<PAGE>
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED MARCH 7, 1996
U.S. $2,600,000,000
THE WALT DISNEY COMPANY
U.S. $1,300,000,000 6 3/8% Senior Notes Due March 30, 2001
U.S. $1,300,000,000 6 3/4% Senior Notes Due March 30, 2006
-------------
THE $1,300,000,000 6 3/8% SENIOR NOTES DUE MARCH 30, 2001 (THE "FIVE-YEAR
NOTES") AND THE $1,300,000,000 6 3/4% SENIOR NOTES DUE MARCH 30, 2006 (THE
"TEN-YEAR NOTES" AND, TOGETHER WITH THE FIVE-YEAR NOTES, THE "NOTES") ARE
BEING OFFERED BY THE WALT DISNEY COMPANY ("DISNEY" OR THE "COMPANY").
INTEREST ON THE NOTES IS PAYABLE SEMIANNUALLY IN ARREARS ON MARCH 30
AND SEPTEMBER 30 OF EACH YEAR, BEGINNING SEPTEMBER 30, 1996. THE
NOTES MAY NOT BE REDEEMED BY DISNEY PRIOR TO MATURITY (EXCEPT AS
DESCRIBED HEREIN UNDER CERTAIN CIRCUMSTANCES RELATING TO THE
OBLIGATION TO PAY ADDITIONAL AMOUNTS) AND ARE NOT ENTITLED
TO ANY MANDATORY REDEMPTION OR SINKING FUND PAYMENTS.
SEE "DESCRIPTION OF THE NOTES" HEREIN AND
"DESCRIPTION OF THE DEBT SECURITIES" IN THE
ACCOMPANYING PROSPECTUS.
THE FIVE-YEAR NOTES AND TEN-YEAR NOTES WILL EACH BE ISSUED IN BOOK-ENTRY FORM
AND REPRESENTED BY ONE OR MORE GLOBAL NOTES (A "GLOBAL NOTE") IN FULLY
REGISTERED FORM, WITHOUT COUPONS, WHICH WILL BE DEPOSITED WITH A CUSTODIAN
FOR, AND REGISTERED IN THE NAME OF A NOMINEE OF, THE DEPOSITORY TRUST COMPANY
("DTC") IN NEW YORK, NEW YORK, AS DEPOSITARY FOR THE ACCOUNTS OF ITS
PARTICIPANTS (INCLUDING MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
BRUSSELS OFFICE, AS OPERATOR OF THE EUROCLEAR SYSTEM ("EUROCLEAR") AND
CEDEL BANK, SOCIETE ANONYME ("CEDEL")). BENEFICIAL INTERESTS IN THE
GLOBAL NOTES WILL BE REPRESENTED, AND TRANSFERS THEREOF WILL BE
EFFECTED, ONLY THROUGH BOOK-ENTRY ACCOUNTS MAINTAINED BY DTC AND ITS
DIRECT OR INDIRECT PARTICIPANTS, INCLUDING EUROCLEAR AND CEDEL.
INITIAL SETTLEMENT FOR THE NOTES WILL BE MADE IN IMMEDIATELY
AVAILABLE FUNDS AND SECONDARY MARKET TRADING ACTIVITY IN BENEFICIAL
INTERESTS THEREIN WILL THEREFORE SETTLE IN SUCH FUNDS. EXCEPT IN
LIMITED CIRCUMSTANCES, DEFINITIVE NOTES WILL NOT BE ISSUED IN
EXCHANGE FOR BENEFICIAL INTERESTS IN THE GLOBAL NOTES. SEE
"DESCRIPTION OF THE NOTES."
THE NOTES ARE OFFERED GLOBALLY FOR SALE IN THOSE JURISDICTIONS IN THE UNITED
STATES, CANADA, EUROPE, ASIA AND ELSEWHERE WHERE IT
IS LAWFUL TO MAKE SUCH OFFERS. SEE "UNDERWRITING."
APPLICATION HAS BEEN MADE TO LIST THE NOTES ON THE LUXEMBOURG STOCK EXCHANGE.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO
WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) DISNEY(1)(3)
------------------------ ------------------------ ------------------------
<S> <C> <C> <C>
PER FIVE-YEAR NOTE........................... 100% .35% 99.65%
TOTAL........................................ $1,300,000,000 $4,550,000 $1,295,450,000
PER TEN-YEAR NOTE............................ 99.855% .5% 99.355%
TOTAL........................................ $1,298,115,000 $6,500,000 $1,291,615,000
</TABLE>
(1) PLUS ACCRUED INTEREST, IF ANY, FROM MARCH 27, 1996.
(2) DISNEY HAS AGREED TO INDEMNIFY THE UNDERWRITERS AGAINST CERTAIN LIABILITIES,
INCLUDING LIABILITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SEE
"UNDERWRITING."
(3) BEFORE DEDUCTING EXPENSES PAYABLE BY DISNEY ESTIMATED AT $750,000.
--------------
THE NOTES ARE OFFERED BY THE SEVERAL UNDERWRITERS, SUBJECT TO PRIOR SALE,
WHEN, AS AND IF ISSUED BY DISNEY AND ACCEPTED BY THE UNDERWRITERS, SUBJECT TO
APPROVAL OF CERTAIN LEGAL MATTERS BY COUNSEL FOR THE UNDERWRITERS AND CERTAIN
OTHER CONDITIONS. THE UNDERWRITERS RESERVE THE RIGHT TO WITHDRAW, CANCEL OR
MODIFY SUCH OFFER AND TO REJECT ORDERS IN WHOLE OR IN PART. IT IS EXPECTED THAT
DELIVERY OF THE NOTES WILL BE MADE IN NEW YORK, NEW YORK, ON OR ABOUT MARCH 27,
1996.
CS First Boston Merrill Lynch & Co.
Bear, Stearns & Co. Inc. Deutsche Morgan Grenfell Goldman, Sachs & Co.
Lehman Brothers J.P. Morgan Securities Ltd. Morgan Stanley & Co. SBC Warburg
International A DIVISION
OF SWISS BANK CORPORATION
ABN AMRO Hoare Govett Bankers Trust International PLC Barclays de Zoete Wedd
Limited BA Securities, Inc.
Citicorp Securities, Inc. Donaldson, Lufkin & Jenrette Securities
Corporation Nikko Europe Plc
Nomura Securities PaineWebber Incorporated Paribas Capital Markets
Salomon Brothers Inc Smith Barney Inc. UBS Securities LLC
THE ACTIVITIES OF THE UNDERWRITERS IN CONNECTION WITH THIS OFFERING ARE LED
JOINTLY BY CS FIRST BOSTON CORPORATION AND MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED.
--------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS MARCH 22, 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE REPRESENTATIVES (IN THE UNITED
KINGDOM, MERRILL LYNCH INTERNATIONAL LIMITED) MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE NOTES OFFERED
HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE LUXEMBOURG STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SECURITIES OTHER THAN THE SECURITIES DESCRIBED
HEREIN AND IN THE PROSPECTUS.
The distribution of this Prospectus Supplement and the accompanying
Prospectus or any part hereof or thereof and the offer, sale and delivery of any
of the Notes may be restricted by law in certain jurisdictions. Persons into
whose possession this Prospectus Supplement and the accompanying Prospectus
comes are required by Disney and the Underwriters to inform themselves about and
to observe any such restrictions. See "Underwriting."
The Company, having made all reasonable inquiries, confirms that this
Prospectus Supplement and the accompanying Prospectus, as of the date hereof,
contains or incorporates by reference all information with regard to the Company
and the Notes that is material in the context of the issue of the Notes and such
information is as of the date hereof accurate in all material respects and does
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements herein, in the light of the
circumstances under which they are made, not misleading. Disney accepts
responsibility for the information contained in this Prospectus Supplement and
the accompanying Prospectus.
There are no pending actions, suits or proceedings against or affecting the
Company except as described in this Prospectus Supplement and the accompanying
Prospectus and the documents incorporated by reference therein which, if
determined adversely to the Company, would individually or in the aggregate have
a material adverse affect on the financial condition, earnings or operations of
the Company or be material in the context of the issue of the Notes, and to the
best knowledge of the Company, no such actions, suits or proceedings are
threatened or contemplated.
Neither the delivery of this Prospectus Supplement and the accompanying
Prospectus, nor the offering, sale or delivery of any Note, shall in any
circumstance create any implication that there has been no adverse change, or
any event reasonably likely to involve any adverse change, in the condition
(financial or otherwise) of the Company or any of its subsidiaries since the
date hereof.
This Prospectus Supplement and the accompanying Prospectus are being
furnished solely in connection with the consideration of a purchase of the
Notes.
A Registration Statement with respect to Disney and the Notes has been filed
with the U.S. Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended. Additional information concerning Disney and
the Notes is to be found in such Registration Statement and any post-effective
amendment thereto, including the various exhibits thereto and the documents
incorporated therein by reference, which may be inspected at the office of the
Commission. Certain terms used but not defined in this Prospectus Supplement are
defined in the accompanying Prospectus.
S-2
<PAGE>
SUMMARY OF THE OFFERING
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
<TABLE>
<S> <C>
Notes.............................. U.S. $1,300,000,000 6 3/8% Senior Notes due March 30,
2001 (the "Five-Year Notes").
U.S. $1,300,000,000 6 3/4% Senior Notes due March 30,
2006 (the "Ten-Year Notes" and, together with the
Five-Year Notes, the "Notes").
Issue Price........................ 100%, Five-Year Notes; 99.855%, Ten-Year Notes.
Interest........................... Interest on the Notes will be payable semi-annually on
March 30 and September 30 of each year, commencing
September 30, 1996.
Redemption......................... The Notes are not redeemable prior to maturity, except
as described herein under the heading "Description of
the Notes -- Redemption for Tax Purposes."
Markets............................ The Notes are offered globally for sale in those
jurisdictions in the United States, Canada, Europe,
Asia and elsewhere where it is lawful to make such
offers. See "Underwriting."
Use of Proceeds.................... The net proceeds from the sale of the Notes will be
used for general corporate purposes, including,
without limitation, to refinance in part commercial
paper issued to finance a portion of the cash
consideration paid in connection with the acquisition
of Capital Cities/ABC, Inc. See "Use of Proceeds" and
"The Company."
Ranking of Notes................... Each of the Five-Year Notes and Ten-Year Notes will be
issued as a separate series of senior debt securities
under an Indenture, dated as of March 7, 1996, between
Disney and Citibank, N.A., as trustee (the
"Indenture"). The Notes will constitute senior
unsecured debt obligations of Disney and will rank
PARI PASSU with all other senior unsecured
indebtedness of Disney from time to time outstanding.
See "Description of the Notes -- General."
