The Walt Disney Co. Announces Financial Results.

BURBANK, Calif.--(BUSINESS WIRE)--Nov. 18, 1997--The Walt Disney Co. Tuesday reported record revenues, operating income and earnings for both the fourth quarter and the fiscal year ended Sept. 30, 1997.

Compared to prior-year pro forma amounts, revenues for the quarter increased 5% to $5.5 billion and operating income increased 13% to $1.0 billion. Net income for the quarter increased 18% to $411 million and earnings per share increased 18% to $0.60. Revenues for the year increased 6% to $22.5 billion. Excluding the non-recurring items discussed below, operating income for the year increased 18% to $4.3 billion, net income increased 25% to $1.9 billion and earnings per share increased 25% to $2.75.

Michael D. Eisner, chairman and chief executive officer, said, "Our outstanding results for both the quarter and the year reflect the strength of our family of brands and provide important momentum as we prepare to launch significant new business initiatives in 1998. Disney's Animal Kingdom will be opening in April 1998 as our fourth and largest theme park at Walt Disney World.

"Also planned for late spring is the maiden voyage of Disney Magic, the first ship of the Disney Cruise Line. Our newly-formed Disney Regional Entertainment business will be opening new Club Disney venues and will be launching two new entertainment concepts: ESPN Grill and DisneyQuest. These and other initiatives will continue to secure Disney's position as the world's preeminent entertainment company."

The company acquired the operations of ABC on Feb. 9, 1996, and completed its final purchase price allocation and determination of related goodwill during the second quarter of this year. To enhance comparability, the operating results for the quarter and year ended Sept. 30, 1996, are presented and discussed on a pro forma basis, which assumes the acquisition of ABC and the related final purchase price allocation occurred at the beginning of fiscal 1996.

In addition, the discussion of the company's operating results excludes the impact of two non-recurring charges recorded by the company during the second quarter of the prior year as well as the gain on the sale of KCAL recorded by the company in the first quarter of the current year.

Both the prior-year non-recurring charges and the gain on the sale of KCAL are discussed below. Creative Content revenues for the quarter increased 2% to $2.7 billion and operating income increased 20% to $448 million. For the year, revenues increased 3% to $10.9 billion and operating income increased 21% to $1.9 billion.

Creative Content results for the quarter reflected growth in the distribution of film and television product in the international television market, continued growth in merchandise licensing and global expansion of The Disney Stores as well as growth in domestic home video driven by the successful releases of "Sleeping Beauty" and "Pooh's Grand Adventure."

Results for the quarter also reflected the successful worldwide performance of "Hercules" and the domestic release of "George of the Jungle." Growth for the year was driven by the successful theatrical performance of "101 Dalmatians," "Ransom," "Con Air," "Hercules" and "The English Patient" worldwide, and "The Hunchback of Notre Dame" internationally.

The full year also reflected the home video releases of "Toy Story," "The Hunchback of Notre Dame" and "101 Dalmatians" worldwide, and "Bambi" and "Sleeping Beauty" domestically. International home video results were lower overall due, in part, to difficult comparisons to the prior year, which benefited from the success of "The Lion King," "Sleeping Beauty" and the animated version of "101 Dalmatians."

The full-year results also benefited from the continued strong growth in worldwide character merchandise licensing, including Winnie the Pooh and 101 Dalmatians, continued worldwide expansion of The Disney Stores as well as growth in the distribution of film and television product in the international television market. In addition, the prior-year results reflected the write-off of certain development projects.

Broadcasting revenues for the quarter increased 9% to $1.5 billion and operating income increased 1% to $241 million. For the year, revenues increased 6% to $6.5 billion and operating income increased 18% to $1.3 billion. Broadcasting results for the quarter and the full year reflected strong cable network performance driven by increased affiliate fees at ESPN and The Disney Channel due to subscriber growth and improved rates.

In addition, ESPN as well as the television and radio stations benefited from stronger demand for advertising. Increases for the quarter were partially offset by higher program amortization at the broadcast network due to a year-over-year reduction in benefits arising from the acquisition.

Increased results for the full year were achieved despite the impact of lower broadcast network ratings, which was partially offset by decreased program amortization and other costs, primarily attributable to the acquisition.

Theme parks and resorts posted record operating results for both the quarter and the full year. Revenues for the quarter increased 7% to $1.3 billion and operating income grew 12% to $272 million. For the year, revenues increased 11% to $5.0 billion and operating income rose 15% to $1.1 billion.

Theme parks and resorts results for the quarter and year reflected increased guest spending at all properties, record attendance levels and increased occupied room nights at the Walt Disney World Resort, partially offset by reduced attendance at Disneyland and start-up costs associated with new business initiatives. Attendance gains at the Walt Disney World Resort were driven by increased domestic tourist visitation primarily attributable to the 25th Anniversary Celebration.

Disneyland's attendance was down due principally to difficult comparisons to the prior years record attendance levels. Increased occupied room nights at the Walt Disney World Resort reflected higher occupancy for both the quarter and the full year as well as an increase in available rooms resulting from the addition of Disney's BoardWalk Resort, which opened during the fourth quarter of the prior year, and the Coronado Springs Hotel and Convention Center, which opened in August 1997.

Compared with prior-year as reported results, revenues during the quarter increased 5%, operating income increased 12% and net income and earnings per share increased 22%. Excluding the prior-year non-recurring items and the KCAL gain, full-year revenues increased 20%, operating income increased 29%, net income increased 23% and earnings per share increased 11%. Results for the current year included a full period of ABC's operations and reflected significant increases in amortization of intangible assets, interest expense and shares outstanding due to the acquisition.

