10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended April 2, 2005 Commission File Number 1-11605

Incorporated in Delaware	I.R.S. Employer Identification
	No. 95-4545390

500 South Buena Vista Street, Burbank, California 91521

(818) 560-1000

          Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

          YES þ  NO o

          Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

          YES þ  NO o

There were 2,041,306,688 shares of common stock outstanding as of May 4, 2005.

1

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures about Market Risk.
	Item 4. Controls and Procedures
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 2. Issuer Purchases of Equity Securities
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 5. Other Information
	Item 6. Exhibits
SIGNATURE
INDEX OF EXHIBITS
EX-10.B
Exhibit 31(a)
Exhibit 31(b)
Exhibit 32(a)
Exhibit 32(b)

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited; in millions, except per share data)

	Quarter Ended						Six Months Ended
	April 2,			March 31,			April 2,			March 31,
	2005			2004			2005			2004
Revenues	$	7,829		$	7,189		$	16,495		$	15,738
Costs and expenses		(6,655	)		(6,153	)		(14,147	)		(13,537	)
Restructuring and impairment charges		(7	)		(3	)		(24	)		(3	)
Net interest expense		(90	)		(147	)		(230	)		(295	)
Equity in the income of investees		113			77			238			174
Income before income taxes and minority interests		1,190			963			2,332			2,077
Income taxes		(438	)		(357	)		(831	)		(767	)
Minority interests		(54	)		(69	)		(80	)		(85	)
Net income	$	698		$	537		$	1,421		$	1,225
Earnings per share:
Diluted	$	0.33		$	0.26		$	0.68		$	0.59
Basic	$	0.34		$	0.26		$	0.70		$	0.60
Average number of common and common equivalent shares outstanding:
Diluted		2,114			2,110			2,109			2,104
Basic		2,044			2,048			2,043			2,047

See Notes to Condensed Consolidated Financial Statements

2

THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited; in millions)

	April 2,			September 30,
	2005			2004
ASSETS
Current assets
Cash and cash equivalents	$	1,941		$	2,042
Receivables		5,354			4,558
Inventories		665			775
Television costs		731			484
Deferred income taxes		772			772
Other current assets		719			738
Total current assets		10,182			9,369
Film and television costs		6,077			5,938
Investments		1,356			1,292
Parks, resorts and other properties, at cost
Attractions, buildings and equipment		25,642			25,168
Accumulated depreciation		(12,314	)		(11,665	)
		13,328			13,503
Projects in progress		2,331			1,852
Land		1,137			1,127
		16,796			16,482
Intangible assets, net		2,807			2,815
Goodwill		16,966			16,966
Other assets		863			1,040
	$	55,047		$	53,902
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and other accrued liabilities	$	5,261		$	5,623
Current portion of borrowings		1,523			4,093
Unearned royalties and other advances		1,812			1,343
Total current liabilities		8,596			11,059
Borrowings		11,664			9,395
Deferred income taxes		3,036			2,950
Other long term liabilities		3,707			3,619
Minority interests		1,081			798
Commitments and contingencies (Note 14)
Shareholders’ equity
Preferred stock, $.01 par value
Authorized – 100 million shares, Issued – none		—			—
Common stock
Common stock – Disney, $.01 par value
Authorized – 3.6 billion shares, Issued – 2.2 billion shares at April 2, 2005 and 2.1 billion shares at September 30, 2004		12,822			12,447
Common stock – Internet Group, $.01 par value		—			—
Authorized – 1.0 billion shares, Issued – none
Retained earnings		16,663			15,732
Accumulated other comprehensive loss		(216	)		(236	)
		29,269			27,943
Treasury stock, at cost, 117.1 million shares at April 2, 2005 and 101.6 million shares at September 30, 2004		(2,306	)		(1,862	)
		26,963			26,081
	$	55,047		$	53,902

See Notes to Condensed Consolidated Financial Statements

3

THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in millions)

	Six Months Ended
	April 2,			March 31,
	2005			2004
OPERATING ACTIVITIES
Net income	$	1,421		$	1,225
Depreciation		651			552
Deferred income taxes		108			199
Equity in the income of investees		(238	)		(174	)
Cash distributions received from equity investees		157			175
Minority interests		80			85
Amortization of film and television production costs		1,476			1,468
Film and television production spending		(1,280	)		(1,225	)
Non current television programming costs		(22	)		(51	)
Changes in noncurrent assets and liabilities and other		(110	)		250
		822			1,279
Changes in working capital
Receivables		(667	)		(170	)
Inventories		(12	)		10
Other current assets		(78	)		(135	)
Accounts payable and other accrued liabilities		66			325
Income taxes		(156	)		156
Television programming costs		(247	)		(186	)
		(1,094	)		—
Cash provided by operations		1,149			2,504
INVESTING ACTIVITIES
Investments in parks, resorts and other properties		(773	)		(468	)
Working capital proceeds from the Disney Store North America sale		100			—
Other		(16	)		39
Cash used by investing activities		(689	)		(429	)
FINANCING ACTIVITIES
Borrowings		141			—
Reduction of borrowings		(1,643	)		(1,117	)
Commercial paper borrowings, net		1,359			622
Dividends		(490	)		(430	)
Repurchases of common stock		(444	)		—
Euro Disney equity offering		171			—
Equity partner contributions		60			—
Exercise of stock options and other		285			141
Cash used by financing activities		(561	)		(784	)
(Decrease) Increase in cash and cash equivalents		(101	)		1,291
Cash and cash equivalents, beginning of period		2,042			1,857
Cash and cash equivalents, end of period	$	1,941		$	3,148

See Notes to Condensed Consolidated Financial Statements

4

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

1.   Principles of Consolidation

     These Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been reflected in these Condensed Consolidated Financial Statements. Operating results for the six months ended April 2, 2005 are not necessarily indicative of the results that may be expected for the year ending October 1, 2005.

     These financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2004 (the 2004 Annual Report).

     Effective with the beginning of fiscal year 2005 and in connection with the completion of the Company’s implementation of new company-wide integrated financial systems in late fiscal 2004, the Company changed its reporting period to a fifty-two/fifty-three week fiscal year from a calendar quarter close. The Company’s periods will end on the Saturday closest to the calendar quarter or year-end. Accordingly, the second quarter of fiscal 2005 began on January 2, 2005 and ended on April 2, 2005 whereas the second quarter of the prior-year began on January 1, 2004 and ended on March 31, 2004, resulting in the same number of reporting days due to a leap year in the prior year. As a result of the reporting period change, fiscal 2005 will end on October 1, 2005 and fiscal 2009 will be the first fifty-three week fiscal year following this change.

     In December 1999, DVD Financing, Inc. (DFI), a subsidiary of Disney Vacation Development, Inc. and an indirect subsidiary of the Company, completed a receivables sale transaction which established a facility that permits DFI to sell receivables arising from the sale of vacation club memberships on a periodic basis. In connection with this facility, DFI prepares separate financial statements, although its separate assets and liabilities are also consolidated in these financial statements.

     The terms “Company”, “we”, “us” and “our” are used in this report to refer collectively to the parent company and the subsidiaries through which our various businesses are actually conducted.

5

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

2.   Segment Information

     The operating segments reported below are the segments of the Company for which separate financial information is available and for which segment results are evaluated regularly by the Chief Executive Officer in deciding how to allocate resources and in assessing performance.

	Quarter Ended				Six Months Ended
	April 2,		March 31,		April 2,		March 31,
	2005		2004		2005		2004
Revenues(1):
Media Networks	$	3,008	$	2,846	$	6,469	$	5,960
Parks and Resorts		2,096		1,669		4,214		3,300
Studio Entertainment		2,260		2,162		4,622		5,126
Consumer Products		465		512		1,190		1,352
	$	7,829	$	7,189	$	16,495	$	15,738
Segment operating income(1):
Media Networks	$	725	$	704	$	1,192	$	1,048
Parks and Resorts		193		188		451		420
Studio Entertainment		253		153		586		611
Consumer Products		111		75		342		312
	$	1,282	$	1,120	$	2,571	$	2,391

⁽¹⁾ The Studio Entertainment segment receives royalties on Consumer Products sales of merchandise based on certain Studio film properties. This intersegment revenue and operating income was $34 million and $30 million for the quarters ended April 2, 2005 and March 31, 2004, respectively, and $53 million and $45 million for the six months ended April 2, 2005 and March 31, 2004, respectively.

