to contributions of
an Employer or an Affiliated Employer provided to the Participant
under any other qualified defined benefit plan, shall be equal to
the lesser of
(i) $90,000 (multiplied by the Adjustment Factor, when
applicable); or
(ii) The Participant's average annual Remuneration during three
consecutive Plan Years (a Plan Year shall be considered a
limitation year" for purposes of Section 415 of the Code) of
his participation in the Plan affording the highest such
average, or during all of the years in which he was a
Participant in the Plan if less than three years, subject to
the following adjustments:
(A) If the Employee has not been a Participant in the Plan
for at least 10 years, the maximum annual Pension in
clause (i) above shall be multiplied by the ratio which
the number of years of his participation in the Plan
bears to 10. This adjustment shall be applied
separately to the amount of the Participant's Pension
resulting from each change in the benefit structure of
the Plan, with the number of years
<PAGE>
of participation in the Plan being measured from the
effective date of each such change.
(B) If the Participant has not completed 10 Years of
Vesting Service, the maximum annual Pension in clause
(ii) above shall be multiplied by the ratio which the
number of his Years of Vesting Service bears to 10.
(C) If the Pension begins before the Participant's Social
Security Retirement Age but on or after his 62nd
birthday, the maximum Pension in clause (i) above shall
be reduced by 5/9 of one percent for each of the first
36 months plus 5/12 of one percent for each additional
month by which the Participant is younger than the
Social Security Retirement Age at the date his Pension
begins. If the Pension begins before the Participant's
62nd birthday, the maximum Pension in clause (i) above
shall be the Actuarial Equivalent value, based on an
interest rate of 5% per year in lieu of the interest
rate otherwise used in the determination of Actuarial
Equivalent, of the maximum benefit payable to age 62 as
determined in accordance with the preceding sentence.
(D) If the Pension begins after the Participant's Social
Security Retirement Age, the maximum Pension in clause
(i) above shall be the Actuarial Equivalent, based on
an interest rate of 5% per year in lieu of the interest
rate otherwise used in the determination of Actuarial
Equivalent of that maximum benefit payable at the
Social Security Retirement Age.
(E) If the Participant's Pension is payable as a joint and
survivor Pension with his spouse as the Contingent
Annuitant, the modification of the Pension for that
form of payment shall be made before the application of
the maximum limitation, and, as so modified, shall be
subject to the limitation.
(F) If the Accrued Pension of a Participant on December 31,
1986 (as determined in accordance with the terms of the
Plan on May 5, 1986) exceeded the maximum allowable
limitation under this Section 5.06(a) above, the
maximum dollar limitation applicable to such
Participant shall
<PAGE>
be the amount of such Accrued Pension.
(b) If a Participant has at any time both participated in a defined
benefit plan and been credited with an "annual addition" under
any qualified plan maintained by an Employer or an Affiliated
Employer for a Plan Year, the sum of the Participant's "defined
benefit plan fraction" and "defined contribution plan fraction"
for such Plan Year shall not exceed 1.0.
The terms "defined benefit plan fraction" and "defined
contribution plan fraction" mean the following:
(i) "Defined benefit plan fraction" for any calendar year is a
fraction --
(A) The numerator of which is the projected annual benefit
of the Participant (determined as of the close of the
calendar year) under all defined benefit plans
maintained by an Employer or an Affiliated Employer,
and
(B) The denominator of which is the lesser of (1) or (2)
below:
(1) The product of 1.25, multiplied by the defined
benefit plan dollar limitation under Section
415(b) (l) (A) of the Code (as multiplied by the
Adjustment Factor) in effect for such calendar
year.
(2) The product of 1.4, multiplied by an amount which
is 100% of the Participant' s average Remuneration
for the 3 consecutive years in which his
Remuneration was the highest.
(ii) "Defined contribution plan fraction" for any calendar year
is a fraction --
(A) The numerator of which is the sum of the annual
additions on behalf of Participant for such calendar
year, and
(B) The denominator of which is the sum of the lesser of
(1) or (2) below determined for such calendar year and
for each prior year of service with an Employer or an
Affiliated Employer.
(1) The product of 1.25, multiplied by the
<PAGE>
defined contribution plan dollar limitation under
Section 415(c) (l) (A) of the Code (as multiplied
by the Adjustment Factor) in effect for such
calendar year.
(2) The product of 1.4 multiplied by an amount equal
to 25% of the Participant's remuneration for such
year.
The "annual addition" on behalf of a Participant under any qualified
plan maintained by an Employer or an Affiliated Employer for a Plan
Year shall not include transfers to this Plan from another qualified
plan but shall include:
(i) The total contributions made by the Participant or by an Employer
or Affiliated Employer on the Participant's behalf under any
qualified plan maintained by an Employer or an Affiliated
Employer; and
(ii) Forfeitures, if applicable, that have been allocated on behalf of
the Participant under any qualified defined contribution plan
maintained by an Employer or an Affiliated Employer.
5.07 SUSPENSION OF BENEFITS.
(a) If a Participant in receipt of a Pension is restored to service
with an Employer as an Eligible Employee and is regularly
scheduled to work at least 80 hours per month, the following
shall apply:
(i) His Pension shall cease and any election of an optional
benefit in effect shall be void.
(ii) Any Years of Vesting Service and Years of Benefit Service
to which he was entitled when he retired or terminated
service shall be restored to him.
(iii) Upon later retirement or termination his Pension shall be
calculated in accordance with the following:
(A) If his reemployment occurred prior to his Normal
Retirement Date, it shall be calculated under the
benefit formula then in effect, based on his
Compensation, Average Monthly Compensation, Past
Service Average Monthly Compensation, Future Service
<PAGE>
Years of Participation and Past Service Months
before and after the period when he was not in the
service of an Employer, reduced by the Actuarial
Equivalent value of the benefits, if any, he
received before his return to service with an
Employer; or
(B) If his reemployment occurred on or after his Normal
Retirement Date, it shall be equal to the greater of
the benefit calculated as described in (A) above or
the benefit the Participant was receiving as of his
rehire date adjusted to be an Actuarial Equivalent
for each month subsequent to his rehire date during
which he did not receive payment of the benefit and
during which he was not regularly scheduled to work
at least 80 hours.
(iv) The portion of the Participant's Pension upon later
retirement payable with respect to Future Service Years of
Participation rendered before his previous retirement or
termination of service shall never be less than the amount
of his previous Pension modified to reflect any option in
effect on his later retirement.
(b) The Committee will establish procedures consistent with
Department of Labor Regulations Section 2530.203-3 regarding the
suspension of benefits under this Section 5.07 including but not
limited to, procedures for resumption of benefits, offsetting
benefit payments and notice regarding suspension of benefits.
