Walt Disney Company (DIS)

Quarter Results

Diluted earnings per share (EPS) decreased 43% for the quarter primarily due to lower operating results driven by a decline in domestic sales of DVD units, lower performing theatrical releases, decreased guest spending at our domestic parks and at Disneyland Resort Paris, lower advertising sales at the owned television stations and ESPN, and higher programming costs at the ABC Television Network. These decreases were partially offset by the benefit of higher rates on affiliate fees from cable, satellite and telecommunications service providers (Cable Service Providers), principally at ESPN.

The current quarter results also included restructuring and impairment charges which had a $0.10 per share impact on EPS and consisted of radio FCC license and other impairments, along with

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severance and related charges resulting from organizational and cost structure initiatives across our businesses. See Note 15 to Condensed Consolidated Financial Statements for further detail.

Quarter Results

Diluted earnings per share decreased 29% for the quarter due primarily to lower operating results, partially offset by a gain on the sale of our investment in two pay television services in Latin America which resulted in a benefit of $0.04 per diluted share. Lower operating results reflected decreased DVD unit sales due to the strong performance in the prior-year quarter of Pirates of the Caribbean: At World’s End and High School Musical 2 and a decrease in catalog sales, lower advertising revenues at the ABC Television Network, ESPN and the owned television stations and decreased attendance and occupancy at our domestic parks. These decreases were partially offset by higher revenues from cable, satellite and telecommunications service providers (Cable Service Providers), principally at ESPN and lower broadcast programming and production cost amortization.

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Quarter Results

Diluted earnings per share increased 16% for the quarter due to a decrease in weighted average shares outstanding and growth in operating income at the Media Networks and Parks and Resorts segments, partially offset by a decline at the Studio Entertainment segment. Diluted earnings per share for the quarter included gains related to the acquisition of the Disney Stores in North America and the sale of movies.com and the favorable resolution of certain prior-year income tax matters. Collectively, these items had a net favorable impact of $0.04 per share. Earnings growth at Media Networks was primarily due to higher affiliate and advertising revenues at our cable businesses. At Parks and Resorts, the adverse impact on attendance from the absence of the Easter holidays in the current-year quarter was more than offset by favorable guest spending and higher

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corporate alliance income. The decline at Studio Entertainment reflected the strong theatrical performance of Pirates of the Caribbean: At World’s End in the prior-year quarter.

Quarter Results

Net income for the quarter increased by $202 million, or 22%, and total revenues increased by $756 million, or 10%, over the second quarter of the prior year, while diluted earnings per share increased 32% to $0.58 per share. Revenue increased in each business segment, and segment operating income increased in the Media Networks, Studio Entertainment and Parks and Resorts segments.

In the Media Networks segment, continued growth at ESPN, and increased international sales of ABC Studios productions contributed to the increase in segment operating income. The Writers Guild of America work stoppage resulted in fewer hours of original scripted programming broadcast during the quarter on the ABC Television Network, which reduced programming and production costs and

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primetime advertising revenue, for a net negative impact on segment operating income which was partially offset by higher advertising rates.

In the Parks and Resorts segment, increased guest spending and theme park attendance at the Walt Disney World Resort and higher vacation club ownership sales at Disney Vacation Club, contributed to the increase in operating income at our domestic businesses. Operating income also increased at Disneyland Resort Paris driven by increased attendance and guest spending. The increase in attendance reflected the fact that the Easter holiday period fell in the second quarter of fiscal 2008 but the third quarter of fiscal 2007.

In the Studio Entertainment segment, the increase in operating income arose from improvements in the domestic home entertainment and worldwide theatrical businesses. In both cases, titles in release during the quarter performed well compared to the titles in release in the prior-year quarter. In the case of the worldwide theatrical business, the fiscal 2008 quarter also benefited from the fact that in fiscal 2007 a significant portion of the distribution expenses for Meet the Robinsons fell in the second quarter, while most of the revenue for that title (which was released at the very end of the quarter) fell in the third quarter.

In Consumer Products, lower minimum revenue guarantees in licensing along with higher operating costs more than offset increases in earned merchandise licensing revenue.

Quarter Results

Revenues for the quarter increased 9%, or $871 million to $10.5 billion, net income decreased by 27% to $1.3 billion and diluted earnings per share decreased by 20% to $0.63.