     The Company evaluates the performance of its operating segments based on segment operating income. A reconciliation of segment operating income to income before income taxes and minority interests is as follows:

	Quarter Ended						Six Months Ended
	April 2,			March 31,			April 2,			March 31,
	2005			2004			2005			2004
Segment operating income	$	1,282		$	1,120		$	2,571		$	2,391
Corporate and unallocated shared expenses		(105	)		(82	)		(218	)		(185	)
Amortization of intangible assets		(3	)		(2	)		(5	)		(5	)
Restructuring and impairment charges		(7	)		(3	)		(24	)		(3	)
Net interest expense		(90	)		(147	)		(230	)		(295	)
Equity in the income of investees		113			77			238			174
Income before income taxes and minority interests	$	1,190		$	963		$	2,332		$	2,077

6

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

3.   Film and Television Costs

     The Company’s Studio and Media Networks segments incur costs to acquire and produce television and feature film programming. These amounts are generally expensed based on the ratio of the current period’s gross revenues to estimated remaining total gross revenues. Spending and amortization for the six months ended April 2, 2005 and March 31, 2004 are as follows:

	Six Months Ended
	April 2,			March 31,
	2005			2004
Film and Television Production
Spending	$	1,280		$	1,225
Amortization		(1,476	)		(1,468	)
Net Change	$	(196	)	$	(243	)
Broadcast Programming Costs
Spending	$	2,401		$	2,348
Amortization		(2,132	)		(2,111	)
Net Change (1)(2)	$	269		$	237

⁽¹⁾ Broadcast programming costs are classified as current or non current depending upon the expected timing of airing of the program. The net change in broadcast programming is allocated between current and non current programming as follows:

	Six Months Ended
	April 2,		March 31,
	2005		2004
Non-current	$	22	$	51
Current		247		186
	$	269	$	237

⁽²⁾ In addition to the cash spending amounts detailed above, we record programming assets with a corresponding increase to programming liabilities when the programming becomes available to us. These amounts were $313 million and $9 million for the six months ended April 2, 2005 and March 31, 2004, respectively.

4.   Accounting Changes

FIN 46

     In January 2003, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 46R, Consolidation of Variable Interest Entities (FIN 46). Pursuant to the provisions of FIN 46, the Company began consolidating Euro Disney and Hong Kong Disneyland’s balance sheets on March 31, 2004, the end of the Company’s second quarter of fiscal 2004 and the income and cash flow statements beginning April 1, 2004, the beginning of the third quarter of fiscal 2004. Under FIN 46 transition rules, the operating results of Euro Disney and Hong Kong Disneyland continued to be accounted for on the equity method for the quarter and six months ended March 31, 2004.

7

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

     The following table presents a condensed consolidating balance sheet for the Company as of April 2, 2005, reflecting the impact of consolidating the balance sheets of Euro Disney and Hong Kong Disneyland.

	Before Euro
	Disney and		Euro Disney,
	Hong Kong		Hong Kong
	Disneyland		Disneyland and
	Consolidation		Adjustments			Total
Cash and cash equivalents	$	1,530	$	411		$	1,941
Other current assets		8,013		228			8,241
Total current assets		9,543		639			10,182
Investments		2,169		(813	)		1,356
Fixed assets		12,467		4,329			16,796
Intangible assets		2,807		—			2,807
Goodwill		16,966		—			16,966
Other assets		6,926		14			6,940
Total assets	$	50,878	$	4,169		$	55,047
Current portion of borrowings	$	1,523	$	—		$	1,523
Other current liabilities		6,573		500			7,073
Total current liabilities		8,096		500			8,596
Borrowings		8,800		2,864			11,664
Deferred income taxes		3,036		—			3,036
Other long-term liabilities		3,570		137			3,707
Minority interest		413		668			1,081
Shareholders’ equity		26,963		—			26,963
Total liabilities and shareholders’ equity	$	50,878	$	4,169		$	55,047

     The following table presents a condensed consolidating income statement of the Company for the quarter ended April 2, 2005, reflecting the impact of consolidating the income statements of Euro Disney and Hong Kong Disneyland.

	Before Euro
	Disney and			Euro Disney,
	Hong Kong			Hong Kong
	Disneyland			Disneyland and
	Consolidation			Adjustments			Total
Revenues	$	7,526		$	303		$	7,829
Cost and expenses		(6,308	)		(347	)		(6,655	)
Restructuring and impairment charges		(7	)		—			(7	)
Net interest expense		(136	)		46			(90	)
Equity in the income of investees		127			(14	)		113
Income before income taxes and minority interests		1,202			(12	)		1,190
Income taxes		(437	)		(1	)		(438	)
Minority interests		(67	)		13			(54	)
Net income	$	698		$	—		$	698

8

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

     The following table presents a condensed consolidating income statement of the Company for the six months ended April 2, 2005, reflecting the impact of consolidating the income statements of Euro Disney and Hong Kong Disneyland.

	Before Euro
	Disney and			Euro Disney,
	Hong Kong			Hong Kong
	Disneyland			Disneyland and
	Consolidation			Adjustments			Total
Revenues	$	15,823		$	672		$	16,495
Cost and expenses		(13,425	)		(722	)		(14,147	)
Restructuring and impairment charges		(24	)		—			(24	)
Net interest expense		(256	)		26			(230	)
Equity in the income of investees		231			7			238
Income before income taxes and minority interests		2,349			(17	)		2,332
Income taxes		(831	)		—			(831	)
Minority interests		(97	)		17			(80	)
Net income	$	1,421		$	—		$	1,421

     The following table presents the condensed consolidating cash flow statement of the Company for the six months ended April 2, 2005, reflecting the impact of consolidating the cash flow statements of Euro Disney and Hong Kong Disneyland.

	Before Euro
	Disney and			Euro Disney,
	Hong Kong			Hong Kong
	Disneyland			Disneyland and
	Consolidation			Adjustments			Total
Cash provided (used) by operations	$	1,195		$	(46	)	$	1,149
Investments in parks, resorts and other property		(459	)		(314	)		(773	)
		736			(360	)		376
Other investing activities		(18	)		102			84
Cash (used) provided by financing activities		(918	)		357			(561	)
(Decrease) increase in cash and cash equivalents		(200	)		99			(101	)
Cash and cash equivalents, beginning of period		1,730			312			2,042
Cash and cash equivalents, end of period	$	1,530		$	411		$	1,941

EITF D-108

     On September 30, 2004, the Emerging Issues Task Force (EITF) of the FASB issued Topic No. D-108, Use of the Residual Method to Value Acquired Assets Other than Goodwill (D-108). D-108 requires that a direct value method be used to value intangible assets acquired in business combinations completed after September 29, 2004. D-108 also requires the Company to perform an impairment test using a direct value method on all intangible assets that were previously valued using the residual method. This impairment test is required to be performed no later than the beginning of fiscal 2006 for the Company. Any impairments arising from the initial application of a direct value method would be reported as a cumulative effect of accounting change. For radio stations acquisitions subsequent to the acquisition of Cap Cities/ABC, Inc. in 1996, the Company has applied the residual value method to value its FCC licenses. The remaining net book value of FCC licenses that were valued under the residual method is approximately $550 million at April 2, 2005. The Company is in the process of evaluating what portion of this amount may be impaired upon the adoption of D-108.

9

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

SFAS 123R

     In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123 (revised 2004) Share-Based Payments (SFAS 123R). The statement requires companies to record stock option expense in its financial statements based on a fair value methodology beginning no later than the first fiscal quarter beginning after June 15, 2005. The United States Securities and Exchange Commission (SEC) recently deferred the implementation date for SFAS 123R to the first fiscal year that begins after June 15, 2005 which is the first quarter of fiscal 2006 for the Company. The Company is evaluating the impact of the new standard and the method and timing of adoption. Although we have not completed our analysis, we anticipate that the expense would not exceed the amounts disclosed in Note 13 had the Company been expensing under the new rule.

5.   Investment in Leveraged Leases

     As of April 2, 2005, our investment in aircraft leveraged leases totaled approximately $155 million, consisting of $101 million and $54 million, with Delta Air Lines, Inc. (Delta) and FedEx Corporation, respectively. Given the current status of the airline industry, we continue to monitor the recoverability of these investments, particularly the Delta leases. Delta has disclosed in its quarterly report for the quarter ended March 31, 2005, that if it is unsuccessful in further reducing its operating expenses and continues to experience significant losses, it will need to seek to restructure under Chapter 11 of the U.S. Bankruptcy Code. Although Delta remains current on their lease payments to us, the inability of Delta to make their lease payments, or the termination of our lease through a bankruptcy proceeding, could result in the write-down of our investment and the acceleration of certain income tax payments.

6.   Restructuring and Impairment Charges

     Effective November 21, 2004, the Company sold substantially all of the Disney Stores chain in North America under a long-term licensing arrangement, to a wholly-owned subsidiary of The Children’s Place (TCP). Pursuant to the terms of sale, the Disney Stores North America retained its lease obligations related to the stores transferred to the buyer and became a wholly owned subsidiary of TCP. TCP will pay the Company a royalty on substantially all of the physical retail store sales beginning on the second anniversary of the closing date of the sale. The Company received $100 million for the working capital transferred to the buyer at the closing of the transaction.

     During the six months ended April 2, 2005, the Company recorded a loss on the working capital transferred to the buyer and additional restructuring and impairment charges totaling $24 million related to the sale of the Disney Stores North America, of which $7 million was recorded in the second quarter. The restructuring and impairment charges were primarily for employee retention and severance and lease termination costs.

     The Company is currently considering options with respect to the Disney Stores in Europe, including a potential sale. The carrying value of the fixed and other long-term assets of the chain in Europe totaled $45 million at April 2, 2005. Depending on the terms of a sale, an impairment of these assets is possible. The remaining undiscounted base lease obligations for the chain in Europe totaled $202 million at April 2, 2005.