<PAGE>
ARTICLE VI
FORM OF PAYMENT OF PENSION BENEFITS
6.01 AUTOMATIC FORM OF PAYMENT.
(a) If the Participant is not married on the date his Pension begins,
his Pension shall be payable in monthly installments ending with
the last monthly payment before death, unless the Participant has
elected an optional form of benefit as described in Section 6.02.
(b) If the Participant is married on the date his Pension begins, and
if he has not elected an optional form of benefit as described in
Section 6.02, the Pension payable shall be a joint and survivor
Pension which is the Actuarial Equivalent of the Pension
otherwise payable, providing for a reduced Pension payable to the
Participant during his life and after his death a Pension at the
rate of one-half the Pension paid to the Participant, payable
during the life of, and to, the spouse to whom he is married at
the date his Pension begins. Once the payment of Participant's
Pension has begun, no adjustment shall be made for any subsequent
chance in marital status or health.
(c) In any case, an Actuarial Equivalent lump sum payment may, in the
discretion of the Committee, be made in lieu of all benefits if
the present value of any Pension is less than $3,500. The lump
sum payment may be made at any time on or after the date the
Participant terminates employment. In addition, if a lump sum
payment is to be made after a Participant's Annuity Starting
Date, the Participant must consent in writing, to such form of
distribution and, if he is married, Spousal Consent must also be
obtained.
6.02 OPTIONS.
(a) A Participant may, subject to the provisions of Section 6.03,
elect to convert the Pension otherwise payable to him into one of
the Actuarial Equivalent optional fords of benefit described
below. However, if the Contingent Annuitant or Beneficiary
selected is not the Participant's spouse, the present value of
the Pension payable to the Participant under the option shall
always be more than 50 per cent of the present value of the
benefits payable under the option to the Participant and his
Contingent Annuitant or Beneficiary.
<PAGE>
Option 1. A Pension payable for the life of the Participant only;
Option 2. A modified Pension payable during the Participant's life,
and after his death payable at 50% or 100% of the rate of
his modified Pension during the life of, and to, the
Contingent Annuitant named by him when he elected the
option. In the event the Participant is married at the time
the annuity starts, the Contingent Annuitant must be the
individual legally then married to the Participant.
Option 3. A modified Pension payable during the Participant's life,
guaranteed for a 10 year period after the date the Pension
begins. If the Participant dies during the designated
period, the modified Pension shall be payable for the
balance of that period to the Beneficiary named by him when
he elected the option; provided that, if there is no
designated Beneficiary or the Beneficiary then does not
survive the 10 year period, an Actuarial Equivalent lump sum
payment of the remaining payments shall be paid to the
alternate Beneficiary or, if none, to the estate of the
Beneficiary.
(b) The following special options and payment apply with respect to
the Actuarial Equivalent of a Participant's Accrued Benefit
attributable to his Past Service Months under Section 5.02(d)
(the "Special Lump Sum Payment").
(1) The Participant or his surviving spouse may elect to receive
the Special Lump Sum Payment determined as a lump sum no
later than the Participant's Age 65 or his earlier death.
(2) This is a special death benefit equal to the Participant's
Special Lump Sum Payment. For purposes of this death
benefit, a Participant's surviving spouse (the person
legally married to the Participant at the Participant's
death) is the beneficiary.
(3) If a Participant dies before his entire Special Lump Sum
Report has been paid to him, or if distribution
<PAGE>
has begun to his surviving spouse and that surviving spouse
dies before the Participant's entire Special Lump Sum has
been distributed to the surviving spouse, the balance of the
Participant's Special Lump Sum must be distributed to his
Beneficiary within five years after his death (or the death
of his surviving spouse). This shall not apply if the
Participant's interest had begun to be distributed for a
term certain.
6.03 ELECTION OF OPTIONS.
(a) A married Participant's election of any option which does not
provide for monthly payments to his spouse for life after the
Participant's death in an equal amount equal to at least 50% but
not more than 100% of the monthly amount payable under the option
to the Participant shall be effective only if Spousal Consent to
the election is received by the Committee.
(b) The Committee shall furnish to each married participant within a
reasonable time, but more than 90 days, before his projected
Annuity Starting Date, a written explanation in nontechnical
language of the terms and conditions of the joint and survivor
Pension provided under Section 6.01(b), the financial effect upon
the Participant's Pension of making an election under Section
6.02 in lieu of the joint and survivor Pension, the requirement
for Spousal Consent as provided in paragraph (a) above, and the
right of the participant to make and to revoke elections. under
Section 6.02. An election under Section 6.02 shall be made on a
form provided by the Committee, and may be made after that
information is furnished to the participant and during the 90-day
election period preceding the participant's Annuity Starting
Date. However, a married participant may file with the Committee
a written request for detailed information as to the amount of
his Pension on a joint and survivor basis under Section 6.01(b)
and under Option l of Section 6.02. If he makes that request,
the period during which an election of Opt ion 1 may be made
shall be extended, if necessary, to include the 60 days following
receipt by the participant of that information.
(c) An election of an option under Section 6.02 may be revoked on a
form provided by the Committee, and subsequent electionS and
revocations may be made at any time and from time to time during
the applicable
<PAGE>
election period. An election of an optional benefit shall be
effective on the date the participant's Pension begins. A
revocation of any election shall be effective when the completed
form is filed with the Committee. If a participant who has
elected an optional benefit dies before the date the election of
the option becomes effective, the election shall be revoked. If
the Contingent Annuitant or Beneficiary designated under an
option dies before the date the election of the option becomes
effective, the election shall be revoked.
6.04 COMMENCEMENT OF PAYMENTS.
(a) Except as otherwise provided in Article 6, payment of a
Participant's Pension shall begin as soon as administratively
practicable following the latest of:
(i) The Participant's 65th birthday;
(ii) The tenth anniversary of the date on which be became a
Participant; or
(iii) The date he terminates services with an Employer or
Affiliated Employer (but not more than 60 days after the
close of the plan Year in which the latest of (i), (ii) or
(iii) occurs).
(b) Notwithstanding the preceding paragraph, the Participant's
Pension shall begin not later than April 1 after the applicable
of the following dates:
(i) Prior to January 1, 1989:
(A) For an Employee who owns a five percent (5%)or more
interest in an Employer or an Affiliated Employer, the
last day of the calendar year in which he attains age
seventy and one-half (70-1/2), or
(B) For any other Employee, the later of:
(1) The last day of the calendar year in which he
terminates from an Employer or an Affiliated
Employer, or
(2) The last day of the calendar year in which he
attains age seventy and one-half (70-1/2).
<PAGE>
(ii) After December 31, 1988:
The end of the calendar year in which the Employee attains
age seventy and one-half (70-1/2). Employees who attain age
70-1/2 in 1988 are deemed to have attained age 70-1/2 in
1989. However, an Employee who attains age seventy and one-
half (70-1/2) before January 1, 1988 and does not at any
time after he attains age sixty-six and one-half (66-1/2)
own a five percent (5%) or more interest in an Employer or
an Affiliated Employer may delay distribution of benefits
until actual retirement.
