Disney’s fiscal 2003 results provided further evidence of the company’s success in converting improved performance into increased cash flow and improved capital returns. These efforts were supplemented by careful stewardship of capital spending. The five years between 1996 and 2001 represented a period of increased levels of investment at the company to strengthen and extend the competitive advantage of Disney’s key brands and businesses. During this time, capital spending averaged $2 billion annually, as we transformed Disney’s theme park properties around the world into destination resorts by adding new theme parks, over 8,000 hotel rooms and 135,000 square feet of convention space to the Parks and Resorts portfolio. During this period, we also allocated resources to expand our cable properties, especially ESPN and the Disney Channel, both domestically and internationally.

Having completed this phase of investment, we decreased capital spending and shifted our focus toward promoting greater utilization of, and increased financial returns from, the company’s expanded asset base. For 2003, capital expenditures were approximately $1 billion, in line with 2002 spending and more than $700 million below 2001 levels. In 2003, investment in the Parks and Resorts segment – the largest draw on capital resources – was $577 million, also below 2002 levels. For 2004 we expect that our capital expenditures will increase somewhat versus 2003 as we allocate more resources towards discretionary projects in response to the improving economic climate and new business opportunities, especially at our theme parks segment. Going forward, we continue to target an average annual capital spending level for domestic theme parks that is meaningfully below $1 billion