Form, Denominations and
Registration...................... The Notes will be issued in the form of one or more
fully registered, global securities (each, a "Global
Note") registered in the name of Cede & Co., as the
nominee of The Depository Trust Company ("DTC").
Except as described in this Prospectus Supplement,
beneficial interests in the Global Notes will be
represented through accounts of financial institutions
acting on behalf of beneficial owners as direct and
indirect participants in DTC. Such beneficial
interests will be in denominations of U.S. $1,000 and
integral multiples thereof. Investors may elect to
hold interests in the Global Notes through DTC in the
United States or through Morgan Guaranty Trust Company
of New York, Brussels Office, as operator of the
Euroclear System ("Euroclear") or Cedel Bank, SOCIETE
ANONYME ("Cedel") in Europe, if they are participants
in such systems, or indirectly
</TABLE>
S-3
<PAGE>
<TABLE>
<S> <C>
through organizations that are participants in such
systems. Euroclear and Cedel will hold interests on
behalf of their participants through their respective
depositaries, Chemical Bank and Citibank, N.A., which
in turn will hold such interests in accounts as
participants in DTC. Except as described in this
Prospectus Supplement, owners of beneficial interests
in a Global Note will not be entitled to have Notes
registered in their names, will not receive or be
entitled to receive physical delivery of the Notes in
definitive form and will not be considered holders
thereof under the Notes or the Indenture. See
"Description of the Notes -- Form, Registration and
Title; Book-Entry System."
Global Clearance and Settlement.... Initial settlement for the Notes will be made in
same-day funds. Any secondary market trading of
beneficial interests in the Global Notes will occur
through participants in DTC, Euroclear and Cedel and
will settle in same-day funds. See "Description of the
Notes -- Global Clearance and Settlement."
Tax Status......................... All payments in respect of the Notes will be made
without deduction for or on account of any withholding
taxes imposed by the United States or its political
subdivisions, subject to certain exceptions. See
"Description of the Notes -- Payment of Additional
Amounts."
Listing............................ Application has been made to list the Notes on the
Luxembourg Stock Exchange.
Governing Law...................... New York.
</TABLE>
S-4
<PAGE>
THE COMPANY
The issuer was formed in the State of Delaware under the name "DC Holdco,
Inc." in July 1995 as a wholly owned subsidiary of what was previously named
"The Walt Disney Company" ("Old Disney"), in connection with the acquisition
(the "Acquisition") of Capital Cities/ABC, Inc. ("Capital Cities") by Old
Disney. As a result of the Acquisition, which became effective on February 9,
1996, Old Disney and Capital Cities became wholly owned subsidiaries of the
issuer and the issuer was renamed "The Walt Disney Company." Accordingly, the
business of The Walt Disney Company 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 in this
section, the "Company" includes The Walt Disney Company and its subsidiaries,
including Old Disney and Capital Cities. See "The Acquisition" in the
accompanying Prospectus.
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 businesss segments
in which the combined company operates for which financial information will be
presented.
FILMED ENTERTAINMENT
The Company produces and acquires live-action and animated motion pictures
for distribution to the theatrical, television and home video markets. Walt
Disney Pictures and Television, a wholly-owned subsidiary of the Company,
produces and acquires live-action motion pictures that are distributed under the
banners Walt Disney Pictures, Touchstone Pictures, Hollywood Pictures and
Caravan Pictures. The Company's Miramax Film Corp. subsidiary distributes films
under its own banner. The Company also produces animated motion pictures under
the banner Walt Disney Pictures. Recent releases under the Company's banners
include MR. HOLLAND'S OPUS, UP CLOSE AND PERSONAL, IL POSTINO and TOY STORY.
The Company generally seeks to distribute approximately 20 to 30 feature
films each year under its various banners, including several live-action family
feature films, one to two full-length animated films under the Walt Disney
Pictures banner, and between 15 and 25 teenage and adult films under the other
motion picture banners. In addition, the Company periodically reissues
previously released animated films. As of September 30, 1995, the Company had
released 311 full-length live-action features (primarily color), 33 full-length
animated color features and approximately 536 cartoon shorts. The Company
distributes and markets its filmed products through its own distribution and
marketing companies in the United States and certain foreign markets.
The Company directly distributes home video releases from each of its
banners in the domestic market. In the international market, the Company
distributes both directly and through foreign distribution companies. In
addition, the Company acquires and produces original programming for
direct-to-video release. As of September 30, 1995, approximately 657 titles,
including 203 feature films and 193 cartoon shorts and animated features, were
available to the domestic marketplace. As of such date, approximately 589
titles, including 293 feature films and 296 cartoon shorts and animated
features, were available to the international home entertainment market.
The Company also produces original television programming for the network
and first-run syndication markets. The Company's network television operation
develops, produces and distributes television programming to network and other
broadcasters. In addition, the Company seeks to syndicate in the domestic market
those television programming series that produce enough programs to permit
syndicated "strip" broadcasting on a five-days-per-week basis. Current original
television programming produced by the Company includes HOME IMPROVEMENT and
ELLEN. The Company licenses television series developed for United States
networks in a number of foreign markets, including Germany, Italy, the United
Kingdom, France, Spain and Canada. In addition, the Company provides programming
for and operates The Disney
S-5
<PAGE>
Channel, a pay television programming service, and KCAL-TV, a Los Angeles,
California very high frequency (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 operation of the Walt
Disney World-Registered Trademark- destination resort in Florida and the
Disneyland Park-Registered Trademark- in California. The Walt Disney World
destination resort is located on approximately 29,900 acres of land owned by the
Company 15 miles southwest of Orlando, Florida. The resort includes three theme
parks (the Magic Kingdom, Epcot and the Disney-MGM Studios Theme Park), hotels
and villas, and an entertainment complex, a shopping village, conference
centers, campgrounds, golf courses, water parks and other recreational
facilities designed to attract visitors for an extended stay. The Company
markets the entire Walt Disney World destination resort through a variety of
national, international and local advertising and promotional activities. A
number of attractions in each of the theme parks are sponsored by corporate
participants though long-term participation agreements. Currently under
development are Disney Cruise Lines, a cruise vacation line expected to include
two ships, and Disney's Animal Kingdom, a themed animal adventure park
incorporating live animals in natural habitats at Walt Disney World.
Disneyland, which opened in 1955, is located on 330 acres owned by the
Company in Anaheim, California and consists of eight principal areas: Toontown,
Fantasyland, Adventureland, Frontierland, Tomorrowland, New Orleans Square, Main
Street and Critter Country. These areas feature themed rides and attractions,
restaurants, refreshment stands and merchandise shops. A number of the
Disneyland attractions are sponsored by corporate participants. The Company
markets Disneyland through national and local advertising and promotional
activities. The Company also owns and operates two hotels near Disneyland.
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's domestic and foreign licensing activities generate
royalties which are usually based on a fixed percentage of the wholesale or
retail selling price of the licensee's products. The Company licenses characters
based upon traditional and newly created film properties. Character merchandise
categories which have been licensed include apparel, watches, toys, gifts,
housewares, stationery, sporting goods and domestic items such as sheets and
towels. Publication categories which have been licensed include
continuity-series books, book sets, art and picture books, magazines and
newspaper comic strips.
The Company also engages in direct retail distribution through the Disney
Stores and consumer catalogs. The Disney Stores are generally located in leading
shopping malls and similar retail complexes. The stores carry a wide variety of
Disney merchandise and promote other businesses of the Company. During fiscal
1995, the Company opened 64 new Disney Stores in the United States and Canada,
26 in Europe and 15 in the Asia-Pacific area, bringing the total number to 429
at September 30, 1995. The Company expects to open additional stores in the
future in selected markets throughout the country, as well as in Asia-Pacific,
European and Latin countries.
S-6
<PAGE>
In addition, the Company is a publisher of books, magazines and comics in
the United States and Europe and produces audio and computer software for all
markets, as well as film and video products for the educational marketplace.
Operating results for the consumer products business are influenced by seasonal
consumer purchasing behavior and by the timing of animated theatrical releases.
OTHER OPERATIONS
Disney Interactive, organized during 1995, is a fully integrated software
venture focused on product development and marketing of entertainment and
educational computer software and video game titles for home and school. Disney
Sports Enterprises provides management and development services for the
Company's National Hockey League franchise, the Mighty Ducks of Anaheim.
DISNEYLAND PARIS
Disneyland Paris is located on a 4,800-acre site at Marne-la-Vallee
approximately 20 miles east of Paris, France. The project has been developed
pursuant to a 1987 master agreement with French governmental authorities by Euro
Disney S.C.A., a publicly held French company in which the Company holds a 39%
equity interest and which is managed by a subsidiary of the Company. In
addition, the Company has licensed various intellectual property rights to Euro
Disney for use in connection with the project.
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, including ESPN, and television production and
distribution.
Capital Cities' assets include the ABC Television Network, which as of
December 31, 1995 had approximately 220 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 VHF
television stations, one ultra high frequency (UHF) television station, eleven
standard (AM) radio stations and ten frequency modulation (FM) radio stations.
All the television stations are affiliated with the ABC Television Network and
all the radio stations are affiliated with the ABC Radio Networks. The ABC Radio
Networks served a total of approximately 3,400 affiliates as of December 31,
1995 through eight different program services, each with its own group of
affiliated stations. The ABC Radio Networks also produce and distribute a number
of radio program series for radio stations nationwide.
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. Its primary services are ESPN Inc., an 80%-owned
subsidiary which operates ESPN; A&E Television Network, a 37 1/2%-owned cable
programming service; Lifetime Television, a 50%-owned cable programming service;
Tele-Munchen Fernseh GmbH & Co., a 50%-owned Germany-based television and
theatrical production/distribution company; RTL 2 Fernsehen GmbH & Co., a
23%-owned Germany-based general entertainment commercial broadcasting company;
Scandinavian Broadcasting System SA, a 23%-owned Luxembourg-based company; and
Hamster Productions, S.A., 33%-owned, and Tesauro, S.A., 25%-owned, television
and theatrical production/distribution companies based in France and Spain,
respectively.
Capital Cities' Multimedia Group is exploring ways to expand Capital Cities'
participation as a content provider with respect to the emerging technologies.
The division's major initiatives involve the development, publication and
distribution of content for narrow-band on-line services, the interactive
software market, interactive television platforms, and a number of out-of-home
video ventures. The division includes the Capital Cities/ABC Video Publishing
unit, which acquires rights to and produces programming for the home video
market.
S-7
<PAGE>
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
Dallas/Fort Worth.
USE OF PROCEEDS
Disney intends to use the net proceeds from the sale of the Notes (estimated
to be approximately $2.586 billion) for general corporate purposes, including,
without limitation, to refinance in part commercial paper issued to finance a
portion of the cash consideration paid in connection with the Acquisition.