<PAGE>
ARTICLE VII
DEATH AND WELFARE BENEFITS
7.01 SPOUSE'S PENSION.
(a) If a married Participant dies in active service after having met
the requirements for any Pension, or after having terminated from
an Employer or an Affiliated Employer after having become
entitled to a vested Pension, a spouse's Pension shall be payable
to his surviving spouse for life.
(b) The spouse's Pension shall commence to be paid, unless the spouse
makes written election to defer commencement to no later than the
date the Participant would have attained age 65, as of the first
day of the calendar month following the later of the
Participant's date of death or what would have been the
Participant's 55th birthday. It shall be equal to:
(i) In the case of a Participant who dies after he has completed
the requirements for a normal or early retirement Pension,
the Pension that would have been payable to the spouse if
the Participant had retired under Section 5.01 or 5.03,
whichever is applicable, and his Pension had commenced as of
the first day of the month in which his death occurred or
such later date as is selected; or
(ii) In the case of any other Participant, the Pension that would
have been payable to the spouse, based on his Accrued
Pension at date of death, if he had elected to have this
vested Pension begin upon his attainment of age 55 or such
later date as Is selected (or his date of death, if later)
and then had died immediately thereafter.
7.02 LATEST DATE OF DISTRIBUTION OF SPOUSE'S PENSION.
The following rules apply with respect to the latest allowable
distribution of death benefits on a Participant's behalf under the
Plan In accordance with Section 401(a) (9) of the Code:
(a) If the Beneficiary is other than the Participant's spouse,
distribution to such Beneficiary shall
<PAGE>
generally be made or commence within one (1) year of the
Participant's date of death; or
(b) If the Beneficiary Is the Participant's spouse, distribution to
such Beneficiary shall generally be made or commence by the date
on which the Participant would have attained age seventy and one-
half (70 1/2).
7.03 OTHER WELFARE BENEFITS.
(a) A Participant who:
(1) has attained age sixty-two;
(2) has at least 30,000 Credited Hours of Service for purposes
of Section 5.02(b);
(3) has at least twenty Years of Vesting Service;
(4) has separated from service; and
(5) has begun receiving early retirement benefits.
is entitled to this section's welfare benefits.
(b) Before his death, a Participant described in Section 7.03(a) is
entitled to medical benefits (including dental benefits, if
applicable) according to the standards (or insurance contracts)
adopted and announced by the Administrative Committee.
(c) The Spouse and eligible children of a Participant who Is eligible
for the welfare benefits described in Section 7.03(a) are also
eligible for those benefits until the Spouse remarries or dies
before remarriage. If a Participant dies as an Employee and
satisfies the conditions of 7.03(a) (2) and (3) and has satisfied
the conditions to receive early retirement pension under Section
2.19, his Spouse and eligible children are entitled to the
benefits described in this section, beginning on the date that
would have been the Participant's sixty-second birthday (or his
later death) and ending at the spouse's remarriage or death
before remarriage.
(d) This Section 7.03 is intended to comply with Code section 401(h)
and must be construed accordingly. Funding for the welfare
benefits under this Section
<PAGE>
must be maintained in a separate account within the Trust Fund.
Except as provided in Section 7.03(e), the assets and Income of
this section's separate account may only be used to provide
welfare benefits under this section and may not be used for or
diverted to any purpose other than providing welfare benefits
under this section.
(e) If all of the Plan's liabilities to provide the welfare benefits
under this Section have been satisfied, any amount remaining in
this Section's separate account must be returned to Disney or to
the other Employers according to Disney's direction.
(f) As to each Employee who is a five-percent owner as defined in
Code section 416(i)(l)(B) during any Plan Year for which
contributions are made under this Plan on his behalf to provide
this section's welfare benefits, the Administrative Committee
must cause the appropriate Trustees and co-Trustees to establish
and maintain a separate account. Each such Employee's separate
subaccount of this section's separate subaccount must hold the
assets used to fund this section's benefits for that Employee and
his Spouse and dependents. Benefits under this section for an
Employee described in this subsection or for this Spouse and
dependents may be paid only from the separate subaccount
maintained for him.
<PAGE>
ARTICLE VIII
ADMINISTRATION OF PLAN
8.01 APPOINTMENT OF PLAN COMMITTEE.
The general administration of the Plan and the responsibility for
carrying out the provisions of the Plan shall be placed with a
Committee, consisting of not less than 3 persons, appointed by the
Board of Directors to serve at the pleasure of such Board. Any member
of the Committee may resign by delivering his written resignation to
the Board of Directors.
8.02 DUTIES OF COMMITTEE.
The members of the Committee shall elect a chairman from their number
and a secretary who may be but need not be one of the members of the
Committee; may appoint from their number such subcommittees with such
powers as they shall determine; and may authorize one or more of their
number or any agent to execute or deliver any instrument or make any
payment on their behalf. In addition, the Committee may retain
counsel, employ agents and provide for such clerical, accounting,
actuarial and consulting services as they may require in carrying out
the provisions of the Plan; and may allocate among themselves or
delegate all or such portion of the duties under the Plan, other than
those granted to the Trustee under the trust agreement adopted for use
in implementing the Plan, as they, in their sole discretion, shall
decide.
8.03 MEETINGS.
The Committee shall hold meetings upon such notice, at such place or
places, and at such time or times as it may from time to time
determine.
8.04 ACTION OF MAJORITY.
Any act which the Plan authorizes or requires the Committee to do may
be done by a majority of its members. The action of that majority
expressed from time to time by a vote at a meeting or in writing
without a-meeting shall constitute the action of the Committee and
shall have the same effect for all purposes as if assented to by all
members of the Committee at the time in office.
<PAGE>
8.05 COMPENSATION AND BONDING.
No member of the Committee shall receive any compensation from the
Plan for his services as such. Except as may otherwise be required by
law, no bond or other security need be required of any member in that
capacity in any jurisdiction.
8.06 ESTABLISHMENT OF RULES.
Subject to the limitations of the Plan, the Committee from time to
time shall establish rules for the administration of the Plan and the
transaction of its business. The determination of the Committee as to
any disputed question shall be conclusive.
8.07 PRUDENT CONDUCT.
The Committee shall use that degree of care, skill, prudence and
diligence that a prudent man acting in a like capacity and familiar
with such matters would use in his conduct of a similar situation.
8.08 SERVICE IN MORE THAN ONE FIDUCIARY CAPACITY.
Any individual, entity or group of persons may serve in more than one
fiduciary capacity with respect to the Plan and/or the funds of the
Plan.
