Driving capital returns is inextricably linked to shareholder value creation.

Management seeks to improve return on invested capital (ROIC) over time for our existing businesses and, although we are not yet satisfied with the absolute level of returns, we are pleased that our ROIC has risen substantially since 2002. ROIC at its low point reflected the impact of heavy capital investment — over $11 billion in capital from fiscal 1997 through fiscal 2002 — and from a downturn in performance in our Parks and our Media Networks businesses in fiscal 2002. We have completed an era of major construction at our domestic Parks and do not expect to invest capital in fixed assets at the same rate going forward.

Our focus on improving cash flow and the evolution of our overall business mix toward a less capital-intensive portfolio also have helped to improve our capital returns. We also divested businesses that were reducing our capital returns, such as the Anaheim Angels in 2003 and The Disney Stores North America in 2004.

Over the long term, we believe that our shareholders benefit the most when we identify opportunities to invest capital in initiatives that will generate strong risk-adjusted returns and drive earnings growth. Accordingly, while we will seek to improve our ROIC over time, we will continue to actively seek out investment opportunities. These opportunities could, in the short run, depress ROIC, but we will only pursue them if we feel that they will be able to deliver ultimately higher returns and long term value to shareholders.