Commercial paper outstanding as of March 18, 1996 was approximately $8.8 billion
and had a weighted average interest rate of 5.38% per annum. See "The
Acquisition" in the accompanying Prospectus.
CAPITALIZATION
The following table sets forth the capitalization of Old Disney and Capital
Cities as of December 31, 1995 and the pro forma capitalization of Disney after
giving effect to the Acquisition (as if it had occurred at such date) and the
offering of the Notes and the application of the proceeds thereof to repay a
portion of the approximately $8.8 billion of commercial paper issued to finance
the cash portion of the consideration paid in connection with the Acquisition.
Since December 31, 1995, there has not been any material adverse change in the
information set forth below, except as described elsewhere in this Prospectus
Supplement or the accompanying Prospectus or in any of the documents
incorporated by reference herein. This table should be read in conjunction with
the "Unaudited Pro Forma Combined Condensed Financial Statements" included
elsewhere in this Prospectus Supplement and Old Disney's historical audited
consolidated financial statements and unaudited interim consolidated financial
statements, including the notes thereto, which are incorporated by reference in
the accompanying Prospectus.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1995
---------------------------------------
HISTORICAL
--------------------------
CAPITAL
OLD DISNEY CITIES PRO FORMA
----------- ------------- -----------
(IN MILLIONS)
<S> <C> <C> <C>
Borrowings:
New Borrowings:
Commercial Paper...................................... $ -- $ -- $ 6,200
Five-Year Notes....................................... -- -- 1,300
Ten-Year Notes........................................ -- -- 1,300
----------- ------ -----------
Total New Borrowings................................ -- -- 8,800(1)
Existing Borrowings..................................... 2,775 522 3,297
----------- ------ -----------
Total Borrowings........................................ 2,775 522 12,097
Total Stockholders' Equity................................ 7,124 4,938 15,936(1)
----------- ------ -----------
Total Capitalization...................................... $ 9,899 $ 5,460 $ 28,033
----------- ------ -----------
----------- ------ -----------
</TABLE>
- ------------------------
(1) The total consideration paid in connection with the Acquisition consists of
154.6 million shares of Disney Common Stock (representing $8.8 billion
valued at the approximate market price of Old Disney's common stock ($57 per
share) when the Acquisition was announced) and $10.5 billion in cash,
including $446 million in settlement of certain Capital Cities benefit
plans. Pro forma total new borrowings represents the excess of the cash
portion of the total consideration paid in connection with the Acquisition
over the amounts actually realized by the Company upon the liquidation of
certain cash balances and short-term investments. Such amount varies from
the approximately $8.1 billion assumed for purposes of the Unaudited Pro
Forma Combined Condensed Financial Statements primarily as a result of the
difference between the actual and assumed amounts realized upon liquidation
of such balances and investments. See "Unaudited Pro Forma Combined
Condensed Financial Statements."
S-8
<PAGE>
SUMMARY HISTORICAL FINANCIAL INFORMATION
OLD DISNEY'S HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth summary historical consolidated financial
information of Old Disney and has been derived from and should be read in
conjunction with Old Disney's audited consolidated financial statements and
unaudited interim consolidated financial statements, including the notes
thereto, which (other than for the years ended September 30, 1992 and 1991) are
incorporated by reference in the accompanying Prospectus. Unaudited interim data
reflect, in the opinion of Disney's management, all adjustments (consisting only
of normal recurring adjustments) considered necessary for a fair presentation of
results for such interim periods. Results of operations for unaudited interim
periods are not necessarily indicative of results which may be expected for any
other interim or annual period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
OR AS OF
DECEMBER 31, YEAR ENDED OR AS OF SEPTEMBER 30,
-------------------- -----------------------------------------------------
1995 1994 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.................................. $ 3,818 $ 3,302 $ 12,112 $ 10,055 $ 8,529 $ 7,504 $ 6,112
Operating Income.......................... 853 791 2,446 1,966 1,725 1,435 1,095
Net Income (a)............................ 496 482 1,380 1,110 671 817 637
BALANCE SHEET DATA:
Total Assets.............................. $ 15,276 $ 13,805 $ 14,606 $ 12,826 $ 11,751 $ 10,862 $ 9,429
Borrowings................................ 2,775 3,665 2,984 2,937 2,386 2,222 2,214
Stockholders' Equity...................... 7,124 5,614 6,651 5,508 5,031 4,705 3,871
OTHER DATA:
EBITDA (b)................................ $ 930 $ 859 $ 2,710 $ 2,159 $ 1,800 $ 1,731 $ 1,291
Cash Flow from Operations................. 969 772 3,510 2,807 2,145 1,838 1,497
</TABLE>
- ------------------------
(a) 1993 includes a $350 million charge relating to Old Disney's investment in
Euro Disney and excludes the cumulative effect of accounting changes of $371
million.
(b) EBITDA represents income before interest, income taxes, depreciation
(including certain amounts allocated to corporate overhead that are included
in general and administrative expenses) and amortization and, in the case of
EBITDA for 1993, excludes a $350 million charge relating to Old Disney's
investment in Euro Disney. EBITDA is not intended to represent cash flow or
any other measure of performance reported in accordance with generally
accepted accounting principles. The Company has included EBITDA as it
understands that EBITDA is used by certain investors as one measure of a
company's ability to service its debt.
S-9
<PAGE>
CAPITAL CITIES' HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth summary historical consolidated financial
information of Capital Cities for the year ended December 31, 1995, which has
been derived from Capital Cities' unaudited consolidated financial statements,
and summary historical consolidated financial information for each year in the
four-year period ended December 31, 1994, which has been derived from and should
be read in conjunction with Capital Cities' audited consolidated financial
statements, including the notes thereto, which (other than for the year ended
December 31, 1991) are incorporated by reference in the accompanying Prospectus.
Unaudited year-end data reflect, in the opinion of Capital Cities' management,
all adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation of results for such period.
<TABLE>
<CAPTION>
YEAR ENDED OR AS OF DECEMBER 31,
-----------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net Revenues..................................................... $ 6,879 $ 6,379 $ 5,674 $ 5,344 $ 5,382
Operating Income................................................. 1,231 1,239 862 722 761
Income Before Extraordinary Charges and
Cumulative Effect of Accounting Changes......................... 729 680 467 389 375
BALANCE SHEET DATA:
Total Assets..................................................... $ 7,616 $ 6,768 $ 5,793 $ 6,522 $ 6,696
Borrowings....................................................... 522 615 622 1,116 1,602
Stockholders' Equity............................................. 4,938 4,289 3,572 3,806 3,655
OTHER DATA:
EBITDA (a)....................................................... $ 1,480 $ 1,408 $ 1,007 $ 896 $ 901
Cash Flow from Operations........................................ 1,060 976 660 424 588
</TABLE>
- ------------------------
(a) EBITDA represents income before interest, income taxes, depreciation and
amortization. EBITDA is not intended to represent cash flow or any other
measure of performance reported in accordance with generally accepted
accounting principles. The Company has included EBITDA as it understands
that EBITDA is used by certain investors as one measure of a company's
ability to service its debt.
S-10
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements
are based upon the consolidated financial statements of Old Disney and Capital
Cities, combined and adjusted to give effect to the Acquisition. As a result of
the Capital Cities Merger, all of the outstanding Capital Cities Common Stock
was converted into the right to receive 154.6 million shares of Disney Common
Stock and $10.1 billion in cash. See "The Acquisition" in the accompanying
Prospectus.
The following unaudited pro forma combined condensed statements of income
for the three months ended December 31, 1995 and the year ended September 30,
1995 give effect to the Acquisition as if it had occurred at the beginning of
each period presented. The unaudited pro forma combined condensed statement of
income for the three months ended December 31, 1995 was prepared based upon the
unaudited consolidated statements of income of Old Disney and Capital Cities for
the three months ended December 31, 1995. The unaudited pro forma combined
condensed statement of income for the year ended September 30, 1995 was prepared
based upon the audited consolidated statement of income of Old Disney for the
year ended September 30, 1995 and the unaudited consolidated statements of
income of Capital Cities for the nine months ended October 1, 1995 and the three
months ended December 31, 1994.
The following unaudited pro forma combined condensed balance sheet as of
December 31, 1995 gives effect to the Acquisition as if it had occurred on such
date and was prepared based upon the unaudited consolidated balance sheets of
Old Disney and Capital Cities as of December 31, 1995.
These unaudited pro forma combined condensed financial statements and the
notes thereto should be read in conjunction with the Old Disney and Capital
Cities audited consolidated financial statements and unaudited interim
consolidated financial statements, including the notes thereto, which are
incorporated by reference in the accompanying Prospectus.
The unaudited pro forma combined condensed financial statements are not
necessarily indicative of the results of operations or financial position of the
combined company that would have occurred had the Acquisition occurred at the
beginning of the periods presented or on the date indicated, nor are they
necessarily indicative of future operating results or financial position.
The unaudited pro forma adjustments are based upon information set forth or
incorporated by reference in the accompanying Prospectus, and certain
assumptions included in the notes to the unaudited pro forma combined condensed
financial statements. Disney believes the pro forma assumptions are reasonable
under the circumstances. In addition, as of the date hereof, Disney believes
that the unaudited pro forma combined condensed financial statements reflect the
impact on the operations and liquidity of Disney of all material events or
changes expected to result from the Acquisition.
The Acquisition will be accounted for by the purchase method of accounting.
Accordingly, Disney's cost to acquire Capital Cities (the "Purchase
Consideration") of $18.9 billion at December 31, 1995 will be allocated to the
assets acquired and liabilities assumed according to their respective fair
values, with the excess Purchase Consideration being allocated to goodwill. The
Disney Common Stock that is included in the Purchase Consideration is valued at
the approximate market price of Old Disney's common stock ($57 per share) when
the transaction was announced. The final allocation of the Purchase
Consideration is dependent upon certain valuations and other studies that have
not progressed to a stage where there is sufficient information to make such an
allocation in the accompanying unaudited pro forma combined condensed financial
statements. Accordingly, the purchase allocation adjustments made in connection
with the development of the unaudited pro forma combined condensed financial
statements are preliminary and have been made solely for the purpose of
developing such unaudited pro forma combined condensed financial statements.
