10-K/A 1 0001.txt ABC, INC. SAVINGS & INVESTMENT PLAN REPORT ON FINANCIAL STATEMENTS DECEMBER 31, 1999 AND 1998 ABC, INC. SAVINGS & INVESTMENT PLAN INDEX TO FINANCIAL STATEMENTS DECEMBER 31, 1999 AND 1998 Report of Independent Accountants Financial Statements: Statements of Net Assets Available for Benefit as of December 31, 1999 and 1998 Statement of Changes in Net Assets Available for Benefits For the year ended December 31, 1999 Notes to Financial Statements Other schedules required by the Department of Labor Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are either not applicable or have been filed directly with the Department of Labor as part of the Master Trust filing. REPORT OF INDEPENDENT ACCOUNTANTS To the Participants and the Employee Benefits Committee of the ABC, Inc. Savings & Investment Plan In our opinion, the accompanying statements of net assets available for benefits and the related statement of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the ABC, Inc. Savings & Investment Plan (the "Plan") at December 31, 1999 and 1998, and the changes in net assets available for benefits for the year ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICEWATERHOUSECOOPERS LLP Los Angeles, CA June 21, 2000 ABC, INC. SAVINGS & INVESTMENT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS (In thousands) [CAPTION] December 31, 1999 1998 ---- ---- Assets Investments: At fair value The Walt Disney Company Common Stock Fund*,** $ 465,112 $ 511,769 Shares of registered investment companies: Fidelity Retirement Money Market Portfolio Fund* 134,557 136,875 Fidelity Inst. Short-Inter Gov't Portfolio Fund 20,390 18,311 Fidelity Asset Manager Fund* 69,132 65,533 Fidelity Growth & Income Portfolio Fund* 195,197 188,509 Fidelity Magellan Fund* 177,035 110,396 Participant Loans 12,810 13,202 ------ ------ Total investments 1,074,233 1,044,595 --------- --------- Receivables: Participants' contributions 1,432 6,021 Employer's contribution 504 857 --------- -------- Total receivables 1,936 6,878 --------- -------- Net assets available for benefits $1,076,169 $1,051,473 ========== ==========
* Investment balance represents 5% or more of the Plan's net assets available for benefits. ** Nonparticipant-directed The accompanying notes are an integral part of these financial statements. ABC, INC. SAVINGS & INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (In thousands) [CAPTION] For the Year Ended December 31, 1999 ------------------- Additions to net assets attributed to: Investment income: Dividends $ 42,900 Interest 1,149 Net appreciation in fair value of investments 15,513 ------- 59,562 ------- Contributions: Participant 31,582 Employer 11,622 --------- 43,204 --------- Total additions 102,766 --------- Deductions from net assets attributed to: Benefits paid to participants 77,962 Administrative expenses 108 -------- Total deductions 78,070 -------- Net increase 24,696 Net assets available for benefits: Beginning of year 1,051,473 --------- End of year $1,076,169 =========
The accompanying notes are an integral part of these financial statements. ABC, INC. SAVINGS & INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (Tabular dollars in thousands) 1. Description of the Plan General The ABC, Inc. Savings & Investment Plan (the "Plan") is a defined contribution plan designed to provide participating employees the opportunity to accumulate retirement funds through a tax-deferred contribution arrangement pursuant to Section 401(k) and after-tax contributions pursuant to Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"). In addition to the Code, the Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). For further information regarding the Plan, refer to the Summary Plan Description and fund prospectus. Administration of the Plan On February 9, 1996, The Walt Disney Company acquired ABC, Inc. (the "Company") (previously called "Capital Cities/ABC, Inc."). The Company appointed the Employee Benefits Committee (the "Committee" or "Plan Administrator") to administer the Plan, interpret its provisions and resolve all issues arising in the administration of the Plan. The assets of the Plan are administered under a trust agreement between the Company and Fidelity Institutional Retirement Services Company ("Fidelity" or the "Trustee"). Pursuant to the trust agreement, Fidelity executes most of the day-to-day activities of administration. Participation Participation in the Plan is available to qualified employees of the Company and those other subsidiaries and divisions of ABC, Inc. which were a part of, or affiliates of the American Broadcasting Companies, Inc. ("ABC") (an indirect wholly-owned subsidiary of ABC, Inc.) prior to January 1, 1989. Individuals who became employees of the corporate and other broadcasting properties of ABC, Inc. subsequent to 1988 also are eligible to participate in the Plan as are employees of certain properties within the Company's Publishing Group not part of ABC, Inc. prior to January 1, 1989. Effective April 1, 1998, certain employees of the corporate and broadcasting operations of the Company hired prior to January 