<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 7, 1996)
$3,000,000,000
THE WALT DISNEY COMPANY
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
---------------------
The Walt Disney Company ("Disney") may offer from time to time Medium-Term
Notes (the "Notes") having an aggregate initial offering price of up to
$3,000,000,000 or the equivalent thereof in one or more foreign or composite
currencies or currency units. Each Note will mature on a Business Day nine
months or more from the date of issue, as selected by the purchaser and agreed
to by Disney, and may be subject to redemption or repurchase by Disney, in whole
or in part, prior to its Stated Maturity, as set forth therein and specified in
a pricing supplement hereto (each, a "Pricing Supplement"). Each Note will be
denominated in U.S. dollars or in one or more foreign or composite currencies or
currency units as set forth in an applicable Pricing Supplement to this
Prospectus Supplement. See "Important Currency Information" and "Currency
Risks." Each Note will bear interest at either a fixed rate (a "Fixed Rate
Note"), which may be zero in the case of certain Notes issued at a price
representing a discount from the principal amount payable at maturity, or a
floating rate (a "Floating Rate Note") as set forth in the applicable Pricing
Supplement. See "Description of the Notes" herein and "Description of the Debt
Securities" in the accompanying Prospectus. Interest on Fixed Rate Notes will
accrue from their date of issue and, unless otherwise specified in the
applicable Pricing Supplement, will be payable semiannually in arrears on
February 1 and August 1 of each year and at Maturity. The rate of interest on
each Floating Rate Note will be reset daily, weekly, monthly, quarterly,
semiannually or annually, and interest on each Floating Rate Note will accrue
from its date of issue and will be payable in arrears monthly, quarterly,
semiannually or annually, in each case as set forth therein and specified in the
applicable Pricing Supplement, and at Maturity. If provided in an applicable
Pricing Supplement, the Notes may be subject to redemption, in whole or in part,
at the option of Disney. In addition, unless specified in an applicable Pricing
Supplement, the Notes will not be subject to repurchase by Disney at the option
of the Holder thereof. See "Description of the Notes -- Redemption or
Repurchase."
Each Note will be issued in fully registered book-entry form (a "Book-Entry
Note") or definitive form (a "Definitive Note"), as set forth in the applicable
Pricing Supplement. Each Book-Entry Note will be represented by a global
security deposited with or on behalf of The Depository Trust Company (or such
other depositary as is identified in an applicable Pricing Supplement) (the
"Depository") and registered in the name of the Depository's nominee. Interests
in Book-Entry Notes will be shown on, and transfers thereof will be effected
only through, records maintained by the Depository and its participants.
Book-Entry Notes will not be issuable as Definitive Notes except under the
limited circumstances described herein. See "Description of the Notes --
Book-Entry Notes."
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS OR ANY
SUPPLEMENT HERETO. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
AGENTS'
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)
--------------- ------------------------- -------------------------------
<S> <C> <C> <C>
Per Note....... 100% .125%-.750% 99.875%-99.250%
Total (4)...... $3,000,000,000 $3,750,000-$18,750,000 $2,996,250,000-$2,981,250,000
<FN>
- ------------------------------
(1) Unless otherwise specified in an applicable Pricing Supplement, the Notes
will be issued at 100% of their principal amount.
(2) Disney will pay a commission, ranging from .125% to .750% of the principal
amount (or in the case of a Note issued with original issue discount, the
price to public) of Notes with a term of less than 30 years sold through an
Agent (as defined below), to such Agent and may sell Notes to an Agent, as
principal, for resale to investors or other purchasers at varying prices
related to prevailing market prices at the time of resale, in either case
as determined by such Agent or, if so agreed, at a fixed public offering
price. Commissions with respect to sales of Notes with a Stated Maturity of
30 years or more will be agreed to by Disney and the applicable Agent at
the time of such sale. Disney has agreed to indemnify the Agents against,
and to provide contribution with respect to, certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See "Plan of
Distribution."
(3) Before deducting expenses payable by Disney estimated at $750,000.
(4) Or the equivalent thereof in one or more foreign or composite currencies or
currency units.
</TABLE>
------------------------------
The Notes are being offered on a continuing basis by Disney through the
Agents, who have agreed to use their reasonable best efforts to solicit offers
to purchase the Notes. Disney may also sell Notes to an Agent, as principal, for
resale to investors or other purchasers and has reserved the right to sell Notes
to or through others and directly to investors on its own behalf. Disney
reserves the right to cancel or modify the offer made hereby without notice. No
termination date has been established for the offering of the Notes. Disney or
an Agent, if it solicits the offer, may reject any offer to purchase Notes in
whole or in part. See "Plan of Distribution." The Notes will not be listed on
any securities exchange and there can be no assurance that the Notes offered by
this Prospectus Supplement will be sold or that there will be a secondary market
for the Notes.
------------------------------
BEAR, STEARNS & CO. INC.
CS FIRST BOSTON
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
MORGAN STANLEY & CO.
INCORPORATED
----------------------------------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS MARCH 7, 1996.
<PAGE>
USE OF PROCEEDS
Disney intends to use the net proceeds from the sale of the Notes (estimated
to be from approximately $2.981 billion to approximately $2.996 billion) for
general corporate purposes, including, without limitation, the repayment of
commercial paper and other borrowings outstanding from time to time, capital
expenditures and the repurchase from time to time of outstanding shares of
Disney's common stock.
DESCRIPTION OF THE NOTES
The Notes will be issued as a series of senior debt securities under an
Indenture, dated as of March 7, 1996 (the "Indenture"), between Disney and
Citibank, N.A., a national banking association, as trustee (the "Trustee"). The
following summary of certain provisions of the Notes and of the Indenture does
not purport to be complete and is qualified in its entirety by reference to the
Indenture, the form of which has been incorporated by reference as an exhibit to
the Registration Statement of which this Prospectus Supplement and the
accompanying Prospectus are a part. Capitalized terms used but not defined
herein or in the accompanying Prospectus have the meanings given to them in the
Indenture. The term "Securities," as used under this caption, refers to all
Securities issued and issuable from time to time under the Indenture and
includes the Notes. The following description will apply to the Notes unless
otherwise specified in a Pricing Supplement.
Each Note will be denominated either in U.S. dollars or in one or more
foreign or composite currencies or currency units (a "Denominated Currency").
The applicable Pricing Supplement will specify such Denominated Currency and the
currency, which may be U.S. dollars or one or more foreign or composite
currencies or currency units (such as the European Currency Unit or "ECU"), in
which the principal and interest with respect to such Note shall be paid (the
"Payment Currency"). The Denominated Currency and the Payment Currency may be
the same currency or different currencies. If the Denominated Currency or the
Payment Currency is not U.S. dollars, the applicable Pricing Supplement shall
also include any other terms relating to such currency or currencies, including
exchange rates as against the U.S. dollar at selected times during the last five
years, and any exchange controls affecting such Denominated Currency or Payment
Currency. See "Important Foreign Currency Information," "Foreign Currency Risks"
and "Certain United States Federal Tax Considerations."
References herein to "U.S. dollars," "U.S. $" or "$" are to the currency of
the United States of America.
GENERAL
All Securities, including the Notes, issued and to be issued under the
Indenture will be senior unsecured obligations of Disney and will rank PARI
PASSU with all other senior unsecured indebtedness of Disney from time to time
outstanding. The Indenture does not limit the aggregate principal amount of
Securities which may be issued thereunder and Securities may be issued
thereunder from time to time as a single series or in two or more separate
series up to the aggregate principal amount from time to time authorized by
Disney for each series. Disney may, from time to time, without the consent of
the holders of the Notes, provide for the issuance of Notes or other Securities
under the Indenture in addition to the $3,000,000,000 aggregate initial offering
price of Securities authorized under the Indenture as of the date of this
Prospectus Supplement, none of which has heretofore been issued.
The Notes are obligations exclusively of Disney. The operations of Disney
are conducted almost entirely through subsidiaries. Accordingly, the cash flow
and the consequent ability to service debt of Disney, including the Notes, are
dependent upon the earnings of its subsidiaries and the distribution of those
earnings to Disney, whether by dividends, loans or otherwise. The payment of
dividends and the making of loans and advances to Disney by its subsidiaries may
be subject to statutory or contractual restrictions, are contingent upon the
earnings of those subsidiaries and are subject to various business
considerations. Any right of Disney to receive assets of any of its subsidiaries
upon their liquidation or reorganization (and the consequent right of the
holders of the Notes to participate in those assets) will be
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effectively subordinated to the claims of that subsidiary's creditors (including
trade creditors), except to the extent that Disney is itself recognized as a
creditor of such subsidiary, in which case the claims of Disney would still be
subordinate to any security interests in the assets of such subsidiary and any
indebtedness of such subsidiary senior to that held by Disney. As of December
31, 1995, on a pro forma basis as if the acquisition of Capital Cities/ABC, Inc.
had occurred at such date, Disney's subsidiaries would have had approximately
$10.4 billion of indebtedness outstanding. The Indenture does not limit Disney's
or Disney's subsidiaries' ability to incur additional indebtedness in the
future.
The Notes offered pursuant hereto are limited to $3,000,000,000 aggregate
initial offering price or the equivalent thereof in one or more foreign or
composite currencies or currency units. The aggregate principal amount of Notes
that may be issued may be reduced to the extent that Disney issues any
securities, other than Notes offered hereby, under the registration statement of
which this Prospectus Supplement constitutes a part. The Notes will be offered
on a continuing basis and will mature on a Business Day (as defined herein) nine
months or more from the date of issue, as selected by the purchaser and agreed
to by Disney. Interest-bearing Notes will bear interest at either a fixed rate
("Fixed Rate Notes"), or a rate determined by reference to one or more Base
Rates (as defined herein), which may be adjusted by a Spread or Spread
Multiplier (as defined herein) ("Floating Rate Notes"). In no event will the
rate of interest payable on any Fixed Rate Note or Floating Rate Note be in
excess of the maximum rate of interest permitted by applicable law. Discount
Notes (as defined herein) may be issued at significant discounts from their
principal amount payable at Stated Maturity and some Discount Notes may be zero
coupon Notes which will not bear interest. Unless otherwise specified in an
applicable Pricing Supplement, the Notes will be denominated and will be payable
in U.S. dollars.
Interest rates, interest rate formulae and other variable terms of the Notes
are subject to change by Disney from time to time, but no such change will
affect any Note already issued or as to which an offer to purchase has been
accepted by Disney. Interest rates offered by Disney with respect to the Notes
may differ, depending upon, among other things, the aggregate principal amount
of the Notes purchased in any single transaction.
Each Note will be a Book-Entry Note or a Definitive Note, in denominations
of $1,000 or any integral multiple of $1,000. Book-Entry Notes may be
transferred or exchanged only through a participating member of the Depository.
See "Book-Entry Notes." Registration of transfers of Definitive Notes will be
made at the Corporate Trust Office of the Trustee. No service charge will be
made by Disney, the Trustee or the Registrar for any such registration of
transfer or exchange of Notes, but Disney may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith (other than exchanges pursuant to Sections 2.9, 3.6 or 9.5 of the
Indenture, not involving any transfer).
Notes denominated in a Denominated Currency other than U.S. dollars will be
issued in denominations of the equivalent of U.S. $1,000 or any integral
multiple of the equivalent of U.S. $1,000, as determined by reference to the
noon U.S. dollar buying rate in New York City for cable transfers of such
Denominated Currency published by the Federal Reserve Bank of New York (the
"Market Exchange Rate") for the Business Day immediately preceding the date of
issuance; PROVIDED, HOWEVER, in the case of ECUs, the Market Exchange Rate shall
be the rate of exchange determined by the Commission of the European Communities
(or any successor thereto) as published in the Official Journal of the European
Communities, or any successor publication, for the Business Day immediately
preceding the date of issuance.
Payments of principal of and interest, if any, on Book-Entry Notes will be
made by Disney through the Trustee to the Depository. See "Book-Entry Notes." In
the case of Definitive Notes, payment of principal at the Stated Maturity of
each Definitive Note (or on any prior date on which the principal or an
installment of principal of such Definitive Note becomes due and payable,
whether by declaration of acceleration, call for redemption, put for repurchase,
or otherwise) (each such date, a "Maturity"), will be made upon presentation of
the Definitive Note at the Corporate Trust Office of the Trustee in the Borough
of Manhattan, The City of New York, or at such other place as Disney may
designate. Payment of interest
S-3
<PAGE>
due at Maturity will be made to the person to whom payment of the principal of
the Definitive Note shall be made. Payment of interest due on Definitive Notes
other than at Maturity will be made at the Corporate Trust Office of the Trustee
or, at the option of Disney, may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the register of
Securities.
The Indenture does not afford holders of the Notes protection in the event
of a highly leveraged transaction, reorganization, restructuring, merger or
similar transaction involving Disney that may adversely affect holders of the
Notes.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law, regulation or executive order to close in The
City of New York; PROVIDED, HOWEVER, that with respect to Notes the payment of
which is to be made in a Denominated Currency other than U.S. dollars, such day
is also not a day on which banking institutions are authorized or required by
law, regulation or executive order to close in the principal financial center of
the country of such Denominated Currency (or, in the case of ECUs, is not a day
designated as an ECU Non-Settlement Day by the ECU Banking Association or
otherwise generally regarded in the ECU interbank market as a day on which
payments in ECU's shall not be made); PROVIDED, HOWEVER, that, with respect to
LIBOR Notes, such day is also a London Business Day (as defined below). "London
Business Day" means any day (i) if the Index Currency (as defined below) is
other than ECU, on which dealings in such Index Currency are transacted in the
London interbank market or (ii) if the Index Currency is ECU, that is not
designated as an ECU Non-Settlement Day by the ECU Banking Association or
otherwise generally regarded in the ECU interbank market as a day on which
payments in ECUs shall not be made.
"Discount Note" means any Security which provides for an amount less than
the principal amount thereof to be due and payable upon declaration of
acceleration of the Stated Maturity thereof.
PAYMENT CURRENCY
If the applicable Pricing Supplement provides for payments of interest and
principal on non-U.S. dollar denominated Notes to be made in U.S. dollars,
conversion of the Payment Currency into U.S. dollars will be effected in the
manner set forth in the applicable Pricing Supplement.
Except as set forth below, if the principal of, or interest on, any Note is
payable in a Payment Currency other than U.S. dollars and such Payment Currency
is not available to Disney for making payments thereof due to the imposition of
exchange controls or other circumstances beyond the control of Disney, or is no
longer used by the government of the country issuing such currency or for the
settlement of transactions by public institutions within the international
banking community, then Disney will be entitled to satisfy its obligations to
Holders of such Notes by making such payment in U.S. dollars on the basis of the
Market Exchange Rate on the date of such payment or, if the Market Exchange Rate
is not then available, as of the most recent practicable date. Any payment made
under such circumstances in U.S. dollars where the required payment is in a
Payment Currency other than U.S. dollars will not constitute an Event of
Default.
If payment on a Note is required to be made in ECUs and ECUs are unavailable
due to imposition of exchange controls or other circumstances beyond the control
of Disney, or are no longer used in the European Monetary System, all payments
in respect of such Notes shall be made in U.S. dollars until the ECUs are
available or are so used. The amount of each payment in U.S. dollars shall be
computed on the basis of the equivalent of the ECU in U.S. dollars, determined
by Disney or its agent as described below, as of the second Business Day prior
to the date on which such payment is due. The component currencies of the ECU
(the "Components") for purposes of such computation shall be those currencies
which were components of the ECU as of the most recent date on which the ECU was
used in the European Monetary System. The equivalent of the ECU in U.S. dollars
shall be calculated by aggregating the U.S. dollar equivalents of the
Components. The U.S. dollar equivalent of each of the Components shall be
determined by Disney or its agent on the basis of the most recently available
Market Exchange Rate for each such Component.
S-4
<PAGE>
If the official unit of any Component is altered by way of combination or
subdivision, the number of units of that currency as a Component shall be
divided or multiplied in the same proportion. If two or more component
currencies are consolidated into a single currency, the amounts of those
currencies as Components shall be replaced by an amount in such single currency
equal to the sum of the amounts of the consolidated component currencies
expressed in such single currency. If any Component is divided into two or more
currencies, the amount of that currency as a Component shall be replaced by
amounts of such two or more currencies, each of which shall have a value on the
date of division equal to the amount of the former component currency divided by
the number of currencies into which that currency was divided.
All determinations referred to above made by Disney or any of its agents
shall be at its sole discretion and, in the absence of manifest error, shall be
conclusive for all purposes and binding on Holders of the Notes.
REDEMPTION OR REPURCHASE
Unless otherwise specified in an applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. If provided in an applicable Pricing
Supplement, the Notes may be subject to redemption, in whole or in part, prior
to their Stated Maturity at the option of Disney or through operation of a
mandatory or optional sinking fund or analogous provisions. Such Pricing
Supplement will set forth the detailed terms of such redemption, including, but
not limited to, the dates after or on which and the price or prices (including
premium, if any) at which such Notes may be redeemed.
Unless otherwise specified in an applicable Pricing Supplement, Notes will
not be subject to purchase by Disney at the option of the Holder thereof. If a
purchase date or dates (each, a "Purchase Date") with respect to a Note is
specified in an applicable Pricing Supplement, on each such Purchase Date so
specified, Disney will become obligated to purchase, at the option of the
Holder, all or a portion of such Note for which a written notice (a "Purchase
Notice") has been delivered by the Holder to the Trustee, at any time from the
opening of business on the date that is 60 days prior to such Purchase Date
until the close of business on the date that is 30 days prior to such Purchase
Date, subject to certain additional conditions described below. The delivery to
the Trustee of a Purchase Notice is irrevocable.
Each Purchase Notice must state (i) the CUSIP numbers of the Notes to be
delivered by the Holder thereof for purchase by Disney; (ii) the portion of the
principal amount of Notes to be purchased, which portion must be an integral
multiple of $1,000; and (iii) that such Notes are to be purchased by Disney
pursuant to the applicable provisions of the Notes. Any Note which is to be
purchased by Disney only in part must be surrendered at a Place of Payment
therefor, and Disney will execute, and the Trustee will authenticate and deliver
to the Holder of such Note without service charge, a new Note or Notes of like
tenor, of any authorized denomination as requested by such Holder, in an
aggregate principal amount equal to and in exchange for the unpurchased portion
of the principal of the Note so surrendered.
The price payable on any Purchase Date with respect to any applicable Note
will be equal to the applicable purchase price (the "Purchase Price") specified
in the applicable Pricing Supplement, together with accrued interest to but
excluding the Purchase Date; PROVIDED, HOWEVER, that installments of interest
payable prior to the Purchase Date will be payable to the Holders of such Notes,
or one or more Predecessor Securities, registered as such at the close of
business on the relevant Regular Record Dates, all according to the provisions
of the Indenture.
If a Purchase Notice has been given with respect to an applicable Note, from
and after the Purchase Date with respect to which such Purchase Notice relates
(unless Disney defaults in payment of the Purchase Price and accrued interest),
such Note (or portion thereof to be purchased) will cease to bear interest and
all other rights of the Holder (other than the right to receive the Purchase
Price, together with accrued interest to but excluding the Purchase Date, upon
the delivery of the Note in accordance with its terms) will terminate. Payment
of the Purchase Price, together with accrued interest to but excluding the
Purchase Date, for a Note for which a Purchase Notice has been delivered is
conditioned upon delivery of such Note (with, if Disney or the Trustee so
requires, due endorsement by, or a written instrument of
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transfer in form satisfactory to Disney and the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing) to the Trustee at its
Corporate Trust Office in the Borough of Manhattan, The City of New York, or at
any other Place of Payment designated by Disney for such purpose, at any time
(whether prior to, on or after the Purchase Date) after delivery of such
Purchase Notice. Payment of the Purchase Price for such Note (or portion thereof
to be purchased), together with accrued interest to the Purchase Date, will be
made on the later of the Purchase Date or promptly following the time of
delivery of such Note.
No Notes may be purchased if there has occurred and is continuing an Event
of Default (other than a default in payment of the Purchase Price, together with
accrued interest, with respect to such Notes).
Disney will not be required to (i) issue, register the transfer of or
exchange any Note having a Purchase Date specified therein during a period
beginning at the opening of business 15 days before the first date any Purchase
Notice may be delivered to the Trustee with respect thereto and ending at the
close of business on the last date a Purchase Notice may be delivered to the
Trustee with respect thereto or (ii) register the transfer of or exchange any
Note, or portion thereof, for which a Purchase Notice has been delivered to the
Trustee, except the portion of any such Note for which the Purchase Notice has
not been delivered to the Trustee.
Disney will comply with the requirements of Rule 14e-1 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and any other applicable
securities laws or regulations in connection with any such repurchase.
Disney may at any time purchase Notes at any price or prices in the open
market or otherwise. Notes so purchased by Disney may be held or resold or, at
the discretion of Disney, may be surrendered to the Trustee for cancellation.
For all purposes of this Prospectus Supplement, any applicable Pricing
Supplement and the Indenture, unless the context otherwise requires, all
provisions relating to the redemption or purchase by Disney of Notes shall
relate, in the case of any Notes redeemed or purchased or to be redeemed or
purchased by Disney only in part, to the portion of the principal amount of such
Notes which has been or is to be so redeemed or purchased.
INTEREST
GENERAL
Unless otherwise specified in an applicable Pricing Supplement, each Note
will bear interest from the date of original issue at the rate per annum, or, in
the case of a Floating Rate Note, pursuant to the interest rate formula, stated
therein, until the principal thereof is paid or made available for payment.
Interest will be payable in arrears on each date specified in a Note on which an
installment of interest is due and payable (an "Interest Payment Date") and at
Maturity. Each interest payment shall be the amount of interest accrued from and
including the most recent Interest Payment Date in respect of which interest has
been paid or duly provided for (or from and including the date of original issue
if no interest has been paid or duly provided for with respect to such Note) to
but excluding the next succeeding Interest Payment Date (an "Interest Accrual
Period"). The first payment of interest on any Note originally issued between a
Regular Record Date and the related Interest Payment Date will be made on the
Interest Payment Date immediately following the next succeeding Regular Record
Date to the registered holder on such next succeeding Regular Record Date. As a
result of certain interest rate characteristics of the Notes, they may be issued
with original issue discount for United States Federal income tax purposes. See
"Certain United States Federal Tax Considerations." Certain United States
Federal tax considerations and other considerations applicable to any Notes may
be described in an applicable Pricing Supplement.