10

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

7.   Borrowings

     The Company’s borrowings are summarized below:

	September 30,							Other			April 2,
	2004		Additions		Payments			activity			2005
Commercial paper borrowings	$	100	$	1,359	$	—		$	(4	)		1,455
U.S. medium-term notes		6,624		—		(750	)		—			5,874
Convertible senior notes		1,323		—		—			—			1,323
Other U.S. dollar denominated debt		305		—		—			—			305
Privately placed debt		254		—		(47	)		—			207
European medium-term notes		1,099		—		(832	)		—			267
Preferred Stock		373		—		—			(5	)		368
Capital Cities/ABC and ABC Family debt		189		—		—			(2	)		187
Other(1)		455		—		(1	)		(120	)		334
Euro Disney borrowings(2)		2,221		—		(13	)		(36	)		2,172
Hong Kong Disneyland borrowings(3)		545		141		—			9			695
Total	$	13,488	$	1,500	$	(1,643	)	$	(158	)	$	13,187

(1)	The $120 million included in other activity is primarily due to interest rate hedging activity.
(2)	Other activity includes the $130 million paydown of Euro Disney senior debt using cash security deposits. This decrease was partially offset by an increase of $107 million due to foreign currency translation as a result of the appreciation of the Euro against the U.S. dollar.
(3)	The additional borrowings were primarily used to fund construction costs.

     Euro Disney’s borrowings were reclassified to long-term during the quarter consistent with their terms as they are no longer subject to acceleration by the lenders due to the completion of the financial restructuring of Euro Disney’s borrowings.

11

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

8.   Euro Disney

     In September 2004, Euro Disney, the Company, and Euro Disney’s lenders finalized a Memorandum of Agreement (MOA) relating to the financial restructuring of Euro Disney and subsequently finalized the legal documentation called for by the MOA. The MOA provides for new financing as well as restructuring Euro Disney’s existing financing. The key provisions of the MOA are described in Note 4 to the Consolidated Financial Statements in the 2004 Annual Report.

     The transactions contemplated by the MOA were fully implemented on February 23, 2005 with the completion of a €253 million equity rights offering, of which the Company subscribed for €100 million. Following the completion of the financial restructuring, the Company’s effective ownership interest in Euro Disney’s operations increased to 51%. As discussed in Note 4 to the Consolidated Financial Statements in the 2004 Annual Report, the MOA provided for a 2% interest rate increase for certain tranches of Euro Disney debt which resulted in a substantial modification of a portion of this debt. Relevant accounting rules require that the substantially modified portion be accounted for as though it had been extinguished and replaced with new borrowings recorded at fair value, resulting in a $61 million gain being recorded in net interest expense.

     Certain indirect, wholly-owned subsidiaries of The Walt Disney Company have liability as current or former general partners of the operating subsidiary of Euro Disney to which substantially all of Euro Disney’s assets and liabilities were transferred in the restructuring. In addition to their interests in this operating subsidiary of Euro Disney, certain of these subsidiaries of The Walt Disney Company have been capitalized with interest-bearing demand notes with a face value of €200 million in aggregate.

9.   Pension and Other Benefit Programs

     The components of net periodic benefit cost are as follows:

													Postretirement
	Pension Plans												Medical Plans
	Quarter Ended						Six Months Ended						Quarter Ended						Six Months Ended
	April 2,			March 31,			April 2,			March 31,			April 2,			March 31,			April 2,			March 31,
	2005			2004			2005			2004			2005			2004			2005			2004
Service cost	$	34		$	37		$	68		$	75		$	8		$	9		$	16		$	18
Interest cost		58			54			116			108			15			15			30			30
Expected return on plan assets		(55	)		(54	)		(110	)		(108	)		(4	)		(4	)		(8	)		(8	)
Amortization of prior service cost		—			1			—			1			—			—			—			(1	)
Recognized net actuarial loss		15			20			30			39			8			16			16			33
Net periodic benefit cost	$	52		$	58		$	104		$	115		$	27		$	36		$	54		$	72

     During the quarter ended April 2, 2005, we made contributions of $74 million into the pension and postretirement medical plans. The Company expects to make contributions of $91 million to its pension and postretirement medical plans during the second half of the fiscal year.

10.   Earnings Per Share

     Diluted earnings per share amounts are based upon the weighted average number of common and common equivalent shares outstanding during the period and are calculated using the treasury stock method for stock options and assuming conversion of the Company’s convertible senior notes. For the quarters ended April 2, 2005 and March 31, 2004, options for 75 million and 100 million shares, respectively, were excluded from the diluted

12

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

earnings per share calculation as they were anti-dilutive. For the six months ended April 2, 2005 and March 31, 2004, options for 92 million and 104 million shares, respectively, were excluded.

A reconciliation of net income and weighted average number of common and common equivalent shares outstanding for calculating diluted earnings per share is as follows:

	Quarter Ended				Six Months Ended
	April 2,		March 31,		April 2,		March 31,
	2005		2004		2005		2004
Net income	$	698	$	537	$	1,421	$	1,225
Interest expense on convertible senior notes (net of tax)		6		5		11		10
	$	704	$	542	$	1,432	$	1,235
Weighted average number of common shares outstanding (basic)		2,044		2,048		2,043		2,047
Weighted average dilutive stock options		25		17		21		12
Assumed conversion of convertible senior notes		45		45		45		45
Weighted average number of common and common equivalent shares outstanding (diluted)		2,114		2,110		2,109		2,104

11.   Shareholders’ Equity

     The Company declared a $490 million dividend ($0.24 per share) on December 1, 2004 related to fiscal 2004, which was paid on January 6, 2005 to shareholders of record on December 10, 2004. The Company paid a $430 million dividend ($0.21 per share) during the second quarter of fiscal 2004 related to fiscal 2003.

     During the six month period, the Company repurchased 15.5 million shares of Disney common stock for approximately $444 million, of which 15.1 million shares for approximately $433 million were repurchased in the second quarter. As of April 2, 2005, the Company had authorization in place to repurchase approximately 300 million additional shares.

12.   Comprehensive Income

     Comprehensive income is as follows:

	Quarter Ended					Six Months Ended
	April 2,			March 31,		April 2,			March 31,
	2005			2004		2005			2004
Net income	$	698		$	537	$	1,421		$	1,225
Market value adjustments for investments and hedges, net of tax		103			45		(34	)		(32	)
Foreign currency translation		(4	)		2		54			32
Comprehensive income	$	797		$	584	$	1,441		$	1,225

13

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

     Accumulated other comprehensive loss, net of tax is as follows:

	April 2,			September 30,
	2005			2004
Market value adjustments for investments and hedges, net of tax	$	(95	)	$	(61	)
Foreign currency translation		140			86
Additional minimum pension liability adjustment, net of tax		(261	)		(261	)
Accumulated other comprehensive loss	$	(216	)	$	(236	)

13.   Stock Incentive Plans

     The following table reflects pro forma net income and earnings per share had the Company elected to record employee stock option expense based on the fair value methodology:

	Quarter Ended						Six Months Ended
	April 2,			March 31,			April 2,			March 31,
	2005			2004			2005			2004
Net income:
As reported	$	698		$	537		$	1,421		$	1,225
Less stock option expense		(65	)		(102	)		(123	)		(193	)
Tax effect		24			38			45			72
Pro forma after stock option expense	$	657		$	473		$	1,343		$	1,104
Diluted earnings per share:
As reported	$	0.33		$	0.26		$	0.68		$	0.59
Pro forma after option expense	$	0.31		$	0.23		$	0.64		$	0.53
Basic earnings per share
As reported	$	0.34		$	0.26		$	0.70		$	0.60
Pro forma after option expense	$	0.32		$	0.23		$	0.66		$	0.54

     These pro forma amounts may not be representative of future disclosures since the estimated fair value of stock options is amortized to expense over the vesting period, and additional options may be granted in future years.

     The Company generally grants stock options and restricted stock units to its key management employees annually in the second quarter of each fiscal year. Historically, these options vested ratably over four or more years and had a ten-year term. Beginning with the grant made in the quarter ended April 2, 2005, the Company generally has reduced the term of these options to seven years. We have assumed that the 10-year options have an average expected life of six years for input into the Black Scholes option valuation which we have used in our pro forma disclosures. For the new seven-year options, we have used a life of 4.75 years based on a simplified method set out in SEC Staff Accounting Bulletin No. 107 (SAB 107). SAB 107, which was issued by the SEC in March 2005, provides interpretive guidance on SFAS 123R. The simplified method defines the life as the average of the contractual term of the options and the weighted average vesting period for all option tranches.

     Additionally, in connection with our analysis of option valuation methodologies for our stock options for our upcoming adoption of SFAS 123R, we reviewed and updated, among other things, our forfeiture and volatility assumptions. Our volatility assumption has been based on the historical volatility of Disney stock and for the last two years we have used an assumed volatility of 40%. The interpretive guidance provided in SAB 107 indicates that if companies have traded financial instruments from which they can derive an implied volatility, they should consider implied volatility in their volatility assumption. We reviewed the implied volatility of our share price from the market prices of Disney exchange traded options and other traded financial instruments, such as our convertible debt. Based on our analysis, we concluded that we can reliably estimate implied volatility such that it

14

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

can be taken into account in our volatility assumption. We considered the implied and historical volatility to determine an expected volatility of 27% which we have used to value the January grant. The weighted average fair values of options at their grant date during the six months ended April 2, 2005 and March 31, 2004, were $7.94 and $9.39, respectively.

