Given the relative levels of population and economic activity outside the United States, the company believes there are opportunities for significant growth in international revenues over the long term.

While dramatic economic growth in other parts of the world may take some time to develop, Disney is positioning itself to capitalize on long-term international growth opportunities.

SHARE REPURCHASE AND DIVIDENDS

As Disney generates greater returns on capital, and therefore greater free cash flow, its first priority will be to deploy that cash in internal investment or acquisition opportunities that can create value for Disney’s shareholders. To the extent that the company generates more cash than it anticipates investing in such opportunities, it may utilize excess cash to buy back its own shares. At the end of fiscal 1999, Disney had authorization to purchase up to approximately 400 million of its outstanding shares.

Since 1983, Disney has invested $3.1 billion to buy back 480 million shares at an average price of approximately $6.50 per share. Measured as of November 30, these shares were worth $13.4 billion for an annualized return of 16 percent exceeding the stock market return of 14 percent as measured by the Standard & Poor’s 500 index over the same period.

Disney also returns capital to shareholders through annual cash dividends. In December 1999, the company paid dividends of more than $430 million to holders of Disney common stock.

TOTAL RETURN TO INVESTORS

As a result of Disney’s financial performance over time, driven by expansion and extension of existing brands and businesses, investment in new businesses and share repurchase, the return to long-term investors in Disney stock has surpassed the return delivered by the market overall. An investment of $1,000 in Disney stock on November 30, 1984, including reinvestment of dividends, was worth $23,850 on November 30, 1999, providing a 24 percent compound annual return over the 15-year period. A similar investment in the Standard & Poor’s 500 would have grown to $12,787 over the same time.

From an even longer-term perspective, 100 shares of Disney stock purchased for $2,500 in the company’s initial public offering would have grown to 250,233 shares worth approximately $7 million as of November 30, a compound annual growth rate of nearly 15 percent over the last 59 years.

While recent results have been disappointing, management is focused on capitalizing upon the long-term growth potential of the company’s assets. Since 1945, Disney’s earnings growth has averaged more than 16 percent per year. By pursuing its growth initiatives, never losing its fundamental focus on the quality of Disney offerings and pursuing the ongoing development of its brands, the company is determined to return to the strong growth it has delivered for decades and to continue providing superior returns for its shareholders.