The $16.1 billion pro forma excess of the Purchase Consideration over
tangible net assets acquired as of December 31, 1995 is being amortized over 40
years at a rate of $402 million per year, in accordance with generally accepted
accounting principles, which require that acquired intangible assets be
amortized over periods not to exceed 40 years. Disney believes that the
intangible assets acquired, representing principally the franchises and
trademarks of Capital Cities, represent scarce assets with indefinite lives,
which have
S-11
<PAGE>
historically appreciated in value over time. In addition, the Acquisition will
permit the continued expansion of current lines of business, as well as the
development of new businesses, via the cross promotion of the well known
franchises, trademarks and products of Old Disney and Capital Cities. Disney
believes it will benefit from the Acquisition for an indeterminable period of
time of at least 40 years and, therefore, a 40-year amortization period is
appropriate. After consummation of the Acquisition, Disney will complete the
valuations and other studies of the significant assets, liabilities and business
operations of Capital Cities. Using this information, Disney will make a final
allocation of the Purchase Consideration, including allocation to tangible
assets and liabilities, identifiable intangible assets and goodwill. Disney
believes that any significant allocation of excess Purchase Consideration to
intangible assets other than goodwill will be amortized over periods
approximating 40 years.
Disney will perform periodic reviews of the goodwill and other intangible
assets arising from the Acquisition, to ensure that they are carried at
recoverable amounts in light of current business conditions.
The future results of operations of Disney will reflect increased
amortization of intangible assets, increased interest expense and a higher
effective income tax rate, since a significant portion of the consideration to
be received by Capital Cities shareholders as a result of the consummation of
the Capital Cities Merger will be non-deductible for tax purposes. The future
financial position of Disney will reflect increased intangible assets as
described above, increased borrowings and increased stockholders' equity
resulting from the issuance of Disney Common Stock to shareholders of Capital
Cities. See "Notes to Unaudited Pro Forma Combined Condensed Financial
Statements."
S-12
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31, 1995
--------------------------------------------------------
HISTORICAL
-------------------------- PRO FORMA
CAPITAL ----------------------------
OLD DISNEY CITIES ADJUSTMENTS COMBINED
----------- ------------- -------------- ------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues.................................................... $ 3,818 $ 2,057 $ 5,875
Costs and Expenses.......................................... 2,850 1,644 $ (57)(a) 4,437
Depreciation................................................ 115 30 145
Amortization of Intangible Assets........................... 17 84(b) 101
----------- ------ ----- ------
Operating Income............................................ 853 366 (27) 1,192
General and Administrative Expenses......................... 54 54
Interest Expense (Income), Net.............................. 13 (5) 170(c) 178
Other Expense (Income), Net................................. 22 (65) (43)
----------- ------ ----- ------
Income Before Income Taxes.................................. 764 436 (197) 1,003
Income Taxes................................................ 268 201 (44)(d) 425
----------- ------ ----- ------
Net Income.................................................. $ 496 $ 235 $ (153) $ 578
----------- ------ ----- ------
----------- ------ ----- ------
Earnings Per Share.......................................... $ 0.93 $ 1.53 $ 0.84(e)
----------- ------ ------
----------- ------ ------
Average Number of Common and Common
Equivalent Shares Outstanding.............................. 534 154 689(e)
----------- ------ ------
----------- ------ ------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1995
-------------------------------------------------------
HISTORICAL
-------------------------- PRO FORMA
CAPITAL ---------------------------
OLD DISNEY CITIES ADJUSTMENTS COMBINED
----------- ------------- ------------- ------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues.................................................. $ 12,112 $ 6,796 $ 18,908
Costs and Expenses........................................ 9,233 5,273 $ (34)(a) 14,472
Depreciation.............................................. 433 111 544
Amortization of Intangible Assets......................... 64 344(b) 408
----------- ------ ------ ------------
Operating Income.......................................... 2,446 1,348 (310) 3,484
General and Administrative Expenses....................... 184 44 228
Interest Expense (Income), Net............................ 110 (4) 682(c) 788
Other Expense, Net........................................ 35 2 37
----------- ------ ------ ------------
Income Before Income Taxes................................ 2,117 1,306 (992) 2,431
Income Taxes.............................................. 737 572 (253)(d) 1,056
----------- ------ ------ ------------
Net Income................................................ $ 1,380 $ 734 $ (739) $ 1,375
----------- ------ ------ ------------
----------- ------ ------ ------------
Earnings Per Share........................................ $ 2.60 $ 4.77 $ 2.01(e)
----------- ------ ------------
----------- ------ ------------
Average Number of Common and Common Equivalent Shares
Outstanding.............................................. 530 154 685(e)
----------- ------ ------------
----------- ------ ------------
</TABLE>
See notes to unaudited pro forma combined condensed financial statements.
S-13
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1995
-----------------------------------------------------
HISTORICAL
-------------------------- PRO FORMA
CAPITAL -------------------------
OLD DISNEY CITIES ADJUSTMENTS COMBINED
----------- ------------- ------------ -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
ASSETS
Cash and Cash Equivalents................................. $ 997 $ 1,327 $ (1,824)(a) $ 500
Investments............................................... 614 101 (600)(b) 115
Receivables............................................... 2,416 1,193 3,609
Inventories............................................... 784 784
Film and Television Costs................................. 2,297 699 2,996
Theme Parks, Resorts and Other Property, Net.............. 6,440 1,306 7,746
Intangible Assets, Net.................................... 2,110 13,988(c) 16,098
Other Assets.............................................. 1,728 880 2,608
----------- ------ ------------ -----------
$ 15,276 $ 7,616 $ 11,564 $ 34,456
----------- ------ ------------ -----------
----------- ------ ------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts and Taxes Payable and
Other Accrued Liabilities................................ $ 3,360 $ 1,623 $ (381)(d) $ 4,602
Borrowings................................................ 2,775 522 8,071(e) 11,368
Other Liabilities......................................... 2,017 533 2,550
Stockholders' Equity...................................... 7,124 4,938 3,874(f) 15,936
----------- ------ ------------ -----------
$ 15,276 $ 7,616 $ 11,564 $ 34,456
----------- ------ ------------ -----------
----------- ------ ------------ -----------
</TABLE>
See notes to unaudited pro forma combined condensed financial statements.
S-14
<PAGE>
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS
(TABULAR DOLLARS IN MILLIONS)
The unaudited pro forma combined condensed financial statements reflect the
conversion of each outstanding share of Capital Cities Common Stock (154.6
million shares as of February 9, 1996, the effective date of the Acquisition)
into 154.6 million shares of Disney Common Stock and $10.1 billion in cash.
<TABLE>
<S> <C>
The Purchase Consideration is detailed as follows:
Cash............................................................. $ 10,049
Disney Common Stock.............................................. 8,812
Settlement of certain benefit plans (1).......................... 65
---------
Total Purchase Consideration....................................... 18,926
Less: Capital Cities tangible net assets as of December 31, 1995... 2,828
---------
Excess of Purchase Consideration over tangible net assets
acquired.......................................................... $ 16,098
---------
---------
</TABLE>
- ------------------------
(1) As a result of the Acquisition, certain Capital Cities benefit plans became
fully vested and the related benefits became immediately payable in a single
lump-sum distribution. In addition, the Acquisition results in accelerated
vesting of Capital Cities Options which, for purposes of these pro forma
combined condensed financial statements, are assumed to be settled in cash.
The amount included in the Purchase Consideration reflects total estimated
payments of $446 million, less related amounts accrued at December 31, 1995
of $327 million, and less estimated income tax benefits of $54 million.
Acquisition expenses, including debt issuance costs, are not expected to be
material and, accordingly, have not been included in the unaudited pro forma
combined condensed financial statements.
Transactions between Old Disney and Capital Cities have not been eliminated
from the unaudited pro forma combined condensed financial statements, as the
amounts are immaterial in the periods presented.
The impact on Disney's financial position from the disposition of its
investment in KCAL-TV and from the disposition of either Capital Cities'
newspaper or radio station operations in Detroit and Dallas/Fort Worth is not
expected to be material and, accordingly, has not been reflected in the
unaudited pro forma combined condensed financial statements.
Certain reclassifications have been made to Old Disney's and Capital Cities'
historical consolidated financial statements to set forth the unaudited pro
forma combined condensed financial statements of Disney after giving effect to
the Acquisition.
Pro forma adjustments giving effect to the Acquisition in the unaudited pro
forma combined condensed statements of income reflect the following:
(a) Elimination of merger costs which are assumed to have been incurred
prior to the Acquisition.
(b) Amortization of the excess of Purchase Consideration over tangible
net assets acquired on a straight-line basis over 40 years, net of
elimination of Capital Cities' historical amortization of excess acquisition
costs over the values assigned to tangible net assets acquired in prior
acquisitions.
(c) Increase in interest expense resulting from the use of new
borrowings to finance a portion of the Purchase Consideration and reduction
in investment and interest income, resulting from the use of certain
short-term investments and cash to fund partial payment of the Purchase
Consideration. The interest rate on new borrowings of $8.1 billion is
assumed to be 6.5%.
(d) Income tax effect of pro forma adjustments, excluding amortization
of the excess of the Purchase Consideration over tangible net assets
acquired, which is non-deductible for tax purposes.
S-15
<PAGE>
(e) Earnings per share based upon the weighted average number of shares
of Old Disney common stock and common equivalent shares outstanding for the
periods presented, including the shares of Disney Common Stock assumed to be
issued in connection with the Acquisition, as if they had been issued at the
beginning of the periods presented.
Pro forma adjustments giving effect to the Acquisition in the unaudited pro
forma combined condensed balance sheet reflect the following:
(a) Liquidation of certain cash balances to fund partial payment of the
Purchase Consideration.
(b) Liquidation of certain short-term investments to fund partial
payment of the Purchase Consideration.
(c) Excess of Purchase Consideration over net assets acquired, net of
Capital Cities' historical excess of purchase consideration over the values
assigned to tangible net assets acquired in prior acquisitions.
(d) Liquidation of accrued liabilities related to the cash settlement of
certain Capital Cities benefit plans and recording of income tax benefits
related to the distribution of accelerated benefits.
(e) New borrowings to finance the cash portion of the Purchase
Consideration and the cash settlement of certain Capital Cities benefit
plans.
(f) Cancellation of Old Disney treasury stock, elimination of Capital
Cities stockholders' equity, and issuance of 154.6 million shares of Disney
Common Stock.
S-16
<PAGE>
DESCRIPTION OF THE NOTES
The $1,300,000,000 6 3/8% Senior Notes due March 30, 2001 (the "Five-Year
Notes") and the $1,300,000,000 6 3/4% Senior Notes due March 30, 2006 (the
"Ten-Year Notes" and, together with the Five-Year Notes, the "Notes") will each
be issued as a separate series of senior debt securities under an Indenture,
dated as of March 7, 1996 (as amended, modified or supplemented from time to
time, the "Indenture"), between Disney and Citibank, N.A., as trustee (the
"Trustee"). The following summary of certain provisions of the Notes and of the
Indenture does not purport to be complete and is qualified in its entirety by
reference to the Indenture, a copy of the form of which has been filed 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. This description of the particular terms of the Notes supplements,
and to the extent inconsistent therewith, replaces the description of the
general terms and provisions of the Debt Securities and the Indenture set forth
in the accompanying Prospectus under the heading "Description of the Debt
Securities," to which description reference is hereby made. The Indenture is
referred to in the accompanying Prospectus as the "Senior Debt Securities
Indenture" and sometimes collectively with the Senior Subordinated Debt
Securities Indenture and the Subordinated Debt Securities Indenture as the
"Indentures." The Notes are "Senior Debt Securities" as that term is used in the
accompanying Prospectus and are also referred to therein as the "Offered Debt
Securities." The term "Securities," as used under this caption, refers to all
Securities issuable from time to time under the Indenture and includes the
Notes.
