As it turns out, I am putting the final touches on this letter on December 5, Walt Disney's 100th birthday. Of course, Walt has always been a guiding light for this company, all the more so during these challenging times. Consider what he had to say during another troubling time, on March 1, 1941: "Once a man has tasted freedom he will never be content to be a slave. That is why I believe that this frightfulness we see everywhere today is only temporary. Tomorrow will be better for as long as America keeps alive the ideals of freedom and a better life."

As my own personal observance of Walt's birthday, I have been listening to a series of interviews that he conducted between 1956 and 1961. They provide revealing insights into his genius and also into the fact that this company has been tested many times throughout the years. Again and again during these interviews, Walt talks about precarious periods that he and his brother Roy went through. First they lost the rights to their star character, Oswald the Lucky Rabbit ... but then came Mickey Mouse. Later, they were struggling to make a profit with their shorts ... but then came The Three Little Pigs. Subsequently, they went into enormous debt to make Snow White ... but the film went on to become the biggest box office hit of the year.

Then came World War II and the disappearance of their international markets. Around this time, they took the company public, issuing stock that plunged from an initial price of $25 a share to $3 a share ... then the stock steadily rose on the strength of such films as Cinderella, Peter Pan and 20,000 Leagues Under the Sea. Next came Disneyland, which sucked up the company's capital and even required Walt to cash out his personal life insurance policy ... needless to say, Disneyland went on to become a complete sensation. Of course, in the early '80s, long after Walt and Roy were gone, the company again encountered problems and was on the verge of being sold off in pieces by corporate raiders.

All of these difficulties - and many more - are generally forgotten because, in the end, The Walt Disney Company has only grown stronger and more vital. And it has always done so through the power of its product. With this in mind, we are taking appropriate measures to ride out the current turbulence before ultimately moving on to new levels of success.

Of course, you can never predict an entertainment phenomenon like Monsters, Inc. or Tokyo DisneySea or Toy Story or The Lion King or Home Improvement or Disneyland or Cinderella or Snow White or Three Little Pigs or Mickey Mouse. But, at this company, they do come along with remarkable regularity.

In closing this letter, I want to make clear my disappointment with the fact that the overall equity value of the company as I am writing this has not risen as it has in the past. It doesn't work to point out the tremendous value creation during most of the years since 1984 nor the enormous growth of Disney to become a worldwide media company. We are a public company, and we want you to own a growth company. At the same time, I don't think about The Walt Disney Company quarter to quarter. I think about The Walt Disney Company quarter to quarter to quarter to quarter to quarter; in other words, over the long term. It is important for this great institution to always be positioned for the future, to spend the needed capital, to steer the prudent and moral course, to make sure we are here to entertain another day. I think therefore we are poised for another growth spurt as investors around the world recognize what we've done and where we are headed creatively and how strong our brand and balance sheet are.

I cannot guarantee what our growth will be. But I do respond with a knowing smile to financial analysts, Disney family members, large investors and journalists when asked. We believe we are on the right track. Frankly, with the Disney brand and the great assets of our company, it isn't easy to fail. It's much easier to succeed. And we will.

Sincerely,

Michael D. Eisner
Chairman and CEO
December 5, 2001