To support Disney’s financial goals, we strive to make increasing operational efficiency an ongoing process for each of our business segments. In all cases, the goal of these efforts is to gain cost advantages without diminishing the quality and integrity of the company’s products or the future revenue potential of our businesses.

This fiscal discipline has been particularly important given the recent downturn in some of our business segments – most notably Parks and Resorts, where a disruption in travel and tourism was accompanied by significant increasing cost pressures in areas such as employee benefits.

We continue to work on three key company-wide programs that we expect to deliver ongoing productivity improvements: Strategic Sourcing and Procurement, an increased use of shared services for back office functions, and our investment in enterprise-wide finance and HR systems. We established our Strategic Sourcing and Procurement organization in 1999 to leverage Disney’s buying power and increase the sophistication of the company’s supply chain and procurement practices. As of the end of fiscal 2003 this organization was delivering annualized purchasing savings of more than $400 million per year. Our move towards shared services seeks to eliminate redundancies in back office processes by centralizing support functions in areas such as accounting and human resources, while the company’s implementation of an enterprise-wide information system is designed to standardize, streamline and consolidate information delivery throughout the company. Together, these two initiatives should ultimately account for more than $100 million in annual savings in the company’s finance and human resource activities.

Just as it has used disciplined cost management to help address recent downturns, the company intends to maintain its cost conscious approach as the environment improves.