While as-reported results were below prior year, on a pro forma basis, excluding restructuring and impairment charges, the company delivered segment operating income and earnings for fiscal 2001 that were roughly on par with the prior year, despite a weakened economy and a fourth quarter that was impacted significantly by the events of September 11 and their aftermath.

The company's diversified mix of businesses helps mitigate the effects of the current weak economy and, over the longer term, the enduring appeal of Disney's assets provides the basis for sustained growth. Disney's portfolio of business can be categorized in four ways.

1. Businesses facing near-term external challenges outside the company's control: These operations are well positioned for a rapid rebound when the economy recovers and once trends in tourism return to normal. For example, while a weakened economy - exacerbated by a sharp decline in travel in the weeks immediately after September 11 - led to declining performance for Parks and Resorts, this segment is poised to grow rapidly once the economy rebounds. The company's television stations and radio operations are affected by the soft ad market, but continue to enjoy strong market share and will benefit from improvement in the external environment.

2. Businesses with fundamental challenges for which management is aggressively implementing turnaround plans: While it is expected that the advertising market will recover, management is focused on improving ratings at the ABC Television Network. ABC has already begun to see better results in certain key dayparts like morning, daytime and late night. Similarly, efforts to reinvigorate Disney Consumer Products also continue as the company has taken a number of important steps to improve the performance in this segment, most importantly a reorganization of the merchandise licensing business.

3. Established businesses that remain strong and provide a solid foundation of earnings despite the economic downturn: While some businesses face near-term challenges, others, including cable networks and Studio Entertainment, provided robust financial performance in 2001 and will be key drivers of Disney's growth going forward.

4. New initiatives that the company believes will help drive long-term growth and value: Exciting new cable properties like ABC Family, SoapNet and Toon Disney are expected to contribute to the company's success in the U.S. in the years to come. Outside the U.S., the company has launched a host of expansion initiatives, including new Disney parks and resorts in Tokyo, Paris and Hong Kong, the development of new Disney Channels around the world, and the recent acquisition of Fox Kids Europe. As a whole, Disney's businesses outside the U.S. and Canada constituted 17 percent of total revenues in 2001. Given the global appeal of Disney's brands and assets, international expansion continues to be one of the most exciting potential sources of long-term growth for the company.