1, 1989 who were previously ineligible for the Plan and participating in the Employee Profit Sharing Plan of ABC, Inc. became eligible to participate in the Plan. Transfer of Assets Effective May 19, 1998, $1,042,000 of employee after-tax contributions of certain employees of Fairchild Publishing Inc. were transferred into the Plan from the Fairchild Publishing Inc. Publishing Pension Plan. ABC, INC. SAVINGS & INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (continued) 1. Description of the Plan (continued) Contributions Participants are permitted to authorize contributions in whole percentages, up to 10 percent of their base compensation on a pre-tax or after-tax basis, through payroll deductions. A participant's total contributions and the Company's matching contributions, in any Plan year, cannot exceed the limits provided under Sections 401(k), 401(a) and 415 of the Code. The Company currently contributes a matching amount equal to 50 percent of the first 5 percent a participant contributes to the Plan. The Company may make matching contributions either in cash, which is invested exclusively in the common stock of The Walt Disney Company, or directly in shares of the common stock of The Walt Disney Company and, at its discretion, the Company may change the level of matching contributions or cease making matching contributions. Participants may not transfer matched company contributions from The Walt Disney Company Common Stock Fund. However, participants are allowed to transfer matched contributions made prior to the merger of ABC, Inc. with The Walt Disney Company into any fund of their choice. Vesting Participants are immediately 100 percent vested with respect to all contributions made by the participant. Effective January 1, 1995, once the participant completes five years of service, matching employer contributions are immediately 100 percent vested. Prior to completion of the fifth year of service, matching employer contributions vest 50 percent at the end of the Plan year for which the contributions are made, and the remaining 50 percent at the end of the subsequent Plan year. Additionally, a participant's account is considered fully vested upon attaining age 65, or death while in active service, or upon termination of service because of permanent and total disability. Forfeitures Nonvested employer contributions are forfeited upon termination and revert to the Company. These amounts are used to reduce future employer contributions. Investments Participants may direct the investment of their contributions in any one or more investment funds established for the Plan. Participants may elect to change the investment of their contributions or to transfer all or part of their account balances among the various investment funds. Such elections may be made as often as once each month, in whole dollars or percentages. All funds are maintained on a unit basis. Unit value is determined daily by dividing the total assets of the fund by the total number of units allocated to participants' accounts. ABC, INC. SAVINGS & INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (continued) 1. Description of the Plan (continued) Investments (continued) Brokerage commissions and stock transfer taxes in connection with the purchase or sale of securities are absorbed within the net asset value of each investment fund on each business day. All other costs and expenses incurred in connection with the administration of the Plan will be charged to the participants' accounts. Benefits, Distributions and Withdrawals A participant's entire vested account balance, adjusted for investment gains or losses, is available for immediate distribution upon termination of employment. Participant account balances under $5,000 are automatically distributed within 60 days following the participant's severance date or as soon as possible, thereafter. All amounts must be distributed when the terminated participant reaches age 65. Under Section 401(k) of the Code, in service withdrawals of tax-deferred contributions by participants are available only in amounts necessary to satisfy a financial hardship and will be made if the Committee determines that the reason for the hardship complies with applicable requirements under the Code. Under Section 401(a) of the Code, in service withdrawals of the value of after-tax contributions by participants can be made at any time, for any reason. In compliance with the Code, active participants who have reached age 70 and one-half must (unless exempt) take an annual minimum required distribution commencing not later than April 1, of the year following the year they attain age 70 and one-half. Loans Participants are permitted to borrow from their accounts subject to certain limitations and conditions established to comply with the current requirements of the Code. All loans made to participants are secured by their accounts with a right of off-set. Participants may borrow up to 50 percent of their vested account balance not to exceed $50,000 in any consecutive twelve month period. A participant may only have one loan outstanding. Loans may