LPWire: Walt Disney Company Reports Earnings for the Quarter Ended December 31, 2002

The Walt Disney Company today reported earnings for the quarter ended December 31, 2002.

Revenues increased 6% to $7.5 billion and segment operating income increased 3% to $778 million for the quarter. Net income and earnings per share were $256 million and $0.13, respectively, compared to $438 million and $0.21 in the prior-year quarter. These results are reduced by the previously announced after-tax charge of $83 million, or $0.04 per share, for the write-off of an investment in aircraft leveraged leases with United Airlines. In the prior-year quarter, net income and earnings per share were $438 million and $0.21, respectively. The prior-year quarter includes a gain of $216 million ($0.06 per share) resulting from the sale of shares of Knight-Ridder, Inc. held by the company (a). Excluding the aircraft lease charge in the current year and the Knight-Ridder gain in the prior year, earnings per share for the current quarter would have been $0.17 versus a prior year figure of $0.15, an increase of 13%.

(a) Due to rounding, the impact of the Knight-Ridder gain was $0.06 per share for the first quarter of fiscal 2002 and $0.07 for the full year.

"In recent years Disney has put significant investment into building the strength and scope of its tremendous collection of branded assets and going forward we are committed to driving shareholder value by capitalizing on those investments. Our most recent quarter's results, especially the strength of the Disney Parks in the face of continued economic softness, are further evidence of the soundness of our strategic plan," said Michael Eisner, chairman and chief executive officer.

"We still have a number of challenges ahead of us, but we remain convinced of the extraordinary potential of our businesses. Assuming a continued gradual improvement in the economic climate, we continue to target earnings per share growth from our operations of 25 - 35 percent this year, and similar growth in 2004."

Operating Results Media Networks

Media Networks revenues for the quarter increased 9% to $3.2 billion, and segment operating income decreased 7% to $22 and "The Hot Chick." Additionally, the prior-year quarter benefited from the success of "Monsters, Inc." Worldwide home video results reflected strong DVD and VHS performances of "Lilo & Stitch" and "Beauty & the Beast," as well as strong sales of DVD live-action titles, compared to the prior year which included "Snow White and the Seven Dwarfs," "The Princess Diaries," and "Pearl Harbor."

Consumer Products

Revenues for the quarter decreased 6% to $787 million and segment operating income increased 9% to $190 million.

Results for the quarter were driven by increases in worldwide merchandise licensing revenue, improvements at Disney Interactive, due to the success of the "Kingdom Hearts" video game, and cost savings, and growth at Disney Publishing reflecting strong performance in Europe. These increases were partially offset by decreases at the Disney Stores, reflecting a soft retail market in North America and lower sales internationally due to the sale of the Disney Store business in Japan during the third quarter of the prior year.

Corporate and Unallocated Shared Expense

Corporate and unallocated shared expense decreased 2% to $102 million from the prior-year quarter. The decrease was primarily due to the absence of certain costs reflected in the prior year for brand promotion initiatives that have concluded. This decrease was partially offset by increased costs for new finance and human resource information technology systems intended to improve productivity and reduce cost.