     On January 3, 2005, the Company made its normal annual stock compensation grant which consisted of 17 million stock options and approximately 9 million restricted stock units. Approximately one million of the restricted stock units include market based performance conditions, which require that on each vesting date, the Company’s total shareholder return must exceed that of the S&P 500 for either the one or three-year period preceding the vesting date in order for the units to vest. Prior to the current year, the Company had issued performance restricted stock that generally vest based on achieving specified earnings targets. As of April 2, 2005, approximately 16 million restricted stock units were outstanding, of which two million vest upon such performance conditions. All other units do not include performance conditions and generally vest 50% two years from grant date and 50% four years from grant date. In certain circumstances as described in our proxy statement dated January 6, 2005, accelerated vesting may occur. During the six months ended April 2, 2005 and March 31, 2004, the Company recorded compensation expense related to restricted stock totaling $57 million and $22 million, respectively. Unearned restricted stock compensation expense for existing grants totaled approximately $310 million as of April 2, 2005 which will be amortized over the remaining vesting period. The increase in restricted stock expense reflects the shift in the Company’s long-term incentive compensation plan to increase the proportion of restricted stock units and reduce the proportion of stock options.

14.   Commitments and Contingencies

     The Company has exposure to various legal and other contingencies arising from the conduct of its businesses.

     Stephen Slesinger, Inc. v. The Walt Disney Company. In this lawsuit, filed on February 27, 1991 in the Los Angeles County Superior Court, the plaintiff claims that a Company subsidiary defrauded it and breached a 1983 licensing agreement with respect to certain Winnie the Pooh properties, by failing to account for and pay royalties on revenues earned from the sale of Winnie the Pooh movies on videocassette and from the exploitation of Winnie the Pooh merchandising rights. The plaintiff seeks damages for the licensee’s alleged breaches as well as confirmation of the plaintiff’s interpretation of the licensing agreement with respect to future activities. The plaintiff also seeks the right to terminate the agreement on the basis of the alleged breaches. If each of the plaintiff’s claims were to be confirmed in a final judgment, damages as argued by the plaintiff could total as much as several hundred million dollars and adversely impact the value to the Company of any future exploitation of the licensed rights. On March 29, 2004, the Court granted the Company’s motion for terminating sanctions against the plaintiff for a host of discovery abuses, including the withholding, alteration, and theft of documents and other information, and, on April 5, 2004, dismissed plaintiff’s case with prejudice. Plaintiff’s subsequent attempts to disqualify the judge who granted the terminating sanctions were denied in 2004, and its motion for a “new trial” was denied on January 26, 2005, allowing plaintiff to proceed with its noticed appeal from the April 5, 2004, order of dismissal.

     Milne and Disney Enterprises, Inc. v. Stephen Slesinger, Inc. On November 5, 2002, Clare Milne, the granddaughter of A. A. Milne, author of the Winnie the Pooh books, and the Company’s subsidiary Disney Enterprises, Inc. filed a complaint against Stephen Slesinger, Inc. (SSI) in the United States District Court for the Central District of California. On November 4, 2002, Ms. Milne served notices to SSI and the Company’s subsidiary terminating A. A. Milne’s prior grant of rights to Winnie the Pooh, effective November 5, 2004, and granted all of

15

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (continued)
(unaudited; tabular dollars in millions, except per share data)

those rights to the Company’s subsidiary. In their lawsuit, Ms. Milne and the Company’s subsidiary seek a declaratory judgment, under United States copyright law, that Ms. Milne’s termination notices were valid; that SSI’s rights to Winnie the Pooh in the United States terminated effective November 5, 2004; that upon termination of SSI’s rights in the United States, the 1983 licensing agreement that is the subject of the Stephen Slesinger, Inc. v. The Walt Disney Company lawsuit terminated by operation of law; and that, as of November 5, 2004, SSI was entitled to no further royalties for uses of Winnie the Pooh. SSI filed (a) an answer denying the material allegations of the complaint and (b) counterclaims seeking a declaration that (i) Ms. Milne’s grant of rights to Disney Enterprises, Inc. is void and unenforceable and (ii) Disney Enterprises, Inc. remains obligated to pay SSI royalties under the 1983 licensing agreement. SSI also filed a motion to dismiss the complaint or, in the alternative, for summary judgment. Subsequently, the Court ruled that Milne’s termination notices are invalid and dismissed SSI’s counterclaims as moot. Following further motions SSI filed an amended answer and counterclaims and a third-party complaint against Harriet Hunt (heir to E. H. Shepard, illustrator of the original Winnie the Pooh stories), who had served a notice of termination and a grant of rights similar to Ms. Milne’s. By order dated August 3, 2004, the Court granted SSI leave to amend its answer to assert counterclaims against the Company allegedly arising from the Milne and Hunt terminations and the grant of rights to the Company’s subsidiary for (a) unlawful and unfair business practices; and (b) breach of the 1983 licensing agreement. In November 2004, the District Court granted a motion by Milne to dismiss her complaint for the purpose of obtaining a final appealable order of dismissal, so as to permit her appeal to the Court of Appeals to proceed, and she has filed notice of such appeal.

     Management believes that it is not currently possible to estimate the impact if any, that the ultimate resolution of these matters will have on the Company’s results of operations, financial position or cash flows.

     The Company, together with, in some instances, certain of its directors and officers, is a defendant or co-defendant in various other legal actions involving copyright, breach of contract and various other claims incident to the conduct of its businesses. Management does not expect the Company to suffer any material liability by reason of such actions.

Contractual Guarantees

     The Company has guaranteed certain special assessment and water/sewer revenue bond series issued by the Celebration Community Development District and the Enterprise Community Development District (collectively, the Districts). The bond proceeds were used by the Districts to finance the construction of infrastructure improvements and the water and sewer system in the mixed-use, residential community of Celebration, Florida. As of April 2, 2005, the remaining debt service obligation guaranteed by the Company was $94 million, of which $59 million was principal. The Company is responsible to satisfy any shortfalls in debt service payments, debt service and maintenance reserve funds, and to ensure compliance with specified rate covenants. To the extent that the Company has to fund payments under its guarantees, the Districts have an obligation to reimburse the Company from future District revenues.

     The Company has also guaranteed certain bond issuances by the Anaheim Public Authority that were used by the City of Anaheim to finance construction of infrastructure and a public parking facility adjacent to the Disneyland Resort. Revenues from sales, occupancy and property taxes from the Disneyland Resort and non-Disney hotels are used by the City of Anaheim to repay the bonds. In the event of a debt service shortfall, the Company will be responsible to fund the shortfall. As of April 2, 2005, the remaining debt service obligation guaranteed by the Company was $402 million, of which $109 million was principal. To the extent that subsequent tax revenues exceed the debt service payments in subsequent periods, the Company would be reimbursed for any previously funded shortfalls.

     To date, tax revenues have exceeded the debt service payments for both the Celebration and Anaheim bonds.

16

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (continued)
(unaudited; tabular dollars in millions, except per share data)

     The Company has guaranteed payment of certain facility and equipment leases on behalf of a third-party service provider that supplies the Company with broadcasting transmission, post production, studio and administrative services in the U.K. If the third-party service provider defaults on the leases, the Company would be responsible for the remaining obligation unless the Company finds another service provider to take over the leases. As of April 2, 2005, the remaining undiscounted facility and equipment lease obligation was $87 million. These leases expire in March 2014.

Commitments

     In April 2005, the Company entered into a new agreement with the NFL for the right to broadcast NFL Monday Night football games on ESPN. The contract provides for total payments of approximately $8.87 billion over an eight-year period, commencing with the 2006-2007 season.

15.   Income Taxes

     As a matter of course, the Company is regularly audited by federal, state and foreign tax authorities. From time to time, these audits result in proposed assessments. Among current audits, the Internal Revenue Service (IRS) is currently examining the Company’s federal income tax returns for 1996 through 2000. In connection with this examination, the IRS is evaluating certain of the Company’s tax positions for the years under examination. The Company believes that its tax positions comply with applicable tax law and that it has adequately provided for any reasonably foreseeable outcome of these matters. Accordingly, the Company does not anticipate any material earnings impact from their ultimate resolution. During the first quarter of fiscal 2005, there was a favorable resolution of an income tax matter that resulted in a $24 million tax reserve release.

