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To Fellow Owners and Cast Members:
I’ve always believed that good news shouldn’t wait,
so this year I thought I’d start right off with a review of
the numbers. In 2003, we experienced solid earnings growth despite
the difficult economic and geopolitical environment that prevailed
during most of the year. Most significantly, our fourth quarter
was very strong, with more than
double the earnings of Q4 in 2002, underscoring our confidence in
generating growth in the new year. Equally important, we delivered
free cash flow for the year that was up more than 50 percent over
last year and continued to bolster our balance sheet. During fiscal
2003, our stock price appreciated 36 percent, compared to the S&P
500’s growth of 25 percent. These positive results are an
outgrowth of the strategy outlined in my letter one year ago, a
straightforward strategy with two broad, underlying components of
(1) building and protecting our key brands and (2) creating long-term
entertainment franchises. As we forge ahead, let me make clear that,
while this year’s results were encouraging, we still have
much to accomplish. Our goal is to generate strong growth and to
reach new levels of achievement.
And the way we’re going to achieve those new heights was
dramatically (and metaphorically) exhibited on October 9 at Epcot,
where we opened Mission: SPACE. This new attraction takes
guests on a realistic flight to Mars and demonstrates the qualities
that make your company’s products so appealing. First of all,
it’s totally unique. Where else can you experience the effect
of rocket-powered lift-off, weightlessness in space and landing
on the Red Planet? It’s so realistic that the NASA astronauts
at the dedication told me it’s the closest thing they’ve
seen to the experience of blasting off from Cape Canaveral. Secondly,
unlike ordinary amusement park thrill rides, this one tells a compelling
story. Everything we do at Disney is based on storytelling and,
throughout our history, the best of the stories we tell are embraced
by people around the world. Third, Mission: SPACE uses cutting
edge technology. Throughout Disney’s history, we have always
pushed the envelope of innovation in order to tell our stories in
exciting new ways. Fourth, the attraction is an important example
of how we have continued to build for the future throughout the
economic downturn. While the total capital expenditure at our parks
has been managed downward and will continue to be, we are still
making targeted investments in order to provide outstanding new
entertainment experiences at our parks and across the company. Because
we have both enhanced our product and also increased operational
efficiencies throughout the economic downturn, we believe that we
are well poised for further improvement in performance as the general
economy recovers.
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