FIXED RATE NOTES
Unless otherwise specified in an applicable Pricing Supplement, the Interest
Payment Dates with respect to any Fixed Rate Note will be February 1 and August
1 of each year, and the Regular Record
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Dates in respect of such Interest Payment Dates will be the immediately
preceding January 15 and July 15 (whether or not a Business Day), respectively.
If any Interest Payment Date or Maturity of a Fixed Rate Note falls on a day
that is not a Business Day with respect to such Fixed Rate Note, the payment due
on such Interest Payment Date or at Maturity will be made on the following day
that is a Business Day with respect to such Fixed Rate Note as if it were made
on the date such payment was due and no interest shall accrue on the amount so
payable for the period from and after such Interest Payment Date or Maturity, as
the case may be. Interest on each Fixed Rate Note will be computed on the basis
of a 360-day year of twelve 30-day months.
FLOATING RATE NOTES
GENERAL. Unless otherwise specified in an applicable Pricing Supplement,
Floating Rate Notes will be issued as described below. Interest on Floating Rate
Notes will be determined by reference to a "Base Rate," which may be one or more
of the following: (a) the Commercial Paper Rate (as defined below), in which
case such Note will be a "Commercial Paper Rate Note;" (b) LIBOR (as defined
below), in which case such Note will be a "LIBOR Note;" (c) the CD Rate (as
defined below), in which case such Note will be a "CD Rate Note;" (d) the
Federal Funds Rate (as defined below), in which case such Note will be a
"Federal Funds Rate Note;" (e) the Treasury Rate (as defined below), in which
case such Note will be a "Treasury Rate Note;" (f) the Prime Rate (as defined
below), in which case such Note will be a "Prime Rate Note;" (g) the CMT Rate
(as defined below), in which case such Note will be a "CMT Rate Note;" or (h)
such other Base Rate or interest rate formula as may be set forth in the
applicable Pricing Supplement. In addition, a Floating Rate Note may bear
interest calculated by reference to the lowest of two or more Base Rates
determined in the same manner as the Base Rates are determined for the types of
Notes described above. Each Floating Rate Note and the applicable Pricing
Supplement will specify the Base Rate or Rates applicable thereto.
INTEREST RATE CALCULATION. The interest rate on each Floating Rate Note
will be calculated by reference to the specified Base Rate or the lowest of two
or more specified Base Rates, in either case plus or minus the Spread, if any,
or multiplied by the Spread Multiplier, if any. The "Spread" is the number of
basis points to be added to or subtracted from the related Base Rate or Rates
applicable to such Floating Rate Note. The "Spread Multiplier" is the percentage
of the related Base Rate or Rates to be multiplied to determine the applicable
interest rate on such Floating Rate Note. The "Index Maturity" is the period to
maturity of the instrument or obligation with respect to which the related Base
Rate or Rates are calculated. Each Floating Rate Note and the applicable Pricing
Supplement will specify the Index Maturity and the Spread or Spread Multiplier,
if any, applicable thereto.
Each Floating Rate Note and the applicable Pricing Supplement will specify
whether the rate of interest on such Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semiannually or annually (each, an "Interest Reset
Period") and the date on which such interest rate will be reset (each, an
"Interest Reset Date"). Unless otherwise specified in a Floating Rate Note and
the applicable Pricing Supplement, the Interest Reset Date will be, in the case
of a Floating Rate Note which resets (a) daily, each Business Day; (b) weekly,
the Wednesday of each week (with the exception of weekly reset Treasury Rate
Notes, which reset the Tuesday of each week, except as specified below); (c)
monthly, the third Wednesday of each month; (d) quarterly, the third Wednesday
of March, June, September and December of each year; (e) semiannually, the third
Wednesday of each of the two months specified in such Pricing Supplement; and
(f) annually, the third Wednesday of the month specified in such Pricing
Supplement. If any Interest Reset Date for any Floating Rate Note would
otherwise be a day that is not a Business Day, such Interest Reset Date will be
postponed to the next succeeding day that is a Business Day, except that in the
case of a LIBOR Note (or a Note for which LIBOR is the applicable Base Rate), if
such Business Day is in the next succeeding calendar month, such Interest Reset
Date shall be the last Business Day in the preceding month.
The interest rate applicable to each Interest Reset Period commencing on the
Interest Reset Date or Dates with respect to such Interest Reset Period will be
the rate determined on the applicable "Interest Determination Date." Unless
otherwise specified in an applicable Pricing Supplement, the Interest
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Determination Date with respect to a Commercial Paper Rate Note (the "Commercial
Paper Interest Determination Date"), a CD Rate Note (the "CD Interest
Determination Date"), a Federal Funds Rate Note (the "Federal Funds Interest
Determination Date"), a Prime Rate Note (the "Prime Rate Interest Determination
Date"), and a CMT Rate Note (the "CMT Interest Determination Date") will be the
second Business Day preceding each Interest Reset Date, and the Interest
Determination Date with respect to a LIBOR Note (the "LIBOR Interest
Determination Date") will be the second London Business Day preceding each
Interest Reset Date. Unless otherwise specified in an applicable Pricing
Supplement, the Interest Determination Date with respect to a Treasury Rate Note
(the "Treasury Rate Interest Determination Date") will be the day in the week in
which the Interest Reset Date falls on which day Treasury Bills normally would
be auctioned (Treasury Bills are normally sold at auction on Monday of each
week, unless that day is a legal holiday, in which case the auction is normally
held on the following Tuesday, except that such auction may be held on the
preceding Friday) or, if no such auction is held for a particular week, the
first Business Day of that week; PROVIDED, HOWEVER, that if, as a result of a
legal holiday, an auction is held on the Friday of the week preceding the
Interest Reset Date, the related Interest Determination Date shall be such
preceding Friday; and PROVIDED, FURTHER, that if an auction shall fall on any
Interest Reset Date, then the Interest Reset Date shall instead be the first
Business Day immediately following such auction. Unless otherwise specified in
the applicable Pricing Supplement, the Interest Determination Date pertaining to
a Note the interest rate of which is determined with reference to two or more
Base Rates will be the first Business Day which is at least two Business Days
prior to such Interest Reset Date for such Note on which each Base Rate shall be
determinable. Each Base Rate shall be determined and compared on such date, and
the applicable interest rate shall take effect on the related Interest Reset
Date.
Any Floating Rate Note and the applicable Pricing Supplement may also
specify either or both a maximum limit and a minimum limit on the rate at which
interest may accrue during any Interest Accrual Period. In addition to any
maximum interest rate which may be applicable to any Floating Rate Note pursuant
to the above provisions, the interest rate on Floating Rate Notes will in no
event be higher than the maximum rate permitted by New York law, as the same may
be modified by United States law of general application. Under present New York
law, the maximum rate of interest is 25% per annum on a simple interest basis.
This limit may not apply to Floating Rate Notes in which $2,500,000 or more has
been invested.
The interest rate in effect with respect to a Floating Rate Note on each day
that is not an Interest Reset Date will be the interest rate determined as of
the Interest Determination Date pertaining to the immediately preceding Interest
Reset Date and the interest rate in effect on any day that is an Interest Reset
Date will be the interest rate determined as of the Interest Determination Date
pertaining to such Interest Reset Date, subject in either case to applicable
provisions of law and any maximum or minimum interest rate limitation referred
to above; PROVIDED, HOWEVER, that the interest rate in effect with respect to a
Floating Rate Note for the period from the date of original issue to the first
Interest Reset Date will be the rate specified as such therein and in the
applicable Pricing Supplement (the "Initial Interest Rate").
With respect to each Floating Rate Note, accrued interest is calculated by
multiplying its face amount by an accrued interest factor. Such accrued interest
factor is computed by adding the interest factor calculated for each day from
the date of issue, or from the last date to which interest has been paid or duly
provided for, to the date for which accrued interest is being calculated. The
interest factor for each such day is computed by dividing the interest rate
applicable to such day by 360, in the case of Commercial Paper Rate Notes, LIBOR
Notes, CD Rate Notes, Federal Funds Rate Notes and Prime Rate Notes, and by the
actual number of days in the year, in the case of Treasury Rate Notes and CMT
Rate Notes. Unless otherwise specified in an applicable Pricing Supplement, the
interest factor for Notes for which the interest rate is calculated with
reference to two or more Base Rates will be calculated in each period in the
same manner as if only the lowest of the applicable Base Rates applied.
All percentages resulting from any calculation on Floating Rate Notes will
be rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage
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point rounded upward (e.g., 9.876545% (or .09876545) will be rounded upward to
9.87655% (or .0987655)), and all dollar amounts used in or resulting from such
calculation on Floating Rate Notes will be rounded to the nearest cent (with
one-half cent being rounded upward).
Unless otherwise specified in an applicable Pricing Supplement, the Trustee
will be the "Calculation Agent" with respect to all Floating Rate Notes. Upon
the request of the holder of any Floating Rate Note, the Trustee will provide
the interest rate then in effect and, if determined, the interest rate that will
become effective as a result of a determination made for the next Interest Reset
Date with respect to such Floating Rate Note. If at any time the Trustee is not
the Calculation Agent, Disney will notify the Trustee of each determination of
the interest rate applicable to any such Floating Rate Note promptly after such
determination is made by any successor Calculation Agent. The "Calculation
Date," where applicable, pertaining to any Interest Determination Date is the
date by which the applicable interest rate must be calculated and will be the
earlier of (a) the tenth calendar day after such Interest Determination Date,
or, if any such day is not a Business Day, the next succeeding Business Day and
(b) the Business Day preceding the applicable Interest Payment Date or Maturity
Date, as the case may be.
INTEREST PAYMENT DATE. Except as provided below or in the applicable
Pricing Supplement, the Interest Payment Date will be, in the case of a Floating
Rate Note which resets (a) daily, weekly or monthly, on the third Wednesday of
each month or on the third Wednesday of each March, June, September and December
of each year, as specified therein and in the applicable Pricing Supplement; (b)
quarterly, on the third Wednesday of March, June, September and December of each
year; (c) semiannually, on the third Wednesday of each of the two months
specified therein and in the applicable Pricing Supplement; and (d) annually, on
the third Wednesday of the month specified therein and in the applicable Pricing
Supplement; and, in each case, at Maturity.
If any Interest Payment Date (other than an Interest Payment Date occurring
on the Maturity Date) for a Floating Rate Note falls on a day that is not a
Business Day with respect to such Note, such Interest Payment Date will be
postponed to the following day that is a Business Day with respect to such Note,
except that, in the case of a LIBOR Note (or a Note for which LIBOR is the
applicable Base Rate), if such Business Day is in the next succeeding calendar
month, such Interest Payment Date shall be the immediately preceding day that is
a Business Day with respect to such Note. If the Maturity of a Floating Rate
Note falls on a day that is not a Business Day with respect to such Note, the
payment of principal and interest may be made on the next succeeding Business
Day with respect to such Note, and no interest on such payment shall accrue for
the period from and after the Maturity. Unless otherwise specified in a Floating
Rate Note and the applicable Pricing Supplement, the Regular Record Date or
Dates for interest payable on such Floating Rate Note will be the fifteenth day
(whether or not a Business Day) immediately preceding the related Interest
Payment Date or Dates.
The interest rate in effect with respect to a Floating Rate Note from the
date of issue to the first Interest Reset Date will be the Initial Interest
Rate. The interest rate for each subsequent Interest Reset Date will be
determined by the Calculation Agent as follows:
COMMERCIAL PAPER RATE NOTES
Commercial Paper Rate Notes will bear interest at the interest rates
(calculated with reference to the Commercial Paper Rate and the Spread or Spread
Multiplier, if any) specified in such Commercial Paper Rate Notes and in an
applicable Pricing Supplement.
Unless otherwise specified in an applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Commercial Paper Interest Determination
Date, the Money Market Yield (as defined below) on such date of the rate for
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement as published by the Board of Governors of the Federal Reserve System
in "Statistical Release H.15(519), Selected Interest Rates" or any successor
publication ("Release H.15(519)") under the heading "Commercial Paper." In the
event that such rate is not published by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Commercial Paper Interest
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Determination Date, then the Commercial Paper Rate will be the Money Market
Yield on such Commercial Paper Interest Determination Date of the rate for
commercial paper of the Index Maturity specified in the applicable Pricing
Supplement as published by the Federal Reserve Bank of New York in its daily
statistical release "Composite 3:30 P.M. Quotations for U.S. Government
Securities" or any successor publication ("Composite Quotations") under the
heading "Commercial Paper." If such rate is not published in either Release
H.15(519) or the Composite Quotations by 3:00 P.M., New York City time, on such
Calculation Date, then the Commercial Paper Rate will be calculated by the
Calculation Agent and will be the Money Market Yield of the arithmetic mean of
the offered rates, as of approximately 11:00 A.M., New York City time, on such
Commercial Paper Interest Determination Date, of three leading dealers of
commercial paper in New York, New York (which may include one or more of the
Agents) selected by the Calculation Agent (after consultation with Disney) for
commercial paper of the specified Index Maturity placed for an industrial issuer
whose bond rating is "AA," or the equivalent, from a nationally recognized
statistical rating agency; PROVIDED, HOWEVER, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the rate of interest in effect for the applicable period will be the
same as the interest rate in effect on such Commercial Paper Interest
Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage rounded, if
necessary, to the nearest one hundred-thousandth of a percent) calculated in
accordance with the following formula:
<TABLE>
<S> <C> <C>
D X 360
Money Market Yield = ------------- X 100
360 - (D X M)
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
LIBOR NOTES
LIBOR Notes will bear interest at the interest rates (calculated with
reference to LIBOR and the Spread or Spread Multiplier, if any) specified in
such LIBOR Notes and in an applicable Pricing Supplement. Unless otherwise
specified in an applicable Pricing Supplement, "LIBOR" means the rate determined
by the Calculation Agent in accordance with the following provisions:
(a) With respect to a LIBOR Interest Determination Date, LIBOR will be,
as specified in the applicable Pricing Supplement, either: (i) the
arithmetic mean of the offered rates for deposits in the Index Currency
having the Index Maturity designated in the applicable Pricing Supplement,
commencing on the second London Business Day immediately following that
LIBOR Interest Determination Date, that appear on the Designated Reuters
LIBOR Page (as defined below) as of 11:00 A.M., London time, on that LIBOR
Interest Determination Date, if at least two such offered rates appear on
the Designated Reuters LIBOR Page ("LIBOR Reuters"), or (ii) the rate for
deposits in the Index Currency having the Index Maturity designated in the
applicable Pricing Supplement, commencing on the second London Business Day
immediately following that LIBOR Interest Determination Date, that appears
on the Designated Telerate LIBOR Page (as defined below) as of 11:00 A.M.,
London time, on that LIBOR Interest Determination Date ("LIBOR Telerate").
"Designated Reuters LIBOR Page" means the display on the Reuters Monitor
Money Rates Service for the purpose of displaying the London interbank rates
of major banks for the applicable Index Currency. "Designated Telerate LIBOR
Page" means the display on the Dow Jones Telerate Service for the purpose of
displaying London interbank rates of major banks for the applicable Index
Currency. If neither LIBOR Reuters nor LIBOR Telerate is specified in the
applicable Pricing Supplement, LIBOR for the applicable Index Currency will
be determined as if LIBOR Telerate (and, if the U.S. dollar is the Index
Currency, Page 3750) had been specified. If fewer than two offered rates
appear on the Designated Reuters LIBOR Page, or if no rate appears on the
Designated Telerate LIBOR Page, as applicable, LIBOR in respect of that
LIBOR Interest Determination Date will be determined as if the parties had
specified the rate described in (b) below.
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(b) If fewer than two offered rates appear on the Designated Reuters
LIBOR Page, or if no rate appears on the Designated Telerate LIBOR Page, as
applicable, LIBOR will be determined as of approximately 11:00 A.M., London
time, on such LIBOR Interest Determination Date on the basis of the rate at
which deposits in the applicable Index Currency having the Index Maturity
specified in the applicable Pricing Supplement are offered to prime banks in
the London interbank market by four major banks in the London interbank
market selected by the Calculation Agent (after consultation with Disney)
commencing on the second London Business Day immediately following such
LIBOR Interest Determination Date and in a principal amount equal to an
amount that is representative for a single transaction in such market at
such time. The Calculation Agent will request the principal London office of
each of such banks to provide a quotation of its rate. If at least two such
quotations are provided, LIBOR for such LIBOR Interest Determination Date
will be the arithmetic mean of such quotations. If fewer than two quotations
are provided, LIBOR for such LIBOR Interest Determination Date will be the
arithmetic mean of the rates quoted as of approximately 11:00 A.M. in the
applicable Principal Financial Center, on such LIBOR Interest Determination
Date by three major banks in such Principal Financial Center, selected by
the Calculation Agent (after consultation with Disney) for loans in the
applicable Index Currency to leading European banks, having the specified
Index Maturity, and in a principal amount equal to an amount of not less
than $1,000,000 (or the equivalent in the Index Currency, if the Index
Currency is not the U.S. dollar) and that is representative for a single
transaction in such market at such time; PROVIDED, HOWEVER, that if the
banks selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the rate of interest in effect for the
applicable period will be the same as the interest rate in effect on such
LIBOR Interest Determination Date.
"Index Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which LIBOR
shall be calculated. If no such currency is specified in the applicable Pricing
Supplement, the Index Currency shall be U.S. dollars.
"Principal Financial Center" will generally be the capital city of the
country of the specified Index Currency, except that with respect to U.S.
dollars, Deutsche Marks, Dutch Guilders, Italian Lire, Swiss Francs and ECUs,
the Principal Financial Center shall be The City of New York, Frankfurt,
Amsterdam, Milan, Zurich and Luxembourg, respectively.
CD RATE NOTES
CD Rate Notes will bear interest at the interest rates (calculated with
reference to the CD Rate and the Spread or Spread Multiplier, if any) specified
in such CD Rate Notes and in an applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CD Rate"
means, with respect to any CD Interest Determination Date, the rate on such date
for negotiable certificates of deposit having the Index Maturity designated in
the applicable Pricing Supplement as published in Release H.15(519) under the
caption "CDs (Secondary Market)" or, if not so published by 9:00 A.M., New York
City time, on the Calculation Date pertaining to such CD Interest Determination
Date, the CD Rate will be the rate on such CD Interest Determination Date for
negotiable certificates of deposit of the Index Maturity designated in the
applicable Pricing Supplement set forth in the Composite Quotations under the
caption "Certificates of Deposit." If by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such CD Interest Determination Date such rate is
not yet published in either Release H.15(519) or the Composite Quotations, then
the CD Rate on such CD Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the secondary market
offered rates as of 10:00 A.M., New York City time, on such CD Interest
Determination Date, of three leading non-bank dealers in negotiable U.S. dollar
certificates of deposit in The City of New York (which may include one or more
of the Agents) selected by the Calculation Agent (after consultation with
Disney) for negotiable certificates of deposit of major United States money
market banks (in the market for negotiable certificates of deposit) with a
remaining maturity closest to the Index Maturity designated in the applicable
Pricing
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Supplement in a denomination of $5,000,000; PROVIDED, HOWEVER, that if the
dealers selected as aforesaid by the Calculation Agent are not quoting as set
forth above, the rate of interest in effect for the applicable period will be
the same as the interest rate in effect on such CD Interest Determination Date.
CD RATE NOTES, LIKE OTHER NOTES, ARE NOT DEPOSIT OBLIGATIONS OF A BANK AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION.
FEDERAL FUNDS RATE NOTES
Federal Funds Rate Notes will bear interest at the interest rates
(calculated with reference to the Federal Funds Rate and the Spread or Spread
Multiplier, if any) specified in such Federal Funds Rate Notes and in an
applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Federal Funds Interest Determination
Date, the rate on such date for Federal Funds as published in Release H.15(519)
under the heading "Federal Funds (Effective)" or, if not so published by 9:00
A.M., New York City time, on the Calculation Date pertaining to such Federal
Funds Interest Determination Date, the Federal Funds Rate will be the rate on
such Federal Funds Interest Determination Date as published in the Composite
Quotations under the column "Effective Rate" under the heading "Federal Funds."
If, by 3:00 P.M., New York City time, on the Calculation Date pertaining to such
Federal Funds Interest Determination Date such rate is not yet published in
either Release H.15(519) or the Composite Quotations, the Federal Funds Rate for
such Federal Funds Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates for the last
transaction in overnight Federal Funds arranged by three leading dealers of
Federal Funds transactions in The City of New York, which dealers have been
selected by the Calculation Agent (after consultation with Disney), as of 9:00
A.M., New York City time, on such Federal Funds Interest Determination Date;
PROVIDED, HOWEVER, that, if the dealers selected as aforesaid by the Calculation
Agent are not quoting as set forth above, the rate of interest in effect for the
applicable period will be the same as the interest rate in effect on such
Federal Funds Interest Determination Date.
TREASURY RATE NOTES
Treasury Rate Notes will bear interest at the interest rates (calculated
with reference to the Treasury Rate and the Spread or Spread Multiplier, if any)
specified in such Treasury Rate Notes and in an applicable Pricing Supplement.
Unless otherwise specified in an applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Treasury Rate Interest Determination Date, the
rate applicable to the most recent auction of direct obligations of the United
States ("Treasury Bills") having the Index Maturity specified in the applicable
Pricing Supplement, as such rate is published in Release H.15(519) under the
heading "Treasury Bills - auction average (investment)" or, if not published by
3:00 P.M., New York City time, on the Calculation Date pertaining to such
Treasury Rate Interest Determination Date, the auction average rate (expressed
as a bond equivalent on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis) as otherwise announced by the United States
Department of the Treasury. In the event that the results of the auction of
Treasury Bills having the specified Index Maturity are not reported as provided
by 3:00 P.M., New York City time, on such Calculation Date, or if no such
auction is held in a particular week, then the Treasury Rate shall be calculated
by the Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) of the arithmetic mean of the secondary market bid rates, as
of approximately 3:30 P.M., New York City time, on such Treasury Rate Interest
Determination Date, of three leading primary United States government securities
dealers (which may include one or more of the Agents) selected by the
Calculation Agent (after consultation with Disney), for the issue of Treasury
Bills with a remaining maturity closest to the specified Index Maturity;
PROVIDED, HOWEVER, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting as set forth in this sentence, the rate of interest in
effect for the applicable period will be the same as the interest rate in effect
on such Treasury Rate Interest Determination Date.