During the first quarter of the current year, the company sold KCAL, a Los Angeles television station, which resulted in a pre-tax gain of $135 million. For the year, the gain on the sale of KCAL increased net income from $1.9 billion to $2.0 billion and earnings per share from $2.75 to $2.86.

During the second quarter of the prior year, the company recorded two non-recurring charges consisting of a $300 million non-cash charge related to the implementation of Statement of Financial Accounting Standards No. 121 and a $225 million charge for costs related to the acquisition of ABC. These prior-year non-recurring charges reduced as reported net income from $1.5 billion to $1.2 billion and reduced as reported earnings per share from $2.48 to $1.96 for the prior year.

During the quarter, the company repurchased 4.6 million of its shares at an average price of $78.40 per share for a total cost of $363 million, bringing the total number of shares repurchased for the full year to 8.5 million at an average price of $74.76 per share for a total cost of $633 million. The share repurchases were made under the company's existing share repurchase program. -0-

Note to Editors: The company makes available its quarterly earnings releases, annual report to shareholders, fact book and SEC filings on its investor relations Web site located at http://www.disney.com/investors -0-

                 CONSOLIDATED STATEMENTS OF INCOME
                   For the Quarter Ended Sept. 30
            (Unaudited; in millions, except per share data)

                         1997     1996         1996
                               (Pro Forma) (As Reported)

Revenues               $5,520    $5,272       $5,272
Costs and Expenses(a)  (4,559)   (4,419)      (4,414)
Operating Income          961       853          858
Corporate Activities
 and Other               (100)      (61)         (61)
Net Interest Expense     (153)     (171)        (171)
Income Before Income
 Taxes                    708       621          626
Income Taxes             (297)     (272)        (290)
Net Income               $411      $349         $336
Earnings Per Share      $0.60     $0.51        $0.49

Average number of common
 and common equivalent
 shares outstanding       686       685          685

(a) Pro forma 1996 amounts reflect the final purchase accounting
valuation related to the acquired assets and liabilities of ABC.
The valuation was completed in the second quarter of FY 1997.

                    CONSOLIDATED STATEMENTS OF INCOME
                       For the Year Ended Sept. 30
             (Unaudited; in millions, except per share data)


                       1997       1996         1996
                               (Pro Forma) (As Reported)

Revenues             $22,473    $21,238     $18,739
Costs and expenses   (18,161)   (17,593)    (15,406)
Gain on sale of
 KCAL                    135         --          --
Accounting change         --       (300)       (300)
Operating income       4,447      3,345       3,033
Corporate Activities
 and other              (367)      (249)       (309)
Net interest expense    (693)      (698)       (438)
Acquisition-related
 costs                    --         --        (225)
Income before income
 taxes                 3,387      2,398       2,061
Income taxes          (1,421)    (1,067)       (847)
Net Income            $1,966     $1,331      $1,214
Earnings per share     $2.86      $1.93       $1.96
Net income excluding
 non-recurring
 items(a)             $1,886     $1,514      $1,534
Earnings per share
 excluding non-
 recurring items(a)    $2.75      $2.20       $2.48
Average number of
 common and common
 equivalent shares
 outstanding             687        689         619

(a) The 1997 amount excludes the gain that the company recognized as
a result of the sale of its investment in KCAL ($135).  The 1996
amounts exclude the impact of charges related to the SFAS 121
accounting change ($300) and acquisition-related costs ($225).

                          SEGMENT RESULTS
                    For the Quarter Ended Sept. 30
                       (Unaudited; in millions)

                      1997       1996     % Change    1996
                              (Pro Forma)         (As reported)

Revenues:
 Creative Content     $2,736    $2,693        2%       $2,693
 Broadcasting          1,492     1,375        9%        1,375
 Theme Parks & Resorts 1,292     1,204        7%        1,204
 Total                $5,520    $5,272        5%       $5,272

Operating Income (a)(b)
 Creative Content       $448      $372       20%         $372
 Broadcasting            241       239        1%          244
 Theme Parks & Resorts   272       242       12%          242
 Total Operating Income $961      $853       13%         $858

(a) Includes depreciation and amortization (excluding film costs) of:

Creative Content         $54    $55
Broadcasting             132    135
Theme Parks & Resorts    101     79

                        $287   $269

(b) 1997, 1996 pro forma and 1996 as reported amounts include
amortization of acquisition-related intangibles of $102, $119 and
$114, respectively.


                          SEGMENT RESULTS
                    For the Quarter Ended Sept. 30
                       (Unaudited; in millions)

                      1997       1996     % Change    1996
                              (Pro Forma)          (As reported)

Revenues:
 Creative Content    $10,937   $10,607        3%      $10,159
 Broadcasting          6,522     6,129        6%        4,078
 Theme Parks & Resorts 5,014     4,502       11%        4,502
 Total               $22,473   $21,238        6%      $18,739

Operating Income (a)(b)
 Creative Content     $1,882    $1,555       21%       $1,561
 Broadcasting          1,294     1,100       18%          782
 Theme Parks & Resorts 1,136       990       15%          990
 Total Operating
  Income               4,312     3,645       18%        3,333

Gain on sale of KCAL     135        --       n/m           --
Accounting change
 for SFAS 121             --      (300)      n/m         (300)
Total Operating
 Income               $4,447    $3,345       33%       $3,033

(a) Includes depreciation and amortization (excluding film costs) of:

Creative Content        $222     $230
Broadcasting             517      521
Theme Parks & Resorts    408      358

                      $1,147   $1,109

(b) 1997, 1996 pro forma and 1996 as reported amounts include
amortization of acquisition-related intangibles of $439, $476 and
$301, respectively.

CONTACT: The Walt Disney Co., Burbank

Winifred Markus Webb, Vice President, Investor Relations

and Shareholder Services

818/560-5758