GENERAL
All Securities, including the Notes, 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 other Securities under the Indenture in addition to the
$2,600,000,000 aggregate principal amount of Notes offered hereby. As of the
date of this Prospectus Supplement, Disney has authorized the issuance under the
Indenture of an additional $2.4 billion of Securities, none of which are issued
or outstanding.
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 the debt of Disney, including the Notes,
are dependent upon the earnings of its subsidiaries and the distribution of
those earnings to Disney, whether by dividends, loans or otherwise. The payment
of dividends and the making of loans and advances to Disney by its subsidiaries
may be subject to statutory or contractual restrictions, are contingent upon the
earnings of those subsidiaries and are subject to various business
considerations. Any right of Disney to receive assets of any of its subsidiaries
upon their liquidation or reorganization (and the consequent right of the
holders of the Notes to participate in those assets) will be effectively
subordinated to the claims of that subsidiary's creditors (including trade
creditors), except to the extent that Disney is itself recognized as a creditor
of such subsidiary, in which case the claims of Disney 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 had occurred at such date,
Disney's subsidiaries would have had approximately $10.4 billion of indebtedness
outstanding (including accounts and taxes payable, accrued liabilities and other
recorded liabilities). Disney has not assumed the obligations of Old Disney and
Capital Cities, and all such obligations remain solely the obligations of such
subsidiaries. The Indenture does not limit Disney's or Disney's subsidiaries'
ability to incur additional indebtedness in the future.
The Five-Year Notes and the Ten-Year Notes will each be limited to
$1,300,000,000 aggregate principal amount and will mature on March 30, 2001 and
March 30, 2006, respectively. The Notes will bear interest from March 27, 1996
at the respective rates per annum shown on the front cover of this Prospectus
S-17
<PAGE>
Supplement. Interest on the Notes will be payable semiannually in arrears on
March 30 and September 30 of each year, commencing on September 30, 1996, to the
persons in whose names the Notes are registered at the close of business on the
March 15 or September 15, as the case may be, next preceding such March 30 or
September 30. Interest on the Notes will be computed on the basis of a 360-day
year of twelve 30-day months. The Notes may not be redeemed by Disney (nor may a
holder require Disney to redeem or repurchase a Note) prior to maturity and are
not entitled to any mandatory redemption or sinking fund payments, except that,
under certain circumstances relating to the obligation to pay Additional
Amounts, the Company may redeem the Notes. In the event of such a redemption by
Disney, the Notes will be redeemed at a redemption price of 100% of their
principal amount plus accrued and unpaid interest to the date of redemption. See
"Redemption for Tax Purposes."
Application has been made to list the Notes on the Luxembourg Stock
Exchange. Disney will appoint a Luxembourg paying agent and a transfer agent
(where the Notes may be tendered for transfer), acceptable to the Trustee, in
the event definitive Notes are issued in exchange for beneficial interests in
Global Notes (as described below). For so long as any Notes are listed on the
Luxembourg Stock Exchange and the rules of such exchange shall so require,
Disney shall maintain such paying agent in Luxembourg.
The statements set forth in this section under the caption "Form,
Registration and Title; Book-Entry System" and "Global Clearance and Settlement"
include summaries of certain rules and operating procedures of The Depository
Trust Company ("DTC"), Morgan Guaranty Trust Company of New York, Brussels
Office, as operator of the Euroclear System ("Euroclear") and Cedel Bank,
SOCIETE ANONYME ("Cedel"), which effect transfers of interest in a Global Note
(as defined below).
FORM, REGISTRATION AND TITLE; BOOK-ENTRY SYSTEM
The Notes will be issued in fully registered form only, without coupons.
Each of the Five-Year Notes and the Ten-Year Notes will be issued in book-entry
form represented by one or more global notes (each, a "Global Note") registered
in the name of Cede & Co. ("Cede"), as the nominee of DTC, for the accounts of
its participants (including Euroclear and Cedel). A Global Note may not be
transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC
to DTC or another nominee of DTC or by DTC or any such nominee to a successor of
DTC or a nominee of such successor. So long as Cede is the registered owner of a
Global Note representing the Notes, Cede will be considered the sole owner or
holder of the Notes represented by such Global Note for all purposes under the
Indenture.
Except as described in this paragraph, definitive Notes will not be issued
in exchange for beneficial interests in the Global Notes. DTC may discontinue
providing its services as securities depositary, with respect to the Notes, at
any time by giving reasonable notice to the Company. If DTC is at any time
unwilling or unable to continue as depositary and a successor depositary is not
appointed by Disney within 90 days after Disney is notified by DTC, Disney will
issues Notes in definitive form in exchange for the Global Note representing
such Notes. In addition, Disney may at any time and in its sole discretion
determine not to have any of the Notes represented by one or more Global Notes
and, in such event, will issue Notes in definitive form in exchange for all of
the Global Notes representing such Notes. In such event, such definitive Notes
will be issued only in fully registered form without coupons in denominations of
U.S. $1,000 and multiples thereof.
Euroclear and Cedel will initially hold Notes on behalf of their
participants through their respective depositaries, which are participants in
DTC. Transfers within DTC, Euroclear and Cedel will be in accordance with the
usual rules and operating procedures of the relevant system. Cross-market
transfers between investors who hold or who will hold Notes through DTC and
investors who hold or will hold Notes through Euroclear and Cedel will be
effected in DTC through the respective depositaries of Euroclear and Cedel,
subject to certain restrictions. Citibank, N.A. ("Citibank") will initially act
as depositary for Cedel and Chemical Bank will initially act as depositary for
Euroclear. See "Global Clearance and Settlement."
Upon the issuance by Disney of the Notes, DTC will credit, on its book-entry
system, the respective principal amounts of the Notes represented by such Global
Note to the accounts of DTC's participants (the "Participants"). The accounts to
be credited shall be designated by the Underwriters. Purchases of Notes
S-18
<PAGE>
under DTC's book-entry system must be made by or through Direct Participants (as
defined below) which will receive a credit on the records of DTC. Owners of
beneficial interests in a Global Note may hold Notes directly through DTC in the
United States or through Euroclear or Cedel in Europe, if they are participants
in such systems, or indirectly through organizations which are participants in
such systems. Owners of beneficial interests in a Global Note will not receive
written confirmation from DTC of their purchase, but each beneficial owner is
expected to receive written confirmation providing details of the transaction,
as well as periodic statements of its holdings, from DTC (if such beneficial
owner is a Direct Participant or an Indirect Participant (as defined below)) or
the Direct or Indirect Participant through which such beneficial owner entered
into the transaction (if such beneficial owner is not a Direct or Indirect
Participant). Transfers of ownership interests in the Notes are expected to be
effected by 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 Notes, except in the event that use of the
book-entry system for the Notes is discontinued. The deposit of Notes with DTC
and the registration of such Notes in the name of Cede or another nominee of DTC
will not effect any change in beneficial ownership. DTC has no knowledge of the
actual beneficial owners of the Notes; DTC's records reflect only the identity
of the Direct Participants to whose accounts such 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. The laws of
some states require that certain purchasers of securities take physical delivery
of such securities in definitive form. Such laws may impair the ability to
transfer beneficial interests in the Notes.
"Direct Participants" include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations, including the
Underwriters. Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
Disney expects that conveyance of notices and other communications by DTC to
Direct Participants, by Direct Participants to Indirect Participants and by
Direct 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. In addition, neither DTC nor
Cede will consent or vote with respect to the Notes. Disney has been advised
that DTC's usual procedure is to mail an omnibus proxy to Disney as soon as
possible after the record date with respect to such consent or vote. The omnibus
proxy would assign Cede's consenting or voting rights to those Direct
Participants to whose accounts the Notes are credited on such record date
(identified in a listing attached to the omnibus proxy).
Euroclear or Cedel, as the case may be, will take any action permitted to be
taken by a holder under the Indenture or the Notes on behalf of a Euroclear
participant or Cedel participant only in accordance with its relevant rules and
procedures and subject to its depositary's ability to effect such actions on its
behalf through DTC.
Principal and interest payments on the Notes will be made to DTC. Disney has
been advised that DTC will credit the accounts of Direct Participants with
payments in amounts proportionate to their respective holdings in principal
amount of interests in the Global Notes as shown on the records of DTC. Disney
has been advised that DTC's practice is to credit Direct Participants' accounts
on the applicable payment date unless DTC has reason to believe that it will not
receive payments on such date. Disney expects that payments by Direct
Participants and Indirect Participants to beneficial owners of the Notes will be
governed by standing customer instructions and customary practices, as is the
case with securities held for the accounts of customers and will be the
responsibility of such Direct Participants and Indirect Participants and not of
DTC or Disney, subject to any statutory or regulatory requirement as may be in
effect from time to time. Payment of principal and interest to DTC is the
responsibility of Disney, disbursement of such payments to Direct Participants
shall be the responsibility of DTC, and disbursement of such payments to the
beneficial owners will be the responsibility of Direct and Indirect
Participants.
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<PAGE>
GLOBAL CLEARANCE AND SETTLEMENT
Although DTC, Euroclear and Cedel presently perform the procedures provided
below in order to facilitate transfers of Notes among participants of DTC,
Euroclear and Cedel, they are under no obligation to perform or continue to
perform such procedures and such procedures may be modified or discontinued at
any time. Neither Disney nor the Trustee will have any responsibility for the
performance by DTC, Euroclear or Cedel or their respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
DTC, Euroclear and Cedel have advised Disney as follows:
A. THE CLEARING SYSTEMS
DTC. DTC 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 Uniform Commercial Code and a "clearing agency" registered,
pursuant to the provisions of Section 17A of the U.S. Securities Exchange Act of
1934, as amended. DTC holds securities that its Participants deposit with DTC.
DTC also facilitates the settlement of securities transactions among
Participants through electronic computerized book-entry changes in accounts of
its Participants, thereby eliminating the need for physical movement of
certificates. DTC is owned by a number of its Direct Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc.
Because DTC can act only on behalf of Direct Participants, who in turn act
on behalf of Indirect Participants and certain banks, the ability of an owner of
a beneficial interest in a Global Note to pledge such interest to persons or
entities that do not participate in the DTC system, or otherwise take actions in
respect of such interest, may be limited by the lack of a definitive certificate
for such interest.