have a term of up to five years. The interest rate on loans is currently Chase Manhattan Bank of New York's prime rate plus 1 percent. Plan Amendment or Termination The Company reserves the right to amend or modify, at any time, the provisions of the Plan. Although the Company expects to continue the Plan indefinitely, the Board of Directors of the Company may terminate the Plan for any reason. If the Plan is terminated each participant will receive, as prescribed by ERISA and its related regulations, and in the form and manner determined by the Committee, a payment equal to the value of the participant's vested account at the time of liquidation. ABC, INC. SAVINGS & INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (continued) 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the Plan are prepared using the accrual basis of accounting. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Actual results could differ from those estimates. Contribution Policy Contributions are recorded in the period during which the Company makes payroll deductions from the employees' earnings. Company contributions are recorded in the same period. Investment Valuation and Income Recognition Investments in securities traded on national security exchanges are valued on the basis of the closing price on the last trading day of the year. Investments in commingled funds are valued at the redemption prices established by the Trustee, which are based on the market value of the fund assets. Participant loans are valued at cost which approximates fair value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net Appreciation/Depreciation in Fair Value of Investments The net appreciation or depreciation in the fair value of investments disclosed in the Statement of Changes in Net Assets Available for Benefits consists of realized gains or losses and unrealized appreciation (depreciation) on investments. Payment of Benefits Benefits are recorded when paid. Reclassifications Certain reclassifications have been made to the prior year amounts to conform to the current year presentation. ABC, INC. SAVINGS & INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (continued) 3. Investments During 1999, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $15,513 as follows: The Walt Disney Company Common Stock Fund $(10,245) Shares of registered investment companies 25,758 ------ $ 15,513 ======
4. Nonparticipant-Directed Investments Information about the significant components of the changes in net assets relating to the nonparticipant-directed investment (The Walt Disney Company Common Stock Fund) is as follows:
Year Ended December 31, 1999 ------------ Changes in Net Assets Contributions $ 25,572 Dividends 3,360 Net depreciation (10,245) Benefits paid to participants (30,911) Administrative expenses (16) Net transfers to participant-directed investments (34,417) ------- $(46,657) =======
5. Income Taxes The Company received an Internal Revenue Service determination letter dated March 28, 1996, stating that the Plan, as currently amended, qualifies under Section 401(a) of the Code and is therefore exempt from Federal income tax under Section 501(a) of the Code. Since the Plan is qualified under Section 401(a) of the Code, under applicable state law it is also exempt from state income taxes. The Plan Administrator and the Plan's tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Code. Accordingly, no provision for income taxes is made in the accompanying financial statements. 6. Related Party Transactions Certain Plan investments are shares of mutual funds managed by Fidelity. Fidelity is the trustee as defined by the Plan, and, therefore, these transactions qualify the Trustee as a party-in-interest for which a statutory exemption exists. Fees paid by the Plan to the Trustee amounted to $107,469 for the year ended December 31, 1999. ABC, INC. SAVINGS & INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (continued) 7. Reconciliation of Financial Statements to Form 5500 The following is a reconciliation of net assets available for benefits according to the financial statements to Form 5500:
December 31, ------------------ 1999 1998 ------ ------ Net assets available for benefits per the financial statements $1,076,169 $1,051,473 Amounts allocated to withdrawing participants (1,232) (322) --------- --------- Net assets available for benefits per Form 5500 $1,074,937 $1,051,151 ========= =========
The following is a reconciliation of benefits paid to participants according to the financial statements to Form 5500: For the Year Ended December 31, 1999 ------------------ Benefits paid to participants per the financial statements $77,962 Add: Amounts allocated to withdrawing participants at December 31, 1999 1,232 Less: Amounts allocated to withdrawing participants at December 31, 1998 (322) ------ Benefits paid to participants per Form 5500 $78,872 ======
