Over the past several years, Disney's overall financial performance has strengthened, while capital needs – in particular those associated with our domestic theme parks – have moderated. This combination allowed us again to deliver significant cash from operations and free cash flow. In fiscal 2005, we generated roughly $4.2 billion in cash from operations and over $3 billion in free cash flow, in each case excluding cash flow and capital expenditures of Euro Disney and Hong Kong Disneyland.

This strong cash flow performance gives our Company a tremendous amount of financial flexibility by helping to maintain our solid, investment- grade credit ratings and ready access to both debt and equity capital that we can put to work for our shareholders. In fiscal 2005, we further strengthened our balance sheet and financial position by reducing net borrowings to roughly $8.3 billion, a reduction of more than $4.5 billion from peak net borrowing levels of $12.9 billion in fiscal 2002⁴. We have also taken advantage of the interest rate environment, locking in low fixed rates on nearly 90% of our net debt portfolio at the end of fiscal 2005. We enjoy an attractive average effective yield on our debt portfolio of just under 5%, with a weighted average maturity of more than 9 years⁵.

3 Our discussions and supporting charts regarding Disney's capital expenditures and free cash flow exclude the impact of consolidating Euro Disney and Hong Kong Disneyland for 2004 and 2005 (discussed previously in Footnote 2) in order to make those years comparable to prior periods. Free cash flow, and each of the measures excluding Euro Disney and Hong Kong Disneyland, are not financial measures defined by GAAP. Reconciliations of these non-GAAP financial measures to equivalent GAAP financial measures are available at the end of the Financial Review.

4 In both cases excluding the impact of consolidating Euro Disney and Hong Kong Disneyland. Net borrowings and net borrowings excluding borrowings of Euro Disney and Hong Kong Disneyland are not financial measures defined by GAAP. Reconciliations of these non-GAAP financial measures to equivalent GAAP financial measures are available at the end of the Financial Review.

5 These data also exclude debt of Euro Disney and Hong Kong Disneyland. 84% of Euro Disney and Hong Kong Disneyland debt is fixed and the average effective yield on that indebtedness is 4.3% with a weighted average maturity of 13.6 years.