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<PAGE>
PRIME RATE NOTES
Prime Rate Notes will bear interest at the interest rate (calculated with
reference to the Prime Rate and the Spread or Spread Multiplier, if any)
specified in such Prime Rate Notes and in an applicable Pricing Supplement,
except that the initial interest rate for each Prime Rate Note will be the rate
specified in the applicable Pricing Supplement.
Unless otherwise specified in an applicable Pricing Supplement, "Prime Rate"
means, with respect to any Prime Rate Interest Determination Date, the rate set
forth in Release H.15(519) for such date opposite the caption "Bank Prime Loan."
If such rate is not so published by 9:00 A.M., New York City time, on the
Calculation Date, the Prime Rate for such Prime Rate Interest Determination Date
will be the arithmetic mean of the rates of interest publicly announced by each
bank named on the Reuters Screen USPRIME1 (as defined below) as such bank's
prime rate or base lending rate as in effect for such Prime Rate Interest
Determination Date as quoted on the Reuters Screen USPRIME1 for such Prime Rate
Interest Determination Date, or if fewer than four such rates appear on the
Reuters Screen USPRIME1 for such Prime Rate Interest Determination Date, the
rate shall be the arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by 360 as of the close of business on
such Prime Rate Interest Determination Date by at least two of the three major
money center banks in The City of New York selected by the Calculation Agent
(after consultation with Disney) from which quotations are requested. If fewer
than two quotations are provided, the Prime Rate shall be calculated by the
Calculation Agent and shall be determined as the arithmetic mean on the basis of
the prime rates in The City of New York by the appropriate number of substitute
banks or trust companies organized and doing business under the laws of the
United States, or any State thereof, in each case having total equity capital of
at least U.S. $500 million and being subject to supervision or examination by
Federal or State authority selected by the Calculation Agent (after consultation
with Disney) to quote such rate or rates. Unless otherwise specified in the
applicable Pricing Supplement, "Reuters Screen USPRIME1" means the display
designated as "USPRIME1" on the Reuters Monitor Money Rates Service (or such
other page as may replace the USPRIME1 page on that service for the purpose of
displaying prime rates or base lending rates of major United States banks).
If in any month the Prime Rate is not published in Release H.15(519) and the
banks or trust companies selected as aforesaid are not quoting as mentioned in
the preceding paragraph, the "Prime Rate" for such Interest Reset Period will be
the same as the Prime Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the rate of interest payable on
the Prime Rate Notes for which the Prime Rate is being determined shall be the
Initial Interest Rate).
CMT RATE NOTES
CMT Rate Notes will bear interest at the interest rate (calculated with
reference to the CMT Rate and the Spread or Spread Multiplier, if any) specified
in the CMT Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any CMT Interest Determination Date relating to a CMT
Rate Note or any Floating Rate Note for which the interest rate is determined
with reference to the CMT Rate, the rate displayed on the Designated CMT
Telerate Page (as defined below) under the caption ". . . Treasury Constant
Maturities . . . Federal Reserve Board Release H.15 . . . Mondays Approximately
3:45 P.M.," under the column for the Designated CMT Maturity Index (as defined
below) for (i) if the Designated CMT Telerate Page is 7055, the rate on such CMT
Interest Determination Date and (ii) if the Designated CMT Telerate Page is
7052, the week, or the month, as applicable, ended immediately preceding the
week, or the month, as applicable, in which the related CMT Interest
Determination Date occurs. If such rate is no longer displayed on the relevant
page, or if not displayed by 3:00 P.M., New York City time, on the related
Calculation Date, then the CMT Rate for such CMT Interest Determination Date
will be such treasury constant maturity rate for the Designated CMT Maturity
Index as published in the relevant H.15(519). If such rate is no longer
published, or if not published by 3:00 P.M., New York City time, on the related
Calculation Date, then the CMT Rate for such CMT Interest Determination Date
will be such treasury constant maturity rate for the Designated CMT Maturity
Index (or other United States Treasury rate for the Designated CMT Maturity
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<PAGE>
Index) for the CMT Interest Determination Date with respect to such Interest
Reset Date as may then be published by either the Board of Governors of the
Federal Reserve System or the United States Department of the Treasury that the
Calculation Agent determines to be comparable to the rate formerly displayed on
the Designated CMT Telerate Page and published in the relevant H.15(519). If
such information is not provided by 3:00 P.M., New York City time, on the
related Calculation Date, then the CMT Rate for the CMT Interest Determination
date will be calculated by the Calculation Agent and will be a yield to
maturity, based on the arithmetic mean of the secondary market closing offer
side prices as of approximately 3:30 P.M., New York City time, on the CMT
Interest Determination Date reported, according to their written records, by
three leading primary United States government securities dealers (each, a
"Reference Dealer") in The City of New York (which may include any Agent or its
affiliates) selected by the Calculation Agent (from five such Reference Dealers
selected by the Calculation Agent (after consultation with Disney) and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for the most recently issued direct noncallable fixed rate obligations
of the United States ("Treasury Notes") with an original maturity of
approximately the Designated CMT Maturity Index and a remaining term to maturity
of not less than such Designated CMT Maturity Index minus one year. If the
Calculation Agent cannot obtain three such Treasury Note quotations, the CMT
Rate for such CMT Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity based on the arithmetic mean
of the secondary market offer side prices as of approximately 3:30 P.M., New
York City time, on the CMT Interest Determination Date of three Reference
Dealers in The City of New York (from five such Reference Dealers selected by
the Calculation Agent (after consultation with Disney) and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for
Treasury Notes with an original maturity of the number of years that is the next
highest to the Designated CMT Maturity Index and a remaining term to maturity
closest to the Designated CMT Maturity Index and in an amount of at least $100
million. If three or four (and not five) of such Reference Dealers are quoting
as described above, then the CMT Rate will be based on the arithmetic mean of
the offer prices obtained and neither the highest nor the lowest of such quotes
will be eliminated; PROVIDED, HOWEVER, that if fewer than three Reference
Dealers selected by the Calculation Agent (after consultation with Disney) are
quoting as described herein, the CMT Rate will be the CMT Rate in effect on such
CMT Interest Determination Date. If two Treasury Notes with an original maturity
as described in the second preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the quotes for the Treasury
Note with the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement (or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519). If
no such page is specified in the applicable Pricing Supplement, the Designated
CMT Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified in
the applicable Pricing Supplement with respect to which the CMT Rate will be
calculated. If no such maturity is specified in the applicable Pricing
Supplement, the Designated CMT Maturity Index shall be 2 years.
RENEWABLE NOTES
The Company may also issue from time to time variable rate renewable notes
(the "Renewable Notes") that will bear interest at the interest rate (calculated
with reference to a Base Rate and the Spread or Spread Multiplier, if any)
specified in the Renewable Notes and in the applicable Pricing Supplement.
The Renewable Notes will mature on an Interest Payment Date as specified in
the applicable Pricing Supplement (the "Initial Maturity Date"), unless the
maturity of all or any portion of the principal amount thereof is extended in
accordance with the procedures described below. On the Interest Payment Dates
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specified in the applicable Pricing Supplement (each such Interest Payment Date,
an "Election Date"), the maturity of the Renewable Notes will be extended to the
Interest Payment Date occurring twelve months after such Election Date, unless
the Holder thereof elects to terminate the automatic extension of the maturity
of the Renewable Notes or of any portion thereof having a principal amount of
$1,000 or any multiple of $1,000 in excess thereof by delivering a notice of
such effect to the Trustee not less than nor more than a number of days to be
specified in the applicable Pricing Supplement prior to such Election Date. If
no such notice period is specified in the applicable Pricing Supplement, such
notice shall be given no less than 30 days nor more than 60 days prior to such
Election Date. Such option may be exercised with respect to less than the entire
principal amount of the Renewable Notes; provided that the principal amount for
which such option is not exercised is at least $1,000 or any larger amount that
is an integral multiple of $1,000. Notwithstanding the foregoing, the maturity
of the Renewable Notes may not be extended beyond the Final Maturity Date, as
specified in the applicable Pricing Supplement (the "Final Maturity Date"). If
the Holder elects to terminate the automatic extension of the maturity of any
portion of the principal amount of the Renewable Notes and such election is not
revoked as described below, such portion will become due and payable on the
Interest Payment Date falling six months (unless another period is specified in
the applicable Pricing Supplement) after the Election Date prior to which the
Holder made such election.
An election to terminate the automatic extension of maturity may be revoked
as to any portion of the Renewable Notes having a principal amount of $1,000 or
any multiple of $1,000 in excess thereof by delivering a notice to such effect
to the Trustee on any day following the effective date of the election to
terminate the automatic extension of maturity and prior to the date 15 days
before the date on which such portion would otherwise mature. Such a revocation
may be made for less than the entire principal amount of the Renewable Notes for
which the automatic extension of maturity has been terminated; provided that the
principal amount of the Renewable Notes for which the automatic extension of
maturity has been terminated and for which such a revocation has not been made
is at least $1,000 or any larger amount that is an integral multiple of $1,000.
Notwithstanding the foregoing, a revocation may not be made during the period
from and including a Record Date to but excluding the immediately succeeding
Interest Payment Date.
An election to terminate the automatic extension of the maturity of the
Renewable Notes, if not revoked as described above by the Holder making the
election or any subsequent Holder, will be binding upon such subsequent Holder.
The Renewable Notes may be redeemed in whole or in part at the option of
Disney on the Interest Payment Dates in each year specified in the applicable
Pricing Supplement, commencing with the Interest Payment Date specified in the
applicable Pricing Supplement, at a redemption price as stated in the applicable
Pricing Supplement, together with accrued and unpaid interest to the date of
redemption. Notwithstanding anything to the contrary in this Prospectus
Supplement, notice of redemption will be provided by mailing a notice of such
redemption to each Holder by first class mail, postage prepaid, at least 180
days (unless otherwise specified in the applicable Pricing Supplement) prior to
the date fixed for redemption.
DISCOUNT NOTES
Discount Notes, and possibly other Notes, may be issued at a price less than
their "stated redemption price at maturity" or may have certain interest payment
characteristics that may result in the Notes being treated as issued with
original issue discount for United States Federal income tax purposes. See
"Certain United States Federal Tax Considerations." Discount Notes may bear no
interest, except in the case of a default in payment of principal upon
acceleration, redemption, or repurchase (if applicable), or may bear no interest
for a specified period following the date of issue or may bear interest at a
rate that at the time of issuance is below market rates. If any Maturity of a
Discount Note which bears no interest falls on a day that is not a Business Day
with respect to such Discount Note, the payment due at such Maturity
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will be made on the following day that is a Business Day with respect to such
Discount Note as if it were made on the date such payment was due and no
interest shall accrue on the amount so payable for the period from and after
such Maturity.
In the case of a default in payment of principal upon acceleration or
redemption (if applicable) or at Stated Maturity, the Accreted Value (as defined
below) of Discount Notes at the date of such default in payment shall bear
interest at the "Yield to Maturity" specified in the applicable Note (to the
extent that the payment of such interest shall be legally enforceable), which
shall accrue from the date of such default in payment to the date payment of
such principal has been made or duly provided for. Such interest will be
computed on the basis of a 360-day year of twelve 30-day months, compounded
semi-annually.
The "Accreted Value" of a Discount Note at any date shall be equal to (i)
the original issue price of the Note plus (ii) the accrued amortization of
original issue discount of the Note attributable ratably on a daily basis to the
period from and including the original issue date to but excluding such date.
The calculation of accrual of original issue discount will be computed on the
basis of a 360-day year of twelve 30-day months, compounded semi-annually.
If an Event of Default with respect to a Discount Note shall occur and be
continuing, a portion of the principal of the Note may be declared due and
payable in the manner and to the effect provided in the Indenture. Such portion
shall be equal to the Accreted Value of the Note at the time of such
declaration. Upon payment (i) of such Accreted Value and (ii) of interest on any
overdue Accreted Value (to the extent that the payment of such interest shall be
legally enforceable), all of Disney's obligations in respect of the payment of
the principal of and interest, if any, on the Note shall terminate.
If a bankruptcy case is commenced by or against Disney under the United
States Bankruptcy Code (the "Bankruptcy Code"), it is possible that a portion of
the face amount of a Discount Note would be treated as interest and the
unamortized portion thereof would be treated as unmatured interest under Section
502(b)(2) of the Bankruptcy Code. Unmatured interest is not allowable as part of
a claim under Section 502(b)(2) of the Bankruptcy Code. Although it is
impossible to predict what portion, if any, of the face amount of a Discount
Note would be treated as unmatured interest, one possible result is that the
bankruptcy court might determine the amount of unmatured interest on such Note
by reference to the amount of amortized original issue discount of such Note for
tax purposes or the unamortized debt discount of such Note for financial
accounting purposes. Each method may yield a substantially different result.
Holders of Notes issued with original issue discount will be required to
include the amount of original issue discount in income in accordance with
applicable provisions of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder. See "Certain United States Federal
Tax Considerations." Certain United States Federal tax considerations and other
considerations applicable to any Discount Notes may be described in an
applicable Pricing Supplement.
CURRENCY INDEXED NOTES
Notes may be issued, from time to time, with the principal amount payable on
any principal payment date, or the amount of interest payable on any Interest
Payment Date, to be determined by reference to the value of one or more
currencies (or composite currencies or currency units). Information as to the
one or more currencies (or composite currencies or currency units) to which the
principal amount payable on any principal payment date or the amount of interest
payable on any Interest Payment Date is indexed, the Denominated Currency of the
Note, the Payment Currency of the Note, any material currency risks relating to
the specific currencies selected, and certain additional tax considerations, if
any, will be set forth in the applicable Pricing Supplement. The Denominated
Currency and the Payment Currency may be the same currency or different
currencies. Unless otherwise specified in the applicable Pricing Supplement,
interest on currency indexed Notes shall be paid in the Denominated Currency
based on the face amount of the Note at the rate per annum and on the dates set
forth in the applicable Pricing Supplement. Currency indexed Notes may include,
but are not limited to, Notes of the types
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described below. An investment in a currency indexed Note involves special tax
considerations. See "Certain United States Federal Tax Considerations." Certain
United States Federal tax considerations and other considerations applicable to
any Currency Indexed Notes may be described in an applicable Pricing Supplement.
CURRENCY LINKED SECURITIES ("CLS")
CLS are Notes pursuant to which the principal amount payable at Stated
Maturity equals the Payment Currency equivalent at Stated Maturity of a fixed
amount of a designated currency (or composite currency or currency unit) (the
"Indexed Currency"). Generally, the fixed amount of Indexed Currency to which
the principal of a CLS will be linked will be approximately equal in value to
the face amount of the CLS in the Denominated Currency based on the exchange
rate between the Indexed Currency and the Denominated Currency in effect at the
time of pricing. The Denominated Currency, the Indexed Currency and the Payment
Currency will be identified in the applicable Pricing Supplement. In addition,
the fixed amount of the Indexed Currency to which the principal of the CLS is
linked will be set forth in the applicable Pricing Supplement for a specific
representative face amount of the CLS as well as for the aggregate face amount
of all CLS forming part of the same issue (the "Conversion Reference Amount").
Holders of CLS may receive an amount of principal greater than, less than or
equal in value to the face amount of CLS, depending on the change, if any, from
the issue date to the date which is two Exchange Rate Days (as defined below)
prior to Stated Maturity, in the relative exchange rates of the Denominated
Currency, the Payment Currency and the Indexed Currency.
If the Payment Currency and the Indexed Currency are not the same, the
Payment Currency equivalent of the Indexed Currency amount on any date shall be
determined in the manner specified in the applicable Pricing Supplement.
REVERSE CURRENCY LINKED SECURITIES ("REVERSE CLS")
Reverse CLS are Notes pursuant to which the principal amount payable at
Stated Maturity equals the Payment Currency equivalent at Stated Maturity of a
fixed amount of a designated currency (or composite currencies or currency
units) (the "First Indexed Currency") minus the amount of the Payment Currency
equivalent at Stated Maturity of a fixed amount of another designated currency
(or composite currency or currency units) (the "Second Indexed Currency");
PROVIDED, HOWEVER, that the minimum principal amount payable at Stated Maturity
shall be zero. Generally, the fixed amount of the First Indexed Currency to
which the principal of a Reverse CLS will be linked will be approximately equal
in value to twice the face amount of the Reverse CLS in the Denominated
Currency, and the fixed amount of the Second Indexed Currency to which the
principal of a Reverse CLS will be linked will be approximately equal in value
to the face amount of the Reverse CLS in the Denominated Currency, in each case
based on the exchange rate between each Indexed Currency and the Denominated
Currency in effect at the time of pricing.
Holders of Reverse CLS may receive an amount of principal greater than, less
than (with a minimum of zero) or equal in value to the face amount of the
Reverse CLS, depending on the change, if any, from the issue date to the date
which is two Exchange Rate Days prior to Stated Maturity in the relative
exchange rates of the Denominated Currency, the Payment Currency and the First
and Second Indexed Currencies.
The Denominated Currency, the First and Second Indexed Currencies and the
Payment Currency will be identified in the applicable Pricing Supplement. In
addition, the fixed amounts of the First and Second Indexed Currencies to which
the principal of the Reverse CLS is linked shall be set forth in the applicable
Pricing Supplement for a specific representative face amount of the Reverse CLS
as well as for the aggregate face amount of all Reverse CLS forming part of the
same issue (respectively, the "First Conversion Reference Amount" and the
"Second Conversion Reference Amount").
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If the Payment Currency and the First Indexed Currency or the Second Indexed
Currency are not the same, the Payment Currency equivalent of the First Indexed
Currency amount or the Second Indexed Currency amount, as the case may be, on
any date shall be determined in the manner specified in the applicable Pricing
Supplement.
MULTICURRENCY CURRENCY LINKED SECURITIES ("MULTICURRENCY CLS")
Multicurrency CLS are Notes pursuant to which the principal amount payable
at Stated Maturity equals the Payment Currency equivalent at Stated Maturity of
a fixed amount of a designated currency (or composite currency or currency
units) (the "First Indexed Currency") plus or minus the Payment Currency
equivalent at Stated Maturity of a fixed amount of a second designated currency
(or composite currency or currency units) (the "Second Indexed Currency") plus
or minus the Payment Currency equivalent at Stated Maturity of a fixed amount of
a third designated currency (or composite currency or currency units) (the
"Third Indexed Currency"); PROVIDED, HOWEVER, that the minimum principal amount
payable at Stated Maturity shall be zero. Generally, the added and subtracted
fixed amounts of the First, Second and Third Indexed Currencies (each, an
"Indexed Currency") to which the principal of a Multicurrency CLS will be linked
will have an aggregate value approximately equal to the face amount of the
Multicurrency CLS in the Denominated Currency based on exchange rates between
each Indexed Currency and the Denominated Currency in effect at the time of
pricing.
Holders of Multicurrency CLS may receive an amount of principal greater
than, less than (with a minimum of zero) or equal in value to the face amount of
the Multicurrency CLS, depending on the change, if any, from the issue date to
the date which is two Exchange Rate Days prior to Maturity in the relative
exchange rates for the Denominated Currency, the Payment Currency and the First,
Second and Third Indexed Currencies.
The Denominated Currency, each Indexed Currency, the Payment Currency and
whether the fixed amounts of the Second and Third Indexed Currencies are to be
added or subtracted to determine the principal amount payable at Stated Maturity
of the Multicurrency CLS shall be set forth in the applicable Pricing
Supplement. In addition, the fixed amounts of the First, Second and Third
Indexed Currencies to which the principal of the Multicurrency CLS is linked
shall be set forth in the applicable Pricing Supplement for a specific
representative face amount of the Multicurrency CLS as well as for the aggregate
face amount of all Multicurrency CLS forming part of the same issue
(respectively, the "First Conversion Reference Amount," the "Second Conversion
Reference Amount" and the "Third Conversion Reference Amount," each a
"Conversion Reference Amount"). As used herein, "Added Indexed Currency" means
the First Indexed Currency and any other Indexed Currency that is added to
determine the principal amount payable at Maturity of the Multicurrency CLS and
a "Subtracted Indexed Currency" means an Indexed Currency that is subtracted to
determine the principal amount payable at Stated Maturity of the Multicurrency
CLS.
If any Added Indexed Currency or Subtracted Index Currency is not the same
as the Payment Currency, the Payment Currency equivalent of such Added Indexed
Currency amount or Subtracted Index Currency amount, as the case may be, on any
date shall be determined in the manner specified in the applicable Pricing
Supplement.
PAYMENTS UPON ACCELERATION OF MATURITY
If the principal amount payable at the Stated Maturity of any CLS, Reverse
CLS or Multicurrency CLS shall be declared due and payable prior to such Stated
Maturity, the amount payable with respect to such Note will be paid in the
Denominated Currency and will equal the face amount of such Note plus accrued
interest to but excluding the date of payment.
NOTES LINKED TO COMMODITY PRICES, EQUITY INDICES OR OTHER FACTORS
Notes may be issued, from time to time, with the principal amount payable on
any principal payment date, or the amount of interest payable on any Interest
Payment Date, to be determined by reference to one or more commodity prices,
equity indices or other factors and on such other terms as may be set forth in
the applicable Pricing Supplement.
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PAYMENTS ON AMORTIZING NOTES
Notes may be issued from time to time as Amortizing Notes (as defined
below). "Amortizing Notes" are Notes for which payments of principal and
interest are made in equal installments over the life of the Note. Interest on
each Amortizing Note will be computed on the basis of a 360-day year of twelve
30-day months. Payments with respect to Amortizing Notes will be applied first
to interest due and payable thereon and then to the reduction of the unpaid
principal amount thereof. A table setting forth repayment information in respect
of each Amortizing Note will be provided to the original purchaser and will be
available, upon request, to subsequent holders.