Amounts allocated to withdrawing participants are recorded on Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, 1999 but not yet paid as of that date. 8. Investment in Master Trust The Plan's investments are held in a Master Trust along with the assets of the Employee Profit Sharing Plan of ABC, Inc., a defined contribution plan sponsored by the Company. Each participating plan has a specific interest in the Master Trust. Assets of the Master Trust are allocated to the participating plans according to the elections of participants within each plan. At December 31, 1999 and 1998, the Plan's interest in the net assets of the Master Trust was approximately 82.8% and 80.5%, respectively. Investment income of the Master Trust is allocated based upon each Plan's interest within each of the investment funds held by the Master Trust. ABC, INC. SAVINGS & INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (continued) 8. Investment in Master Trust (continued) Investments held by the Master Trust are as follows: December 31, ---------------------- 1999 1998 ----------- ---------- Investments, at fair value: The Walt Disney Company Common Stock Fund $ 465,112 $ 511,769 Shares of registered investment companies 817,276 770,361 Loans 14,622 14,917 ----------- ---------- Total $1,297,010 $1,297,047 =========== ==========
The investment income of the Master Trust is as follows: For the Year Ended December 31, 1999 ------------------ Investment Income: Interest and dividends $58,297 Net depreciation (13,045) -------- Total $45,252 ========
The net (depreciation)/appreciation (including net realized gains/losses) in the fair value of the investments held by the Master Trust is as follows: For the Year Ended December 31, 1999 ------------------ Net (Depreciation)/Appreciation: The Walt Disney Company Common Stock Fund $(10,245) Shares of registered investment companies (2,800) ------------------ Total $(13,045) ==================
9. Subsequent Events Effective April 1, 2000, the current Master Trust agreement was terminated. The Plan's investments were transferred into the Disney 401k Master Trust, along with the assets of the Employee Profit Sharing Plan of ABC, Inc., the Disney Salaried Savings & Investment Plan, the Go.com Savings and Investment Plan, and the Disney Hourly Savings and Investment Plan. All plans in the Master Trust are defined contribution plans sponsored by the Company. Each participating plan has a specific interest in the Master Trust. Assets of the Master Trust are allocated to the participating plans according to the elections of participants within each plan. Investment income of the Master Trust is allocated based upon each Plan's interest within each of the investment funds held by the Master Trust. Effective after June 1, 2000, the Employee Profit Sharing Plan of ABC, Inc., a defined contribution plan, will be merged into the Plan. Total net assets to be transferred amount to approximately $217,332,681. During 1999, the Company sold certain Publishing Group properties. In accordance with the terms and conditions of the sales, total net assets amounting to $25,508,676 were transferred to successor trustees on January 3, 2000. DISNEY SALARIED SAVINGS AND INVESTMENT PLAN REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES DECEMBER 31, 1999 AND 1998 DISNEY SALARIED SAVINGS AND INVESTMENT PLAN INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES DECEMBER 31, 1999 AND 1998 Report of Independent Accountants Financial Statements: Statements of Net Assets Available for Benefits as of December 31, 1999 and 1998 Statement of Changes in Net Assets Available for Benefits For the year ended December 31, 1999 Notes to Financial Statements Supplemental Schedules Schedule I - Schedule of Assets Held for Investment Purposes Schedule II - Schedule of Reportable Transactions Other schedules required by the Department of Labor Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they were not applicable. REPORT OF INDEPENDENT ACCOUNTANTS To the Participants and Investment and Administrative Committee for the Disney Salaried Savings and Investment Plan In our opinion, the accompanying statements of net assets available for benefits and the related statement of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the Disney Salaried Savings and Investment Plan (the "Plan") at December 31, 1999 and 1998 and the changes in net assets available for benefits for the year ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of Assets Held for Investment Purposes and Reportable Transactions are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. These supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. PRICEWATERHOUSECOOPERS LLP Los Angeles, CA June 21, 2000 DISNEY SALARIED SAVINGS AND INVESTMENT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS (In thousands) [CAPTION] December 31, -------------------- 1999 1998 ------- ------- Assets Investments At fair value: The Walt Disney Company Common Stock Fund*,** $383,635 $383,655 Shares of registered investment companies: Fidelity Inst. Short-Int. Govt Portfolio Fund 36,657 34,761 Fidelity Magellan Fund* 164,824 115,352 PIMCO Total Return Fund 13,418 11,946 Fidelity Growth & Income Fund* 121,203 102,549 Sequoia Fund* 32,965 36,665 Fidelity Diversified International Fund 15,875 6,658 Putnam New Opportunities Fund 30,646 11,031 Participant Loans 16,194 15,034 ------- ------- Total investments 815,417 717,651 ------- ------- Receivables: Participants' contributions 2,584 1,215 Employer's contribution 646 280 Interest income 50 26 ------- ------- Total receivables 3,280 1,521 ------- ------- Net assets available for benefits $818,697 $719,172 ======= =======