EUROCLEAR. Euroclear was created in 1968 to hold securities for
participants of Euroclear and to clear and settle transactions between Euroclear
participants through simultaneous electronic book-entry delivery against
payment, thereby eliminating the need for physical movement of certificates and
any risk from lack of simultaneous transfers of securities and cash. Euroclear
includes various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries. Euroclear is operated by
the Brussels, Belgium office of Morgan Guaranty Trust Company of New York (the
"Euroclear Operator"), under contract with Euro-clear Clearance Systems S.C., a
Belgian cooperative corporation (the "Cooperative"). All operations are
conducted by the Euroclear Operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the Cooperative. The Cooperative establishes policy for Euroclear on behalf
of Euroclear participants. Euroclear participants include banks (including
central banks), securities brokers and dealers and other professional financial
intermediaries and may include the Underwriters. Indirect access to Euroclear is
also available to other firms that clear through or maintain a custodial
relationship with a Euroclear participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear participants.
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<PAGE>
Distribution with respect to Notes held beneficially through Euroclear will
be credited to cash accounts of Euroclear participants in accordance with the
Terms and Conditions to the extent received by the U.S. depositary for
Euroclear.
CEDEL. Cedel is incorporated under the laws of Luxembourg as a professional
depositary. Cedel holds securities for its participating organizations and
facilitates the clearance and settlement of securities transactions between
Cedel participants through electronic book-entry changes in accounts of Cedel
participants, thereby eliminating the need for physical movement of
certificates. Cedel provides to Cedel participants, among other things, services
for safekeeping, administration, clearance and settlement of internationally
traded securities and securities lending and borrowing. Cedel interfaces with
domestic markets in several countries. As a professional depositary, Cedel is
subject to regulation by the Luxembourg Monetary Institute. Cedel participants
are recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the Underwriters. Indirect
access to Cedel is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Cedel participant either directly or indirectly.
Distributions with respect to the Notes held beneficially through Cedel will
be credited to cash accounts of Cedel participants in accordance with its rules
and procedures, to the extent received by the U.S. depositary for Cedel.
B. INITIAL SETTLEMENT
Upon the issuance by Disney of the Notes, DTC or its custodian will credit,
on its internal system, the respective principal amount of the individual
beneficial interests represented by the Global Notes to the accounts of persons
who have accounts with DTC. Such accounts initially will be designated by or on
behalf of the Underwriters.
Investors that hold their interests in the Notes through DTC will follow the
settlement practices applicable to global bond issues. Investors' securities
custody accounts will be credited with their holdings against payment in
same-day funds on the settlement date.
Investors that hold their interests in the Notes through Euroclear or Cedel
accounts will follow the settlement procedures applicable to conventional
eurobonds in registered form. The interests will be credited to the securities
custody accounts on the settlement date against payment in same-day funds.
C. SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
TRADING BETWEEN DTC PURCHASERS AND SELLERS. Secondary market trading
between Participants will be settled using the procedures applicable to global
bonds in same-day funds.
TRADING BETWEEN EUROCLEAR AND/OR CEDEL PARTICIPANTS. Secondary market
trading between Euroclear participants and/or Cedel participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
TRADING BETWEEN DTC SELLER AND EUROCLEAR OR CEDEL PURCHASER. When Notes are
to be transferred from the account of a Participant to the account of a
participant in Euroclear or Cedel, the purchaser will send instructions to
Euroclear or Cedel through a Euroclear or Cedel participant, as the case may be,
at least one business day prior to settlement. Euroclear or Cedel will instruct
its respective depositary to receive such Notes against payment. Payment will
then be made by the depositary to the Participant's account against delivery of
the Notes. After settlement has been completed, the Notes will be credited to
the respective clearing system, and by the clearing system, in accordance with
its usual procedures, to the Euroclear or Cedel participant's account. The
securities credit will appear the next day (European time) and the cash
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<PAGE>
debit will be back-valued to the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on the
intended value date (i.e., the trade fails), the Euroclear or Cedel cash debit
will be valued instead as of the actual settlement date.
Euroclear and Cedel participants will need to make available to the
respective clearing system the funds necessary to process same-day funds
settlement. The most direct means of doing so is to preposition funds for
settlement, either from cash on hand or existing lines of credit. Under this
approach, participants may, however, take on credit exposure to Euroclear and
Cedel until the interests in the Global Note are credited to their accounts one
day later.
As an alternative, if Euroclear or Cedel has extended a line of credit to a
Euroclear or Cedel participant, as the case may be, such participant may elect
not to preposition funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, Euroclear or Cedel participants purchasing
Notes would incur overdraft charges for one day, assuming they cleared the
overdraft when the Notes were credited to their accounts. However, interest on
the Notes would accrue from the value date. Therefore, in many cases the
investment income on Notes earned during that one-day period may substantially
reduce or offset the amount of such overdraft charges, although this result will
depend on each participant's particular cost of funds.
Since the settlement will occur during New York business hours, Participants
can employ their usual procedures for transferring global bonds to the
respective depositaries of Euroclear or Cedel for the benefit of Euroclear or
Cedel participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC seller, a cross-market sale transaction will
settle no differently than a trade between two Participants.
TRADING BETWEEN EUROCLEAR OR CEDEL SELLER AND DTC PURCHASER. Due to time
zone differences in their favor, Euroclear and Cedel participants may employ
their customary procedures for transactions in which Notes are to be transferred
by the respective clearing system, through its respective depositary, to a
Participant. The seller will send instructions to Euroclear or Cedel through a
participant at least one business day prior to settlement. In these cases,
Euroclear or Cedel will instruct its respective depositary to credit the Notes
to the Participant's account against payment. The payment will then be reflected
in the account of the Euroclear or Cedel participant on the following day, and
receipt of the cash proceeds in the Euroclear or Cedel participant's account
would be back-valued to the value date (which would be the preceding day, when
settlement occurred in New York).
Should the Euroclear or Cedel participant have a line of credit in its
respective clearing system and elect to be in a debit position in anticipation
of receipt of the sale proceeds in its account, the back-valuation may
substantially reduce or offset any overdraft charges incurred over that one-day
period. If settlement is not completed on the intended value date (I.E., the
trade fails), receipt of the cash proceeds in the Euroclear or Cedel
participant's account would instead be valued as of the actual settlement date.
Finally, day traders that use Euroclear or Cedel to purchase Notes from
Participants for delivery to Euroclear or Cedel participants should note that
these trades automatically fail on the sale side unless affirmative action is
taken. At least three techniques should be readily available to eliminate this
potential problem: (i) borrowing through Euroclear or Cedel for one day (until
the purchase side of the day trade is reflected in their Euroclear or Cedel
accounts) in accordance with the clearing system's customary procedures; (ii)
borrowing the Notes in the United States from a Participant no later than one
day prior to settlement, which would give the Notes sufficient time to be
reflected in their Euroclear or Cedel account in order to settle the sale side
of the trade; or (iii) staggering the value date for the buy and sell sides of
the trade so that the value date for the purchase from the Participant is at
least one day prior to the value date for the sale to the Euroclear or Cedel
participant.
PAYMENT OF ADDITIONAL AMOUNTS
Disney will, subject to certain exceptions and limitations set forth below,
pay to the holder of any Note who is a United States Alien (as defined below),
as additional interest, such amounts ("Additional Amounts") as may be necessary
in order that every net payment on such Note (including payment of the
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principal of and interest on such Note) by Disney or a paying agent, after
deduction or withholding for or on account of any present or future tax,
assessment or other governmental charge imposed upon or as a result of such
payment by the United States (or any political subdivision or taxing authority
thereof or therein), will not be less than the amount provided in such Note to
be then due and payable; provided, however, that the foregoing obligation to pay
Additional Amounts will not apply to:
(a) any tax, assessment or other governmental charge that would not have
been so imposed but for (i) the existence of any present or former
connection between such holder or beneficial owner of such Note (or between
a fiduciary, settlor or beneficiary of, or a person holding a power over,
such holder, if such holder is an estate or a trust, or a member or
shareholder of such holder, if such holder is a partnership or corporation)
and the United States or any political subdivision or taxing authority
thereof or therein, including, without limitation, such holder (or such
fiduciary, settlor, beneficiary, person holding a power, member or
shareholder) being or having been a citizen or resident of the United States
or treated as a resident thereof or being or having been engaged in a trade
or business or present therein or having or having had a permanent
establishment therein or (ii) such holder's or beneficial owner's past or
present status as a personal holding company, foreign personal holding
company, foreign private foundation or other foreign tax-exempt organization
with respect to the United States, controlled foreign corporation for United
States tax purposes or corporation that accumulates earnings to avoid United
States Federal income tax;
(b) any estate, inheritance, gift, excise, sales, transfer, wealth or
personal property tax or any similar tax, assessment or other governmental
charge;
(c) any tax, assessment or other governmental charge that would not have
been imposed but for the presentation by the holder of a Note for payment
more than the 10 days after the date on which such payment became due and
payable or the date on which payment thereof was duly provided for,
whichever occurred later;
(d) any tax, assessment or other governmental charge that is payable
otherwise than by withholding from a payment on a Note;
(e) any tax, assessment or other governmental charge required to be
withheld by any paying agent from a payment on a Note, if such payment can
be made without such withholding by any other paying agent;
(f) any tax, assessment or other governmental charge that would not have
been imposed but for a failure to comply with applicable certification,
information, documentation, identification or other reporting requirements
concerning the nationality, residence, identity or connection with the
United States of the holder or beneficial owner of a Note if such compliance
is required by statute or regulation of the United States or by an
applicable tax treaty to which the United States is a party as a
precondition to relief or exemption from such tax, assessment or other
governmental charge;
(g) any tax, assessment or other governmental charge imposed on a holder
that actually or constructively owns 10 percent or more of the combined
voting power of all classes of stock of Disney;
(h) any tax, assessment or other governmental charge which would not
have been imposed but for the fact that such Note constitutes a "United
States real property interest" as defined in section 897(c)(1) of the United
States Internal Revenue Code of 1986, as amended, with respect to the
beneficial owner of such Note; or
(i) any combination of items (a), (b), (c), (d), (e), (f), (g) and (h);
nor shall Additional Amounts be paid with respect to a payment on a Note to a
holder that is a fiduciary or partnership or other than the sole beneficial
owner of such payment to the extent a beneficiary or settlor with respect to
such fiduciary or a member of such partnership or a beneficial owner would not
have been entitled to Additional Amounts (or payment of Additional Amounts would
not have been necessary) had such beneficiary, settlor, member or beneficial
owner been the holder of such Note.