EXTENSION OF MATURITY
The Pricing Supplement relating to each Note will indicate whether Disney
has the option to extend the Stated Maturity of such Note for one or more whole
year periods (each an "Extension Period") up to but not beyond the date (the
"Final Maturity Date") set forth in such Pricing Supplement and the basis or
formula, if any, for setting the interest rate or the Spread or Spread
Multiplier, as the case may be, applicable to any such Extension Period.
Disney may exercise such option with respect to a Note by notifying the
Trustee of such exercise at least 45 but not more than 60 days prior to the
Stated Maturity of such Note in effect prior to the exercise of such option (the
"Original Stated Maturity Date"). No later than 40 days prior to the Original
Stated Maturity Date, the Trustee will mail to the holder of such Note a notice
(the "Extension Notice") relating to such Extension Period, first class, postage
prepaid, setting forth (i) the election of Disney to extend the Stated Maturity
of such Note, (ii) the new Stated Maturity, (iii) in the case of a Fixed Rate
Note, the interest rate applicable to the Extension Period or, in the case of a
Floating Rate Note, the Spread or Spread Multiplier applicable to the Extension
Period, and (iv) the provisions, if any, for redemption during the Extension
Period, including the date or dates on which or the period or periods during
which and the price or prices at which such redemption may occur during the
Extension Period. Upon the mailing by the Trustee of an Extension Notice to the
holder of a Note, the Stated Maturity of such Note shall be extended
automatically as set forth in the Extension Notice, and, except as modified by
the Extension Notice and as described in the next paragraph, such Note will have
the same terms as prior to the mailing of such Extension Notice.
Notwithstanding the foregoing, not later than 20 days prior to the Original
Stated Maturity Date for a Note, Disney may, at its option, revoke the interest
rate, in the case of a Fixed Rate Note, or the Spread or Spread Multiplier, in
the case of a Floating Rate Note, provided for in the Extension Notice and
establish a higher interest rate, in the case of a Fixed Rate Note, or a higher
Spread or Spread Multiplier, in the case of a Floating Rate Note, for the
Extension Period by mailing or causing the Trustee to mail notice of such higher
interest rate or higher Spread or Spread Multiplier, as the case may be, first
class, postage prepaid, to the holder of such Note. Such notice shall be
irrevocable. All Notes with respect to which the Original Stated Maturity Date
is extended will bear such higher interest rate, in the case of a Fixed Rate
Note, or higher Spread or Spread Multiplier, in the case of a Floating Rate
Note, for the Extension Period.
If Disney elects to extend the Stated Maturity of a Note, the Holder of such
Note may, if provided for in the applicable Pricing Supplement, have the option
to elect repurchase of such Note by Disney on the Original Stated Maturity Date
at a price equal to the principal amount thereof plus any accrued interest to
such date. In order for a Note to be so repurchased on the Original Stated
Maturity Date, the Holder thereof must follow the procedures set forth above
under "Redemption and Repurchase" for repurchase at the option of the Holder,
except that the period for delivery of such Note or notification to the Trustee
shall be at least 30 but not more than 35 Business Days prior to the Original
Stated Maturity Date and except that a Holder who has tendered a Note for
Repurchase pursuant to an Extension Notice may, by written notice to the
Trustee, revoke any such tender for repayment until the close of business on the
tenth day prior to the Original Stated Maturity Date.
BOOK-ENTRY NOTES
Upon issuance, all Book-Entry Notes having the same original issue date,
Stated Maturity and otherwise having identical terms and provisions will be
represented by a single global security (each, a
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"Global Security"); PROVIDED, HOWEVER, that if by reason of the foregoing, a
single Global Security would exceed $200,000,000 in aggregate principal amount,
one Global Security will be issued to represent each $200,000,000 of aggregate
principal amount and an additional Global Security will be issued to represent
any remaining principal amount. Each Global Security representing Book-Entry
Notes will be deposited with, or on behalf of, the Depository. Except as set
forth below, a Global Security may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
nominee to a successor of the Depository or a nominee of such successor.
The Depository Trust Company, New York, New York ("DTC") will be the initial
Depository with respect to the Book-Entry Notes. DTC has advised Disney and the
Agents that it is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provision of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates settlement of securities transactions among its Participants,
such as transfers and pledges in deposited securities through electronic
computerized book-entry changes in accounts of the Participants, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations, including the Agents. DTC
is owned by a number of Direct Participants and by the New York Stock Exchange,
Inc., the American Stock Exchange, Inc. and the National Association of the
Securities Dealers, Inc. Access to DTC's book-entry system is also available to
others, such as banks, securities brokers and dealers and trust companies that
clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants").
Purchases of Book-Entry Notes under DTC's book-entry system must be made by
or through Direct Participants, which will receive a credit for the Notes on the
records of DTC. The ownership interest of each actual purchaser of each
Book-Entry Note (the "Beneficial Owner") is in turn to be recorded on the Direct
Participants' or Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchase, but Beneficial Owners
are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings from the Direct
or Indirect Participant through which the Beneficial Owner entered into the
transaction. Transfers of ownership interests in the Book-Entry Notes will be
effected only through entries made on the books of Participants acting on behalf
of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in the Book-Entry Notes, except in the
event that use of the book-entry system for the Book-Entry Notes is
discontinued. The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to own, transfer or pledge
beneficial interests in a Global Security.
To facilitate subsequent transfers, all Book-Entry Notes deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Book-Entry Notes with DTC and their registration in
the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Book-Entry Notes; DTC's records
reflect only the identity of the Direct Participants to whose accounts such
Book-Entry Notes are credited, which may or may not be the Beneficial Owners.
The Participants will remain responsible for keeping account of their holdings
on behalf of their customers.
So long as DTC or its nominee is the registered owner of a Global Security,
DTC or its nominee, as the case may be, will be considered the sole owner or
holder of the Book-Entry Notes represented by such Global Security for all
purposes under the Indenture. Except as provided below, Beneficial Owners of a
Global Security or Securities will not be entitled to have Book-Entry Notes
represented by such Global Security registered in their names, will not receive
or be entitled to receive physical delivery of Book-Entry Notes in definitive
form and will not be considered the owners or Holders thereof under the
Indenture. Accordingly, each person owning a beneficial interest in a Global
Security must rely on the
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procedures of DTC and, if such person is not a Participant, on the procedures of
the Participants through which such Person owns its interest, to exercise any
rights of a holder under the Indenture. Disney understands that under existing
industry practices, in the event that Disney requests any action of holders or
that an owner of a beneficial interest in such Global Security desires to give
or take any action which a holder is entitled to give or take under the
Indenture, DTC would authorize the Participants holding the relevant beneficial
interests to give or take such action, and such Participants would authorize
Beneficial Owners owning through such Participants to give or to take such
action or would otherwise act upon the instructions of Beneficial Owners.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Beneficial Owners, will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Payments of principal of and interest, if any, on the Book-Entry Notes
represented by a Global Security will be made to DTC. None of Disney, the
Trustee, or any other agent of Disney or agent of the Trustee will have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests of a Global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests. DTC's practice is to credit the accounts of the
Direct Participants with payment in amounts proportionate to their respective
holdings in principal amount of beneficial interest in such Global Security as
shown on the records of DTC, unless DTC has reason to believe that it will not
receive payment on the payable date. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form or
registered in "street name" and will be the responsibility of such Participants.
Redemption notices shall be sent to Cede & Co. If less than all of the Notes
within an issue are being redeemed, DTC's practice is to determine by lot the
amount of the interest of each Direct Participant in such issue to be redeemed.
DTC may discontinue providing its services as securities depository, with
respect to the Notes, at any time by giving reasonable notice to the Company. If
at any time: (i) DTC is unwilling or unable to continue as depository and a
successor depository is not appointed by Disney within 90 days, or (ii) Disney
determines in its discretion not to have the Book-Entry Notes represented by the
Global Security or Securities and delivers to the Trustee an order to such
effect, then the Global Security or Securities will be exchangeable for
Definitive Notes of like tenor and of an equal aggregate principal amount, in
denominations of $1,000 and integral multiples thereof. Such Definitive Notes
shall be registered in such name or names as DTC shall instruct the Trustee. It
is expected that such instructions may be based upon directions received by DTC
from Participants with respect to ownership of beneficial interests in Global
Securities.
IMPORTANT CURRENCY INFORMATION
Unless otherwise specified in the applicable Pricing Supplement, purchasers
are required to pay for Notes in the applicable Denominated Currency in
immediately available funds. Currently, there are limited facilities in the
United States for conversion of U.S. dollars into foreign currencies, composite
currencies, or currency units and vice versa, and few banks offer non-U.S.
dollar checking or savings account facilities in the United States. However, if
requested by a prospective purchaser of Notes denominated in a Denominated
Currency other than U.S. dollars, the Agent soliciting the offer to purchase
will use reasonable efforts to arrange for the conversion of U.S. dollars into
such Denominated Currency to enable the purchaser to pay for such Notes. Such
requests must be made on or before the third Business Day preceding the date of
delivery of the Notes, or by such other date as determined by such Agent. Each
such conversion will be made by the relevant Agent on such terms and subject to
such conditions, limitations and charges as such Agent may from time to time
establish in accordance with its regular foreign exchange practice. All costs of
exchange will be borne by purchasers of the Notes.
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For purposes of determining whether the Holders of the requisite principal
amount of outstanding Securities have taken or authorized any action under the
Indenture, the principal amount of a Note denominated in a currency other than
the U.S. dollar at any time outstanding shall be deemed to be the U.S. dollar
equivalent, determined on the basis of the Market Exchange Rate as of the date
of the original issuance of such Note, of the principal amount of such Note.
FOREIGN CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Notes that are denominated in a Denominated Currency other
than U.S. dollars, or in respect of which the Payment Currency is other than
U.S. dollars, entails significant risks (over which Disney has no control) that
are not associated with a similar investment in a security denominated, and with
respect to which principal and interest are payable, in U.S. dollars. Such risks
include, without limitation, the possibility of significant changes in the rate
of exchange between the U.S. dollar and the applicable Denominated Currency and
Payment Currency and the possibility of the imposition or modification of
foreign exchange controls by either the United States or foreign governments,
which risks generally depend on economic and political events. In recent years,
rates of exchange between the U.S. dollar and certain foreign currencies have
been highly volatile and such volatility may occur in the future. The exchange
rate between the U.S. dollar and a foreign currency, composite currency or
currency unit is at any moment a result of the supply and demand for such
currency or the currencies comprising such composite currency or currency unit,
and changes in the rate result over time from the interaction of many factors,
among which are rates of inflation, interest rate levels, balances of payments
and the extent of governmental surpluses or deficits in the countries of such
currencies. These factors are in turn sensitive to the monetary, fiscal and
trade policies pursued by such governments and those of other countries
important to international trade and finance. Fluctuations in any particular
exchange rate that have occurred in the past are not necessarily indicative,
however, of fluctuations in the rate that may occur during the term of any Note.
Depreciation against the U.S. dollar of the Payment Currency of a Note would
result in a decrease in the effective yield of such Note below its coupon rate
and, in certain circumstances, could result in a loss to the investor on a U.S.
dollar basis. In addition, depending on the specific terms of a currency linked
Note, changes in exchange rates relating to any of the currencies involved may
result in a decrease in its effective yield and, in some circumstances, could
result in a loss of all or a substantial portion of the principal of a Note to
the investor.
The information set forth in this Prospectus Supplement is directed to
prospective purchasers who are residents of the United States and Disney
disclaims any responsibility to advise prospective purchasers who are residents
of countries other than the United States with respect to matters that may
affect the purchase, holding or receipt of payments of principal of, premium, if
any, and interest on the Notes. Persons who are not residents of the United
States should consult their own legal advisors with regard to such matters.
INDEXED NOTES RISKS
An investment in Notes indexed, as to principal or interest or both, to one
or more values of currencies (including exchange rates between currencies),
commodities or interest rate indices entails significant risks that are not
associated with similar investments in a conventional fixed-rate debt security.
If the interest rate of such a Note is so indexed, it may result in an interest
rate that is less than that payable on a conventional fixed-rate debt security
issued at the same time, including the possibility that no interest will be
paid, and, if the principal amount of such a Note is so indexed, the principal
amount payable at maturity may be less than the original purchase price of such
Note if allowed pursuant to the terms of such Note, including the possibility
that no principal will be paid. The secondary market for such Notes will be
affected by a number of factors, independent of the creditworthiness of the
issuer and the value of the applicable currency, commodity or interest rate
index, including the volatility of the applicable currency, commodity or
interest rate index, the time remaining to the maturity of such Notes, the
amount outstanding of such Notes and market interest rates. The value of the
applicable
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currency, commodity or interest rate index depends on a number of interrelated
factors, including economic, financial and political events, over which Disney
has no control. Additionally, if the formula used to determine the principal
amount or interest payable with respect to such Notes contains a multiple or
leverage factor, the effect of any change in the applicable currency, commodity
or interest rate index will be increased. The historical experience of the
relevant currencies, commodities or interest rate indices should not be taken as
an indication of future performance of such currencies, commodities or interest
rate indices during the term of any Note. The credit ratings assigned to
Disney's medium-term note program are a reflection of Disney's credit status,
and, in no way, are a reflection of the potential impact of the factors
discussed above, or any other factors, on the market value of the Notes.
Accordingly, prospective investors should consult their own financial and legal
advisors as to the risks entailed by an investment in such Notes and the
suitability of such Notes in light of their particular circumstances.
THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED PROSPECTUS DO NOT DESCRIBE ALL
THE RISKS OF AN INVESTMENT IN NOTES DENOMINATED IN, OR THE PAYMENT OF WHICH IS
RELATED TO THE VALUE OF, A FOREIGN CURRENCY OR A COMPOSITE CURRENCY OR CURRENCY
UNIT OR NOTES INDEXED TO CURRENCY VALUES, COMMODITIES OR INTEREST RATE INDICES
AND DISNEY DISCLAIMS ANY RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF SUCH
RISKS AS THEY EXIST AT THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS
MAY CHANGE FROM TIME TO TIME. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR
FINANCIAL, LEGAL AND TAX ADVISORS AS TO THE RISKS ENTAILED IN AN INVESTMENT IN
FOREIGN CURRENCY NOTES OR INDEXED NOTES. SUCH NOTES ARE NOT AN APPROPRIATE
INVESTMENT FOR PROSPECTIVE PURCHASERS WHO ARE UNSOPHISTICATED WITH RESPECT TO
FOREIGN CURRENCY OR INDEXED TRANSACTIONS.
GOVERNING LAW AND FOREIGN CURRENCY JUDGMENTS
The Indenture and the Notes will be governed by, and construed in accordance
with, the laws of the State of New York. An action based upon an obligation
denominated in a Denominated Currency other than U.S. dollars can be brought in
courts in the United States. However, courts in the United States have not
customarily rendered judgments for money damages denominated in any currency
other than the U.S. dollar. The Judiciary Law of the State of New York provides,
however, that an action based upon an obligation denominated in a currency other
than U.S. dollars will be rendered in the foreign currency of the underlying
obligation and converted into U.S. dollars at a rate of exchange prevailing on
the date of the entry of the judgment or decree.
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a summary of certain United States Federal tax
considerations of the acquisition, ownership, and disposition of the Notes by
original purchasers of the Notes who are United States Holders or Non-United
States Holders (each as defined below). This summary is based on existing United
States Federal tax law, which is subject to change, possibly retroactively. This
discussion does not discuss all aspects of United States Federal taxation that
may be relevant to a particular holder in light of its personal investment
circumstances, such as holders who hold the Notes as a position in a "straddle"
or "hedge" for United States Federal income tax purposes, holders who have a
functional currency other than the U.S. dollar, or holders subject to special
treatment under the United States Federal income tax laws (for example,
financial institutions, insurance companies, tax exempt organizations, and
broker-dealers), and it does not discuss any aspects of foreign, state, or local
tax laws. This summary assumes that purchasers will hold the Notes as "capital
assets" (generally, property held for investment) under the Internal Revenue
Code of 1986, as amended (the "Code"). Prospective investors are urged to
consult their tax advisors regarding the United States Federal tax consequences
of acquiring, holding, and disposing of the Notes, as well as any tax
consequences that may arise under the laws of any foreign, state, local, or
other taxing jurisdiction.
For purposes of this summary, the term "United States Holder" means a
beneficial owner of a Note that is, for United States Federal income tax
purposes, a citizen or resident of the United States, a
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corporation, partnership, or other entity created or organized in the United
States or under the laws of the United States or of any political subdivision
thereof, or an estate or trust whose income is includible in gross income for
United States Federal income tax purposes regardless of its source. As used
herein, the term "Non-United States Holder" means a holder of a Note that is not
a United States Holder.
UNITED STATES HOLDERS
ORIGINAL ISSUE DISCOUNT
Notes with a term greater than one year may be issued with original issue
discount for United States Federal income tax purposes. Original issue discount
will arise if the stated principal amount at maturity of a Note exceeds its
issue price by more than a DE MINIMIS amount, or if a Note has certain interest
payment characteristics (E.G., interest holidays, interest payable in additional
Notes, certain stepped rates, or certain rates based on multiple indices). If a
Note is issued with original issue discount, the holder of the Note will be
required to include amounts in gross income for United States Federal income tax
purposes in advance of the receipt of the cash payment to which such income is
attributable. The amount of original issue discount to be included in income in
any tax period will be determined using a constant yield to maturity method,
which will result in a greater portion of such discount being included in income
in the later part of the term of the Notes. Any amounts included in income as
original issue discount will increase a holder's adjusted tax basis in the Note.
Disney will report annually to the Internal Revenue Service and to each
holder of such Note the amount of original issue discount accrued with respect
to the Note. Prospective purchasers are advised to consult their tax advisors
with respect to the particular original issue discount characteristics of the
Note that is being purchased.
ACQUISITION DISCOUNT
Notes that have a fixed maturity of one year or less may be issued with
acquisition discount. Acquisition discount may arise under the circumstances set
forth above with respect to original issue discount. Accrual basis taxpayers,
taxpayers in certain specified classes, and cash basis taxpayers making an
appropriate election to accrue acquisition discount under the Code would be
required to include acquisition discount in income currently in an amount and
manner similar to that applicable to original issue discount. A cash basis
holder who makes such an election cannot revoke such accrual election without
the consent of the Internal Revenue Service, and such election applies to all
short-term obligations acquired by the holder in the taxable year in which the
election is made and in all subsequent taxable years. Individuals and other
non-electing cash basis taxpayers holding Notes with acquisition discount are
not required to include accrued acquisition discount in income until the cash
payments attributable to such amounts are received, which amounts will be
treated as ordinary income. A holder who does not recognize acquisition discount
currently may also be subject to limitations on the deductibility of interest on
indebtedness incurred to purchase or, in certain circumstances, carry such a
Note.
DISPOSITION OF NOTES
In general, and subject to the foregoing discussion of acquisition discount,
a holder of a Note will recognize gain or loss on the sale, redemption, exchange
or other disposition of the Note in an amount equal to the difference between
the amount realized (except to the extent attributable to accrued interest) and
the holder's adjusted tax basis in the Note.
FOREIGN CURRENCY NOTES
INTEREST PAYMENTS AND ORIGINAL ISSUE DISCOUNT
Interest on Notes that are denominated in, or determined by reference to, a
currency or currencies other than the U.S. dollar ("Foreign Currency Notes")
will generally be taxable to a United States Holder in accordance with such
holder's method of accounting for United States Federal income tax purposes, and
any original issue discount must be included in income as it accrues. Regardless
of whether an interest payment is in fact converted into U.S. dollars, the
amount of interest income (including any original issue discount) required to be
included in income (the "Includible Amount") will generally be (i) in the case
of a cash basis taxpayer, the U.S. dollar value of the foreign currency interest
payment
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based on the exchange rate in effect on the date of receipt of the payment plus
the amount of any accrued original issue discount, as described below, and (ii)
in the case of an accrual basis taxpayer, the average U.S. dollar value of the
accrued amounts based on the average exchange rate in effect during the interest
accrual period (unless an election is made pursuant to Treasury regulations to
use a different exchange rate). Such U.S. dollar value will be the holder's tax
basis in the foreign currency. The amount of original issue discount on a
Foreign Currency Note required to be included in income will be computed for
each accrual period in the relevant foreign currency and then translated into a
U.S. dollar value based on the average exchange rate in effect during such
accrual period.
An accrual basis taxpayer will be required to recognize gain or loss upon
the receipt of interest payments in a foreign currency on a Foreign Currency
Note as a result of fluctuations in currency exchange rates between the dates of
accrual and receipt ("Exchange Gain or Loss"), which gain or loss will be equal
to the U.S. dollar value of the foreign currency payment based on the exchange
rate in effect on the date of receipt of such payment less the Includible
Amount. Similarly, upon the sale, exchange or retirement of a Foreign Currency
Note, a holder who receives proceeds in a foreign currency which are
attributable to original issue discount or, in the case of an accrual basis
taxpayer, accrued but unpaid interest, will be required to recognize Exchange
Gain or Loss. Any such Exchange Gain or Loss will be treated as ordinary income
or loss.
PURCHASE AND DISPOSITION OF THE FOREIGN CURRENCY NOTES
A United States Holder's tax basis in a Foreign Currency Note will be the
U.S. dollar value of the foreign currency amount paid for such Foreign Currency
Note based on the exchange rate in effect on the date of purchase of the Foreign
Currency Note, plus the U.S. dollar value of any accrued original issue discount
on the Foreign Currency Note that the holder has included in gross income. A
holder who converts U.S. dollars to a foreign currency and immediately uses that
currency to purchase a Foreign Currency Note denominated in the same currency
will ordinarily not recognize Exchange Gain or Loss in connection with such
conversion and purchase. If a holder purchases a Foreign Currency Note with
previously owned foreign currency, the holder will recognize Exchange Gain or
Loss in an amount equal to the difference, if any, between such holder's tax
basis in the foreign currency and the U.S. dollar fair market value of the
Foreign Currency Note based on the exchange rate in effect on the date of
purchase. Gain or loss will be recognized upon the sale, redemption, exchange or
other disposition of a Foreign Currency Note equal to the U.S. dollar value of
the foreign currency received upon such disposition less the U.S. dollar tax
basis in the Foreign Currency Note. Such gain or loss that is recognized will be
ordinary income or loss to the extent it is Exchange Gain or Loss. Any gain or
loss recognized in excess of the Exchange Gain or Loss will be treated as
capital gain or loss.