17

PART I. FINANCIAL INFORMATION—(continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

ORGANIZATION OF INFORMATION

     Management’s Discussion and Analysis provides a narrative of the Company’s financial performance and condition that should be read in conjunction with the accompanying financial statements. It includes the following sections:

Overview
Seasonality
Business Segment Results
               Quarter Results
               Six Month Results
Corporate and Other Non-Segment Items
Stock Option Accounting
Financial Condition
Commitments and Contingencies
Other Matters
Market Risk
Forward Looking Statements

OVERVIEW

     Our summary consolidated results are presented below:

	Quarter Ended									Six Months Ended
	April 2,			March 31,						April 2,			March 31,
(in millions, except per share data)	2005			2004			% Change			2005			2004			% Change
Revenues	$	7,829		$	7,189			9	%	$	16,495		$	15,738			5	%
Costs and expenses		(6,655	)		(6,153	)		(8	)%		(14,147	)		(13,537	)		(5	)%
Restructuring and impairment charges		(7	)		(3	)		nm			(24	)		(3	)		nm
Net interest expense		(90	)		(147	)		39	%		(230	)		(295	)		22	%
Equity in the income of investees		113			77			47	%		238			174			37	%
Income before income taxes and minority interests		1,190			963			24	%		2,332			2,077			12	%
Income taxes		(438	)		(357	)		(23	)%		(831	)		(767	)		(8	)%
Minority interests		(54	)		(69	)		22	%		(80	)		(85	)		6	%
Net income	$	698		$	537			30	%	$	1,421		$	1,225			16	%
Diluted earnings per share	$	0.33		$	0.26			27	%	$	0.68		$	0.59			15	%

Quarter Results

     Net income increased 30%, or $161 million, to $698 million driven by growth at all operating segments led by Studio Entertainment. Diluted earnings per share increased 27% to $0.33 in the current year quarter. Current quarter earnings per share includes a $61 million ($38 million after-tax) gain recognized in connection with the Euro Disney financial restructuring and a $32 million ($20 million after-tax) charge to write down an investment.

Six Month Results

     Net income for the six-month period increased 16%, or $196 million, to $1.4 billion. The increase in net income was primarily due to segment operating growth at the Media Networks, Parks & Resorts and Consumer Products segments, partially offset by a decrease at Studio Entertainment. Diluted earnings per share increased 15% to $0.68 in the six month period. In addition to the Euro Disney debt restructuring gain and investment write-down recorded in the second quarter, the six month period also included a $24 million benefit from the favorable resolution of certain income tax matters which was recorded in the first quarter and restructuring and impairment charges of $24 million ($15 million after-tax), of which $7 million ($4 million after-tax) was recorded in the second quarter.

18

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

SEASONALITY

     The Company’s businesses are subject to the effects of seasonality. Consequently, the operating results for the quarter and six months ended April 2, 2005 for each business segment, and for the Company as a whole, are not necessarily indicative of results to be expected for the full year.

     Media Networks revenues are influenced by advertiser demand and the seasonal nature of programming, and generally peak in the spring and fall.

     Parks and Resorts revenues fluctuate with changes in theme park attendance and resort occupancy resulting from the seasonal nature of vacation travel. Peak attendance and resort occupancy generally occur during the summer months, when school vacations occur, and during early-winter and spring holiday periods.

     Studio Entertainment revenues fluctuate based upon the timing of theatrical motion picture, home entertainment (DVD and VHS) and television releases. Release dates for theatrical, home entertainment and television products are determined by several factors, including timing of vacation and holiday periods and competition in the market.

     Consumer Products revenues are influenced by seasonal consumer purchasing behavior and the timing of animated theatrical releases.

BUSINESS SEGMENT RESULTS

	Quarter Ended							Six Months Ended
	April 2,		March 31,					April 2,		March 31,
(in millions)	2005		2004		% Change			2005		2004		% Change
Revenues:
Media Networks	$	3,008	$	2,846		6	%	$	6,469	$	5,960		9	%
Parks and Resorts		2,096		1,669		26	%		4,214		3,300		28	%
Studio Entertainment		2,260		2,162		5	%		4,622		5,126		(10	)%
Consumer Products		465		512		(9	)%		1,190		1,352		(12	)%
	$	7,829	$	7,189		9	%	$	16,495	$	15,738		5	%
Segment operating income:
Media Networks	$	725	$	704		3	%	$	1,192	$	1,048		14	%
Parks and Resorts		193		188		3	%		451		420		7	%
Studio Entertainment		253		153		65	%		586		611		(4	)%
Consumer Products		111		75		48	%		342		312		10	%
	$	1,282	$	1,120		14	%	$	2,571	$	2,391		8	%

19

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

     The Company evaluates the performance of its operating segments based on segment operating income. The following table reconciles segment operating income to income before income taxes and minority interests.

	Quarter Ended									Six Months Ended
	April 2,			March 31,						April 2,			March 31,
(in millions)	2005			2004			% Change			2005			2004			% Change
Segment operating income	$	1,282		$	1,120			14	%	$	2,571		$	2,391			8	%
Corporate and unallocated shared expenses		(105	)		(82	)		(28	)%		(218	)		(185	)		(18	)%
Amortization of intangible assets		(3	)		(2	)		(50	)%		(5	)		(5	)		—
Restructuring and impairment charges		(7	)		(3	)		nm			(24	)		(3	)		nm
Net interest expense		(90	)		(147	)		39	%		(230	)		(295	)		22	%
Equity in the income of investees		113			77			47	%		238			174			37	%
Income before income taxes and minority interests	$	1,190		$	963			24	%	$	2,332		$	2,077			12	%

     Depreciation expense is as follows:

	Quarter Ended				Six Months Ended
	April 2,		March 31,		April 2,		March 31,
(in millions)	2005		2004		2005		2004
Media Networks	$	44	$	42	$	87	$	84
Parks and Resorts
Domestic		186		181		372		358
International (1)		50		—		100		—
Studio Entertainment		9		6		14		10
Consumer Products		7		13		13		26
Segment depreciation expense		296		242		586		478
Corporate		31		37		65		74
Total depreciation expense	$	327	$	279	$	651	$	552

⁽¹⁾ Represents 100% of Euro Disney and Hong Kong Disneyland’s depreciation expense. The Company began consolidating the results of operations and cash flows of these two entities beginning April 1, 2004.

     Segment depreciation expense is included in segment operating income and corporate depreciation expense is included in corporate and unallocated shared expenses.

20

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

Business Segment Results – Quarter Results

Media Networks

     The following table provides supplemental revenue and segment operating income detail for the Media Networks segment:

	Quarter Ended							Six Months Ended
	April 2,		March 31,					April 2,		March 31,
(in millions)	2005		2004		% Change			2005		2004		% Change
Revenues:
Cable Networks	$	1,622	$	1,508		8	%	$	3,429	$	3,068		12	%
Broadcasting		1,386		1,338		4	%		3,040		2,892		5	%
	$	3,008	$	2,846		6	%	$	6,469	$	5,960		9	%
Segment operating income:
Cable Networks	$	671	$	676		(1	)%	$	998	$	872		14	%
Broadcasting		54		28		93	%		194		176		10	%
	$	725	$	704		3	%	$	1,192	$	1,048		14	%

Revenues

     Media Networks revenues increased 6%, or $162 million, to $3.0 billion, reflecting an 8% increase, or $114 million, at the Cable Networks, and a 4% increase, or $48 million, at Broadcasting.

     Increased Cable Networks revenues were driven by increases of $73 million in revenues from cable and satellite operators and $66 million in advertising revenues. Revenues from cable and satellite operators are generally derived from fees charged on a per subscriber basis, and the increase in the current quarter primarily reflected contractual rate adjustments, and to a lesser extent, subscriber growth at ESPN and Disney Channels partially offset by a revenue deferral at ESPN. Increased advertising revenue was primarily due to improvements at ESPN and ABC Family.

     The Company’s contractual arrangements with cable and satellite operators are renewed or renegotiated from time to time in the ordinary course of business. A number of these arrangements are currently in negotiation or will be up for renewal in the next six months. Consolidation in the cable and satellite distribution industry and other factors may adversely affect the Company’s ability to obtain and maintain contractual terms for the distribution of its various cable and satellite programming services that are as favorable as those currently in place. If this were to occur, revenues from Cable Networks could increase at slower rates than in the past or could be stable or decline. Certain of the Company’s existing contracts with cable and satellite operators as well as contracts in negotiation include annual programming commitments. In these cases, revenue subject to the commitment is deferred until the annual commitments are satisfied which generally results in revenue shifting from the first half of the year to the second half. During the quarter, the Company deferred $111 million of revenue subject to these commitments. We expect to satisfy the programming commitments and recognize the deferred revenue in the second half of fiscal 2005 with the majority of the revenues deferred for the year to be recognized in the fourth quarter.

     Increased Broadcasting revenues were driven by an increase of $16 million at the ABC Television Network and $12 million at Radio Stations. The increase in the ABC Television Network revenues was primarily due to an increase in primetime advertising revenue due to higher primetime rates and ratings partially offset by more college

21

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

football broadcasts in the prior-year quarter. The increase at the Radio Stations was primarily due to higher advertising revenues due to increased market share in major markets.

Costs and Expenses

     Costs and expenses, which consist primarily of programming rights costs, production costs, distribution and selling expenses and labor costs, increased 7%, or $141 million, to $2.3 billion. The increase was due primarily to higher programming and production costs at the cable operations driven mainly by higher sports programming costs, partially offset by lower programming and production costs at the broadcast operations.

     The Company has various contractual commitments for the purchase of television rights for sports and other programming, including the NBA, NFL, MLB, and various college football conference and bowl games. The costs of these contracts have increased significantly in recent years. We enter into these contractual commitments with the expectation that, over the life of the contracts, revenue from advertising during the programming and affiliate fees will exceed the costs of the programming. While contract costs may initially exceed incremental revenues and negatively impact operating income, it is our expectation that the combined value to our networks from all of these contracts will result in long-term benefits. The actual impact of these contracts on the Company’s results over the term of the contracts is dependent upon a number of factors, including the strength of advertising markets, effectiveness of marketing efforts and the size of viewer audiences.