8.09 LIMITATION OF LIABILITY.
The Board of Directors, the Committee, the Employees and any officer,
employee or agent of an Employer shall not incur any liability
individually or on behalf of any other individuals or on behalf of an
Employer for any act or failure to act, made in good faith in relation
to the Plan or the funds of the Plan. However, this limitation shall
not act to relieve any such Individual or an Employer from a
responsibility or liability for any fiduciary responsibility,
obligation or duty under Part 4, Title 1 of ERISA.
8. 10 INDEMNIFICATION.
The Committee, the Board of Directors, and the officers, employees and
agents of the Employers shall be indemnified against any and all
liabilities arising by reason of any act, or failure to act, in
relation to the Plan or the funds of the Plan, includIng, without
limitation, expenses reasonably incurred In the defense of any claim
relating to the Plan or the funds of the Plan, and amounts paid in any
compromise or settlement
<PAGE>
relating to the Plan or the funds of the Plan, except for actions or
failures to act made in bad faith. The foregoing indemnification
shall be from the funds of the Plan to the extent of those funds and
to the extent permitted under applicable law; otherwise from the
assets of the Employers.
8.11 EXPENSES OF ADMINISTRATION.
All expenses incurred prior to the termination of the Plan which shall
arise in connection with the administration of the Plan, including but
not limited to the compensation of the Trustee, administrative
expenses and proper charges and disbursements of the Trustee and
compensation and other expenses and charges of any enrolled actuary,
counsel, accountant, specialist, or other person who shall be employed
by the Committee in connection with the administration thereof, shall
be paid from the trust fund to the extent not paid by the Employers.
8.12 CLAIMS PROCEDURES.
The Committee will ordinarily instruct the Trustee to pay benefits
when benefits become available without the necessity of a claim by
Participants, Contingent Annuitants or Beneficiaries. If any
Participant, Contingent Annuitant or Beneficiary makes a written claim
for benefits under the Plan and such benefits are denied, the
Committee, within 90 days of the date the claim is filed (or, if
special circumstances require an extension of time for processing the
claim and written notice is given to the claimant of such extension,
up to 180 days after the original claim is filed), shall give the
claimant notice in writing of the denial of claimed benefits, setting
forth specific reasons for the denial, references to pertinent Plan
provisions, the reason for and description of any additional material
or information needed to perfect the claim and an explanation of the
review procedure. The decision of the Committee shall be final unless
the claimant, within 60 days after receipt of notice of the decision
of the Committee, makes a written request for review of the decision.
The claimant or his authorized representative shall have 30 days after
submitting a written request for review during which Plan documents
may be reviewed and written issues and comments may be submitted.
Within 60 days after receipt of the written request for review, the
Committee shall issue a written decision including reasons for the
decision and references to controlling Plan provisions, which decision
shall be final.
<PAGE>
ARTICLE IX
MANAGEMENT OF FUNDS
9.01 TRUST AGREEMENT.
All the funds of the Plan shall be held by a Trustee appointed from
time to time by the Board of Directors under a Trust Agreement
adopted, or as amended, by the Board of Directors for use in providing
the benefits of the Plan and paying its expenses not paid directly by
the Employers. The Employers shall have no liability for the payment
of benefits under the Plan nor for the administration of the funds
paid over to the Trustee.
9.02 APPOINTMENT OF INVESTMENT MANAGER.
The Company may, in its discretion, appoint one or more investment
managers (within the meaning of Section 3(38) of ERISA) to manage
(including the power to acquire and dispose of) all or part of the
assets of the Plan, as the Company shall designate. In that event
authority over and responsibility for the management of the assets so
designated shall be the sole responsibility of that investment
manager.
<PAGE>
ARTICLE X
GENERAL PROVISIONS
10.01 EXCLUSIVE BENEFIT RULE.
Except as otherwise provided in the Plan, no part of the corpus or
income of the funds of the Plan shall be used for, or diverted to,
purposes other than for the exclusive benefit of Participants and
other persons entitled to benefits under the Plan before satisfaction
of all liabilities with respect to them. No person shall have any
interest in or right to any part of the earnings of the funds of the
Plan, or any right in, or to, any part of the assets held under the
Plan, except as and to the extent expressly provided in the Plan.
10.02 NONALIENATION.
Except as required by any applicable law, no benefit under the Plan
shall in any manner be anticipated, assigned or alienated, and any
attempt to do so shall be void. However, payment shall be made in
accordance with the provisions of any judgment, decree, or order
which:
(a) Creates for, or assigns to, a spouse, former spouse, child or
other dependent of a Participant the right to receive all or a
portion of the Participant's benefits under the Plan for the
purpose of providing child support, alimony payments or marital
property rights to that spouse, child or dependent;
(b) Is made pursuant to a state domestic relations law;
(c) Does not require the Plan to provide any type of benefit, or any
option, not otherwise provided under the Plan; and
(d) Otherwise meets the requirements of Section 206(d) of ERISA, as
amended, as a "Qualified Domestic Relations Order", as determined
by the Committee.
10.03 CONDITIONS OF EMPLOYMENT NOT AFFECTED BY THE PLAN.
The establIshment of the Plan shall not confer any legal Rights upon
any Employee or other person for a contInuation of employment, nor
shall It Interfere With the Rights of an Employer to discharge any
Employee and to
<PAGE>
treat him Without regard to the effect which that treatment might have
upon him as a Participant or potential Participant in the Plan.
10.04 FACILITY OF PAYMENT.
If the Committee shall find that a Participant or other person
entitled to a benefit is unable to care for his affairs because of
illness or accident or is a minor, the Committee may direct that any
benefit due him, unless claim shall have been made for the benefit by
a duly appointed legal representative, be paid to his spouse, a child,
a parent or other blood relative, or to a person with whom he resides.
Any payment so made shall be a complete discharge of the liabilities
of the Plan for that benefit.
10.05 INFORMATION REQUIRED FROM PARTICIPANT.
Each Participant, Contingent Annuitant, Beneficiary or other person
entitled to a benefit, before any benefit shall be payable to him or
on his account under the Plan, shall file with the Committee the
information that it shall require to establish his rights and benefits
under the Plan.
10.06 CONSTRUCTION.
(a) GOVERNING LAWS. Except as otherwise provided by ERISA, this Plan
and all provisions thereof shall be construed and administered
according to the laws of the State of California.
(b) TITLE AND HEADINGS NOT TO CONTROL. The titles to the Articles
and the headings of Sections in the Plan are placed herein for
convenience of reference only, and in the case of any conflict,
the text of this instrument rather than such titles or headings
shall control.
(c) GENDER AND PERSON. The masculine pronoun shall include the
feminine, the feminine pronoun shall include the masculine and
the singular shall include the plural wherever the context so
requires.
10.07 NON-DUPLICATION OF BENEFITS.
Any Pension payable under the Plan shall be reduced by any pension
paid to a Participant under the terms of any other
<PAGE>
defined benefit pension plan to which an Employer contributes,
directly or indirectly, other than by payment of taxes, to the extent
that such pension is based on a period of employment with an Employer
for which a Participant receives credit for Pension benefits under
this Plan.
