Fellow Owners and Cast Members:
2004 was certainly a momentous year for The Walt Disney Company. By every measure, the Company prospered. Earnings per share were up 72%; the stock price was up 12%; and operating income, return on invested capital and cash flow were all up significantly, with cash flow hitting record levels. Performance of this kind would be gratifying under any circumstances. But it was that much more so given the circumstances in which it was achieved.

The past several years were influenced by the horror of 9/11, a worldwide recession, two wars, a downturn in tourism, an unsolicited and below market offer by Comcast to buy your Company and an unusually intense publicity campaign against the Board and management by two dissident former directors. As we confronted this confluence of events we were resolute in keeping our focus on the operations of the Company and returning to the kind of stellar performance our shareholders expect of us. I am exceedingly proud of our management team and entire Cast, who not only kept the Company on course throughout this challenging period, but were able to deliver the phenomenal results it did as the turbulence began to subside.

I'm writing this letter on Thanksgiving day in Vermont with my family while waiting for Kermit to float by on television at the Macy's parade, waiting for the arrival of my children who are driving up to New England, and waiting for our turkey meal with the smell of chestnuts interrupting my thoughts. It does seem like yesterday, in 1984, that I wrote my first letter to you at the same kitchen table in my parents' home in Saxton's River, but it also seems like many movies ago. In some ways, the decision to retire from being the Disney CEO by September 2006 was made easier by the strong management team that is now in place and the strong rebound it has delivered (see paragraph above!), since I am determined to depart this job with Disney firing on all cylinders, poised to continue with strong performance over the years long after I have become just another ex-CEO, but still a long-term Disney shareholder.

So that's the preamble. I’d now like to review some of the reasons 2004 was so positive and discuss why we’re so well positioned for continued growth in the years ahead.

continue to part II of Letter to Shareholders >>

Michael Eisner,
chief executive officer,
The Walt Disney Company.

MAGIC HAPPENS – Mickey and Minnie Mouse delight a group of children when they unexpectedly dropped in for some ice skating fun at Central Park in New York City.