EXCHANGE OF THE FOREIGN CURRENCY
Foreign currency received or accrued as interest on a Foreign Currency Note
or on the sale, redemption, exchange or other disposition of a Foreign Currency
Note will have a tax basis equal to its U.S. dollar value based on the exchange
rate in effect at the time such interest is received or accrued or at the time
of such disposition. Any gain or loss recognized on a sale or other disposition
of the foreign currency will be ordinary income or loss.
NON-UNITED STATES HOLDERS
Under present United States Federal income and estate tax law, assuming
certain certification requirements are satisfied (which include identification
of the beneficial owner of the instrument), and subject to the discussion of
backup withholding below:
(a) payments of interest (including any original issue discount) on the
Notes to any Non-United States Holder will not be subject to United States
Federal income or withholding tax, provided that (1) the holder does not
actually or constructively own 10% or more of the total combined voting
power of all classes of stock of Disney entitled to vote, (2) the holder is
not (i) a foreign tax exempt organization or a foreign private foundation
for United States Federal income tax purposes, (ii) a bank receiving
interest pursuant to a loan agreement entered into in the ordinary
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course of its trade or business, or (iii) a controlled foreign corporation
that is related to Disney through stock ownership, and (3) such interest
payments are not effectively connected with the conduct of a United States
trade or business of the holder;
(b) a holder of a Note who is a Non-United States Holder will not be
subject to United States Federal income tax on gain realized on the sale,
exchange, retirement or other disposition of a Note, unless (1) such holder
is an individual who is present in the United States for 183 days or more
during the taxable year and certain other requirements are met, or (2) the
gain is effectively connected with the conduct of a United States trade or
business of the holder;
(c) if interest on the Notes is exempt from withholding of United States
Federal income tax under the rules described above, the Notes will not be
included in the estate of a deceased Non-United States Holder for United
States Federal estate tax purposes.
The certification referred to above may be made on an Internal Revenue
Service Form W-8 or substantially similar substitute form.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In the case of payments of interest to Non-United States Holders, temporary
Treasury regulations provide that the 31% backup withholding tax and certain
information reporting will not apply to such payments with respect to which
either the requisite certification, as described above, has been received or an
exemption has otherwise been established; provided that neither Disney nor its
payment agent has actual knowledge that the holder is a United States person or
that the conditions of any other exemption are not in fact satisfied. Under
temporary Treasury regulations, these information reporting and backup
withholding requirements will apply, however, to the gross proceeds paid to a
Non-United States Holder on the disposition of the Notes by or through a United
States office of a United States or foreign broker, unless the holder certifies
to the broker under penalties of perjury as to its name, address, and status as
a foreign person or the holder otherwise establishes an exemption. Information
reporting requirements, but not backup withholding, will also apply to a payment
of the proceeds of a disposition of the Notes by or through a foreign office of
a United States broker or foreign brokers with certain types of relationships to
the United States. Neither information reporting nor backup withholding will
generally apply to a payment of the proceeds of a disposition of the Notes by or
through a foreign office of a foreign broker not subject to the preceding
sentence.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the Non-United
States Holder's United States Federal income tax liability, provided that the
required information is furnished to the Internal Revenue Service.
These information reporting and backup withholding rules are under review by
the United States Treasury and their application to the Notes could be changed
by future regulations.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis for sale by Disney through
Bear, Stearns & Co. Inc., CS First Boston Corporation, Goldman, Sachs & Co.,
Lehman Brothers, Lehman Brothers Inc., Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc. and Morgan
Stanley & Co. Incorporated (each, an "Agent," and collectively, the "Agents"),
who have agreed to use their reasonable best efforts to solicit offers to
purchase the Notes. Disney will pay the Agent through which a Note has been sold
a commission which, depending on the Stated Maturity of such Note or, in the
case of Notes which are subject to repurchase by Disney at the option of the
Holder, the period of time until the first purchase date specified in the
applicable Note, will range from .125% to .750% of the principal amount (or in
the case of a Discount Note, the price to public) of such Note, except that in
the case of a Note with a Stated Maturity 30 years or more from the date of
issuance such commission shall be determined by Disney and the relevant Agents.
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Disney may also sell Notes to an Agent, as principal, for resale to
investors or other purchasers. In addition, the Agents may offer the Notes they
have purchased as principal to other dealers. The Agents may sell Notes to any
dealer at a discount and, unless otherwise specified in the applicable Pricing
Supplement, such discount allowed to any dealer will not be in excess of the
discount to be received by such Agent from Disney. Unless otherwise indicated in
the applicable Pricing Supplement, any Notes sold to an Agent as principal will
be purchased by such Agent at a price equal to 100% of the principal amount
thereof less a percentage equal to the commission applicable to any agency sale
of a Note of identical maturity, and may be resold by the Agent to investors and
other purchasers from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of sale by such Agent or may be resold to certain dealers
as described above. After the initial public offering of Notes to be resold to
investors and other purchasers, the public offering price (in the case of Notes
to be resold at a fixed public offering price), the concession and discount may
be changed. Disney has agreed to reimburse the Agents for certain expenses.
Disney reserves the right to sell Notes to or through others and to sell
Notes directly on its own behalf in those jurisdictions where it is authorized
to do so or through additional agents, acting either as agent or principal. Any
other agent or underwriter will be identified in an applicable Pricing
Supplement. No commission will be allowed or be payable on any sales made
directly by Disney.
Payment of the purchase price of the Notes will be required to be made in
immediately available funds in The City of New York on the date of settlement.
Disney reserves the right to withdraw, cancel or modify the offer made
hereby without notice and has the sole right to accept offers to purchase Notes
and may reject any proposed purchase of Notes in whole or in part. An Agent will
have the right, in its discretion reasonably exercised, to reject in whole or in
part any offer to purchase Notes received by it.
Each Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). Disney has agreed to
indemnify the Agents against certain liabilities, including liabilities under
the Securities Act, or to contribute to payments the Agents may be required to
make in respect thereof.
There is no established trading market for the Notes and the Notes will not
be listed on any securities exchange. The Agents have advised Disney that they
may from time to time purchase and sell Notes in the secondary market, as
permitted by applicable laws and regulations. The Agents are not obligated,
however, to make any such purchases and sales and any such purchases and sales
may be discontinued at any time without notice at the sole discretion of the
Agents. There can be no assurance that there will be a secondary market for the
Notes or liquidity in the secondary market if one develops.
LEGAL MATTERS
Certain legal matters with respect to the legality of the securities being
offered hereby will be passed upon for Disney by Skadden, Arps, Slate, Meagher &
Flom, Los Angeles, California. Gibson, Dunn & Crutcher will act as counsel for
the Agents. Skadden, Arps, Slate, Meagher & Flom has from time to time
represented, and continues to represent, each of the Agents in connection with
certain legal matters. Gibson, Dunn & Crutcher has from time to time represented
each of the Agents, and anticipates that it may continue to represent, Disney on
certain unrelated matters.
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PROSPECTUS
THE WALT DISNEY COMPANY
DISNEY ENTERPRISES, INC.
SECURITIES
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This Prospectus relates to the offering of securities described herein of
The Walt Disney Company, a Delaware corporation ("Disney"), and of Disney
Enterprises, Inc., a Delaware corporation ("Old Disney"). Disney, previously a
wholly owned subsidiary of Old Disney and named "DC Holdco, Inc.", became the
parent corporation of Old Disney as a result of Old Disney's acquisition (the
"Acquisition") of Capital Cities/ABC, Inc. ("Capital Cities"). As a result of
the Acquisition, Disney was renamed "The Walt Disney Company" and Old Disney,
previously named "The Walt Disney Company," was renamed "Disney Enterprises,
Inc." See "The Acquisition." Disney may offer from time to time (i) debt
securities (the "Debt Securities"), which may be any of senior debt securities
("Senior Debt Securities"), senior subordinated debt securities ("Senior
Subordinated Debt Securities") or subordinated debt securities ("Subordinated
Debt Securities"), in each case consisting of debentures, notes and/or other
unsecured evidences of indebtedness, (ii) shares of preferred stock (the
"Preferred Stock"), which may be issued in the form of depositary receipts (the
"Depositary Shares"), each of which will represent a fraction of a share of
Preferred Stock, and (iii) warrants to purchase Debt Securities or Preferred
Stock as shall be designated by Disney at the time of the offering (the
"Warrants"). The Debt Securities, the Preferred Stock, the Depositary Shares,
the Warrants and any guarantees of the foregoing by Old Disney are collectively
referred to as the "Securities" and will have an aggregate initial offering
price of up to $5,000,000,000 or the equivalent thereof in U.S. dollars if any
Securities are denominated in a currency other than U.S. dollars or in currency
units. The Securities may be offered separately or together (in any combination)
and as separate series, in any case in amounts, at prices and on terms to be
determined at the time of sale.
The form in which the Securities are to be issued, their specific
designation, aggregate principal amount or aggregate initial offering price,
maturity, if any, rate and times of payment of interest or dividends, if any,
redemption, conversion, exchange and sinking fund terms, if any, voting or other
rights, if any, exercise price and detachability, if any, whether or not any
Securities are being guaranteed by Old Disney and other specific terms will be
set forth in a Prospectus Supplement (including any related term sheet) relating
to such Securities (the "Prospectus Supplement"), together with the terms of
offering of such Securities. If so specified in the applicable Prospectus
Supplement, Debt Securities of a series may be issued in whole or in part in the
form of one or more temporary or permanent global securities. The Prospectus
Supplement will also contain information, as applicable, about certain material
United States Federal income tax considerations relating to the particular
Securities offered thereby. The Prospectus Supplement will also contain
information, where applicable, as to any listing on a national securities
exchange of the Securities covered by such Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The Securities may be sold directly, through agents designated from time to
time or to or through underwriters or dealers. See "Plan of Distribution." If
any agents of an issuer or any underwriters are involved in the sale of any
Securities in respect of which this Prospectus is being delivered, the names of
such agents or underwriters and any applicable commissions or discounts will be
set forth in a Prospectus Supplement. The net proceeds to the applicable
issuer(s) from such sale also will be set forth in a Prospectus Supplement.
------------------------
March 7, 1996
<PAGE>
AVAILABLE INFORMATION
Prior to the Acquisition, Old Disney and Capital Cities were each subject to
the informational requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and in accordance therewith, filed reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; 7
World Trade Center, 13th Floor, New York, New York 10048; and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Such
reports and other information concerning Old Disney and Capital Cities may also
be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005 and the Pacific Stock Exchange, 115 Sansome Street, 2nd
Floor, San Francisco, California 94104. Information set forth herein relating to
Capital Cities is derived entirely from public filings made by Capital Cities.
Disney and Capital Cities intend to terminate or suspend, to the extent
permitted by applicable law, their reporting obligations under the Exchange Act
and, accordingly, may no longer file reports or other information with the
Commission. As a result of the Acquisition, Disney has become subject to the
informational requirements under the Exchange Act and information will be
provided, to the extent required, in filings made by Disney thereunder.
Disney and Old Disney (collectively, the "Issuers") have filed with the
Commission in Washington, D.C. a registration statement on Form S-3 (including
all amendments thereto, the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to the Securities
offered hereby. As permitted by the rules and regulations of the Commission,
this Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. Such additional
information is available for inspection and copying at the offices of the
Commission. Statements contained in this Prospectus, in any Prospectus
Supplement or in any document incorporated by reference herein or therein as to
the contents of any contract or other document referred to herein or therein are
not necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to, or incorporated by
reference in, the Registration Statement, each such statement being qualified in
all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by Disney (File No. 1-11605) or Old
Disney (File No. 1-4083), as the case may be, with the Commission under the
Exchange Act are incorporated herein by reference:
(a) Old Disney's Annual Report on Form 10-K for the fiscal year ended
September 30, 1995;
(b) Old Disney's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1995 (the "Old Disney December Form 10-Q");
(c) Old Disney's Current Reports on Form 8-K, dated October 6, 1995,
December 1, 1995 and January 4, 1996; and
(d) Old Disney's and Disney's Current Report on Form 8-K, dated February
9, 1996;
(e) Disney's Current Report on Form 8-K, dated March 7, 1996.
The following documents previously filed by Capital Cities (File No. 1-4278)
with the Commission under the Exchange Act are incorporated herein by reference:
(a) Capital Cities' Annual Report on Form 10-K for the year ended
December 31, 1994;
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(b) Capital Cities' Quarterly Reports on Form 10-Q for the quarters
ended April 2, 1995, July 2, 1995 and Form 10-Q for the quarter ended
October 1, 1995 as amended by Form 10-Q/A filed with the Commission on
November 29, 1995; and
(c) Capital Cities' Current Reports on Form 8-K, dated July 31, 1995,
October 6, 1995 and January 4, 1996.
The Joint Proxy Statement/Prospectus of Old Disney and Capital Cities dated
November 13, 1995 and the Supplement to the Joint Proxy Statement/Prospectus,
dated February 9, 1996, are also incorporated herein by reference.
All documents filed by Disney or Old Disney, pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of the offering
of the Securities made hereby, shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the date of filing of such
documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document that is or is deemed to be incorporated by
reference herein) modifies or supersedes such previous statement. Any statement
so modified or superseded shall not be deemed to constitute a part hereof except
as so modified or superseded.
Disney will provide without charge to each person to whom a copy of this
Prospectus has been delivered, on the written or oral request of such person, a
copy of any or all of the documents referred to above which have been or may be
incorporated by reference in this Prospectus other than exhibits to such
documents, unless such exhibits are also specifically incorporated by reference
herein. Requests for such copies should be directed to The Walt Disney Company,
500 South Buena Vista Street, Burbank, California 91521, Attention: Corporate
Secretary; telephone number (818) 560-1000.
------------------------
Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement are stated in United States dollars ("$," "dollars," "U.S.
dollars" or "U.S.$").
------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
ANY PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY ANY OF THE
ISSUERS OR ANY UNDERWRITER OR AGENT. THIS PROSPECTUS AND ANY PROSPECTUS
SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THEIR RESPECTIVE DATES.
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BUSINESS OF DISNEY
Disney was formed in the State of Delaware under the name "DC Holdco, Inc."
in July 1995 as a wholly owned subsidiary of Old Disney in connection with the
acquisition of Capital Cities. Prior to the consummation of the Acquisition,
Disney had not conducted any substantial business activities, other than those
incident to its formation, its execution of the Merger Agreements (as defined
below), its participation in the preparation of the Registration Statement and
this Prospectus and other actions taken in contemplation of the consummation of
the Acquisition or in connection herewith. As a result of the Acquisition, which
became effective on February 9, 1996, Old Disney and Capital Cities became
wholly owned subsidiaries of Disney, which was renamed "The Walt Disney
Company." Accordingly, the business of Disney is conducted through its wholly
owned subsidiaries and is comprised of the businesses previously conducted by
Old Disney, Capital Cities and their respective subsidiaries. As used herein,
unless otherwise specified or unless the context otherwise requires, the
"Company" includes Disney's current subsidiaries, including Old Disney and
Capital Cities.
The Company is a diversified international entertainment company with
operations in the following lines of business: Filmed Entertainment; Theme Parks
and Resorts; Consumer Products; and Broadcasting and Publishing. Although these
lines of business have been reported historically as business segments of Old
Disney and Capital Cities, financial information is not necessarily presented by
the Company for such lines of business. Since the Acquisition, the Company has
been analyzing, but has not yet determined, the appropriate business segments in
which the combined company operates for which financial information will be
presented.
The Company's principal executive offices are located at 500 South Buena
Vista Street, Burbank, California 91521, and its telephone number is (818)
560-1000.
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 VHF television station. In connection with
the Acquisition, the Company has announced its intention to divest its interest
in KCAL-TV. The success of all of 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.
THEME PARKS AND RESORTS
The Theme Parks and Resorts business includes the Company's operation of the
Walt Disney World-Registered Trademark- destination resort in Florida, the
Disneyland Park-Registered Trademark- and two hotels near Disneyland
Park-Registered Trademark- in California. In addition, 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.
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
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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.
BROADCASTING
The Company through its subsidiaries, including Capital Cities, operates the
ABC Television Network, ten television stations, the ABC Radio Networks and 21
radio stations, and provides programming for cable television. Capital Cities,
through joint ventures, is engaged in domestic and international broadcast/cable
services and television production and distribution.
Capital Cities' assets include the ABC Television Network, which as of June
30, 1995 had 224 primary affiliated stations reaching 99.9% of all U.S.
television households. A number of secondary affiliated stations add to the
primary coverage. In addition, Capital Cities owns nine very high frequency
(VHF) television stations, one ultra high frequency (UHF) television station,
eleven standard (AM) radio stations and ten frequency modulation (FM) radio
stations. All but one television station are affiliated with the ABC Television
Network and all but four radio stations are affiliated with the ABC Radio
Networks.
Capital Cities' Cable and International Broadcast operations are principally
involved in the production and distribution of cable television programming, in
the licensing of programming to domestic and international markets and in joint
ventures in foreign-based television operations and television production and
distribution entities. The primary domestic cable programming services, which
are operated through joint-ventures, are ESPN, A&E Television Network and
Lifetime Television.
PUBLISHING
Capital Cities' publishing operations (i) publish seven daily newspapers
(five of which have Sunday editions); weekly community newspapers in four
states; shopping guides and real estate magazines in eleven states; specialized
publications that involve news and ideas for various industries; and consumer,
special interest, trade and agricultural publications; and (ii) engage in
research and database services.
In connection with the Acquisition, the Company is required to divest its
interest in certain newspapers or radio stations in each of Detroit and Fort
Worth.
THE ACQUISITION
Old Disney and Capital Cities entered into an Amended and Restated Agreement
and Plan of Reorganization, dated as of July 31, 1995 (the "Reorganization
Agreement"), which, together with related merger agreements (the "Merger
Agreements"), provided for the merger of DCA Merger Corp., a Delaware
corporation and a wholly owned subsidiary of Disney (the "Old Disney Merger"),
with and into Old Disney and the merger of DCB Merger Corp., a Delaware
corporation and a wholly owned subsidiary of Disney, with and into Capital
Cities (the "Capital Cities Merger"). The reorganization of the business of
Disney and Capital Cities resulting from the Reorganization Agreement and the
Merger Agreements is referred to herein as the "Acquisition." As a result of the
Acquisition, each of Old Disney and Capital Cities has become a wholly owned
subsidiary of Disney and Disney has been renamed "The Walt Disney Company." As a
result of the consummation of the Acquisition, each Outstanding Capital Cities
Share (as defined below) has been converted into the right to receive cash,
shares of common stock, par value $0.01 per share, of Disney ("Disney Common
Stock") or a combination of both cash and Disney Common Stock. Each Capital
Cities shareholder will have the opportunity to indicate, on a form of election
(the "Election Form"), whether such shareholder wishes to make a Standard
Election, a Stock Election or a Cash Election (as such terms are defined below)
for each share of common stock, par value $0.10 per share, of Capital Cities
("Capital Cities Common Stock") held by such shareholder. The allocation of cash
and/or shares of Disney Common Stock that a shareholder of Capital Cities may
receive will depend on (i) the stated preferences of the Capital Cities
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shareholders on the Election Forms and (ii) the proration procedures to be
applied if the Requested Stock Amount exceeds the Stock Component or the
Requested Cash Amount exceeds the Cash Component (as such terms are defined
below).
Shareholders of Capital Cities who make an effective "Standard Election"
will receive, for each share of Capital Cities Common Stock for which such
election is made, one share of Disney Common Stock plus $65 in cash
(collectively, the "Standard Consideration"). The number of shares of Disney
Common Stock and the amount of cash to be distributed to Capital Cities
shareholders who make an effective Standard Election will not be affected in any
way by the proration procedures described below. Shareholders of Capital Cities
who make an effective "Stock Election" will receive (subject to the proration
procedures described below), for each share of Capital Cities Common Stock for
which such election is made, (i) one share of Disney Common Stock plus (ii) a
number of shares of Disney Common Stock equal to a fraction, the numerator of
which is $65 and the denominator of which is the Old Disney Common Stock Price
(collectively, the "Stock Consideration"). The "Old Disney Common Stock Price"
of $62 is an amount equal to the average of the closing sales prices of Old
Disney Common Stock on the New York Stock Exchange Composite Tape on each of the
ten consecutive trading days immediately preceding the second trading day prior
to the Effective Time. "Effective Time" means February 9, 1996. Shareholders of
Capital Cities who make an effective "Cash Election" will receive (subject to
the proration procedures described below) for each share of Capital Cities
Common Stock for which such election is made, in cash, an amount equal to $65
plus the Old Disney Common Stock Price (collectively, the "Cash Consideration").
If a holder of Capital Cities Common Stock does not make a Standard Election, a
Cash Election or a Stock Election, or properly revokes an effective, properly
completed Election Form without timely submitting a revised, properly completed
Election Form, such Capital Cities shareholder will be deemed to have made a
Cash Election.
In the event that the aggregate number of shares of Disney Common Stock
requested by shareholders of Capital Cities pursuant to effective Stock
Elections (the "Requested Stock Amount") exceeds the Stock Component, each
holder making an effective Stock Election will receive, for each share of
Capital Cities Common Stock for which a Stock Election has been made, (x) a
number of shares of Disney Common Stock equal to the product of the Stock
Consideration and a fraction, the numerator of which is the Stock Component and
the denominator of which is the Requested Stock Amount (such product, the
"Prorated Stock Amount") and (y) cash in an amount equal to the product of (a)
the Stock Consideration minus the Prorated Stock Amount and (b) the Old Disney
Common Stock Price. The "Stock Component" is the number of Outstanding Capital
Cities Shares minus the aggregate number of Outstanding Capital Cities Shares
with respect to which effective Standard Elections have been received by the
Exchange Agent (as defined below). The "Outstanding Capital Cities Shares"
consist of the shares of Capital Cities Common Stock outstanding immediately
prior to the Effective Time (which is exclusive of shares of Capital Cities
Common Stock held in the Capital Cities treasury) minus the number of shares of
Capital Cities Common Stock with respect to which dissenters' rights have been
perfected pursuant to Section 623 of the New York Business Corporation Law
("Dissenting Shares").