10.08 PROOF OF DEATH AND RIGHT OF BENEFICIARY OR OTHER PERSON.
The Committee may require and rely upon such proof of death and such
evidence of the right of any Contingent Annuitant or Beneficiary or
other person to receive the value of the Plan benefits of a deceased
Participant as the Committee may deem proper, and its determination of
death and of the right of that Contingent Annuitant or Beneficiary or
other person to receive payment shall be conclusive.
10.09 FAILURE TO LOCATE RECIPIENT.
In the event that the Committee is unable to locate a Participant,
Contingent Annuitant, or Beneficiary who is entitled to payment under
the Plan within 5 years from the date such payment was to have been
made, the amount to which such Participant, Contingent Annuitant or
Beneficiary was entitled shall be declared a forfeiture and shall be
used to reduce future Employer contributions to the Plan. If the
Participant, Contingent Annuitant or Beneficiary is later located, the
benefit which was previously forfeited hereunder shall be restored by
means of additional Employer contributions to the Plan.
10.10 NO CONTRACT OF EMPLOYMENT.
The Plan shall not be deemed to constitute a contract between any
Participating Company and any person or to be consideration an
inducement for the employment of any person by any plan any person or
to be consideration or inducement for the employment of any person by
any Participating Company. Nothing contained In the Plan shall be
deemed:
(a) To give any person the right to be retained in the service of a
Participating Company; or
(b) To interfere with the right of any Participating Company to
discharge any person at any time without regard to the effect
which such discharge shall have upon his rights or potential
rights, if any, under the Plan.
<PAGE>
ARTICLE XI
AMENDMENT, MERGER AND TERMINATION
11.01 AMENDMENT OF PLAN.
The Board of Directors reserves the right at any time and from time to
time, and retroactively if deemed necessary or appropriate, to amend
in whole or in part any or all of the provisions of the Plan. However,
no amendment shall make it possible for any part of the funds of the
Plan to be used for, or diverted to, purposes other than for the
exclusive benefit of persons entitled to benefits under the Plan
before the satisfaction of all liabilities with respect to them. No
amendment shall be made which has the effect of decreasing the Accrued
Pension of any Participant or of reducing the nonforfeitable
percentage of the Accrued Pension of a Participant below the
nonforfeitable percentage computed under the Plan as in effect on the
date on which the amendment is adopted or, if later, the date on which
the amendment becomes effective. In addition, if the Plan is amended
to change the vesting requirements, any Participant with at least
three Years of Vesting Service may elect to have his vested percentage
computed under the Plan without regard to the amendment. However, any
right of the Company to cause mergers or asset and liability transfers
or to take a reversion of assets terminate as of the date there is a
Change in Control of Disney which is defined as follows:
(1) any person (within the meaning of Sections 13(d) and 14(d) (2) of
the Securities Exchange Act of 1934) is or becomes the beneficial
owner, directly or indirectly, to securities of Disney
representing fifty percent or more of the combined voting power
of Disney's then outstanding securities; or
(2) during any period of two consecutive years, individuals who at
the beginning of such period constitute Disney's Board cease for
any reason to constitute at least a majority of Disney's Board,
unless the election (or the nomination for election by the Disney
shareholders) of each new director was approved by a vote of at
least two-thirds of the directors then still in office
who were directors at the beginning of the period.
11.02 DISTRIBUTION FOLLOWING PLAN TERMINATION.
In the event of the complete or partial termination of the
<PAGE>
Plan, the Plan assets shall be converted into cash and, after payment
of all costs or charges incidental to the allocation and distribution
of assets, shall be distributed as provided herein and in Section
14.3. That portion of the assets of the Plan allocable to the
separate account referred to in Section 6.4(a) and attributable to:
(a) The contributions of each Participating Company with respect to
which the Plan is terminating; and
(b) The contributions of Participants with respect to such Company,
together with interest thereon pursuant to Section 411(c) (2) (C)
of the Internal Revenue Code, shall vest in such Participants and
shall be used and applied for the account of such Participants
and their Beneficiaries in the order specified in Section 4044 of
ERISA. In the event of a partial termination, this paragraph
shall apply only to the portion of the Plan so terminated.
In the event there has not been a Change in Control of Disney, as
defined in Section 11.01, any assets remaining after such distribution
shall be distributed to the appropriate Participating Companies
provided that:
(a) All liabilities of the Plan to Participants and Beneficiaries
have been satisfied; and
(b) The distribution does not contravene any provisions of law.
11.03 In the event of termination of the Plan or of the provisions of
Section 7.03, that portion of the assets of the Plan allocable to the
separate account referred to in Section 7.03(d) and attributable to
contributions of Participating Companies as to which the Plan (or
Section 7.03) is terminating, after provision for such expenses as may
be incurred, shall be applied toward making provisions for the payment
of health and welfare benefits in accordance with the benefits in
effect as of the date of termination, under the terms and conditions
of Section 7.03.
Upon the satisfaction of all liabilities under the Plan to provide
such health and welfare benefits, any amount remaining in such
separate account shall be returned to the appropriate Participating
Companies.
<PAGE>
11.04 MERGER OR CONSOLIDATION.
The Plan may not be merged or consolidated with, and its assets or
liabilities may not be transferred to, any other plan unless each
person entitled to benefits under the Plan would, if the resulting
plan were then terminated, receive a benefit immediately after the
merger, consolidation, or transfer which is equal to or greater than
the benefit he would have been entitled to receive immediately before
the merger, consolidation, or transfer if the Plan had then
terminated.
11.05 ADDITIONAL PARTICIPATING EMPLOYERS.
(a) If any company is or becomes a subsidiary of or associated with
an Employer, the Board of Directors may include the employees of
that subsidiary or associated company as participants in the Plan
upon appropriate action by that company necessary to adopt the
Plan. In that event, or if any persons become Employees of an
Employer as the result of merger or consolidation or as the
result of acquisition of all or part of the assets or business of
another company, the Board of Directors shall determine to what
extent, if any, previous service with the subsidiary or
associated company shall be recognized under the Plan, but
subject to the continued qualification of the trust for the Plan
as tax-exempt under the Code.
(b) Any Employer may terminate its participation in the Plan upon
appropriate action by it. In that event the assets of the Plan
held on account of Participants in the employ of that Employer,
and any unpaid Accrued Pensions of all Participants who have
separated from the employ of that Employer, shall be determined
by the Committee. Those assets shall be distributed as provided
in Section 11.06 if the Plan is terminated; otherwise, they shall
be segregated by the Trustee as a separate trust pursuant to
certification to the Trustee by the Committee, in which case a
separate plan for the employees of that Employer shall be created
and the board of directors of that Employer shall succeed to all
the powers and duties of the Board of Directors, including the
appointment of a Committee, with respect to such assets.