* Investment balance represents 5% or more of the Plan's net assets available for benefits. ** Nonparticipant-directed The accompanying notes are an integral part of these financial statements. DISNEY SALARIED SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (In thousands) [CAPTION] For the Year Ended December 31, 1999 ------------------ Additions to net assets attributed to: Investment income: Dividends $ 31,145 Interest 1,374 Net appreciation in fair value of investments 14,589 -------- 47,108 -------- Contributions: Participant 76,492 Employer 17,409 -------- 93,901 -------- Total additions 141,009 -------- Deductions from net assets attributed to: Benefits paid to participants 41,518 Administrative expenses 55 ------- Total deductions 41,573 ------- Net increase 99,436 Transfer of assets from the Jumbo Pictures Inc. 401(k) Plan (Note 1) 89 ------- Net increase including transfer 99,525 ------- Net assets available for benefits: Beginning of year 719,172 ------- End of year $818,697 =======
The accompanying notes are an integral part of these financial statements. DISNEY SALARIED SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (Tabular dollars in thousands) 1. Description of the Plan General The Walt Disney Company (the "Company") implemented the Disney Salaried Savings and Investment Plan (the "Plan") on January 1, 1985. The Plan is a defined contribution plan designed to provide participating employees the opportunity to accumulate retirement funds through a tax-deferred contribution arrangement pursuant to Section 401(k) of the Internal Revenue Code of 1986, as amended (the "Code"). In addition to the Code, the Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). For further information regarding the Plan, refer to the Summary Plan Description. Administration of the Plan The Board of Directors of the Company has appointed the Investment and Administrative Committee of The Walt Disney Company Sponsored Qualified Benefit Plans and Key Employees Deferred Compensation and Retirement Plan (the "Committee" or "Plan Administrator") to administer the Plan, interpret its provisions and resolve all issues arising in the administration of the Plan. The assets of the Plan are administered under a trust agreement between the Company and Fidelity Institutional Retirement Services Company ("Fidelity" or the "Trustee"). Pursuant to the trust agreement, Fidelity executes most of the day-to-day activities of administration. Administrative expenses of the Plan, such as benefit plan consultation fees (exclusive of brokerage commissions on the purchase or sale of Company stock) may be paid from the assets of the Plan unless the Company, at its discretion, pays such expenses. Investment expenses incurred by the investment funds are charged to the respective funds. Participation Participation in the Plan is available to all domestic salaried employees of the Company and its subsidiaries participating in the Plan who are regularly scheduled to work 1,000 hours or more during a year. To be eligible, employees must be age 18 or older and have completed one year of employment during which they must also work at least 1,000 hours. The Plan accepts direct cash rollovers from other qualified plans regardless of whether the employee has met the one-year eligibility requirement. However, such funds are not available for hardship distributions or loans until after the employee has met the one-year eligibility requirement and has become a participant of the Plan. Transfer of Assets Effective November 1, 1999, $89,640 was transferred into the Plan from the Jumbo Pictures, Inc. 401(k) Plan. DISNEY SALARIED SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (continued) 1. Description of the Plan (continued) Contributions Participants are permitted to authorize income deferrals in whole percentages, up to 15 percent of their base compensation on a pre-tax basis, through weekly payroll deductions. A participant's total tax-deferred contributions and the Company's matching contributions, in any Plan year, cannot exceed the limits provided under Section 415 of the Code. Effective January 1, 1987, the Plan ceased to accept voluntary post-tax contributions. Post-tax contributions made prior to January 1, 1987 may remain in the Plan and continue to share in the Plan's investment results on a tax-deferred basis. Income earned on voluntary contributions is not taxable for Federal income tax purposes until withdrawal and such post-tax contributions are recovered tax free when withdrawn or distributed. The Company currently contributes a matching amount equal to 50 percent of a participant's pre-tax contributions up to a maximum of 2 percent of such participant's base compensation. The Company may make matching contributions either in