Of course, our domestic business is what you're used to hearing me expound about and, to be sure, it remains the bulk of what we do.

Certainly, the big event of our domestic theme parks this year was the expansion of the world's very first theme park - Disneyland - with the addition of a second park - Disney's California Adventure - a shopping district - Downtown Disney - and a magnificent resort hotel - Disney's Grand Californian. Put them all together and we now have a fantastic destination resort. Unfortunately, we launched it in a year of abnormal rain (for Southern California), a softening economy, a California energy crisis and, of course, the uncertainty following September 11. Unlike Tokyo DisneySea, the crowds that the expansion has attracted have not been of the magnitude we had hoped for in its inaugural year. But we now have a vastly improved asset in Anaheim, which - as the economy improves, and the lights stay on, and the Bug's Life children's land opens this fall, and The Twilight Zone Tower of Terror opens in a few years - will turn the park, like our others, into the blockbuster we all know it is. As Richard Corliss of Time magazine wrote, "At this splendid Disney adventure, visitors need never stop glowing."

I have already mentioned the 100 Years of Magic celebration that will be enhancing our Walt Disney World properties in 2002. Further down the road, in 2003, we will be unveiling Mission: Space, sponsored by Compaq. For the price of admission to Epcot, this amazing "E ticket" attraction will allow guests to experience what it's like to travel beyond earth's gravitational pull. Considering that, in 2001, Dennis Tito spent $20 million for a similar outer space experience, our guests will be getting quite a bargain! I rode it in test phase. No comment other than to say I'm still walking!

At Disney Consumer Products, significant new models of doing business are being developed. As in Europe, we are pursuing direct-to-retail relationships with major apparel retailers, such as JCPenney and Kmart. Working with these leading companies, we will have more control over the quality, creativity and presentation of Disney-branded merchandise. Also during the year, we established two major global relationships to produce Disney-branded food products - with Coca-Cola's Minute Maid unit for non-carbonated children's beverages and Kellogg's for breakfast foods. These arrangements will allow us to work closely with these great companies to create innovative and healthy products that reflect the fun and fantasy of Disney.

An area of great potential growth is our Interactive games business. Here, technology is opening up new entertainment possibilities for us as the capabilities of gaming platforms keep increasing. Of course, people don't generally think of Disney as a high-tech company ... at least, we didn't think they did until we saw an article in Wired magazine that asked Internet users in the 10 biggest markets of the world to rate 250 tech brands. Disney ranked in the top 10 in every one of the nations surveyed ... and in the top five in eight of them. Remember, this survey rated tech brands among tech users. These people should know what they're talking about, and they ranked Disney higher than brands such as Intel in Germany, Panasonic in Japan and Microsoft in England. I never used to be a believer in this kind of research, but I think I'll be a convert going forward. Clearly, the cutting-edge technology of Interactive games is a natural fit for our company. For example, we are currently working on a game called Kingdom Hearts, which Square Soft of Japan is developing with us. It creates a dazzling and imaginative interactive Disney universe on the screen, and will be available for PlayStation 2 later this year.

I've already mentioned the measures being taken at the ABC Network. However, our cable holdings are performing well. This is in part because Disney Channel is not advertiser supported, and in part because these assets are so strong. And, the addition of ABC Family will further solidify our presence on cable. We have interests in the premier sites for history with The History Channel, for culture with A&E, for entertainment with E! and for women with Lifetime. And of course we own 100 percent of SoapNet, a cable channel that airs daytime serials during primetime. Then there is the category of sports, which is all but owned by ESPN, ESPN2, ESPN Classic and ESPNEWS. Indeed, ESPN continues to be an extraordinary asset. In this age when brand recognition is so valuable, we clearly own the two strongest brands in the entire field of entertainment - Disney and ESPN. Which brings me to the family audience, for which we have Disney Channel, Toon Disney and now ABC Family, which has a reach of 81 million households. Whereas broadcast networks face the daunting challenge of creating programming for all tastes, cable channels are able to cultivate devoted viewership because they can tailor programming for specific tastes. In this realm, we truly have the field covered.

Finally, there is our Studios unit, which had an excellent year and I believe is poised for even greater success. The combined grosses of Walt Disney Pictures, Touchstone Pictures, Miramax and Dimension films have made us number one at the U.S. box office for six of the past seven years, at the international box office for five of the last seven years and in domestic home video for the last 13 years.

In live action for 2002, Touchstone will have the next film from M. Night Shyamalan, who directed The Sixth Sense and Unbreakable. This one is called Signs and stars Mel Gibson. Also from Touchstone is Bad Company, starring Chris Rock. Reign of Fire about real live dragons is in post production. Among the offerings from Walt Disney Pictures will be The Rookie about a 38-year-old high school baseball coach who tries out for the major leagues, and Country Bears, which is a really hysterical film that is based on the classic theme park attraction at Walt Disney World and Tokyo Disneyland. Our Walt Disney Pictures live-action franchise has been a particular success story, with films like The Kid and Remember The Titans and this past summer's surprise hit (it was a surprise to the industry, not to us) The Princess Diaries.

Then there's Miramax, which continues to amaze. In 2001, they released a remarkable range of successful films - from Bridget Jones's Diary to Spy Kids to The Others to Scary Movie 2. And, for 2002, they have what looks to be their best slate of movies ever, including films based on the critically-acclaimed bestsellers, The Shipping News and Cold Mountain starring Tom Cruise, plus Martin Scorsese's period epic, Gangs of New York.

Home Entertainment is performing increasingly well, in part because of the rapid growth of DVD. Snow White and the Seven Dwarfs was a hit on DVD, Pearl Harbor will be one of the leading video releases of the year and our Disney Video Premieres continue to be an outstanding business. Lady and the Tramp II: Scamp's Adventure sold more than 10 million units worldwide and, in 2002, we will have two more Disney Video Premiere animated releases - Cinderella II: Dreams Come True and 101 Dalmatians II.

With regard to theatrical animation releases, 2002 also looks to be particularly strong. Of course, the fiscal year started off with Monsters, Inc., produced with our partners at Pixar, and it is an instant classic and true franchise. In January, we are re-releasing Beauty and the Beast in IMAX^® and other large format theaters. I've seen it projected that way. It's like a whole new movie. And it will feature a witty and moving sequence never before seen - Human Again, in which the Beast's servants dream of what it would be like to return to their human forms. In February, we have the sequel to Peter Pan - called Return to Never Land. I just walked out of a screening. It's a hit, he said confidently! For summer, there is the extremely funny, endearing and original Lilo & Stitch, which is shown on the cover of this report. It must be great. We wouldn't put it there if it weren't. And for the fall, we have the graphically cutting-edge, futuristic adaptation of Robert Louis Stevenson's classic Treasure Island, called Treasure Planet.