11.06 TERMINATION OF PLAN.
The Board of Directors may terminate the Plan for any reason at any
time provided there has not been a Change in Control of Disney as
defined in Section 11.02. In case of
<PAGE>
termination of the Plan, the rights of Participants to the benefits
accrued under the Plan to the date of termination, to the extent then
funded or guaranteed by the Pension Benefit Guaranty Corporation, if
greater, shall be nonforfeitable. The funds of the Plan shall be used
for the exclusive benefit of persons entitled to benefits under the
Plan as of the date of termination, except as provided in
Section 4.03. However, any funds not required to satisfy all
liabilities of the Plan for benefits because of erroneous actuarial
computation shall be returned to the Employers. The Committee shall
determine on the basis of actuarial valuation the share of the funds
of the Plan allocable to each person entitled to benefits under the
Plan in accordance with Section 4044 of ERISA, or corresponding
provision of any applicable law in effect at the time. In the event
of a partial termination of the Plan, the provisions of this Section
shall be applicable to the Participants affected by the partial
termination.
11.07 LIMITATION CONCERNING 25 HIGHEST PAID EMPLOYEES.
(a) The provisions of this Section shall apply to any Participant who
is one of the 25 highest paid Employees of the Employers on any
"commencement date" and whose anticipated annual Pension provided
under the Plan at Normal Retirement Date exceeds $1,500.
"Commencement date", for purposes of this Section, shall mean the
Effective Date of the Plan or the effective date of any amendment
to the Plan which increases the benefits. If the Plan is
terminated during the first 10 years after a "commencement date",
the amount of the Pension provided under the Plan for any one of
the Participants to whom this Section applies shall not be
greater than the amount of Pension that can be provided by the
largest of the following amounts:
(i) The Employers' contributions (or funds attributable to those
contributions) which would have been applied to provide the
Pension if the Plan as in effect on the date before that
"commencement date" had been continued without change;
(ii) $20,000;
(iii) The sum of
(A) The Employers' contributions (or funds attributable to
those contributions) which would have been applied to
provide benefits for the
<PAGE>
Employee if the Plan had been terminated on the day
before that "commencement date"; plus
(B) An amount computed by multiplying the smaller of
$10,000 or 20 per cent of the average annual
remuneration of that Employee during the last five
years of service, by the number of years since that
"commencement date"; or
(iv) The present value of the maximum benefit guaranteed by the
Pension Benefit Guaranty Corporation (PBGC), as described in
Sect ion 4022(b) (3) (B) of ERISA, determined on the basis
of the actuarial assumptions promulgated by the PBGC
applicable as of the date of termination of the Plan or the
date Pension payments commence, whichever is earlier.
(b) Any excess reserves arising by application of the provisions of
paragraph (a) above shall be used and applied as provided in the
Plan for the benefit of the other persons entitled to benefits
under the Plan. However, if sufficient funds are available to
provide in full for the Pensions accrued for all other persons
entitled to benefits under the Plan to the date of termination of
the Plan, those excess reserves shall first be used and applied
to provide the accrued Pensions of the Participants whose
Pensions have been restricted by operation of the provisions of
this Section.
(c) If it should subsequently be determined by statute, court
decision acquiesced in by the Commissioner of Internal Revenue,
- or ruling by the Commissioner of Internal Revenue, that the
provisions of this Section are no longer necessary to qualify the
Plan under the Code, this Section shall be ineffective without
the necessity of further amendment to the Plan.
11.08 CHANGE IN CONTROL.
Notwithstanding any other provision of this Plan to the contrary, in
the event of a change in control as defined in Section 11.01, any
residual assets of the trust fund must be used to provide additional
retirement benefits to the Participants, in the proportion to their
relative Compensation, and then to provide Participants with
nondiscriminatory welfare benefits as determined by a group of three
individuals elected by a majority of the Participants voting PER
CAPITA. For purposes of this Section 11.07 the term "Participants"
means only those who were Participants one day prior to the change in
control defined in Section 11.01.
<PAGE>
ARTICLE XII
TOP-HEAVY PROVISIONS
12.01 For purposes of this Section, the Plan shall be "top-heavy" with
respect to any Plan Year if, as of the applicable determination date,
the top-heavy ratio exceeds 60 per cent. The top-heavy ratio shall be
determined as of the applicable valuation date in accordance with
Section 416(g) (3) and (4) of the Code utilizing the Plan actuarial
assumptions (other than those used to calculate a lump sum) contained
in the definition of "Actuarial Equivalent". For purposes of
determining whether the Plan is top-heavy, the present value of
Accrued Pensions under the Plan will be combined with the present
value of accrued benefits or account balances under each other plan in
the required aggregation group, and, in the Company's discretion, may
be combined with the present value of accrued benefits or account
balances under any other qualified plan in the permissive aggregation
group.
The following provisions shall be applicable to Participants for any
Plan Year with respect to which the Plan is top-heavy:
(a) The Accrued Pension of a Participant who is a non-key employee
shall not be less than 2% of his average Remuneration multiplied
by the number of his Years of Vesting Service, not in excess of
10, during the Plan Years for which the Plan is top-heavy. That
minimum benefit shall be payable at a Participant's Normal
Retirement Date. If payments commence at a time other than the
Participant's Normal Retirement Date, the minimum Accrued Pension
shall be of Actuarial Equivalent value to that minimum benefit.
(b) A Participant shall vest in his Accrued Pension in accordance
with the following schedule in lieu of the provisions of Section
5.05(a):
Years of Vesting Service
------------------------
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 or more 100%
(c) The multiplier "1.25" in subsections (b) (i) (B) (I) and
(b)(ii)(B)(I) of Section 5.06 shall be reduced to "1.0".
<PAGE>
12.03 The following definitions apply to the terms used in this Section:
(i) "applicable determination date" means the last day of
the preceding Plan Year;
(ii) "top-heavy ratio" means the ratio of:
(A) The present value of the Accrued Pension under the
Plan for key employees to;
(B) The present value of the Accrued Pension under the
Plan for all key employees and non-key employees;
(iii) "key employee" means an employee who is in a category
of employees determined in accordance with the
provisions of Section 416(i) (l) and (5) of the Code
and any regulations thereunder, and where applicable,
on the basis of the Employee's Remuneration from an
Employer or an Affiliated Employer;
(iv) "non-key employee" means any Employee who is not a key
employee;
(v) "applicable valuation date" means the valuation date
coincident with or immediately preceding the last day
of the first Plan Year or the preceding Plan Year,
whichever is applicable;
(vi) "average remuneration" means the average annual
Remuneration of a Participant for the five consecutive
Years of Vesting Service after December 31, 1988 during
which he received the greatest aggregate Remuneration
from an Employer or an Affiliated Employer, excluding
any Remuneration for service after the last Plan Year
with respect to which the Plan is top-heavy;
(vii) "required aggregation group" beans any other qualified
plan(s) of an Employer or an Affiliated Employer in
which there are participants who are key employees or
which enable(s) the Plan to beet the requirements of
Section 401(a) (4) or 410 of the Code; and
<PAGE>
(viii) "permissive aggregation group" means each plan in the
required aggregation group and any other qualified
plan(s) of an Employer or an Affiliated Employer in
which all participants are non-key employees, if the
resulting aggregation group continues to meet the
requirements of Section 401(a) (4) and 410 of the Code.