     In April 2005, the Company entered into a new agreement with the NFL for the right to broadcast NFL Monday Night football games on ESPN. The contract provides for total payments of approximately $8.87 billion over an eight-year period, commencing with the 2006-2007 season. The payment terms of the new contract provide for average increases in the annual payments of approximately 4% per year. We expect that our expense recognition of the costs of the new contract will reflect this payment schedule.

Segment Operating Income

     Segment operating income increased 3%, or $21 million, to $725 million for the quarter due to an increase of $26 million at Broadcasting, partially offset by a decrease of $5 million at the Cable Networks. The increase at Broadcasting was driven by improvements at the ABC TV Network due to higher advertising revenues and lower programming costs, partially offset by higher advertising and promotion expenses. The decrease in cable operating income was due primarily to the $111 million revenue deferral at ESPN, higher programming costs and the absence of the benefit from a bankruptcy settlement with a cable operator in the prior-year quarter, partially offset by higher affiliate and advertising revenues.

MovieBeam

     The Company launched MovieBeam, an on-demand electronic movie rental service in three domestic cities in October 2003. For the last several months, the Company has been evaluating its go-forward business model and negotiating with strategic and financial investors. The Company recently suspended service in its three test markets. Based on the progress of the negotiations and certain long term technology changes affecting the technology that is used by the MovieBeam venture, the Company updated its valuation of its investment in the company that provides this technology and concluded that there was a partial impairment and consequently recorded a $32 million investment write-down. The write-down is recorded in interest and investment income (loss). As of April 2, 2005, the Company’s remaining recorded investment related to the MovieBeam venture totaled $33 million. The Company has executed licensing arrangements under which it would pay an additional $45 million over the next three years if the Company continues to pursue this business over that time frame. At this time, the Company continues to pursue strategic and financial investors. However, if these efforts are unsuccessful, the remaining $33 million investment will be fully written off.

22

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

Parks and Resorts

Revenues

     Revenues at Parks and Resorts increased 26%, or $427 million, to $2.1 billion. The increase was driven by increases of $303 million from the consolidation of Euro Disney and Hong Kong Disneyland (almost entirely Euro Disney) and $123 million from the Walt Disney World Resort.

     At the Walt Disney World Resort, increased revenues were primarily driven by higher guest spending and increased occupied room nights. Higher guest spending at the theme parks reflected ticket price increases and fewer promotional offers driven by increased product demand reflecting the ongoing recovery in travel and tourism and the popularity of Disney as a travel destination. Increased occupancy was partially driven by the reopening of approximately one thousand rooms in the French Quarter portion of the Port Orleans hotel late in the second quarter of the prior year.

     Across our domestic theme parks, attendance increased 3% and per capita guest spending increased 11% compared to the prior-year quarter. Attendance at the Walt Disney World Resort increased 5% while per capita guest spending increased 10%. Attendance at the Disneyland Resort decreased 3% while per capita guest spending increased 12%. Operating statistics for our hotel properties are as follows:

	East Coast Resorts						West Coast Resorts						Total Domestic Resorts
	Quarter Ended						Quarter Ended						Quarter Ended
	April 2,			March 31,			April 2,			March 31,			April 2,			March 31,
	2005			2004			2005			2004			2005			2004
Occupancy		84	%		77	%		80	%		81	%		83	%		77	%
Available Room Nights (in thousands)		2,188			2,175			202			204			2,390			2,379
Per Room Guest Spending	$	207		$	209		$	261		$	245		$	211		$	212

     Per room guest spending consists of the average daily hotel room rate as well as guest spending on food, beverages, and merchandise at the hotels.

Costs and Expenses

     Costs and expenses, which consist principally of labor, costs of merchandise, food and beverages sold, depreciation, repairs and maintenance, entertainment, marketing and sales and information technology expense, increased 28%, or $422 million compared to the prior-year quarter. The increase in costs and expenses was primarily due to the consolidation of Euro Disney and, to a lesser extent, Hong Kong Disneyland. In total, the consolidation of these businesses increased costs and expenses by $347 million. The remaining increase was due to higher volume-related expenses, fixed charges, and increased information technology expenses at Walt Disney World.

     Hong Kong Disneyland is scheduled to open in September 2005 and has incurred pre-opening costs and other expenses of $13 million and $24 million during the current quarter and six months period, respectively. We expect to incur additional pre-opening costs during the remainder of fiscal 2005 which will be charged to expense as incurred.

Segment Operating Income

     Segment operating income increased 3%, to $193 million primarily due to growth at Walt Disney World partially offset by decreases due to the consolidation of Euro Disney and, to a lesser extent, Hong Kong Disneyland.

23

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

Studio Entertainment

Revenues

     Revenues increased 5%, or $98 million, to $2.3 billion, primarily driven by an increase of $184 million in domestic home entertainment, partially offset by decreases of $82 million in international theatrical motion picture distribution and $48 million in international home entertainment. Revenues for domestic theatrical motion picture distribution were comparable quarter over quarter.

     Higher domestic home entertainment revenues reflected higher DVD unit sales of current quarter titles, which included Disney/Pixar’s The Incredibles, Ladder 49 and Bambi as compared to the prior-year quarter, which included The Lion King 1 ¹/2, Brother Bear and Spy Kids 3: Game Over. Lower international theatrical motion picture distribution revenues reflected the performance of current quarter titles, which included The Incredibles and National Treasure as compared to Disney/Pixar’s Finding Nemo, Brother Bear and Haunted Mansion in the prior-year quarter. In international home entertainment, revenues from current quarter releases, which included The Incredibles and Bambi, were lower than the prior-year quarter titles, which included Finding Nemo, Pirates of the Caribbean, and The Lion King 1 ¹/2.

Costs and Expenses

     Costs and expenses, which consist primarily of production cost amortization, distribution and selling expenses, product costs and participation costs, remained comparable at $2.0 billion. Lower costs in worldwide theatrical motion picture distribution were offset by higher costs in domestic home entertainment and other distribution channels. Lower costs in worldwide theatrical motion picture distribution reflected lower distribution costs and production write-offs. The prior year included higher profile films that had more extensive marketing campaigns to launch the films. Higher costs in domestic home entertainment reflected higher participation costs and higher distribution costs related to the release of The Incredibles during the quarter. Pixar receives an equal share of profits (after distribution fees) as co-producer of The Incredibles.

Segment Operating Income

     Segment operating income increased 65%, or $100 million, to $253 million, primarily driven by higher DVD unit sales in domestic home entertainment, lower writeoffs and increases in worldwide theatrical motion picture distribution. These increases were partially offset by a decline in international home entertainment.

Miramax

     In March 2005, the Company entered into agreements with Miramax co-chairmen, Bob and Harvey Weinstein, and their new production company. Pursuant to those agreements, the Company, among other things, substantially resolved all economic issues relating to the Weinsteins’ existing employment agreements; terminated the Weinsteins’ existing employment agreements and entered into new employment agreements with them through September 30, 2005; sold interests in certain films in various stages of production to the Weinsteins’ new company and provided it with the opportunity to acquire certain development projects, as well as sequel rights to certain library product. The Company will retain certain co-financing, distribution and participation rights in several of these properties. The Company will also retain the Miramax and Dimension film libraries and the name “Miramax Films,” while the Weinsteins will take the Dimension name into their new company. No material charges were recorded as a result of the execution of the agreements. The Company intends to evaluate projects currently in progress and other aspects of Miramax’s business plan when new management of Miramax is put in place this summer. Although the Company does not currently anticipate that it will incur material charges in connection with this evaluation, it is unable to determine the amount of any potential charges until the evaluation is completed.

24

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

Consumer Products

Revenues

     Revenues for the quarter decreased 9%, or $47 million, to $465 million, reflecting a decrease of $100 million at the Disney Stores, driven by the sale of the Disney Store North America chain in November 2004, partially offset by an increase in merchandise licensing of $50 million. The increase in licensing revenue was primarily due to the recognition of contractual minimum guarantee revenues of $34 million.

Costs and Expenses

     Costs and expenses decreased 19%, or $83 million, to $354 million. The decrease was primarily due to the sale of the Disney Stores North America chain.

Segment Operating Income

     Segment operating income increased 48%, or $36 million, to $111 million, driven by the recognition of contractual minimum guarantee revenue and the absence of the loss in the prior year from the Disney Store North America chain.

The Disney Store

     Effective November 21, 2004, the Company sold substantially all of the Disney Stores chain in North America under a long-term licensing arrangement, to a wholly-owned subsidiary of The Children’s Place (TCP). Pursuant to the terms of sale, the Disney Stores North America retained its lease obligations related to the stores transferred to the buyer and became a wholly owned subsidiary of TCP. TCP will pay the Company a royalty on substantially all of the physical retail store sales beginning on the second anniversary of the closing date of the sale. The Company received $100 million for the working capital transferred to the buyer at the closing of the transaction.

     During the six months ended April 2, 2005, the Company recorded a loss on the working capital that was transferred to the buyer and additional restructuring and impairment charges totaling $24 million, related to the sale of the Disney Stores North America, of which $7 million was recorded in the second quarter. The restructuring and impairment charges were primarily for employee retention and severance and lease termination costs.