In the event that the aggregate amount of cash requested by shareholders of
Capital Cities pursuant to effective or deemed Cash Elections (the "Requested
Cash Amount") exceeds the Cash Component, each such holder will receive, for
each share of Capital Cities Common Stock for which a Cash Election has been
made or deemed to be made, (x) cash in an amount equal to the product of the
Cash Consideration and a fraction, the numerator of which is the Cash Component
and the denominator of which is the Requested Cash Amount (such product, the
"Prorated Cash Amount") and (y) a number of shares of Disney Common Stock equal
to a fraction, the numerator of which is equal to the Cash Consideration minus
the Prorated Cash Amount and the denominator of which is the Old Disney Common
Stock Price. The "Maximum Cash Amount" is equal to the product of the number of
Outstanding Capital Cities Shares and $65; PROVIDED, HOWEVER, that the Maximum
Cash Amount may be increased in Old Disney's sole discretion at any time prior
to the fifth business day after March 7, 1996, the election deadline for Capital
Cities shareholders to submit to the Exchange Agent appointed
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pursuant to the Reorganization Agreement (the "Exchange Agent") their completed
Election Forms. The "Cash Component" is equal to the Maximum Cash Amount minus
the product of (i) the number of shares of Capital Cities Common Stock for which
effective Standard Elections have been made and (ii) $65. See the pro forma
financial information in the Old Disney December Form 10-Q.
No fractional shares of Disney Common Stock will be issued pursuant to the
Capital Cities Merger. In lieu of the issuance of any fractional shares of
Disney Common Stock, cash equal to the product of such fractional share amount
and the Old Disney Common Stock Price will be paid to holders in respect of any
fractional share of Disney Common Stock that would otherwise be issuable.
USE OF PROCEEDS
Unless otherwise indicated in an accompanying Prospectus Supplement, Disney
intends to use the net proceeds from the sale of the Securities for general
corporate purposes, including, without limitation, to repay commercial paper or
other indebtedness incurred by Disney to finance the Acquisition.
RATIOS OF EARNINGS TO FIXED CHARGES
Set forth below are the consolidated ratios of earnings to fixed charges for
Old Disney for the three-month periods ended December 31, 1995 and 1994 and for
each of the years in the five-year period ended September 30, 1995. Also set
forth below are the unaudited pro forma combined ratios of earnings to fixed
charges for Disney for the three months ended December 31, 1995 and for the year
ended September 30, 1995:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED DECEMBER
31, YEAR ENDED SEPTEMBER 30,
--------------- -------------------------------------
1995 1994 1995 1994 1993 1992 1991
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Actual (1).................... 11x 11x 9x 9x 7x 8x 6x
Pro forma (1)(2):
Scenario 1.................. 5x 4x
Scenario 2.................. 3x 2x
<FN>
- ------------------------
(1) For purposes of these ratios, earnings are calculated by adding to
(subtracting from) income from continuing operations before income taxes
and cumulative effect of accounting changes, the following: fixed charges,
excluding capitalized interest; and losses and (undistributed earnings)
recognized with respect to less than 50% owned equity investments. Fixed
charges consist of interest on borrowings and that portion of rental
expense that approximates interest.
(2) The pro forma combined ratios of earnings to fixed charges for Disney give
effect to the Acquisition as if it had been consummated at the beginning of
each period presented. As a result of the consummation of the Acquisition,
each outstanding share of Capital Cities Common Stock has been converted
into the right to receive cash, shares of Disney Common Stock or a
combination of both cash and Disney Common Stock. The exact amount of cash
and/or shares of Disney Common Stock to be received by each shareholder of
Capital Cities pursuant to the Acquisition is dependent upon, among other
things, (i) the stated preferences of the Capital Cities shareholders on
their Election Forms, (ii) the proration procedures to be applied if the
Requested Stock Amount exceeds the Stock Component or the Requested Cash
Amount exceeds the Cash Component, and (iii) the level of the Maximum Cash
Amount, including any increase of the Maximum Cash Amount by Old Disney, in
its sole discretion. Accordingly, two alternative scenarios of unaudited
pro forma combined ratios of earnings to fixed charges are presented, which
give effect to the range of possible amounts of Disney Common Stock and/or
cash to be received by Capital Cities shareholders. Scenario 1 assumes that
all Capital Cities shareholders receive one share of Disney Common Stock
and $65 in cash for each outstanding share of Capital Cities Common Stock,
reflecting the maximum number of shares of Disney Common Stock which could
be issued in
</TABLE>
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<TABLE>
<S> <C>
connection with the Acquisition. Scenario 2 assumes that all Capital Cities
shareholders receive solely cash for each outstanding share of Capital
Cities Common Stock, without regard to the Cash Component. See the pro
forma financial information in the Old Disney December Form 10-Q.
</TABLE>
DESCRIPTION OF THE DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement and
the extent, if any, to which such general provisions may apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Debt Securities.
The Debt Securities may be issued, from time to time, in one or more series,
and will constitute either Senior Debt Securities, Senior Subordinated Debt
Securities or Subordinated Debt Securities. Senior Debt Securities may be issued
from time to time under an Indenture (the "Senior Debt Securities Indenture") to
be entered into between Disney and Citibank, N.A., a national banking
association, as trustee (the "Senior Debt Securities Trustee"). Senior
Subordinated Debt Securities may be issued from time to time under an Indenture
(the "Senior Subordinated Debt Securities Indenture") to be entered into between
Disney and The Chase Manhattan Bank, N.A., as trustee (the "Senior Subordinated
Debt Securities Trustee"). Subordinated Debt Securities may be issued from time
to time under an Indenture (the "Subordinated Debt Securities Indenture") to be
entered into between Disney and The First National Bank of Chicago, as trustee
(the "Subordinated Debt Securities Trustee").
The Senior Debt Securities Indenture, the Senior Subordinated Debt
Securities Indenture, and the Subordinated Debt Securities Indenture are
referred to herein individually as an "Indenture" and, collectively, as the
"Indentures," and the Senior Debt Securities Trustee, the Senior Subordinated
Debt Securities Trustee and the Subordinated Debt Securities Trustee are
referred to herein individually as the "Trustee" and collectively as the
"Trustees." Forms of the Indentures are filed as exhibits to the Registration
Statement. Capitalized terms used in this section which are not otherwise
defined in this Prospectus shall have the meanings set forth in the Indentures
to which they relate. The following summaries of certain provisions of the Debt
Securities and the Indentures do not purport to be complete and are subject to,
and are qualified in their entirety by express reference to, all the provisions
of the Indentures, including the definitions therein of certain terms. As used
in this section of the Prospectus, "Disney" does not include its subsidiaries.
GENERAL
The Debt Securities will be direct, unsecured obligations of Disney.
The Indentures do not limit the aggregate principal amount of Debt
Securities that may be issued thereunder and provide that Debt Securities may be
issued thereunder from time to time in one or more series.
Under the Indentures, Disney will have the ability to issue Debt Securities
with terms different from those of Debt Securities previously issued, without
the consent of the holders of previously issued series of Debt Securities, in an
aggregate principal amount determined by Disney.
Securities may be issued as Discount Securities, which may be sold at a
discount below their principal amount. Even if Securities are not issued at a
discount below their principal amount, such Securities may, for United States
Federal income tax purposes, be deemed to have been issued with "original issue
discount" ("OID") because of certain interest payment characteristics. Special
United States Federal income tax considerations applicable to Securities issued
with original issue discount, including Discount Securities, will be described
in more detail in any applicable Prospectus Supplement. In addition, special
United States Federal tax considerations or other restrictions or terms
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applicable to any Debt Securities which are issuable in bearer form, offered
exclusively to United States Aliens or denominated in a currency other than
United States dollars will be set forth in a Prospectus Supplement relating
thereto.
The applicable Prospectus Supplement or Prospectus Supplements will
describe, among other things, the following terms of the Debt Securities offered
thereby (the "Offered Debt Securities"): (i) the title of the Offered Debt
Securities; (ii) any limit on the aggregate principal amount of the Offered Debt
Securities; (iii) whether the Offered Debt Securities are to be issuable as
registered securities or bearer securities or both and whether the Offered Debt
Securities may be represented initially by a Debt Security in temporary or
permanent global form, and if so, the initial Depositary with respect to such
temporary or permanent global Debt Security and whether and the circumstances
under which beneficial owners of interests in any such temporary or permanent
global Debt Security may exchange such interests for Debt Securities of such
series and of like tenor of any authorized form and denomination; (iv) the price
or prices at which the Offered Debt Securities will be issued; (v) the date or
dates on which the principal of the Offered Debt Securities is payable or the
method of determination thereof; (vi) the place or places where and the manner
in which the principal of and premium, if any, and interest, if any, on such
Offered Debt Securities will be payable and the place or places where such
Offered Debt Securities may be presented for transfer and, if applicable,
conversion or exchange; (vii) the rate or rates at which the Offered Debt
Securities will bear interest, or the method of calculating such rate or rates,
if any, and the date or dates from which such interest, if any, will accrue;
(viii) the calculation agent and/or exchange rate agent for such Debt
Securities; (ix) the Stated Maturities (as defined below) of installments of
interest (the "Interest Payment Dates"), if any, on which any interest on the
Offered Debt Securities will be payable, and the Regular Record Date for any
interest payable on any Offered Debt Securities which are registered securities;
(x) the right or obligation, if any, of Disney to redeem or purchase Debt
Securities of the series pursuant to any sinking fund or analogous provisions or
at the option of a holder thereof, the conditions, if any, giving rise to such
right or obligation, and the period or periods within which, and the price or
prices at which and the terms and conditions upon which Debt Securities of the
series shall be redeemed or purchased, in whole or part, and any provisions for
the remarketing of such Debt Securities; (xi) whether such Offered Debt
Securities are convertible or exchangeable into other debt or equity securities,
and, if so, the terms and conditions upon which such conversion or exchange will
be effected including the initial conversion or exchange price or rate and any
adjustments thereto, the conversion or exchange period and other conversion or
exchange provisions; (xii) the currency or currencies, including composite
currencies or currency units, of payment of principal of and interest, if any,
on the Offered Debt Securities, if other than U.S. dollars, and, if other than
U.S. dollars, whether the Offered Debt Securities may be satisfied and
discharged other than as provided in the Indenture and whether Disney or the
holders of any such Offered Debt Securities may elect to receive payments in
respect of such Offered Debt Securities in a currency or currency units other
than that in which such Offered Debt Securities are stated to be payable; (xiii)
any terms applicable to such Offered Debt Securities issued at an issue price
below their stated principal amount, including the issue price thereof and the
rate or rates at which such original issue discount will accrue; (xiv) if the
amount of payments of principal of and interest, if any, on the Offered Debt
Securities is to be determined by reference to an index or formula, or based on
a coin or currency or currency unit other than that in which the Offered Debt
Securities are stated to be payable, the manner in which such amounts are to be
determined and the calculation agent, if any, with respect thereto; (xv) if
other than the principal amount thereof, the portion of the principal amount of
the Offered Debt Securities which will be payable upon declaration or
acceleration of the maturity thereof pursuant to an Event of Default; (xvi) any
deletions from, modifications of or additions to the Events of Default or
covenants of Disney with respect to such Offered Debt Securities, whether or not
such Events of Default or covenants are consistent with the Events of Default or
covenants set forth herein; (xvii) the terms and conditions of any Debt
Guarantees (as defined below) of Old Disney with respect to the Offered Debt
Securities; (xviii) any special United States Federal income tax considerations
applicable to the Offered Debt
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Securities; and (xix) any other terms of the Offered Debt Securities not
inconsistent with the provisions of any applicable Indenture. The applicable
Prospectus Supplement will also describe the following terms of any series of
Subordinated or Senior Subordinated Debt Securities offered hereby in respect of
which this Prospectus is being delivered: (a) the rights, if any, to defer
payments of interest on the Subordinated or Senior Subordinated Debt Securities
of such series by extending the interest payment period, and the duration of
such extensions, and (b) the subordination terms of the Subordinated or Senior
Subordinated Debt Securities of such series. The foregoing is not intended to be
an exclusive list of the terms that may be applicable to any Offered Debt
Securities and shall not limit in any respect the ability of Disney to issue
Debt Securities with terms different from or in addition to those described
above or elsewhere in this Prospectus provided that such terms are not
inconsistent with the applicable Indenture and this Prospectus. Any such
Prospectus Supplement will also describe any special provisions for the payment
of additional amounts with respect to the Offered Debt Securities.
The operations of Disney are conducted almost entirely through subsidiaries.
The operations of Old Disney are currently conducted in significant part through
subsidiaries. Accordingly, the cash flow and the consequent ability to service
debt of Disney and Old Disney, including the Debt Securities and any Debt
Guarantees are dependent upon the earnings of their subsidiaries and the
distribution of those earnings to Disney or Old Disney, as the case may be,
whether by dividends, loans or otherwise. The payment of dividends and the
making of loans and advances to Disney and Old Disney by their subsidiaries may
be subject to statutory or contractual restrictions, are contingent upon the
earnings of those subsidiaries and are subject to various business
considerations. Any right of Disney and Old Disney to receive assets of any of
its subsidiaries upon their liquidation or reorganization (and the consequent
right of the holders of the Debt Securities to participate in those assets) will
be effectively subordinated to the claims of that subsidiary's creditors
(including trade creditors), except to the extent that Disney or Old Disney, as
the case may be, is itself recognized as a creditor of such subsidiary, in which
case the claims of Disney or Old Disney, as the case may be, would still be
subordinate to any security interests in the assets of such subsidiary and any
indebtedness of such subsidiary senior to that held by Disney or Old Disney.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
The Debt Securities of a series may be issued solely as registered
securities, solely as bearer securities (with or without coupons attached) or as
both registered securities and bearer securities. Debt Securities of a series
may be issuable in whole or in part in the form of one or more global Debt
Securities, as described below under "Global Debt Securities." Unless otherwise
indicated in an applicable Prospectus Supplement, registered securities will be
issuable in denominations of $1,000 and integral multiples thereof, and bearer
securities will be issuable in denominations of $5,000 and $100,000.
Registered securities of any series will be exchangeable for other
registered securities of the same series of any authorized denominations and of
a like aggregate principal amount and tenor. In addition, if Debt Securities of
any series are issuable as both registered securities and as bearer securities,
at the option of the holder, subject to the terms of the applicable Indenture,
bearer securities (accompanied by all unmatured coupons, except as provided
below, and all matured coupons in default) of such series will be exchangeable
for registered securities of the same series of any authorized denominations and
of a like aggregate principal amount and tenor. Unless otherwise indicated in an
applicable Prospectus Supplement, any bearer security surrendered in exchange
for a registered security between a Regular Record Date or a Special Record Date
and the relevant date for payment of interest will be surrendered without the
coupon relating to such date for payment of interest and interest will not be
payable in respect of the registered security issued in exchange for such bearer
security, but will be payable only to the holder of such coupon when due in
accordance with the terms of the applicable Indenture. Bearer securities may not
be issued in exchange for registered securities.
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Debt Securities may be presented for exchange as provided above, and unless
otherwise indicated in an applicable Prospectus Supplement, registered
securities may be presented for registration of transfer, at the office or
agency of Disney designated as registrar or co-registrar with respect to any
series of Debt Securities, without service charge and upon payment of any taxes,
assessments or other governmental charges as described in the applicable
Indenture. Such transfer or exchange will be effected on the books of the
registrar or any other transfer agent appointed by Disney upon such registrar or
transfer agent, as the case may be, being satisfied with the documents of title
and identity of the person making the request. Disney intends to initially
appoint the Trustee as registrar and the name of any different or additional
registrar designated by Disney with respect to the Offered Debt Securities will
be included in the Prospectus Supplement relating thereto. If a Prospectus
Supplement refers to any transfer agents (in addition to the registrar)
designated by Disney with respect to any series of Debt Securities, Disney may
at any time rescind the designation of any such transfer agent or approve a
change in the location through which any such transfer agent acts, except that,
if Debt Securities of a series are issuable only as registered securities,
Disney will be required to maintain a transfer agent in each Place of Payment
for such series and, if Debt Securities of a series are issuable as bearer
securities, Disney will be required to maintain (in addition to the registrar) a
transfer agent in a Place of Payment for such series located outside the United
States. Disney may at any time designate additional transfer agents with respect
to any series of Debt Securities.
Unless otherwise indicated in an applicable Prospectus Supplement, the
Indentures do not include covenants limiting the amount of indebtedness that may
be incurred or otherwise restricting Disney's ability to enter into a highly
leveraged transaction, including a reorganization, restructuring, merger or
similar transaction involving Disney that may adversely affect the holders of
the Debt Securities, if such transaction is a permissible consolidation, merger
or similar transaction. In addition, unless otherwise specified in an applicable
Prospectus Supplement, the Indentures do not afford the holders of the Debt
Securities the right to require Disney to repurchase or redeem the Debt
Securities in the event of a highly leveraged transaction. See "Mergers and Sale
of Assets."
In the event of any partial redemption of Debt Securities of any series,
Disney will not be required to (i) issue, register the transfer of or exchange
Debt Securities of that series during a period beginning at the opening of
business 15 days before any selection of Debt Securities of that series to be
redeemed and ending at the close of business on (a) if Debt Securities of the
series are issuable only as registered securities, the day of mailing of the
relevant notice of redemption, and (b) if Debt Securities of the series are
issuable as bearer securities, the day of the first publication of the relevant
notice of redemption or, if Debt Securities of the series are also issuable as
registered securities and there is no publication, the mailing of the relevant
notice of redemption; (ii) register the transfer of or exchange any registered
security, or portion thereof, called for redemption, except the unredeemed
portion of any registered security being redeemed in part; or (iii) exchange any
bearer security called for redemption, except to exchange such bearer security
for a registered security of that series and of like tenor and principal amount
that is immediately surrendered for redemption.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and interest, if any, on registered securities will be made at
the office of such paying agent or paying agents as Disney may designate from
time to time, except that at the option of Disney payment of principal or
interest may be made by check or by wire transfer to an account maintained by
the payee. Unless otherwise indicated in an applicable Prospectus Supplement,
payment of any installment of interest on registered securities will be made to
the person in whose name such registered security is registered at the close of
business on the Regular Record Date for such interest.
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and interest, if any, on bearer securities will be payable,
subject to any applicable laws and regulations, at the offices of such paying
agents outside the United States as Disney may designate from time to time,
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or by check or by transfer to an account maintained by the payee outside the
United States. Unless otherwise indicated in an applicable Prospectus
Supplement, any payment of interest on any bearer securities will be made only
against surrender of the coupon relating to such interest installment.
Unless otherwise indicated in an applicable Prospectus Supplement, the
Trustee will be designated as Disney's sole paying agent for payments with
respect to Debt Securities which are issuable solely as registered securities
and as Disney's paying agent in the Borough of Manhattan, The City of New York,
for payments with respect to Debt Securities (subject to any limitations
described in any applicable Prospectus Supplement) which are issuable as bearer
securities. Any paying agents outside the United States and any other paying
agents in the United States initially designated by Disney for the Offered Debt
Securities will be named in an applicable Prospectus Supplement. Disney may at
any time designate additional paying agents or rescind the designation of any
paying agent or approve a change in the office through which any paying agent
acts, except that, if Debt Securities of a series are issuable only as
registered securities, Disney will be required to maintain a paying agent in
each Place of Payment for such series and, if Debt Securities of a series are
issuable as bearer securities, Disney will be required to maintain (i) a paying
agent in the Borough of Manhattan, The City of New York for payments with
respect to any registered securities of the series (and for payments with
respect to bearer securities of the series in the circumstances described in the
Indenture, but not otherwise), and (ii) a paying agent in a Place of Payment
located outside the United States where Debt Securities of such series and any
related coupons may be presented and surrendered for payment.
All moneys paid by Disney to a paying agent for the payment of principal of
or interest, if any, on any Debt Security which remains unclaimed at the end of
two years after such principal or interest shall have become due and payable
will be repaid to Disney, and the holder of such Debt Security or any coupon
will thereafter look only to Disney for payment thereof.
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in global
form. A Debt Security in global form will be deposited with, or on behalf of, a
Depositary, which will be identified in an applicable Prospectus Supplement. A
global Debt Security may be issued in either registered or bearer form and in
either temporary or permanent form. A Debt Security in global form may not be
transferred except as a whole to the Depositary for such Debt Security or to a
nominee or successor of such Depositary. If any Debt Securities of a series are
issuable in global form, the applicable Prospectus Supplement will describe the
circumstances, if any, under which beneficial owners of interests in any such
global Debt Security may exchange such interests for definitive Debt Securities
of such series and of like tenor and principal amount in any authorized form and
denomination, the manner of payment of principal of and interest, if any, on any
such global Debt Security and the specific terms of the depositary arrangement
with respect to any such global Debt Security.
GUARANTEES OF DEBT SECURITIES
Under the terms of supplements to the Indentures that may be entered into
from time to time and subject to the provisions thereof, Old Disney may, at its
option, unconditionally guarantee to the holders from time to time of specified
series of Debt Securities the full and prompt payment of principal, premium, if
any, and interest when and as the same shall become due and payable, whether at
maturity, upon redemption or otherwise. Any such guarantees (each, a "Debt
Guarantee") will be unsecured obligations of Old Disney. Any right of payment of
the holders of Senior Debt Securities under the related Debt Guarantee will be
prior to the right of payment of the holders of Senior Subordinated Debt
Securities or Subordinated Debt Securities under the related Debt Guarantee, and
any right of payment of the holders of Senior Subordinated Debt Securities under
the related Debt Guarantee will be prior to the right of payment of the holders
of Subordinated Debt Securities under the related Debt Guarantee, in each case
upon the terms set forth in the applicable Prospectus Supplement. The Debt
Guarantees may be subordinated to other indebtedness and obligations of Old
Disney to the extent set forth in the applicable Prospectus Supplement.
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If a Debt Guarantee is applicable to Debt Securities offered hereby,
reference is made to the applicable Indenture and related supplemental indenture
and the accompanying Prospectus Supplement for a description of the specific
terms of such Debt Guarantee, including events of default relating thereto, the
outstanding principal amount of indebtedness and other obligations that will
rank senior to such Debt Guarantee and, where applicable, subordination
provisions of such Debt Guarantee and covenants of the Guarantor.