<PAGE>
ARTICLE XIII
AMENDMENTS
13.01 AMENDMENTS EFFECTIVE OCTOBER 1, 1988.
(a) Section 5.05(b) is amended by deleting the final period (".") and
adding the following at the end thereof:
"or in Section 5.08, if applicable, with respect to a Participant
who terminates service after completing at least 25 Years of
Vesting Service."
(b) The following new Section 5.08 is added at the end of Article V:
"5.08 SPECIAL EARLY RETIREMENT.
(a) In lieu of, and notwithstanding the provisions of
Section 5.03, the provisions of this Section 5.08
shall apply in the case of a Participant who:
(i) has reached an Early Retirement Date,
(ii) retires from service on or after
September 15, 1986,
(iii) retires from service prior to his Normal
Retirement Date, and
(iv) has completed at least 25 Years of Vesting
Service.
(b) A Participant who retires from service on or after
October 1, 1988 and on or after his sixty-second
birthday shall commence to receive an early
retirement Pension as of the first day of the
calendar month coincidental with or immediately
following his retirement from service. Subject to
the provisions of Section 6.01, the amount of such
Pension shall be equal to the Participant's
Accrued Pension.
(c) A Participant who retires from service on or after
October 1, 1988 but prior to his sixty-second
birthday shall commence to receive an early
retirement Pension as of the first day of the
calendar month after he submits to the Committee a
written application for retirement benefits and
after he separates from service. Unless the
Participant otherwise elects, the early retirement
Pension shall be a deferred pension beginning on
the
<PAGE>
first day of the month coincidental with or
immediately following his sixty-second birthday
and, subject to the provisions of Section 6.01,
shall be equal to his Accrued pension. However,
the Participant may elect to receive an early
retirement Pension beginning on the first day of
any calendar month on or after his Early
Retirement Date but before his sixty-second
birthday. In that case, the Participant's Pension
shall be equal to the deferred Pension reduced by
5% for each year by which the date the
Participant's early retirement Pension begins
precedes the first day of the calendar month
coincidental with or next following the
Participant's sixty-second birthday, with a pro-
rata reduction for any portion of year.
(d) A Participant who retired from service on or after
September 15, 1986 but prior to October 1, 1988
under the conditions specified in Section 5.08(a)
above shall have his future Pension payments
increased effective with the Pension payment
payable as of October 1, 1988.
Such increase shall be equal to the additional
amount of Pension the Participant would have
received at his original Pension commencement date
had the provisions of Sections 5.08(b) or 5.08(c),
whichever is applicable, been in effect on such
date.
If a Participant covered by this Section 5.08(d)
had not yet commenced to receive Pension payments
as of October 1, 1988, then the Pension
subsequently payable to him from or after
October 1, 1988 shall be determined under the
provisions of Section 5.08(c)."
13.02 AMENDMENTS EFFECTIVE JANUARY 1, 1994.
Section 7.03 is amended in its entirety to read as follows:
"7.03 OTHER WELFARE BENEFITS.
(a) A Participant who:
(1) has an Employment Commencement Date prior to January 1, 1994
and, except as provided in Sections 7.03(b) and 7.03(e), has
no rehire dates with an Employer or an Affiliated Employer
after December 31, 1993;
(2) has attained age 65;
<PAGE>
(3) has at least 30,000 Credited Hours of Service including
Credited Hours of Service as defined in Section 5.02(b) plus
credited hours under any of the Associated Plans after April
30, 1984;
(4) has at least twenty years of Vesting Service, but only
considering Vesting Service accumulated while in an
employment classification providing eligibility for
participation in this Plan or any of the Associated Plans;
(5) has separated from service on account of Disability as
defined in Section 5.04(b), or on or after attainment of age
55 in any other case; and
(6) has begun receiving retirement benefits under the Plan
is entitled to this Section's welfare benefits, provided the
Participant is not "in competition" with an Employer, or any
Affiliated Employer. For purposes of this Section, no
Participant shall be considered "in competition" with an
Employer, or any Affiliated Employer unless the Participant had
been a Senior Vice President of an Employer (or any Affiliated
Employer) for at least five years during his career with an
Employer or any Affiliated Employers, and the Participant becomes
either a 5% or greater percentage owner of a competing business
or is employed by a competing business in a classification of
Vice President or higher. Considering the preceding, the
determination of competition with an Employer or with any
Affiliated Employer shall be determined under Committee rules of
uniform application.
(b) In addition to the provisions of Section 7.03(a) above, a
Participant who meets the following requirements shall also be
entitled to this Section's welfare benefits:
(1) has attained age 62;
(2) has begun receiving early retirement benefits; and
(3) has either (A) separated from service prior to July 1, 1994
and prior to March 1, 1994, completed at least 30,000
Credited Hours of Service including Credited Hours of
Service as defined in Section 5.02(b) plus credited hours
under any of the
<PAGE>
Associated Plans after April 30, 1984, and completed at
least twenty years of Vesting Service, but only considering
Vesting Service accumulated while in an employment
classification providing eligibility for participation in
this Plan or any of the Associated Plans or (B) attained age
60 prior to March 1, 1994, and separates from service after
completion of at least 30,000 Credited Hours of Service,
including Credited Hours of Service as defined in Section
5.02(b) plus credited hours under any of the Associated
Plans after April 30, 1984, and completion of at least
twenty years of Vesting Service, but only considering
Vesting Service accumulated while in an employment
classification providing eligibility for participation in
this Plan or any of the Associated Plans.
If a Participant who meets the requirements of this Section
7.03(b) is rehired by an Employer or an Affiliated Employer
subsequent to June 30, 1994 and prior to his attainment of age
55, he will not be entitled to this Section's welfare benefits
pursuant to the provisions of this Section 7.03(b). Subsequent
eligibility, if any, for this Section's welfare benefits shall be
dependent upon fulfillment of the requirements of Section
7.03(a), considering the provisions of Section 7.03(e).
If a participant who meets the requirements of this Section
7.03(b) is rehired by an Employer or an Affiliated Employer on or
after his attainment of age 55, he will remain entitled to this
Section's welfare benefits pursuant to the provisions of this
Section 7.03(b) upon his subsequent retirement.
(c) Before his death, a Participant described in Sections or 7.03(b)
is entitled to health benefits dental or vision benefits, if
applicable) according to the standards (or insurance contracts)
adopted and announced by the Committee from time to time.