cash, which is invested exclusively in the Company's common stock, or directly in shares of the Company's common stock and, at its discretion, the Company may change the level of matching contributions or cease making matching contributions. Participants are fully vested immediately in all contributions including the Company's matching contributions made to the Plan and all earnings thereon. Investments Participants may direct the investment of their contributions in any one or more investment funds established for the Plan. Participants may elect to change the investment of their contributions or to transfer all or part of their account balances among the various investment funds. Such elections must be made in 1 percent increments. Benefits, Distributions and Withdrawals A participant's entire account balance, adjusted for investment gains or losses, is available for immediate distribution upon termination of employment. Participants' account balances under $5,000 are automatically distributed within 90 days following the participant's severance date. The participant has 60 days following the participant's severance date to elect whether or not to rollover the funds into an IRA or another qualified plan. If no election is made, the funds will be dispersed to the participant less 20 percent for federal withholding tax. Participants with account balances of $5,000 or more may elect a distribution at anytime following termination, before age 65. All amounts must be distributed when the participant reaches age 65. DISNEY SALARIED SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (continued) 1. Description of the Plan (continued) Benefits, Distributions and Withdrawals (continued) Under Section 401(k) of the Code, in service withdrawals of tax-deferred contributions by participants are available only in amounts necessary to satisfy a financial hardship and will be made if the Committee determines that the reason for the hardship complies with applicable requirements under the Code. A participant may withdraw his or her post-tax contributions twice each Plan year. The minimum amount of each post-tax contribution withdrawal is $500. Loans Participants are permitted to borrow from their accounts subject to certain limitations and conditions established to comply with the current requirements of the Code. All loans made to participants are secured by their accounts with a right of off-set. Voluntary post-tax contributions and any earnings thereon are not available for loans. Participants may borrow up to 50 percent of their account balance not to exceed $50,000 in any consecutive twelve month period. A participant may only have one loan outstanding. Loans may have a term of up to four years. However, the term can be extended to ten years if the loan is used to acquire or construct a principal residence of the participant. The interest rate on loans is currently prime plus 1 percent. Plan Amendment or Termination The Company reserves the right to amend or modify, at any time, the provisions of the Plan. Although the Company expects to continue the Plan indefinitely, the Board of Directors of the Company may terminate the Plan for any reason. If the Plan is terminated each participant will receive, as prescribed by ERISA and its related regulations, and in the form and manner determined by the Committee, a payment equal to the value of the participant's account at the time of liquidation. 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the Plan are prepared using the accrual basis of accounting. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Actual results could differ from those estimates. Contribution Policy Contributions are recorded in the period during which the Company makes payroll deductions from the employees' earnings. Company contributions are recorded in the same period. DISNEY SALARIED SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (continued) 2. Summary of Significant Accounting Policies (continued) Investment Valuation and Income Recognition Investments in securities traded on national security exchanges are valued on the basis of the closing price on the last trading day of the year. Investments in commingled funds are valued at the redemption prices established by the Trustee, which are based on the market value of the fund assets. Participant loans are valued at cost which approximates fair value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net Appreciation/Depreciation in Fair Value of Investments The net appreciation or depreciation in the fair value of investments disclosed in the Statement of Changes in Net Assets Available for Benefits consists of realized gains or losses and unrealized appreciation (depreciation) on investments. Payment of Benefits Benefits are recorded when paid. 3. Investments During 1999, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $14,589 as follows: The Walt Disney Company Common Stock Fund $(8,619) Shares of registered investment companies 23,208 ------ $14,589 ======