MERGERS AND SALES OF ASSETS
Disney may not consolidate with or merge into any other person or convey,
transfer or lease its properties and assets substantially as an entirety to
another person, unless, among other things, (i) the resulting, surviving or
transferee person (if other than Disney) is organized and existing under the
laws of the United States, any state thereof or the District of Columbia and
such person expressly assumes all obligations of Disney under the Debt
Securities and the Indenture, and (ii) immediately after giving effect to such
transaction, no event which is, or after notice or passage of time or both would
be, an Event of Default (any such event, a "Default") or Event of Default shall
have occurred or be continuing under the Indenture. Upon the assumption of
Disney's obligations by a person to whom such properties or assets are conveyed,
transferred or leased, subject to certain exceptions, Disney shall be discharged
from all obligations under the Debt Securities and the Indenture.
EVENTS OF DEFAULT
Each Indenture provides that, if an Event of Default specified therein shall
have occurred and be continuing, with respect to each series of the Debt
Securities outstanding thereunder individually, the Trustee or the holders of
not less than 25% in aggregate principal amount of the outstanding Debt
Securities of such series may declare the principal amount (or, if any of the
Debt Securities of such series are Discount Securities, such portion of the
principal amount of such Debt Securities as may be specified by the terms
thereof) of the Debt Securities of such series to be immediately due and
payable. Under certain circumstances, the holders of a majority in aggregate
principal amount of the outstanding Debt Securities of such series may rescind
such a declaration.
Under each Indenture, an Event of Default is defined as, with respect to
each series of Securities outstanding thereunder individually, any of the
following: (i) default in payment of the principal of any Debt Security of such
series; (ii) default in payment of any interest on any Debt Security of such
series when due, continuing for 30 days (or 60 days, in the case of Senior
Subordinated or Subordinated Debt Securities); (iii) failure by Disney to comply
with its other agreements in the Debt Securities of such series or such
Indenture for the benefit of the holders of Debt Securities of such series upon
the receipt by Disney of notice of such Default by the Trustee or the holders of
at least 25% in aggregate principal amount of the outstanding Debt Securities of
such series and Disney's failure to cure such Default within 60 days after
receipt by Disney of such notice; (iv) certain events of bankruptcy or
insolvency; and (v) any other Event of Default set forth in an applicable
Prospectus Supplement.
The Trustee shall give notice to holders of the Debt Securities of any
continuing Default known to the Trustee within 90 days after the occurrence
thereof; PROVIDED, that the Trustee may withhold such notice, as to any Default
other than a payment Default, if it determines in good faith that withholding
the notice is in the interests of the holders.
The holders of a majority in principal amount of the outstanding Debt
Securities of any series may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee with respect to the Debt Securities of such
series; PROVIDED that such direction shall not be in conflict with any law or
the Indenture and subject to certain other limitations. Before proceeding to
exercise any right or power under the Indenture at the direction of such
holders, the Trustee shall be entitled to receive from such holders reasonable
security or indemnity satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in complying with any such direction.
With respect to each series of Debt Securities, no holder will have any right to
pursue any remedy with respect to the Indenture or the Debt Securities, unless
(i) such holder shall have previously given the Trustee written notice of a
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continuing Event of Default with respect to the Debt Securities of such series;
(ii) the holders of at least 25% in aggregate principal amount of the
outstanding Debt Securities of such series shall have made a written request to
the Trustee to pursue such remedy; (iii) such holder or holders have offered to
the Trustee reasonable indemnity satisfactory to the Trustee; (iv) the holders
of a majority in aggregate principal amount of the outstanding Debt Securities
of such series have not given the Trustee a direction inconsistent with such
request within 60 days after receipt of such request; and (v) the Trustee shall
have failed to comply with the request within such 60-day period.
Notwithstanding the foregoing, the right of any holder of any Debt Security
or coupon to receive payment of the principal of and interest in respect of such
Debt Security or payment of such coupon on the date specified in such Debt
Security or coupon representing such installment of interest as the fixed date
on which an amount equal to the principal of such Debt Security or an
installment of principal thereof or interest thereon is due and payable (the
"Stated Maturity" or "Stated Maturities") or to institute suit for the
enforcement of any such payments shall not be impaired or adversely affected
without such holder's consent. The holders of at least a majority in aggregate
principal amount of the outstanding Debt Securities of any series may waive an
existing Default with respect to such series and its consequences, other than
(i) any Default in any payment of the principal of, or interest on, any Debt
Security of such series or (ii) any Default in respect of certain covenants or
provisions in the Indenture which may not be modified without the consent of the
holder of each outstanding Debt Security of such series affected as described in
"Modification and Waiver," below.
Each Indenture provides that Disney shall deliver to the Trustee within 120
days after the end of each fiscal year of Disney (beginning with the fiscal year
ending September 30, 1996) an officers' certificate stating whether or not the
signers know of any Default that occurred during such period.
MODIFICATION AND WAIVER
Disney and the Trustee may execute a supplemental indenture without the
consent of the holders of the Debt Securities or any related coupons (i) to add
to the covenants, agreements and obligations of Disney for the benefit of the
holders of all the Debt Securities of any series or to surrender any right or
power conferred in the Indenture upon Disney; (ii) to evidence the succession of
another corporation to Disney and the assumption by it of the obligations of
Disney under the Indenture and the Debt Securities; (iii) to provide that bearer
securities may be registrable as to principal, to change or eliminate any
restrictions (including restrictions relating to payment in the United States)
on the payment of principal of or interest, if any, on bearer securities, to
permit bearer securities to be issued in exchange for registered securities, to
permit bearer securities to be issued in exchange for bearer securities of other
authorized denominations or to permit the issuance of Debt Securities in
uncertificated form; (iv) to establish the form or terms of Debt Securities of
any series or coupons as permitted by the Indenture; (v) to provide for the
acceptance of appointment under the Indenture of a successor Trustee with
respect to the Debt Securities of one or more series and to add to or change any
provisions of the Indenture as shall be necessary to provide for or facilitate
the administration of the trusts by more than one Trustee; (vi) to cure any
ambiguity, defect or inconsistency; (vii) to add to, change or eliminate any
provisions (which addition, change or elimination may apply to one or more
series of Debt Securities), PROVIDED that any such addition, change or
elimination neither (a) applies to any Debt Security of any series created prior
to the execution of such supplemental indenture and is entitled to the benefit
of such provision nor (b) modifies the rights of the holder of any such Debt
Security with respect to such provision; (viii) to secure the Debt Securities;
or (ix) to make any other change that does not adversely affect the rights of
any Securityholder.
Each Indenture provides that, with the consent of the holders of not less
than a majority in aggregate principal amount of the outstanding Debt Securities
of the series affected by such supplemental indenture, Disney and the Trustee
may also execute a supplemental indenture to add provisions to, or change in any
manner or eliminate any provisions of, the Indenture with respect to such series
of Debt Securities or modify in any manner the rights of the holders of the Debt
Securities of such series and any related coupons under such Indenture; PROVIDED
that no such supplemental
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indenture will, without the consent of the holder of each such outstanding Debt
Security affected thereby (i) change the stated maturity of the principal of, or
any installment of principal or interest on, any such Debt Security or any
premium payable upon redemption thereof, or reduce the amount of principal of
any Debt Security that is a Discount Security and that would be due and payable
upon declaration of acceleration of maturity thereof; (ii) reduce the principal
amount of, or the rate of interest on, any such Debt Security; (iii) change the
place or currency of payment of principal or interest, if any, on any such Debt
Security; (iv) impair the right to institute suit for the enforcement of any
payment on or with respect to any such Debt Security; (v) reduce the
above-stated percentage of holders of Debt Securities of any series necessary to
modify or amend such Indenture; (vi) modify the foregoing requirements or reduce
the percentage in principal amount of outstanding Debt Securities of any series
necessary to waive any covenant or past default; or (vii) in the case of Senior
Subordinated or Subordinated Debt Securities, amend or modify any of the
provisions of such Indenture relating to subordination of the Debt Securities in
any manner adverse to the holders of such Debt Securities. Holders of not less
than a majority in principal amount of the outstanding Debt Securities of any
series may waive certain past Defaults and may waive compliance by Disney with
certain of the restrictive covenants described above with respect to the Debt
Securities of such series.
DISCHARGE AND DEFEASANCE
Unless otherwise indicated in an applicable Prospectus Supplement, each
Indenture provides that Disney may satisfy and discharge obligations thereunder
with respect to the Debt Securities of any series by delivering to the Trustee
for cancellation all outstanding Debt Securities of such series or depositing
with the Trustee, after such outstanding Debt Securities have become due and
payable, cash sufficient to pay at Stated Maturity all of the outstanding Debt
Securities of such series and paying all other sums payable under the Indenture
with respect to such series.
In addition, unless otherwise indicated in an applicable Prospectus
Supplement, each Indenture provides that: Disney (a) shall be discharged from
its obligations in respect of the Debt Securities of such series ("defeasance
and discharge"), or (b) may cease to comply with certain restrictive covenants
("covenant defeasance") including those described under "Mergers and Sales of
Assets" and any such omission shall not be an Event of Default with respect to
the Debt Securities of such series, in each case at any time prior to the Stated
Maturity or redemption thereof, when Disney has irrevocably deposited with the
Trustee, in trust, (i) sufficient funds in the currency or currency unit in
which the Debt Securities are denominated to pay the principal of (and premium,
if any) and interest to Stated Maturity (or redemption) on, the Debt Securities
of such series, or (ii) such amount of direct obligations of, or obligations the
principal of (and premium, if any) and interest on which are fully guaranteed
by, the government which issued the currency in which the Debt Securities are
denominated, and which are not subject to prepayment, redemption or call, as
will, together with the predetermined and certain income to accrue thereon
without consideration of any reinvestment thereof, be sufficient to pay when due
the principal of (and premium, if any) and interest to Stated Maturity (or
redemption) on, the Debt Securities of such series. Such defeasance and
discharge and covenant defeasance are conditioned upon, among other things,
Disney's delivery of an opinion of counsel that the holders of the Debt
Securities of such series will not recognize income, gain or loss for United
States Federal income tax purposes as a result of such defeasance, and will be
subject to tax in the same manner as if no defeasance and discharge or covenant
defeasance, as the case may be, had occurred. Upon such defeasance and
discharge, the holders of the Debt Securities of such series shall no longer be
entitled to the benefits of the Indenture, except for the purposes of
registration of transfer and exchange of the Debt Securities of such series and
replacement of lost, stolen or mutilated Debt Securities and shall look only to
such deposited funds or obligations for payment.
THE TRUSTEES
The Senior Debt Securities Trustee is a national banking association, is a
participating lender under various credit arrangements with Old Disney and its
subsidiaries and is also the fiscal agent with respect to certain debt
securities of Old Disney. The Senior Debt Securities Trustee is also an
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affiliate of the administrative agent under Disney's credit agreements. Each of
the Senior Subordinated Debt Securities Trustee and the Subordinated Debt
Securities Trustee is a lender under Disney's credit agreements. Each Trustee
will be permitted to engage in other transactions with Old Disney, Disney and
each of their subsidiaries; HOWEVER, if the Trustee acquires any conflicting
interest, it must eliminate such conflict or resign.
DESCRIPTION OF PREFERRED STOCK
Disney may issue, from time to time, shares of one or more series or classes
of Preferred Stock. The following description sets forth certain general terms
and provisions of the Preferred Stock to which any Prospectus Supplement may
relate. The particular terms of any series of Preferred Stock and the extent, if
any, to which such general provisions may apply to the series of Preferred Stock
so offered will be described in the Prospectus Supplement relating to such
Preferred Stock. The following summary of certain provisions of the Preferred
Stock do not purport to be complete and is subject to, and is qualified in its
entirety by express reference to, the provisions of Disney's Restated
Certificate of Incorporation (the "Disney Certificate of Incorporation") and the
Certificate of Designation relating to a specific series of the Preferred Stock
(the "Certificate of Designation"), which will be in the form filed as an
exhibit to, or incorporated by reference in, the Registration Statement of which
this Prospectus is a part at or prior to the time of issuance of such series of
Preferred Stock.
Under the Disney Certificate of Incorporation, Disney has the authority to
issue 100,000,000 shares of Preferred Stock. The Board of Directors of Disney is
authorized to issue shares of Preferred Stock, in one or more series or classes,
and to fix for each such series voting powers and such preferences and relative,
participating, optional or other special rights and such qualifications,
limitations or restrictions as are permitted by the Delaware General Corporation
Law.
The Board of Directors of Disney shall be authorized to determine for each
series of Preferred Stock, and the Prospectus Supplement shall set forth with
respect to such series: (i) the designation of such shares and the number of
shares that constitute such series, (ii) the dividend rate (or the method of
calculation thereof), if any, on the shares of such series and the priority as
to payment of dividends with respect to other classes or series of capital stock
of Disney, (iii) the dividend periods (or the method of calculation thereof),
(iv) the voting rights of the shares, (v) the liquidation preference and the
priority as to payment of such liquidation preference with respect to other
classes or series of capital stock of Disney and any other rights of the shares
of such series upon any liquidation or winding-up of Disney, (vi) whether or not
and on what terms the shares of such series will be subject to redemption or
repurchase at the option of Disney, (vii) whether and on what terms the shares
of such series will be convertible into or exchangeable for other debt or equity
securities, (viii) whether depositary shares representing shares of such series
of Preferred Stock will be offered and, if so, the fraction of a share of such
series of Preferred Stock represented by each depositary share (see "Description
of Depositary Shares" below), (ix) whether the shares of such series of
Preferred Stock will be listed on a securities exchange, (x) any special United
States Federal income tax considerations applicable to such series, and (xi) the
other rights and privileges and any qualifications, limitations or restrictions
of such rights or privileges of such series.
DIVIDENDS
Holders of shares of Preferred Stock shall be entitled to receive, when and
as declared by the Board of Directors of Disney out of funds of Disney legally
available therefor, an annual cash dividend payable at such dates and at such
rates, if any, per share per annum as set forth in the applicable Prospectus
Supplement.
Unless otherwise set forth in the applicable Prospectus Supplement, each
series of Preferred Stock will rank junior as to dividends to any Preferred
Stock that may be issued in the future that is expressly senior as to dividends
to the Preferred Stock. If at any time Disney has failed to pay accrued
dividends on any such senior shares at the time such dividends are payable,
Disney may not pay any
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dividend on the Preferred Stock or redeem or otherwise repurchase shares of
Preferred Stock until such accumulated but unpaid dividends on such senior
shares have been paid or set aside for payment in full by Disney.
Unless otherwise set forth in the applicable Prospectus Supplement, no
dividends (other than in common stock or other capital stock ranking junior to
the Preferred Stock of any series as to dividends and upon liquidation) shall be
declared or paid or set aside for payment, nor shall any other distribution be
declared or made upon the common stock, or any other capital stock of Disney
ranking junior to or on a parity with the Preferred Stock of such series as to
dividends, nor shall any common stock or any other capital stock of Disney
ranking junior to or on a parity with the Preferred Stock of such series as to
dividends be redeemed, purchased or otherwise acquired for any consideration (or
any moneys be paid to or made available for a sinking fund for the redemption of
any shares of any such stock) by Disney (except by conversion into or exchange
for other capital stock of Disney ranking junior to the Preferred Stock of such
series as to dividends) unless (i) if such series of Preferred Stock has a
cumulative dividend, full cumulative dividends on the Preferred Stock of such
series have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for all past dividend periods
and the then current dividend period and (ii) if such series of Preferred Stock
does not have a cumulative dividend, full dividends on the Preferred Stock of
such series have been or contemporaneously are declared and paid or declared and
a sum sufficient for the payment thereof set apart for payment for the then
current dividend period; provided, however, that any monies theretofore
deposited in any sinking fund with respect to any preferred stock in compliance
with the provisions of such sinking fund may thereafter be applied to the
purchase or redemption of such preferred stock in accordance with the terms of
such sinking fund, regardless of whether at the time of such application full
cumulative dividends upon shares of the Preferred Stock outstanding on the last
dividend payment date shall have been paid or declared and set apart for
payment; and provided, further, that any such junior or parity preferred stock
or common stock may be converted into or exchanged for stock of Disney ranking
junior to the Preferred Stock as to dividends.
The amount of dividends payable for the initial dividend period or any
period shorter than a full dividend period shall be computed on the basis of a
360-day year of twelve 30-day months. Accrued but unpaid dividends will not bear
interest.
CONVERTIBILITY
No series of Preferred Stock will be convertible into, or exchangeable for,
other securities or property except as set forth in the applicable Prospectus
Supplement.
REDEMPTION AND SINKING FUND
No series of Preferred Stock will be redeemable or receive the benefit of a
sinking fund except as set forth in the applicable Prospectus Supplement.
LIQUIDATION RIGHTS
Unless otherwise set forth in the applicable Prospectus Supplement, in the
event of any liquidation, dissolution or winding up of Disney, the holders of
shares of each series of Preferred Stock are entitled to receive out of assets
of Disney available for distribution to stockholders, before any distribution of
assets is made to holders of: (i) any other shares of preferred stock ranking
junior to such series of Preferred Stock as to rights upon liquidation,
dissolution or winding up; and (ii) shares of common stock, liquidating
distributions per share in the amount of the liquidation preference specified in
the applicable Prospectus Supplement for such series of Preferred Stock plus any
dividends accrued and accumulated but unpaid to the date of final distribution;
but the holders of each series of Preferred Stock will not be entitled to
receive the liquidating distribution of, plus such dividends on, such shares
until the liquidation preference of any shares of Disney's capital stock ranking
senior to such series of the Preferred Stock as to the rights upon liquidation,
dissolution or winding up shall have been paid (or a sum set aside therefor
sufficient to provide for payment) in full. If upon any liquidation, dissolution
or winding up of Disney, the amounts payable with respect to the Preferred
Stock, and any other Preferred Stock ranking as to any such distribution on a
parity with
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the Preferred Stock are not paid in full, the holders of the preferred stock and
such other parity preferred stock will share ratably in any such distribution of
assets in proportion to the full respective preferential amount to which they
are entitled. Unless otherwise specified in a Prospectus Supplement for a series
of Preferred Stock, after payment of the full amount of the liquidating
distribution to which they are entitled, the holders of shares of Preferred
Stock will not be entitled to any further participation in any distribution of
assets by Disney. Neither a consolidation or merger of Disney with another
corporation nor a sale of securities shall be considered a liquidation,
dissolution or winding up of Disney.
VOTING RIGHTS
Holders of Preferred Stock will not have any voting right except as set
forth below or in the applicable Prospectus Supplement or as otherwise from time
to time required by law. Whenever dividends on any applicable series of
Preferred Stock or any other class or series of stock ranking on a parity with
the applicable series of Preferred Stock with respect to the payment of
dividends shall be in arrears for the equivalent of six quarterly dividend
periods, whether or not consecutive, the holders of shares of such series of
Preferred Stock (voting separately as a class with all other series of Preferred
Stock then entitled to such voting rights) will be entitled to vote for the
election of two of the authorized number of directors of Disney at the next
annual meeting of stockholders and at each subsequent meeting until all
dividends accumulated on such series of Preferred Stock shall have been fully
paid or set apart for payment. The term of office of all directors elected by
the holders of such Preferred Stock shall terminate immediately upon the
termination of the right of the holders of such Preferred Stock to vote for
directors. Unless otherwise set forth in the applicable Prospectus Supplement,
holders of shares of Preferred Stock will have one vote for each share held.
So long as any shares of any series of Preferred Stock remain outstanding,
Disney shall not, without the consent of holders of at least two-thirds of the
shares of such series of Preferred Stock outstanding at the time, voting
separately as a class with all other series of Preferred Stock of Disney upon
which like voting rights have been conferred and are exercisable, (i) issue or
increase the authorized amount of any class or series of stock ranking prior to
the outstanding Preferred Stock as to dividends or upon liquidation or (ii)
amend, alter or repeal the provisions of Disney's Certificate of Incorporation
or of the resolutions contained in the Certificate of Designation relating to
such series of Preferred Stock, whether by merger, consolidation or otherwise,
so as to materially adversely affect any power, preference or special right of
such series of Preferred Stock or the holders thereof; PROVIDED, HOWEVER, that
any increase in the amount of the authorized common stock or authorized
preferred stock or any increase or decrease in the number of shares of any
series of preferred stock or the creation and issuance of other series of common
stock or preferred stock ranking on a parity with or junior to Preferred Stock
as to dividends and upon liquidation, dissolution or winding up shall not be
deemed to materially adversely affect such powers, preferences or special
rights.
GUARANTEES OF PREFERRED STOCK
Under the terms of a guarantee which Old Disney may, at its option, issue in
favor of the holders of Preferred Stock, and subject to the provisions thereof,
Old Disney may unconditionally guarantee to the holders from time to time of
specified series or classes of Preferred Stock the full and prompt payment of
dividend payments and payments upon liquidation or redemption or otherwise. Any
such guarantees (each, a "Preferred Stock Guarantee") will be unsecured
obligations of Old Disney. The Preferred Stock Guarantees may be subordinated to
other indebtedness and obligations of Old Disney to the extent set forth in the
applicable Prospectus Supplement.
If a Preferred Stock Guarantee is applicable to Preferred Stock offered
hereby, reference is made to the applicable accompanying Prospectus Supplement
for a description of the specific terms of such Preferred Stock Guarantee and
covenants, if any, of Old Disney.
MISCELLANEOUS
The holders of Preferred Stock will have no preemptive rights. The Preferred
Stock, upon issuance against full payment of the purchase price therefor, will
be fully paid and nonassessable.
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Shares of Preferred Stock redeemed or otherwise reacquired by Disney shall
resume the status of authorized and unissued shares of Preferred Stock
undesignated as to series, and shall be available for subsequent issuance. There
are no restrictions on repurchase or redemption of the Preferred Stock while
there is any arrearage on sinking fund installments except as may be set forth
in an applicable Prospectus Supplement. Payment of dividends on any series of
Preferred Stock may be restricted by loan agreements, indentures and other
transactions entered into by Disney. The accompanying Prospectus Supplement will
describe any material contractual restrictions on dividend payments.