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<PAGE>
For the purposes above, a "United States Alien" means any person who, for
United States Federal income tax purposes, is a foreign corporation, a
non-resident alien individual, a non-resident alien fiduciary of a foreign
estate or trust, or a foreign partnership one or more of the members of which
is, for United States Federal income tax purposes, a foreign corporation, a
non-resident alien individual or a non-resident alien fiduciary of a foreign
estate or trust. "United States" means the United States of America (including
the States and the District of Columbia) and its territories, its possessions
and other areas subject to its jurisdiction.
REDEMPTION FOR TAX PURPOSES
If (a) as a result of any change in, or amendment to, the laws (or any
regulations or rulings promulgated thereunder) of the United States (or any
political subdivision or taxing authority thereof or therein), or any change in
the official application (including a ruling by a court of competent
jurisdiction in the United States) or interpretation of such laws, regulations
or rulings, which change or amendment is announced or becomes effective on or
after the consummation of this offering, Disney becomes or will become obligated
to pay Additional Amounts as described above or (b) any act is taken by a taxing
authority of the United States on or after the consummation of this offering,
whether or not such act is taken with respect to Disney or any affiliate, that
results in a substantial likelihood that Disney will or may be required to pay
such Additional Amounts, then Disney may, at its option, redeem, as a whole, but
not in part, the Notes on not less than 30 nor more than 60 days' prior notice,
at a redemption price equal to 100% of their principal amount, together with
interest accrued thereon to the date fixed for redemption; provided that Disney
determines, in its business judgment, that the obligation to pay such Additional
Amounts cannot be avoided by the use of reasonable measures available to it, not
including substitution of the obligor under the Notes or any action that would
entail a material cost to Disney. No redemption pursuant to (b) above may be
made unless Disney shall have received an opinion of independent counsel to the
effect that an act taken by a taxing authority of the United States results in a
substantial likelihood that it will or may be required to pay Additional Amounts
described above and Disney shall have delivered to the Trustee a certificate,
signed by a duly authorized officer, stating that based on such opinion Disney
is entitled to redeem the Notes pursuant to their terms.
CERTAIN UNITED STATES TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of a Note will generally be subject to the 30% United
States Federal withholding tax that generally applies to payments of interest on
a registered form debt obligation issued by a United States person, unless one
of the following steps is taken to obtain an exemption from or reduction of the
tax:
EXEMPTION FOR UNITED STATES ALIENS (IRS FORM W-8). A beneficial owner of a
Note that is a United States Alien can obtain an exemption from the withholding
tax by providing a properly completed Internal Revenue Service ("IRS") Form W-8
(Certificate of Foreign Status). See "Certain United States Federal Tax
Considerations to United States Aliens."
EXEMPTION FOR UNITED STATES ALIENS WITH EFFECTIVELY CONNECTED INCOME (IRS
FORM 4224). A beneficial owner of a Note that is a United States Alien,
including a non-United States corporation or bank with a United States branch,
that conducts a trade or business in the United States with which the interest
income on a Note is effectively connected, can obtain an exemption from the
withholding tax by providing a properly completed IRS Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a Trade
or Business in the United States).
EXEMPTION OR REDUCED RATE FOR UNITED STATES ALIENS ENTITLED TO THE BENEFITS
OF A TREATY (IRS FORM 1001). A beneficial owner of a Note that is a United
States Alien entitled to the benefits of an income tax treaty to which the
United States is a party can obtain an exemption from or reduction of the
withholding tax (depending on the terms of the treaty) by providing a properly
completed IRS Form 1001 (Ownership, Exemption or Reduced Rate Certificate).
EXEMPTION FOR NON-UNITED STATES ALIENS (IRS FORM W-9). A beneficial owner
of a Note that is not a United States Alien can obtain an exemption from the
withholding tax by providing a properly completed IRS Form W-9 (Request for
Taxpayer Identification Number and Certification).
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UNITED STATES FEDERAL INCOME TAX REPORTING PROCEDURE. A beneficial owner of
a Note, or, in the case of IRS Forms 1001 and 4224, its agent, is required to
submit the appropriate IRS form under applicable procedures to the person
through which the owner directly holds the Note. For example, if the beneficial
owner is listed directly on the books of Euroclear or Cedel as the holder of the
Note, the IRS form must be provided to Euroclear or Cedel, as the case may be.
Each other person through which a Note is held must submit, on behalf of the
beneficial owner, the IRS form (or in certain cases a copy thereof) under
applicable procedures to the person through which it holds the Note, until the
IRS form is received by the United States person who would otherwise be required
to withhold United States Federal income tax from interest on the Note. For
example, in the case of Notes held through Euroclear or Cedel, the IRS form (or
a copy thereof) must be received by the United States Depositary of such
clearing agency. Applicable procedures include additional certification
requirements if a beneficial owner of the Note provides an IRS Form W-8 to a
securities clearing organization, bank or other financial institution that holds
the Note on its behalf. See "Certain United States Federal Tax Considerations to
United States Aliens."
EACH HOLDER OF A NOTE SHOULD BE AWARE THAT IF IT DOES NOT PROPERLY PROVIDE
THE REQUIRED IRS FORM, OR IF THE IRS FORM (OR, IF PERMISSIBLE, A COPY OF SUCH
FORM) IS NOT PROPERLY TRANSMITTED TO AND RECEIVED BY THE UNITED STATES PERSON
OTHERWISE REQUIRED TO WITHHOLD UNITED STATES FEDERAL INCOME TAX, INTEREST ON THE
NOTE MAY BE SUBJECT TO UNITED STATES WITHHOLDING TAX AT A 30% RATE AND THE
HOLDER (INCLUDING THE BENEFICIAL OWNER) WILL NOT BE ENTITLED TO ANY ADDITIONAL
AMOUNTS FROM DISNEY DESCRIBED UNDER THE HEADING "DESCRIPTION OF THE NOTES --
PAYMENT OF ADDITIONAL AMOUNTS" WITH RESPECT TO SUCH TAX. SUCH TAX, HOWEVER, MAY
IN CERTAIN CIRCUMSTANCES BE ALLOWED AS A REFUND OR AS A CREDIT AGAINST SUCH
HOLDER'S UNITED STATES FEDERAL INCOME TAX. THE FOREGOING DOES NOT DEAL WITH ALL
ASPECTS OF UNITED STATES FEDERAL INCOME TAX WITHHOLDING THAT MAY BE RELEVANT TO
FOREIGN HOLDERS OF THE NOTES. INVESTORS ARE ADVISED TO CONSULT THEIR TAX
ADVISORS FOR SPECIFIC ADVICE CONCERNING THE OWNERSHIP AND DISPOSITION OF THE
NOTES.
NOTICES
All notices will be published in English in Luxembourg in the LUXEMBURGER
WORT for so long as the Notes are listed on the Luxembourg Stock Exchange. If at
any time publication in such newspaper is not practicable, notices will be valid
if published in an English language newspaper with general circulation in the
market regions as the Trustee shall determine. Any such notice shall be deemed
to have been given on the date of such publication or, if published more than
once on different dates, on the first date on which publication is made.
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<PAGE>
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
TO UNITED STATES ALIENS
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 Aliens. This summary is
based on existing United States Federal income 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 or to holders subject to special
treatment under the United States Federal income tax laws (including certain
financial institutions). 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.
GENERAL
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 Note), and subject to the discussion of backup
withholding below:
(a) payments of interest (including any original issue discount) on the
Notes to any United States Alien will not be subject to United States
Federal income or withholding tax, provided that (1) the holder does not
actually or constructively own 10% or more of the total combined voting
power of all classes of stock of Disney entitled to vote, (2) the holder is
not (i) a foreign tax exempt organization or a foreign private foundation
for United States Federal income tax purposes, (ii) a bank receiving
interest pursuant to a loan agreement entered into in the ordinary course of
its trade or business, or (iii) a controlled foreign corporation that is
related to Disney through stock ownership, and (3) such interest payments
are not effectively connected with the conduct of a United States trade or
business of the holder;
(b) a holder of a Note who is a United States Alien 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 United States Alien 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. See "Description of
the Notes -- Certain United States Tax Documentation Requirements."
BACKUP WITHHOLDING AND INFORMATION REPORTING
Disney will, where required, report to the holders of the Notes and the
Internal Revenue Service the amount of any interest paid on the Notes in each
calendar year and the amounts of tax withheld, if any, with respect to such
payments.
In the case of payments of interest to United States Aliens, 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
United States Alien 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
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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 United States
Alien'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.
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UNDERWRITING
Under the terms and subject to the conditions contained in the Underwriting
Agreement relating to the Notes (the "Underwriting Agreement"), each of the
Underwriters named below (the "Underwriters"), for whom Merrill Lynch, Pierce,
Fenner & Smith Incorporated and CS First Boston Corporation are acting as
representatives (the "Representatives"), has severally agreed to purchase from
Disney the aggregate principal amount of Notes set forth opposite its name
below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF FIVE-YEAR
UNDERWRITER NOTES
- ---------------------------------------------------------------------------- ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................................... $ 423,500,000
CS First Boston Corporation................................................. 423,500,000
Bear, Stearns & Co. Inc. ................................................... 65,000,000
Deutsche Bank AG London..................................................... 65,000,000
Goldman, Sachs & Co. ....................................................... 65,000,000
J.P. Morgan Securities Ltd. ................................................ 65,000,000
Morgan Stanley & Co. International Limited.................................. 65,000,000
Swiss Bank Corporation...................................................... 65,000,000
ABN AMRO Bank N.V. ......................................................... 9,000,000
Banque Paribas.............................................................. 9,000,000
Barclays de Zoete Wedd Limited.............................................. 9,000,000
Citicorp Securities, Inc. .................................................. 9,000,000
Nikko Europe Plc............................................................ 9,000,000
Nomura International plc.................................................... 9,000,000
UBS Securities LLC.......................................................... 9,000,000
----------------
Total............................................................. $1,300,000,000
----------------
----------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF TEN-YEAR
UNDERWRITER NOTES
- ---------------------------------------------------------------------------- ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................................... $ 423,500,000
CS First Boston Corporation................................................. 423,500,000
Bear, Stearns & Co. Inc. ................................................... 78,000,000
Goldman, Sachs & Co. ....................................................... 78,000,000
Lehman Brothers International (Europe)...................................... 78,000,000
J.P. Morgan Securities Ltd. ................................................ 78,000,000
Morgan Stanley & Co. International Limited.................................. 78,000,000
Bankers Trust International PLC............................................. 9,000,000
BA Securities, Inc. ........................................................ 9,000,000
Citicorp Securities, Inc. .................................................. 9,000,000
Donaldson, Lufkin & Jenrette Securities Corporation......................... 9,000,000
PaineWebber Incorporated.................................................... 9,000,000
Salomon Brothers Inc ....................................................... 9,000,000
Smith Barney Inc. .......................................................... 9,000,000
----------------
Total............................................................. $ 1,300,000,000
----------------
----------------
</TABLE>
In the Underwriting Agreement, the Underwriters have severally agreed,
subject to the terms and conditions set forth therein, to purchase all the Notes
offered hereby if any Notes are purchased. In addition, the Underwriting
Agreement entitles the Representatives to terminate the Underwriting Agreement
in certain circumstances prior to payment for the Notes being made to Disney.