(d) The Spouse and eligible children of a Participant who is eligible
under Sections 7.03(a) or 7.03(b) for the welfare benefits
described in Section 7.03(c) are also eligible for those benefits
until the Spouse remarries or dies before remarriage. If a
Participant dies as an Employee and satisfies the conditions of
Section 7.03(a)(1),(3) and (4) and has satisfied the conditions
<PAGE>
to receive an early retirement pension under Section 2.19, his
Spouse and eligible children are entitled to the benefits
described in this Section, beginning on the Participant's date of
death, or if later the date that would have been the
Participant's sixty-fifth birthday (sixty-second birthday if the
Participant is eligible under Section 7.03(b) above) and ending
at the Spouse's remarriage or death before remarriage.
(e) In general, a Participant who has an Employment Commencement Date
or any rehire date with an Employer or an Affiliated Employer
that is after December 31, 1993 shall not be entitled to this
Section's welfare benefits. However, a Participant's rehire date
with an Employer or an Affiliated Employer which occurs after
December 31, 1993 shall be ignored for purposes of Section
7.03(a) (1)if the participant satisfies the requirements of
subsection (1) and the requirements of either subsection (2) or
subsection (3) below:
(1) Prior to the rehire date, the Participant has at least
30,000 Credited Hours of Service including Credited Hours of
Service as defined in Section 5.02(b) plus credited hours
under any of the Associated Plans after April 30, 1984 and,
has at least twenty years of Vesting Service but only
considering Vesting Service accumulated while in an
employment classification providing eligibility for
participation in this Plan or any of the Associated Plans,
and
(2) The Participant attained age 55 prior to or coincidental
with his rehire date, or
(3) The Participant fulfilled all of the following conditions:
(A) The Participant has only one rehire date which occurs
after December 31, 1993 and prior to attainment of age
55;
(B) The Participant's period of termination of service
immediately prior to the rehire date is less than 366
days;
(C) The Participant's period of reemployment following his
rehire date is at least 365 consecutive days during
which he is credited with at least 1000 Hours of
Service.
<PAGE>
For purposes of this Section 7.03(e), a Participant shall not be
deemed to have a separation from service and shall not be deemed
to have a rehire date that occurs subsequent to December 31,
1993, if the Participant's termination of service is on account
of Disability as defined in section 5.04(b) and the Participant
returns to service upon recovery from Disability or if the
Participant is laid-off and recalled within 12 months of the
layoff. In such cases and for the purposes of this Section, such
Participant shall be treated as if there was no interruption in
the continuity of his service. However, a layoff in excess of 12
months is deemed a separation from service as of the first day of
lay off.
Further, a Participant who has a rehire date due to the
acquisition of his employer by an Employer or an Affiliated
Employer, shall be deemed not to have a rehire date provided his
employment terminates within the three month period commencing on
the date of acquisition of his employer.
(f) This Section 7.03 is intended to comply with Code Section 401(h)
and must be construed accordingly. Funding for the welfare
benefits under this Section must be maintained in a separate
account within the Trust Fund. Except as provided in Section
7.03(g), the assets and income of this Section's separate account
may only be used to provide welfare benefits under this Section
and may not be used for or diverted to any purpose other than
providing welfare benefits under this Section.
(g) If all of the Plan's liabilities to provide the welfare benefits
under this Section have been satisfied, any amount remaining in
this Section's separate account must be returned to Disney or to
the other Employers according to Disney's direction.
(h) As to each Employee who is a five-percent owner as defined in
Code section 416(i) (l) (B) during any Plan Year for which
contributions are made under this Section's welfare benefits, the
Administrative Committee must cause the appropriate Trustees and
co-Trustees to establish and maintain a separate account. Each
such Employee's separate subaccount of this Section's separate
subaccount must hold the assets used to fund this Section's
benefits for that Employee and his Spouse and dependents.
Benefits under this
<PAGE>
Section for an Employee described in this subsection or for his
Spouse and dependents may be paid only from the separate
subaccount maintained for him."
13.03 AMENDMENTS EFFECTIVE MARCH 1, 1994.
(a) Section 5.03(b) is amended effective March 1, 1994 with respect
to Participants retiring from service on or after said date by
adding the following sentence at the end thereof:
"Notwithstanding the foregoing, the Pension payable under this
Section 5.03(b) for any Participant who retires from service
after completing twenty-five Years of Vesting Service shall not
be less than his Accrued Pension as of February 28, 1994 reduced
by 5% for each year by which the date the Participant's early
retirement Pension begins precedes the first day of the calendar
month coincidental with or next following the Participants sixty-
second birthday, with a pro-rata reduction for any portion of a
year."
(b) The last sentence of Section 5.05(b) is amended to read as
follows:
"In that case, the Participant's Pension shall be equal to the
vested Pension otherwise payable at his Normal Retirement Date
reduced as provided for Early Retirement in Section 5.03."
(c) Section 5.08 of the Plan is deleted effective March 1, 1994 for
Participants retiring from service on or after said date.
<PAGE>
Exhibit 21
THE WALT DISNEY COMPANY AND SUBSIDIARIES
Name of subsidiary State of Incorporation
- ------------------ ----------------------
Buena Vista Home Video, Inc. California
Buena Vista International, Inc. California
Buena Vista Pictures Distribution, Inc. California
Buena Vista Television California
EDL Holding Company Delaware
Fidelity Television, Inc. California
KCAL-TV, Inc. California
Lake Buena Vista Communities, Inc. Delaware
The Disney Channel California
The Disney Store, Inc. California
Walt Disney Pictures and Television California
Walt Disney World Co. Delaware
WCO Parent Corporation Delaware
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated balance sheet and consolidated statement of income found on
pages 27 and 26 of the Company's Form 10-K for 1994 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-START> OCT-1-1993
<PERIOD-END> SEP-30-1994
<EXCHANGE-RATE> 1
<CASH> 187
<SECURITIES> 1323
<RECEIVABLES> 1670
<ALLOWANCES> 0
<INVENTORY> 668
<CURRENT-ASSETS> 0
<PP&E> 8442
<DEPRECIATION> 2627
<TOTAL-ASSETS> 12826
<CURRENT-LIABILITIES> 0
<BONDS> 2937
<COMMON> 945
0
0
<OTHER-SE> 4563
<TOTAL-LIABILITY-AND-EQUITY> 12826
<SALES> 10055
<TOTAL-REVENUES> 10055
<CGS> 0
<TOTAL-COSTS> 8089
<OTHER-EXPENSES> 162
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 120
<INCOME-PRETAX> 1703
<INCOME-TAX> 593
<INCOME-CONTINUING> 1110
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1110
<EPS-PRIMARY> 2.04
<EPS-DILUTED> 2.04
</TABLE>