NO OTHER RIGHTS
The shares of a series of Preferred Stock will not have any preferences,
voting powers or relative, participating, optional or other special rights
except as set forth above or in the applicable Prospectus Supplement, the
Certificate of Incorporation or the applicable Certificate of Designation or as
otherwise required by law.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for each series of Preferred Stock will be
designated in the applicable Prospectus Supplement.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
Disney may, at its option, elect to offer fractional shares of the Preferred
Stock of a series, rather than full shares of the Preferred Stock of such
series. In the event such option is exercised, Disney will issue receipts for
Depositary Shares, each of which will represent a fraction (to be set forth in
the Prospectus Supplement relating to a particular series of Preferred Stock) of
a share of a particular series of Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary Shares
will be deposited under a Deposit Agreement (the "Deposit Agreement") among
Disney, a depositary to be named in the applicable Prospectus Supplement (the
"Preferred Stock Depositary"), and the holders from time to time of depositary
receipts issued thereunder. Subject to the terms of the Deposit Agreement, each
holder of a Depositary Share will be entitled, in proportion to the applicable
fraction of a share of Preferred Stock represented by such Depositary Share, to
all the rights and preferences of the Preferred Stock represented thereby
(including dividend, voting, redemption, subscription and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of the
related series of Preferred Stock.
The following description sets forth certain general terms and provisions of
the Depositary Shares to which any Prospectus Supplement may relate. The
particular terms of the Depositary Shares to which any Prospectus Supplement may
relate and the extent, if any, to which such general provisions may apply to the
Depositary Shares so offered will be described in the applicable Prospectus
Supplement. The forms of Deposit Agreement and Depositary Receipt are filed as
exhibits to the Registration Statement. The following summary of certain
provisions of the Depositary Shares and Deposit Agreement does not purport to be
complete and is subject to, and is qualified in its entirety by express
reference to, all the provisions of the Deposit Agreement, including the
definitions therein of certain terms.
Immediately following the issuance of shares of a series of Preferred Stock
by Disney, Disney will deposit such shares with the Preferred Stock Depositary,
which will then issue and deliver the Depositary Receipts to the purchasers
thereof. Depositary Receipts will only be issued evidencing whole Depositary
Shares. A Depositary Receipt may evidence any number of whole Depositary Shares.
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Pending the preparation of definitive engraved Depositary Receipts, the
Preferred Stock Depositary may, upon the written order of Disney, issue
temporary Depositary Receipts substantially identical to (and entitling the
holders thereof to all the rights pertaining to) the definitive Depositary
Receipts but not in definitive form. Definitive Depositary Receipts will be
prepared thereafter without unreasonable delay, and such temporary Depositary
Receipts will be exchangeable for definitive Depositary Receipts at Disney's
expense.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of the related series of Preferred Stock
to the record holders of Depositary Shares relating to such series of Preferred
Stock in proportion to the number of such Depositary Shares owned by such
holders.
In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Shares entitled thereto in proportion to the number of Depositary
Shares owned by such holders, unless the Preferred Stock Depositary determines
that such distribution cannot be made proportionately among such holders or that
it is not feasible to make such distributions, in which case the Preferred Stock
Depositary may, with the approval of Disney, adopt such method as it deems
equitable and practicable for the purpose of effecting such distribution,
including the sale (at public or private sale) of the securities or property
thus received, or any part thereof, at such place or places and upon such terms
as it may deem proper.
The amount distributed in any of the foregoing cases will be reduced by any
amounts required to be withheld by Disney or the Preferred Stock Depositary on
account of taxes or other governmental charges.
REDEMPTION OF DEPOSITARY SHARES
If a series of the Preferred Stock underlying the Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the proceeds
received by the Preferred Stock Depositary resulting from any redemption, in
whole or in part, of such series of the Preferred Stock held by the Preferred
Stock Depositary. The redemption price per Depositary Share will be equal to the
applicable fraction of the redemption price per share payable with respect to
such series of the Preferred Stock. If Disney redeems shares of a series of
Preferred Stock held by the Preferred Stock Depositary, the Preferred Stock
Depositary will redeem as of the same redemption date the number of Depositary
Shares representing the shares of Preferred Stock so redeemed. If less than all
the Depositary Shares are to be redeemed, the Depositary Shares to be redeemed
will be selected by lot or substantially equivalent method determined by the
Preferred Stock Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which the
holders of such Depositary Shares were entitled upon such redemption, upon
surrender to the Preferred Stock Depositary of the Depositary Receipts
evidencing such Depositary Shares. Any funds deposited by Disney with the
Preferred Stock Depositary for any Depositary Shares that the holders thereof
fail to redeem will be returned to Disney after a period of two years from the
date such funds are so deposited.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of any series of
the Preferred Stock are entitled to vote, the Preferred Stock Depositary will
mail the information contained in such notice of meeting to the record holders
of the Depositary Shares relating to such series of Preferred Stock. Each record
holder of such Depositary Shares on the record date (which will be the same date
as the record date for the related series of Preferred Stock) will be entitled
to instruct the Preferred Stock Depositary as to the exercise of the voting
rights pertaining to the number of shares of the series of Preferred Stock
represented by such holder's Depositary Shares. The Preferred Stock Depositary
will endeavor,
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insofar as practicable, to vote or cause to be voted the number of shares of the
Preferred Stock represented by such Depositary Shares in accordance with such
instructions, provided the Preferred Stock Depositary receives such instructions
sufficiently in advance of such meeting to enable it to so vote or cause to be
voted the shares of Preferred Stock, and Disney will agree to take all
reasonable action that may be deemed necessary by the Preferred Stock Depositary
in order to enable the Preferred Stock Depositary to do so. The Preferred Stock
Depositary will abstain from voting shares of the Preferred Stock to the extent
it does not receive specific instructions from the holders of Depositary Shares
representing such Preferred Stock.
WITHDRAWAL OF STOCK
Upon surrender of the Depositary Receipts at the corporate trust office of
the Preferred Stock Depositary and upon payment of the taxes, charges and fees
provided for in the Deposit Agreement and subject to the terms thereof, the
holder of the Depositary Shares evidenced thereby is entitled to delivery at
such office, to or upon his or her order, of the number of whole shares of the
related series of Preferred Stock and any money or other property, if any,
represented by such Depositary Shares. Holders of Depositary Shares will be
entitled to receive whole shares of the related series of Preferred Stock, but
holders of such whole shares of Preferred Stock will not thereafter be entitled
to deposit such shares of Preferred Stock with the Preferred Stock Depositary or
to receive Depositary Shares therefor. If the Depositary Receipts delivered by
the holder evidence a number of Depositary Shares in excess of the number of
Depositary Shares representing the number of whole shares of the related series
of Preferred Stock to be withdrawn, the Preferred Stock Depositary will deliver
to such holder or upon his or her order at the same time a new Depositary
Receipt evidencing such excess number of Depositary Shares.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time and from time to time be
amended by agreement between Disney and the Preferred Stock Depositary. However,
any amendment that materially adversely alters the rights of the holders of
Depositary Shares will not be effective unless such amendment has been approved
by the holders of at least a majority of the Depositary Shares then outstanding.
Every holder of a Depositary Receipt at the time such amendment becomes
effective will be deemed, by continuing to hold such Depositary Receipt, to be
bound by the Deposit Agreement as so amended. Notwithstanding the foregoing, in
no event may any amendment impair the right of any holder of any Depositary
Shares, upon surrender of the Depositary Receipts evidencing such Depositary
Shares and subject to any conditions specified in the Deposit Agreement, to
receive shares of the related series of Preferred Stock and any money or other
property represented thereby, except in order to comply with mandatory
provisions of applicable law. The Deposit Agreement may be terminated by Disney
at any time upon not less than 60 days prior written notice to the Preferred
Stock Depositary, in which case, on a date that is not later than 30 days after
the date of such notice, the Preferred Stock Depositary shall deliver or make
available for delivery to holders of Depositary Shares, upon surrender of the
Depositary Receipts evidencing such Depositary Shares, such number of whole or
fractional shares of the related series of Preferred Stock as are represented by
such Depositary Shares. The Deposit Agreement shall automatically terminate
after all outstanding Depositary Shares have been redeemed or there has been a
final distribution in respect of the related series of Preferred Stock in
connection with any liquidation, dissolution or winding up of Disney and such
distribution has been distributed to the holders of Depositary Shares.
CHARGES OF DEPOSITARY
Disney will pay all transfer and other taxes and the governmental charges
arising solely from the existence of the depositary arrangements. Disney will
pay the charges of the Preferred Stock Depositary, including charges in
connection with the initial deposit of the related series of Preferred Stock and
the initial issuance of the Depositary Shares and all withdrawals of shares of
the related series of
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<PAGE>
Preferred Stock, except that holders of Depositary Shares will pay other
transfer and other taxes and governmental charges and such other charges as are
expressly provided in the Deposit Agreement to be for their accounts.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Stock Depositary may resign at any time by delivering to
Disney written notice of its election to do so, and Disney may at any time
remove the Depositary, any such resignation or removal to take effect upon the
appointment of a successor Preferred Stock Depositary, which successor Preferred
Stock Depositary must be appointed within 60 days after delivery of the notice
of resignation or removal and must be a bank or trust company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000.
MISCELLANEOUS
The Preferred Stock Depositary will forward to the holders of Depositary
Shares all reports and communications from Disney that are delivered to the
Preferred Stock Depositary and which Disney is required to furnish to the
holders of the Preferred Stock.
The Preferred Stock Depositary's corporate trust office will be identified
in the applicable Prospectus Supplement. Unless otherwise set forth in the
applicable Prospectus Supplement, the Preferred Stock Depositary will act as
transfer agent and registrar for Depositary Receipts and if shares of a series
of Preferred Stock are redeemable, the Preferred Stock Depositary will act as
redemption agent for the corresponding Depositary Receipts.
DESCRIPTION OF WARRANTS
GENERAL
Disney may issue, together with other Securities or separately, warrants for
the purchase of (i) Debt Securities ("Debt Warrants") or (ii) Preferred Stock
("Preferred Stock Warrants" and, together with the Debt Warrants, the
"Warrants").
The Warrants will be issued under Warrant Agreements (as defined below) to
be entered into between Disney and a bank or trust company, as warrant agent
(the "Warrant Agent"), all to be set forth in the applicable Prospectus
Supplement relating to any or all Warrants in respect of which this Prospectus
is being delivered. Copies of the form of agreement for each Warrant (each a
"Debt Securities Warrant Agreement" or "Preferred Stock Warrant Agreement," as
the case may be, or collectively the "Warrant Agreements"), including the forms
of certificates representing the Warrants ("Debt Warrant Certificates" or
"Preferred Stock Warrant Certificates," as the case may be, or collectively, the
"Warrant Certificates") reflecting the provisions to be included in such
agreements that will be entered into with respect to the particular offerings of
each type of warrant are filed as exhibits to the Registration Statement of
which this Prospectus forms a part.
The following description sets forth certain general terms and provisions of
the Warrants to which any Prospectus Supplement may relate. The particular terms
of the Warrants to which any Prospectus Supplement may relate and the extent, if
any, to which such general provisions may apply to the Warrants so offered will
be described in the applicable Prospectus Supplement. The following summary of
certain provisions of the Warrants, Warrant Agreements and Warrant Certificates
does not purport to be complete and is subject to, and is qualified in its
entirety by express reference to, all the provisions of the Warrant Agreements
and Warrant Certificates, including the definitions therein of certain terms.
DEBT WARRANTS
GENERAL. Reference is made to the applicable Prospectus Supplement for the
terms of Debt Warrants in respect of which this Prospectus is being delivered,
the Debt Securities Warrant Agreement relating to such Debt Warrants and the
Debt Warrant Certificates representing such Debt Warrants, including the
following: (i) the designation, aggregate principal amount and terms of the
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Debt Securities purchasable upon exercise of such Debt Warrants and the
procedures and conditions relating to the exercise of such Debt Warrants; (ii)
the designation and terms of any related Debt Securities with which such Debt
Warrants are issued and the number of such Debt Warrants issued with each such
Debt Security; (iii) the date, if any, on and after which such Debt Warrants and
the related Debt Securities will be separately transferable; (iv) the principal
amount of Debt Securities purchasable upon exercise of each Debt Warrant and the
price at which such principal amount of Debt Securities may be purchased upon
such exercise; (v) the date on which the right to exercise such Debt Warrants
shall commence and the date on which such right shall expire; (vi) a discussion
of the material United States Federal income tax considerations applicable to
the exercise of Debt Warrants; (vii) whether the Debt Warrants represented by
the Debt Warrant Certificates will be issued in registered or bearer form, and,
if registered, where they may be transferred and registered; (viii) call
provisions of such Debt Warrants, if any; and (ix) any other terms of the Debt
Warrants.
Debt Warrant Certificates will be exchangeable for new Debt Warrant
Certificates of different denominations and Debt Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of their Debt
Warrants, holders of Debt Warrants will not have any of the rights of holders of
the Debt Securities purchasable upon such exercise and will not be entitled to
payments of principal of (and premium, if any) or interest, if any, on the Debt
Securities purchasable upon such exercise.
EXERCISE OF DEBT WARRANTS. Each Debt Warrant will entitle the holder to
purchase for cash such principal amount of Debt Securities at such exercise
price as shall in each case be set forth in, or be determinable as set forth in,
the applicable Prospectus Supplement relating to the Debt Warrants offered
thereby. Debt Warrants may be exercised at any time up to 5:00 p.m. New York
City time on the expiration date set forth in the applicable Prospectus
Supplement. After 5:00 p.m. New York City time on the expiration date,
unexercised Debt Warrants will become void.
Debt Warrants may be exercised as set forth in the applicable Prospectus
Supplement relating to the Debt Warrants. Upon receipt of payment and the Debt
Warrant Certificate properly completed and duly executed at the corporate trust
office of the Warrant Agent or any other office indicated in the applicable
Prospectus Supplement, Disney will, as soon as practicable, forward the Debt
Securities purchasable upon such exercise. If less than all of the Debt Warrants
represented by such Debt Warrant Certificate are exercised, a new Debt Warrant
Certificate will be issued for the remaining amount of Debt Warrants.
PREFERRED STOCK WARRANTS
GENERAL. Reference is made to the applicable Prospectus Supplement for the
terms of Preferred Stock Warrants in respect of which this Prospectus is being
delivered, the Preferred Stock Warrant Agreement relating to such Preferred
Stock Warrants and the Preferred Stock Warrant Certificates representing such
Preferred Stock Warrants, including the following: (i) the designation and terms
of the shares of Preferred Stock purchasable upon exercise of such Preferred
Stock Warrants and the procedures and conditions relating to the exercise of
such Preferred Stock Warrants; (ii) the designation and terms of any related
shares of Preferred Stock with which such Preferred Stock Warrants are issued
and the number of such Preferred Stock Warrants issued with each such share of
Preferred Stock; (iii) the date, if any, on and after which such Preferred Stock
Warrants and the related shares of Preferred Stock will be separately tradeable;
(iv) the offering price of such Preferred Stock Warrants, if any; (v) the number
of shares of Preferred Stock purchasable upon exercise of such Preferred Stock
Warrants and the initial price at which such shares may be purchased upon
exercise; (vi) the date on which the right to exercise such Preferred Stock
Warrants shall commence and the date on which such right shall expire; (vii) a
discussion of the material United States Federal income tax considerations
applicable to the exercise of Preferred Stock Warrants; (viii) call provisions
of such Preferred Stock Warrants, if any; and (ix) any other terms of the
Preferred Stock Warrants.
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Preferred Stock Warrant Certificates will be exchangeable for new Preferred
Stock Warrant Certificates of different denominations and Preferred Stock
Warrants may be exercised at the corporate trust office of the Warrant Agent or
any other office indicated in the applicable Prospectus Supplement. Prior to the
exercise of their Preferred Stock Warrants, holders of Preferred Stock Warrants
will not have any of the rights of holders of Preferred Stock purchasable upon
such exercise, and will not be entitled to any dividend payments on the
Preferred Stock purchasable upon such exercise.
EXERCISE OF STOCK WARRANTS. Each Preferred Stock Warrant will entitle the
holder to purchase for cash such number of shares of Preferred Stock at such
exercise price as shall in each case be set forth in, or be determinable as set
forth in, the applicable Prospectus Supplement relating to the Preferred Stock
Warrants offered thereby. Unless otherwise specified in the applicable
Prospectus Supplement, Preferred Stock Warrants may be exercised at any time up
to 5:00 p.m. New York City time on the expiration date set forth in the
applicable Prospectus Supplement. After 5:00 p.m. New York City time on the
expiration date, unexercised Preferred Stock Warrants will become void.
Preferred Stock Warrants may be exercised as set forth in the applicable
Prospectus Supplement relating to the Preferred Stock Warrants. Upon receipt of
payment and the Preferred Stock Warrant Certificates properly completed and duly
executed at the corporate trust office of the Warrant Agent or any other office
indicated in the applicable Prospectus Supplement, Disney will, as soon as
practicable, forward a certificate representing the number of shares of
Preferred Stock purchasable upon such exercise. If less than all of the
Preferred Stock Warrants represented by such Preferred Stock Warrant Certificate
are exercised, a new Preferred Stock Warrant Certificate will be issued for the
remaining amount of Preferred Stock Warrants.
PLAN OF DISTRIBUTION
Disney may sell Securities to one or more underwriters for public offering
and sale by them or may sell Securities to investors directly or through agents
or dealers. Any such underwriter, agent or dealer involved in the offer and sale
of the Securities will be named in an applicable Prospectus Supplement.
Securities offered pursuant to a particular Prospectus Supplement are referred
to herein as "Offered Securities."
Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. Disney also may, from time to time, authorize underwriters
acting as its agents to offer and sell the Offered Securities upon the terms and
conditions set forth in any Prospectus Supplement. In connection with the sale
of Offered Securities, underwriters may be deemed to have received compensation
from Disney in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of Offered Securities for whom they may act
as agent. Underwriters may sell Offered Securities to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions (which may be changed from
time to time) from the purchasers for whom they may act as agent.
Any underwriting compensation paid by Disney to underwriters or agents in
connection with the offering of Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in an applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Offered Securities may be
deemed to be underwriters under the Securities Act, and any discounts and
commissions received by them and any profit realized by them on resale of the
Offered Securities may be deemed to be underwriting discounts and commissions
under the Securities Act. Underwriters, dealers and agents may be
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entitled, under agreements with Disney and, under certain circumstances, Old
Disney, to indemnification against and contribution toward certain civil
liabilities, including liabilities, under the Securities Act, and to
reimbursement by Disney and, under certain circumstances, Old Disney for certain
expenses.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, Disney will sell such Securities to such dealer,
as principal. The dealer may then resell such Securities to the public at
varying prices to be determined by such dealer at the time of resale.
If so indicated in an applicable Prospectus Supplement, Disney will
authorize dealers acting as its agents to solicit offers by certain institutions
to purchase Offered Securities from Disney at the public offering price set
forth in such Prospectus Supplement pursuant to Delayed Delivery Contracts
("Contracts") providing for payment and delivery on the date or dates stated in
such Prospectus Supplement. Each Contract will be for an amount not less than,
and the aggregate principal amount of Offered Securities sold pursuant to
Contracts shall not be less nor more than, the respective amounts stated in such
Prospectus Supplement. Institutions with whom Contracts, when authorized, may be
made include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and other
institutions, but will in all cases be subject to the approval of Disney.
Contracts will not be subject to any conditions except (i) the purchase by an
institution of the Offered Securities covered by its Contracts shall not at the
time of delivery be prohibited under the laws of any jurisdiction in the United
States to which such institution is subject, and (ii) if the Offered Securities
are being sold to underwriters, Disney shall have sold to such underwriters the
total principal amount of the Offered Securities less the principal amount
thereof covered by Contracts. Agents and underwriters will have no
responsibility in respect of the delivery or performance of Contracts.
The Securities may or may not be listed on a national securities exchange or
a foreign securities exchange. No assurances can be given that there will be a
market for any of the Securities.
LEGAL MATTERS
Certain legal matters with respect to the legality of the Securities being
offered hereby will be passed upon for Disney and Old Disney by Skadden, Arps,
Slate, Meagher & Flom, Los Angeles, California.
EXPERTS
The consolidated financial statements and related schedules of Old Disney
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
for the year ended September 30, 1995 have been so incorporated in reliance on
the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated financial statements and related schedule of Capital Cities
incorporated in this Prospectus by reference to the Capital Cities Annual Report
on Form 10-K for the year ended December 31, 1994 have been audited by Ernst &
Young LLP, independent auditors, as set forth in their reports therein and
incorporated herein by reference. Such consolidated financial statements and
schedule are incorporated herein by reference in reliance upon such reports,
given upon the authority of said firm as experts in auditing and accounting.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE HEREIN, IN
CONNECTION WITH THIS OFFER AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON. THIS PROSPECTUS AND PROSPECTUS
SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO
BUY, ANY OF THESE SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY
OF THIS PROSPECTUS AND PROSPECTUS SUPPLEMENT AT ANY TIME DOES NOT IMPLY THAT
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR RESPECTIVE
DATES.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Use of Proceeds............................... S-2
Description of the Notes...................... S-2
Important Currency Information................ S-21
Foreign Currency Risks........................ S-22
Indexed Notes Risks........................... S-22
Certain United States Federal Tax
Considerations............................... S-23
Plan of Distribution.......................... S-26
Legal Matters................................. S-27
PROSPECTUS
Available Information......................... 2
Incorporation of Certain
Documents by Reference....................... 2
Business of Disney............................ 4
The Acquisition............................... 5
Use of Proceeds............................... 7
Ratios of Earnings to Fixed Charges........... 7
Description of the Debt Securities............ 8
Description of Preferred Stock................ 16
Description of Depositary Shares.............. 19
Description of Warrants....................... 22
Plan of Distribution.......................... 24
Legal Matters................................. 25
Experts....................................... 25
</TABLE>
$3,000,000,000
THE WALT DISNEY COMPANY
MEDIUM-TERM NOTES
----------------------
PROSPECTUS SUPPLEMENT
----------------------------
BEAR, STEARNS & CO. INC.
CS FIRST BOSTON
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
MORGAN STANLEY & CO.
INCORPORATED
MARCH 7, 1996
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