     The Company is currently considering options with respect to the Disney Stores in Europe, including a potential sale. The carrying value of the fixed and other long-term assets of the chain in Europe totaled $45 million at April 2, 2005. Depending on the terms of a sale, an impairment of these assets is possible. The remaining undiscounted base lease obligations for the chain in Europe totaled $202 million at April 2, 2005.

25

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

     The following table provides supplemental revenue and operating income detail for the Disney Stores. Amounts for North America reflect operations through November 20, 2004 (the day prior to the effective date of the sale of these stores).

	Quarter Ended									Six Months Ended
	April 2,			March 31,						April 2,			March 31,
(in millions)	2005			2004			% Change			2005			2004		% Change
Revenues:
North America	$	2		$	102			(98	)%	$	82		$	358		(77	)%
Europe		69			69			nm			197			189		4	%
Other		5			5			nm			10			12		(17	)%
	$	76			176			(57	)%	$	289		$	559		(48	)%
Operating income (loss):
North America	$	(2	)	$	(21	)		90	%	$	(1	)	$	9		nm
Europe		(8	)		(5	)		(60	)%		15			20		(25	)%
Other		3			3			nm			6			6		nm
	$	(7	)	$	(23	)		70	%	$	20		$	35		(43	)%

Business Segment Results – Six Month Results

Media Networks

Revenues

     Media Networks revenues increased 9%, or $509 million, to $6.5 billion, reflecting a 12% increase, or $361 million at the Cable Networks, and an increase of 5%, or $148 million at Broadcasting.

     Increased Cable Networks revenues were driven by increases of $254 million in revenues from cable and satellite operators and $141 million in advertising revenues. Revenues from cable and satellite operators are largely derived from fees charged on a per subscriber basis, and the increase in the current period primarily reflected contractual rate adjustments, and to a lesser extent, subscriber growth at ESPN and the Disney Channels, partially offset by the programming commitment revenue deferral at ESPN. Increased advertising revenue was primarily due to improvements at ESPN and ABC Family.

     During the six month period, the Company deferred $127 million of revenue subject to sports programming commitments at ESPN. We expect to satisfy the programming commitments and recognize the deferred revenue in the second half of fiscal 2005 with the majority of the revenues deferred for the year to be recognized in the fourth quarter.

     Increased Broadcasting revenues were driven by an increase of $73 million at the ABC Television Network and $52 million at Television Production and Distribution. The increase in the ABC Television Network revenues was driven by an increase in primetime advertising revenue due to higher primetime rates and ratings. The increase in television production and distribution was due to higher license fee revenues relating to Desperate Housewives and Lost from international markets.

Costs and Expenses

     Costs and expenses increased 7%, or $365 million, to $5.3 billion. The increase was due to higher programming and production, advertising and promotion and other administrative costs at both the Cable Networks and Broadcasting operations.

26

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

Segment Operating Income

     Segment operating income increased 14%, or $144 million, to $1.2 billion due to increases of $126 million at the Cable Networks and $18 million at Broadcasting. The increase in Cable operating income was driven by higher affiliate and advertising revenue partially offset by higher costs and the programming commitment revenue deferral. Additionally, the prior-year period benefited from a bankruptcy settlement with a cable operator in Latin America. The increase at Broadcasting was primarily due to higher advertising revenues, offset by cost increases.

Parks and Resorts

Revenues

     Revenues at Parks and Resorts increased 28%, or $914 million, to $4.2 billion. The increase was driven by increases of $672 million from the consolidation of Euro Disney and Hong Kong Disneyland (almost entirely Euro Disney), $221 million from the Walt Disney World Resort and $50 million from the Disneyland Resort.

     At the Walt Disney World Resort, increased revenues were primarily driven by higher guest spending and occupied room nights as well as increased attendance. Higher guest spending at the theme parks reflected ticket price increases and fewer promotional offers due to increased product demand reflecting the ongoing recovery in travel and tourism and the popularity of Disney as a travel destination. Increased hotel occupancy and theme park attendance were driven by increased domestic, international, and resident guest visitation, reflecting the ongoing recovery in travel and tourism.

     At the Disneyland Resort, increased revenues were driven by higher guest spending at the theme parks and hotel properties.

     Across our domestic theme parks, attendance increased 3% and per capita guest spending increased 7%. Attendance at the Walt Disney World Resort increased 5% while per capita guest spending increased 4%. Attendance at the Disneyland Resort decreased 3% while per capita guest spending increased 12%. Operating statistics for our hotel properties are as follows:

	East Coast Resorts						West Coast Resorts						Total Domestic Resorts
	Six Months Ended						Six Months Ended						Six Months Ended
	April 2,			March 31,			April 2,			March 31,			April 2,			March 31,
	2005			2004			2005			2004			2005			2004
Occupancy		83	%		78	%		85	%		84	%		83	%		78	%
Available Room Nights (in thousands)		4,367			4,119			404			408			4,771			4,527
Per Room Guest Spending	$	201		$	202		$	257		$	242		$	206		$	206

     The increase in available room nights reflected the opening of Disney’s Pop Century Resort at Walt Disney World late in the first quarter of fiscal 2004. Per room guest spending consists of the average daily hotel room rate as well as guest spending on food, beverages, and merchandise at the hotels.

Costs and Expenses

     Costs and expenses increased 31%, or $883 million, compared to the prior-year period. The increase in costs and expenses was primarily due to the consolidation of Euro Disney and, to a lesser extent, Hong Kong Disneyland. In total, the consolidation of these businesses increased costs and expenses by $722 million. The remaining increase was due to higher volume-related expenses and fixed charges at Walt Disney World and Disneyland and increased information technology expenses at Walt Disney World.

27

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

Segment Operating Income

     Segment operating income increased 7%, or $31 million, to $451 million due to growth at Walt Disney World and Disneyland. These increases were partially offset by a decrease due to the consolidation of Euro Disney and Hong Kong Disneyland.

Studio Entertainment

Revenues

     Revenues decreased 10%, or $504 million, to $4.6 billion, due to decreases of $688 million in worldwide home entertainment and $151 million in international theatrical motion picture distribution, partially offset by increases of $164 million in television distribution and $106 million in domestic theatrical motion picture distribution.

     Lower worldwide home entertainment revenues reflected lower overall DVD unit sales of current period titles, which included The Incredibles, King Arthur and Princess Diaries 2: Royal Engagement as compared to the strong performances of Finding Nemo, Pirates of the Caribbean and The Lion King Platinum Release in the prior-year period. Despite the strong performances of current period titles, which included The Incredibles and National Treasure, international theatrical motion picture distribution revenues were lower compared to the stronger performances of prior-year period titles, which included Finding Nemo, Brother Bear and Pirates of the Caribbean. Higher television distribution revenues were driven by higher pay television sales due to better performing titles. Higher revenues in domestic theatrical motion picture distribution were primarily driven by the strong performance of current period titles, which included The Incredibles and National Treasure.

Costs and Expenses

     Costs and expenses decreased 11%, or $479 million. Lower costs and expenses reflected decreases in domestic home entertainment and worldwide theatrical motion picture distribution, partially offset by an increase in television distribution. Lower costs in domestic home entertainment reflected higher distribution costs in the prior year for the releases of Finding Nemo, Pirates of the Caribbean and The Lion King Platinum Release compared to The Incredibles in the current-year period. Additionally, participation costs were higher in the prior-year period driven by Finding Nemo and Pirates of the Caribbean compared to The Incredibles in the current period. Pixar receives an equal share of profits (after distribution fees) as co-producer of Finding Nemo and The Incredibles. Lower costs in worldwide theatrical motion picture distribution reflected lower distribution costs and production write-offs. The prior year included higher profile films that had more extensive marketing campaigns to launch the films. Higher costs and expenses in television distribution reflected higher production cost amortization due to higher worldwide pay television sales in the current period.

Segment Operating Income

     Segment operating income decreased 4%, or $25 million, to $586 million, due to declines in worldwide home entertainment and international theatrical motion picture distribution, partially offset by increases in domestic theatrical motion picture distribution and television distribution.

28

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

Consumer Products

Revenues

     Revenues decreased 12%, or $162 million, to $1.2 billion, due to a decrease of $270 million at the Disney Stores, driven by the sale of the Disney Stores North America chain in November 2004, partially offset by increases in merchandise licensing and Buena Vista Games of $73 million and $37 million, respectively.

     The increase in merchandise licensing reflected higher revenues in all categories, in particular, toy revenues which increased largely due to the recognition of contractual minimum guarantee revenues. Growth in other categories was driven by home and infant furnishings and fast moving consumer goods. The increases at Buena Vista Games reflected the recognition of contractual minimum guarantee revenue, sales of The Incredibles on several platforms and Game Boy Advance sales of Lizzie McGuire 2, Raven, and Lilo and Stitch 2 titles.

Costs and Expenses

     Costs and expenses decreased 18%, or $192 million, to $848 million. The decrease was primarily due to the sale of the Disney Stores North America chain.

Segment Operating Income

     Segment operating income increased 10%, or $30 million, to $342 million, driven by increased revenues at merchandise licensing and Buena Vista Games, partially offset by the sale of the Disney Store North America chain prior to the current year’s holiday season, which was profitable in the prior-year period.