4. Nonparticipant-Directed Investments Information about the significant components of the changes in net assets relating to the nonparticipant-directed investment (The Walt Disney Company Common Stock Fund) is as follows: Year Ended December 31, 1999 ------------- Changes in Net Assets Contributions $ 41,210 Dividends 2,707 Net depreciation (8,619) Benefits paid to participants (18,303) Administrative expenses (12) Net transfers to participant-directed investments (17,003) ------- $ (20) =======
DISNEY SALARIED SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (continued) 5. Income Taxes The Company has received an Internal Revenue Service determination letter dated June 18, 1996 stating that the Plan qualifies under Section 401(a) of the Code and is therefore exempt from Federal income tax under Section 501(a) of the Code. Since the Plan is qualified under Section 401(a) of the Code, under applicable state law it is also exempt from state income taxes. The Plan Administrator and the Plan's tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Code. Accordingly, no provision for income taxes is made in the accompanying financial statements. 6. Related Party Transactions Certain Plan investments are shares of mutual funds managed by Fidelity. Fidelity is the trustee as defined by the Plan, and, therefore, these transactions qualify the Trustee as a party-in-interest for which a statutory exemption exists. Fees paid by the Plan to the Trustee amounted to $54,754 for the year ended December 31, 1999. 7. Reconciliation of Financial Statements to Form 5500 The following is a reconciliation of net assets available for benefits according to the financial statements to Form 5500: December 31, ----------------- 1999 1998 ------ ------ Net assets available for benefits per the financial statements $818,697 $719,172 Amounts allocated to withdrawing participants (292) (440) ------- ------- Net assets available for benefits per Form 5500 $818,405 $718,732 ======= =======
The following is a reconciliation of benefits paid to participants according to the financial statements to Form 5500: Year Ended December 31, 1999 ------------- Benefits paid to participants per the financial statements $41,518 Add: Amounts allocated to withdrawing participants at December 31, 1999 292 Less: Amounts allocated to withdrawing participants at December 31, 1998 (440) ------ Benefits paid to participants per Form 5500 $41,370 ======
Amounts allocated to withdrawing participants are recorded on Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, 1999 but not yet paid as of that date. DISNEY SALARIED SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (continued) 8. Subsequent Event Effective April 1, 2000, the trust agreement between the Company and Trustee was converted to a Master Trust agreement. The Plan's investments are held in the Disney 401k Master Trust, along with the assets of the ABC, Inc. Savings & Investment Plan, the Employee Profit Sharing Plan of ABC, Inc., the Go.com Savings and Investment Plan, and the Disney Hourly Savings and Investment Plan. All plans in the Master Trust are defined contribution plans sponsored by the Company. Each participating plan has a specific interest in the Master Trust. Assets of the Master Trust are allocated to the participating plans according to the elections of participants within each plan. Investment income of the Master Trust is allocated based upon each Plan's interest within each of the investment funds held by the Master Trust. DISNEY SALARIED SAVINGS AND INVESTMENT PLAN SCHEDULE I SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT DECEMBER 31, 1999 (DOLLARS ARE NOT IN THOUSANDS) [CAPTION] CURRENT DESCRIPTION OF INVESTMENTS COST** VALUE ------------ ------------ * The Walt Disney Company Common Stock Fund $202,213,969 $383,634,801 * Fidelity Inst. Short-Inter Gov't Portfolio Fund 36,657,570 * Fidelity Magellan Fund 164,824,486 PIMCO Total Return Fund 13,418,045 * Fidelity Growth & Income Fund 121,202,812 Sequoia Fund 32,964,961 * Fidelity Diversified International Fund 15,874,580 Putnam New Opportunities Fund 30,646,488 Participant Loans (Maturities go through 2009 Interest rates range from 7.00% to 10.00%) 16,193,825 ----------- $815,417,568 ===========
* Parties-in-interest ** Disclosed for nonparticipant-directed investments only DISNEY SALARIED SAVINGS AND INVESTMENT PLAN SCHEDULE II SCHEDULE OF REPORTABLE TRANSACTIONS** FOR THE YEAR ENDED DECEMBER 31, 1999 (DOLLARS ARE NOT IN THOUSANDS) Identity Selling/ of party Description Number of Purchase distribution involved of assets Transactions Price Price -------- ------------ ------------ -------- ------------ The Walt The Walt Disney 250 $57,395,793 Disney Company Common 250 $48,795,469 Company* Stock Fund Current Cost of value of asset Lease Expense assets sold/ on transaction Net rental incurred distributed date gain ---------- -------------- ------------- -------------- ----------- $31,450,251 $17,345,218
* Parties-in-interest ** Transactions or series of transactions in excess of 5 percent of the current value of the Plan's assets as of December 31, 1998 as defined in 29 CFR 2520.103-6 of the Department of Labor Rules and Regulations for Reporting and Disclosure under ERISA.