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Results for the prior-year quarter included the net favorable impact of the items summarized below (amounts in millions, except per share data):

Diluted earnings per share decreased for the quarter due to the prior-year gains and other items detailed above, partially offset by growth at the operating segments and a decrease in weighted average shares outstanding. Earnings growth at the operating segments was primarily due to higher affiliate and advertising revenues at our cable businesses, increased primetime advertising revenue at the ABC Television Network, higher guest spending and theme park attendance at Walt Disney World and Disneyland Resort Paris, improved performance of our film productions in theatrical markets and strong sales of licensed products and self-published video games at Consumer Products. These increases were partially offset by lower DVD sales and higher programming and production costs at our cable businesses.

Quarter Results

Revenues for the quarter increased 7%, or $571 million, to $9.0 billion, net income increased 5% to $1.2 billion, and diluted earnings per share from continuing operations increased 14% to $0.58.

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Earnings growth was primarily due to increased sales of ABC Studios productions and lower programming and production costs at our broadcasting businesses, higher affiliate and advertising revenues at our cable businesses, higher guest spending at Walt Disney World and Disneyland and higher theme park attendance at Walt Disney World and the success of Pirates of the Caribbean: At World’s End at our theatrical distribution business. These increases were partially offset by lower DVD sales due to the success of The Chronicles of Narnia: The Lion, The Witch and The Wardrobe in the prior-year quarter.

Quarter Results

Revenues for the quarter increased 1%, or $46 million, to $8.1 billion. The increase was driven by the following:

These increases were offset by the absence of the Super Bowl and three less College Bowl games at the ABC Television Network and lower international theatrical distribution revenues reflecting the strong performance of The

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Chronicles of Narnia: The Lion, The Witch and The Wardrobe and Chicken Little in the prior-year quarter, as well as fewer titles in release in the current quarter.

Net income for the quarter increased 27%, or $198 million, to $931 million. The increase was primarily due to higher affiliate and advertising revenues and lower costs at ESPN and improvements in domestic theatrical distribution driven by a better-performing slate of titles in the current quarter and lower distribution expense due to timing of releases.

Quarter Results

Revenues for the quarter increased 10%, or $0.9 billion, to $9.7 billion. The increase was driven by the following:

These increases were partially offset by lower worldwide theatrical motion picture distribution revenues reflecting the box-office performance of current quarter titles compared to the strong performance of The Chronicles of Narnia: The Lion, The Witch and The Wardrobe in the prior-year quarter and lower advertising revenues driven by the absence of National Football League programming at the ABC Television Network.

Net income increased by $1.0 billion to $1.7 billion from $734 million due to gains on sales of equity investments and growth in worldwide home entertainment and at Media Networks.

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Diluted earnings per share increased to $0.79 from $0.37 in the current quarter. Results for the current and prior-year quarter included the net favorable impact of the items summarized in the following tables (in millions, except per share data):

Nine Month Results

Revenues for the nine months increased 5%, or $1.3 billion, to $25.5 billion. The increase was driven by the strong performance from both of our domestic theme parks, led by the on-going success of the 50th anniversary celebration, increased advertising revenues at the ABC Television Network driven by strength in ratings and higher rates, a full nine months of theme park operations at Hong Kong Disneyland as compared to the prior year period when the park was not yet open, higher license fees from sales of Touchstone Television dramas in international markets and higher affiliate revenues at ESPN driven by contractual rate increases. These increases were partially offset by lower DVD unit sales at home entertainment.

Net income increased 20%, or $438 million, to $2.6 billion driven by the strong performance at both of our domestic theme parks, improved primetime results at the ABC Television Network and growth at ESPN.

Diluted earnings per share increased 24% to $1.28 in the nine month period. In addition to the non-taxable gain on the deemed termination of the Pixar distribution agreement and the impairment of Pixar-related sequel projects, the current nine months benefited from gains of $70 million ($44 million after-tax) related to the sales of a cable television equity investment in Spain and the Discover Magazine business. In addition to the gain from the sale of the Mighty Ducks of Anaheim and the investment impairment and write-downs disclosed above, the prior nine-month period included a $61 million benefit ($38 million after-tax) on the restructuring of Euro Disney’s borrowings, a $24 million benefit from the favorable resolution of certain tax matters, a $32 million charge ($20 million after-tax) to write-down an investment and restructuring and impairment charges totaling $26 million ($16 million after-tax) related to the sale of the Disney Store North America.

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