The Representatives have advised Disney that the Underwriters propose
initially to offer the Five-Year Notes and the Ten-Year Notes to the public at
the respective public offering prices set forth on the cover
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page of this Prospectus Supplement and to dealers at such prices less a
concession not in excess of .2% of the principal amount of the Five-Year Notes
and .3% of the principal amount of the Ten-Year Notes. After the initial public
offering, the public offering prices and concessions may be changed.
Although application has been made to list the Notes on the Luxembourg Stock
Exchange, the Notes are new issues of securities with no established trading
markets. The Underwriters have advised Disney that one or more of them intends
to act as a market maker for the Notes. However, the Underwriters are not
obligated to do so and may discontinue any market making at any time without
notice. No assurance can be given as to the liquidity of the trading markets for
the Notes.
The Notes are offered globally for sale in those jurisdictions in the United
States, Canada, Europe, Asia and elsewhere where it is lawful to make such
offers. Each Underwriter has undertaken that it has not offered, sold or
delivered and it will not offer, sell or deliver, directly or indirectly, any of
the Notes or distribute this Prospectus Supplement, the accompanying Prospectus,
any preliminary prospectus or any other material relating to the Notes, in or
from any jurisdiction except under circumstances that will, to the best of its
knowledge and belief, result in compliance with the applicable laws and
regulations thereof and which will not impose any obligations on the Company
except as contained in the Underwriting Agreement. Sales in the United States by
Underwriters who are not U.S. registered broker-dealers will be made to or
through such Underwriters' U.S. registered broker-dealer affiliates. Persons
into whose hands this Prospectus Supplement and the accompanying Prospectus
comes are required by Disney and the Underwriters to comply with all applicable
laws and regulations in each country or jurisdiction in which they purchase,
offer, sell or deliver the Notes or have in their possession, distribute or
publish any offering material relating to the Notes, in all cases at their own
expense.
Each Underwriter has represented and agreed severally that it has not
offered or sold and will not offer or sell any of the Notes to persons in the
United Kingdom (the "U.K.") except to persons whose ordinary activities involve
them in acquiring, holding, managing or disposing of investments (as principal
or agent) for the purposes of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to the public in the
U.K. within the meaning of the Public Offers of Securities Regulation 1995; (ii)
it has complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the Notes
in, from or otherwise involving the U.K.; and (iii) it has only issued or passed
on, and will only issue or pass on, in the U.K. any document received by it in
connection with the issue of the Notes, to a person who is of a kind described
in Article 11(3) of the Financial Services Act 1986 (Investment Advertisement)
(Exemptions) Order 1995 or is a person to whom the document may otherwise
lawfully be issued or passed on.
Each Underwriter has represented and agreed severally that it will not offer
or sell any Notes directly or indirectly in Japan or to, or for the benefit of
any Japanese person or to others, for re-offering or re-sale directly or
indirectly in Japan or to any Japanese person except under circumstances which
will result in compliance with all applicable laws, regulations and guidelines
promulgated by the relevant governmental and regulatory authorities in effect at
the relevant time. For purposes of this paragraph, "Japanese person" shall mean
any person resident in Japan, including any corporation or other entity
organized under the laws of Japan.
Each Underwriter has agreed that it has not distributed and will not
distribute this Prospectus Supplement or the accompanying Prospectus in Hong
Kong other than to persons whose business involves the acquisition, disposal or
holding of securities, whether as principal or as agent, unless such Underwriter
is a person permitted to do so under the securities laws of Hong Kong.
Purchasers of the Notes may be required to pay stamp taxes and other charges
in accordance with the laws and practices of the country of purchase in addition
to the public offering prices set forth on the cover page of this Prospectus
Supplement. Neither Disney nor any Underwriter represents that the Notes may at
any time be lawfully sold in compliance with any applicable registration or
other requirements in any jurisdiction, or pursuant to an exemption available
thereunder, or assumes any responsibility for facilitating such sales.
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Disney has agreed to indemnify the Underwriters against certain liabilities,
including liabilities under the U.S. Securities Act of 1933, as amended, or to
contribute to certain payments the Underwriters may be required to make in
respect thereof.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Notes in Canada is being made only on a private
placement basis exempt from the requirement that the Company prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of the Notes are effected. Accordingly, any resale of the Notes in Canada
must be made in accordance with applicable securities laws which will vary
depending on the relevant jurisdiction, and which may require resales to be made
in accordance with available statutory exemptions or pursuant to a discretionary
exemption granted by the applicable Canadian securities regulatory authority.
Purchasers are advised to seek legal advice prior to any resale of the Notes.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Notes in Canada who receives a purchase confirmation will
be deemed to represent to the Company and the dealer from whom such purchase
confirmation is received that (i) such purchaser is entitled under applicable
provincial securities laws to purchase such Notes without the benefit of a
prospectus qualified under such securities laws, (ii) where required by law,
that such purchaser is purchasing as principal and not as agent, and (iii) such
purchaser has reviewed the text above under "Resale Restrictions."
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the SECURITIES ACT (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.
All of the Company's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Ontario purchasers to effect service of process within Canada on the Company
or such persons. All or a substantial portion of the assets of the Company and
such persons may be located outside of Canada and, as a result, it may not be
possible to satisfy a judgment against the Company or such persons in Canada or
to enforce a judgment obtained in Canadian courts against the Company or such
persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Notes to whom the SECURITIES ACT (British Columbia) applies
is advised that such purchaser is required to file with the British Columbia
Securities Commission a report within ten days of the sale of any Notes acquired
by such purchaser pursuant to this offering. Such report must be in the form
attached to British Columbia Securities Commission Blanket Order BOR No. 95/17,
a copy of which may be obtained from the Company. Only one such report must be
filed in respect of Notes acquired on the same date and under the same
prospectus exemption.
GENERAL INFORMATION
Application has been made to list the Notes on the Luxembourg Stock
Exchange. In connection with the listing application, the Restated Certificate
of Incorporation and the By-Laws of Disney and a legal notice relating to the
issuance of the Notes will be deposited prior to listing with Greffier en Chef
du Tribunal d'Arrondissement de et a Luxembourg, where copies thereof may be
obtained upon request. Copies of the above documents together with this
Prospectus Supplement, the accompanying Prospectus, the Indenture and Old
Disney's current Annual and Quarterly Reports, as well as all future Annual
Reports and Quarterly Reports of Disney, so long as any of the Notes are
outstanding, will be made available for inspection at the
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main office of Citibank (Luxembourg, S.A.), in Luxembourg. Citibank (Luxembourg,
S.A.) will act as a contact between the Luxembourg Stock Exchange and Disney or
the holders of the Notes. In addition, copies of the Annual Reports and
Quarterly Reports of Disney may be obtained at such office.
Resolutions relating to the issue and sale of the Notes were adopted by the
Board of Directors of Disney on September 18, 1995.
The Five-Year Notes and Ten-Year Notes have been assigned International
Security Identification Number (ISIN) US254687AJ51 and US254687AM80,
respectively, and CUSIP No. 254687AJ5 and 254687AM8, respectively.
Disney does not publish unconsolidated financial statements. The historical
financial statements of Capital Cities are available at the main office of
Citibank (Luxembourg, S.A.), in Luxembourg.
As of the date of this Prospectus Supplement, there has been no material
adverse change in the financial condition, earnings or operations of Disney,
other than as disclosed herein or in any documents incorporated by reference
herein.
LEGAL MATTERS
Certain legal matters with respect to the legality of the Notes being
offered hereby will be passed upon for Disney by Skadden, Arps, Slate, Meagher &
Flom, Los Angeles, California. Brown & Wood will act as counsel for the
Underwriters. Skadden, Arps, Slate, Meagher & Flom has from time to time
represented, and continues to represent, certain of the Underwriters in
connection with various other legal matters.
S-31
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PROSPECTUS
THE WALT DISNEY COMPANY
DISNEY ENTERPRISES, INC.
SECURITIES
------------------
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 Reports on Form 8-K, dated
February 9, 1996 and 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. In addition, copies of such
documents incorporated by reference herein can be obtained, without charge, at
the main office of Citibank (Luxembourg, S.A.), in Luxembourg.
------------------------
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.
3
<PAGE>
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
Dallas/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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<PAGE>
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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<PAGE>
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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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
24
<PAGE>
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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THE COMPANY
THE WALT DISNEY COMPANY
500 SOUTH BUENA VISTA STREET
BURBANK, CALIFORNIA 91521
TRUSTEE, REGISTRAR AND
PAYING AGENT
CITIBANK, N.A.
120 WALL STREET
NEW YORK, NEW YORK 10043
LUXEMBOURG LISTING AGENT
CITIBANK (LUXEMBOURG) S.A.
58, BOULEVARD GRANDE-DUCHESSE
CHARLOTTE
L-1330 LUXEMBOURG
LEGAL ADVISORS
TO THE COMPANY: TO THE UNDERWRITERS:
SKADDEN, ARPS, SLATE, MEAGHER & BROWN & WOOD
FLOM 10900 WILSHIRE BOULEVARD
300 SOUTH GRAND AVENUE SUITE 1100
SUITE 3400 LOS ANGELES, CALIFORNIA 90024
LOS ANGELES, CALIFORNIA 90071
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY
PRICE WATERHOUSE LLP
1880 CENTURY PARK EAST
SUITE 1600
LOS ANGELES, CALIFORNIA 90067
<PAGE>
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR BY THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS 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 OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS 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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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Summary of the Offering....................... S-3
The Company................................... S-5
Use of Proceeds............................... S-8
Capitalization................................ S-8
Summary Historical Financial Information...... S-9
Unaudited Pro Forma Combined Condensed
Financial Statements......................... S-11
Description of the Notes...................... S-17
Certain United States Federal Tax
Considerations To United States
Aliens....................................... S-26
Underwriting.................................. S-28
Notice to Canadian Residents.................. S-30
General Information........................... S-30
Legal Matters................................. S-31
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>
U.S. $2,600,000,000
THE WALT DISNEY COMPANY
U.S. $1,300,000,000
6 3/8% Senior Notes
Due March 30, 2001
U.S. $1,300,000,000
6 3/4% Senior Notes
Due March 30, 2006
P R O S P E C T U S S U P P L E M E N T
CS First Boston
Merrill Lynch & Co.
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[LOGO] PRINTED ON RECYCLED PAPER.
