As we wait for more tangible signs of a recovery, we are managing our businesses prudently and efficiently in order to gain rapid momentum when the economy does turn around. While 2001 presented a year of challenge for Disney, it also represented a year of meaningful progress in a number of areas. It was a year that saw the culmination of projects set in motion to improve the efficiency of our organization and to establish a firm base from which to grow.
Eighteen months ago, for example, we set out to take $500 million out of our cost structure and to put in place a rigorous focus on cost containment. In doing so, we sought to instill a fundamental attitude about efficiency throughout the company. In 2001 we met this goal.
Seeing the early signs of a softening economy, we also made the painful decision to reduce our workforce by some 4,000 positions. This action, which is virtually complete and was accomplished primarily through a voluntary separation program, will yield an additional $350 million in annual savings over time.
Over the past two years, we have engaged in a company-wide project to focus all our businesses on driving greater shareholder value. This project established a new set of performance metrics for each of our business units centered around improving returns on capital and increasing cash flow -- in addition to earnings growth. These key drivers are now an important part of management objectives and evaluation throughout the company.
We feel this focus will generate greater shareholder value and provide capital for future growth through acquisitions or investments in existing and new businesses. In keeping with these efforts, Disney has already shown strong growth in its cash flow. In 2001, the company delivered after-tax cash flow from operations of over $3 billion, which represents annual growth of nearly 20% per year since 1998.
A portion of this cash flow was used to re-purchase almost 64 million shares of Disney stock, which is certainly an investment that we believe will show great returns for our shareholders.
As troubling as the economic conditions are, it is important to keep them in perspective and recognize that this company has been through uncertain times before. There is no question that the current situation will have an impact on our results for a few quarters to come. However, the true measure of good management is its performance in times of austerity, not prosperity.
Given the efforts I've just outlined, as the economy rebounds, we will be in an even stronger position to deliver attractive and growing earnings and cash flow coupled with steady increases in our capital returns.
Disney has unparalleled assets, a strong balance sheet, and significant earnings and cash flow potential. In this environment, it is easy to lose sight of those facts, but never more important to keep them in mind.
Thank you.
Chairman & CEO, Michael D. Eisner and President & COO, Robert A. Iger
Eisner: Bob and I will now take you through the rest of the presentation.
We've already introduced you to the members of the Board. Now, we'd like to introduce you to a few more prominent individuals at The Walt Disney Company.
Iger: First, there's a long-time veteran who has had a tremendous impact on this company across all of our businesses -- on film, television, consumer products, video games and, especially, at our theme parks. He is truly an inspiration, viewing every challenge as an opportunity. Ladies and gentlemen ... Mickey Mouse.
Eisner: The next individual truly needs no introduction. He's a real high-flyer who seems to always be in tune with young people around the world ... his latest film, "Return to Neverland" just opened Friday ... Peter Pan.
Iger: Next is a woman who is an inspiration for readers everywhere and is truly a real beauty. She recently made her debut in IMAX theaters and can be seen here in Hartford at the Crown Odyssey Giant Screen Theater on New Park Avenue. Ladies and gentlemen ... Belle.