CORPORATE AND OTHER NON-SEGMENT ITEMS

Corporate and Unallocated Shared Expenses

     Corporate and unallocated shared expenses are presented below:

	Quarter Ended									Six Months Ended
	April 2,			March 31,						April 2,			March 31,
(in millions)	2005			2004			% Change			2005			2004			% Change
Corporate and unallocated shared expenses	$	(105	)	$	(82	)		(28	)%	$	(218	)	$	(185	)		(18	)%

     The increase in corporate and unallocated shared expenses for the quarter and six months primarily reflected reductions in litigation reserves in the prior year as a result of favorable developments in a legal matter. Additionally, the current year periods reflected higher restricted stock expense due to a shift in the Company’s long-term incentive compensation plan to increase the proportion of restricted stock units and reduce the proportion of stock options used in the long-term incentive awards. This increase was offset by other cost reductions.

Net Interest Expense

     Net interest expense is presented below:

	Quarter Ended						Six Months Ended
	April 2,			March 31,			April 2,			March 31,
(in millions)	2005			2004			2005			2004
Interest expense	$	(141	)	$	(140	)	$	(303	)	$	(288	)
Interest and investment income (loss)		(10	)		(7	)		12			(7	)
Euro Disney gain on restructuring		61			—			61			—
Net interest expense	$	(90	)	$	(147	)	$	(230	)	$	(295	)

29

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

     Interest expense was essentially flat for the quarter and up $15 million for six months as the benefit from lower average debt balances was offset by increases of $15 million and $36 million for the quarter and six months ended April 2, 2005, respectively, due to the consolidation of Euro Disney and Hong Kong Disneyland. Net interest expense was also impacted by a $61 million gain (primarily non-cash) that was recognized as a result of the restructuring of Euro Disney’s borrowings (see Note 8 to the Condensed Consolidated Financial Statements).

     Interest and investment income (loss) for the quarter and six months ended April 2, 2005 includes a $32 million write-down of our investment in a company that licenses technology to our MovieBeam venture, while the prior-year quarter and six months included a $13 million write-down of another investment.

Equity in the Income of Investees

	Quarter Ended				Six Months Ended
	April 2,		March 31,		April 2,		March 31,
(in millions)	2005		2004		2005		2004
Equity in the income of investees	$	113	$	77	$	238	$	174

     The increase in equity in the income of investees for the quarter and six months ended April 2, 2005, was primarily due to the absence of equity losses from Euro Disney. Euro Disney was accounted for under the equity method in the prior-year and is consolidated in the current-year.

Effective Income Tax Rate

	Quarter Ended									Six Months Ended
	April 2,			March 31,			ppt			April 2,			March 31,			ppt
	2005			2004			Change			2005			2004			Change
Effective Income Tax Rate		36.8	%		37.1	%		(0.30	)		35.6	%		36.9	%		(1.30	)

     The decrease in the effective income tax rate from 36.9% to 35.6% for the six months was primarily due to the favorable resolution of an income tax matter in the first quarter of the current year which resulted in a $24 million tax reserve release and a 1.1% reduction in the effective rate.

     The tax provision for the current quarter reflects an estimated tax benefit of $19 million from an exclusion provided under U.S. income tax laws with respect to certain extraterritorial income attributable to foreign trading gross receipts (FTGRs). This exclusion was repealed as part of the American Jobs Creation Act of 2004 (the Act), which was enacted on October 22, 2004. The Act provides for a phase-out such that the exclusion for the Company’s otherwise qualifying FTGRs generated in fiscal 2005, 2006 and 2007 will be limited to approximately 85%, 65% and 15%, respectively. No exclusion will be available in fiscal years 2008 and thereafter.

     The Act also made a number of other changes to the U.S. income tax laws which will affect the Company in future years, the most significant of which is a new deduction for qualifying domestic production activities. The Internal Revenue Service and U.S. Treasury Department are expected to issue further guidance regarding the application of this new law by the end of the current fiscal year. We are evaluating and will quantify the impact of the Act following the issuance of the additional guidance.

30

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

STOCK OPTION ACCOUNTING

     The following table reflects pro forma net income and earnings per share had the Company elected to record stock option expense based on the fair value methodology:

	Quarter Ended						Six Months Ended
	April 2,			March 31,			April 2,			March 31,
(in millions, except per share data)	2005			2004			2005			2004
Net income:
As reported	$	698		$	537		$	1,421		$	1,225
Less stock option expense		(65	)		(102	)		(123	)		(193	)
Tax effect		24			38			45			72
Pro forma after stock option expense	$	657		$	473		$	1,343		$	1,104
Diluted earnings per share:
As reported	$	0.33		$	0.26		$	0.68		$	0.59
Pro forma after stock option expense	$	0.31		$	0.23		$	0.64		$	0.53

     These pro forma amounts may not be representative of future disclosures since the estimated fair value of stock options is amortized to expense over the vesting period and additional options may be granted in future years.

     Fully diluted shares outstanding and diluted earnings per share include the effect of in-the-money stock options calculated based on the average share price for the period and assumes conversion of the convertible senior notes. The dilution from employee options increases as the Company’s share price increases, as shown below:

Average		Total		Percentage of			Hypothetical
Disney		In-the-Money	Incremental	Average Shares			Q2 2005
Share Price		Options	Diluted Shares (1)	Outstanding			EPS Impact (3)
$	28.43	162 million	— (2)		—		$	0.000
	30.00	168 million	5 million		0.24	%		(0.001	)
	40.00	227 million	33 million		1.56	%		(0.005	)
	50.00	235 million	52 million		2.46	%		(0.008	)

(1)	Represents the incremental impact on fully diluted shares outstanding assuming the average share prices indicated, using the treasury stock method. Under the treasury stock method, the tax effected proceeds that would be received from the exercise of all in-the-money options are assumed to be used to repurchase shares.
(2)	Fully diluted shares outstanding for the quarter ended April 2, 2005 total 2,114 million and include the dilutive impact of in-the-money options at the average share price for the period of $28.43 and assumes conversion of the convertible senior notes. At the average share price of $28.43, the dilutive impact of in-the-money options was 25 million shares for the quarter.
(3)	Based upon Q2 2005 earnings of $698 million, or $0.33 per share.

31

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

FINANCIAL CONDITION

     For the six months ended April 2, 2005, cash and cash equivalents decreased by $101 million as detailed below.

	Six Months Ended
	April 2,			March 31,
(in millions)	2005			2004			Change
Cash provided by operations	$	1,149		$	2,504		$	(1,355	)
Cash used by investing activities		(689	)		(429	)		(260	)
Cash used by financing activities		(561	)		(784	)		223
(Decrease) Increase in cash and cash equivalents	$	(101	)	$	1,291		$	(1,392	)

Operating Activities

     Cash provided by operations decreased $1.4 billion to $1.1 billion, driven by increased receivables primarily due to the second quarter home video release of The Incredibles and the timing of payments related to accounts payable, accrued expenses, income taxes and minority partner dividends.

Investing Activities

     During the six months ended April 2, 2005, the Company invested $773 million in parks, resorts and other properties. Investments in parks, resorts and other properties by segment are as follows:

	Six Months Ended
	April 2,		March 31,
(in millions)	2005		2004
Media Networks	$	75	$	75
Parks and Resorts
Domestic		333		301
International (1)		314		—
Studio Entertainment		15		16
Consumer Products		3		6
Corporate and unallocated shared		33		70
	$	773	$	468

⁽¹⁾  Represents 100% of Euro Disney and Hong Kong Disneyland’s capital expenditures for the current six month period. The Company began consolidating the results of operations and cash flows of these two entities beginning April 1, 2004.

     Capital expenditures for the Parks and Resorts segment are principally for theme park and resort expansion, new rides and attractions and recurring capital and capital improvements. The international park spending in 2005 primarily reflects Hong Kong Disneyland’s construction costs. Our equity partner funded $60 million of Hong Kong Disneyland’s cash requirement which is included as a source of cash in financing activities.

Other Investing Activities

     In connection with the sale of the Disney Stores in North America, the Company received $100 million for the working capital transferred to the buyer.

32

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

Financing Activities

     During the six months ended April 2, 2005, the Company’s borrowing activity was as follows:

	September 30,							Other			April 2,
(in millions)	2004		Additions		Payments			activity			2005
Commercial paper borrowings	$	100		1,359	$	—		$	(4	)		1,455
U.S. medium-term notes		6,624		—		(750	)		—			5,874
Convertible senior notes		1,323		—		—			—			1,323
Other U.S. dollar denominated debt		305		—		—			—			305
Privately placed debt		254		—		(47	)		—			207
European medium-term notes		1,099		—		(832	)		—			267
Preferred Stock		373		—		—			(5	)		368
Capital Cities/ABC and ABC Family debt		189		—		—			(2	)		187
Other(1)		455		—		(1	)		(120	)		334
Euro Disney borrowings(2)		2,221		—		(13	)		(36	)		2,172
Hong Kong Disneyland borrowings(3)		545		141		—			9			695
Total	$	13,488	$	1,500	$	(1,643	)	$	(158	)	$	13,187

(1)	The $120 million included in other activity is primarily due to interest rate hedging activity.
(2)	Other activity includes the $130 million paydown of Euro Disney senior debt using cash security deposits. This decrease was partially offset by an increase of $107 million due to foreign currency translation as a result of the appreciation of the Euro against the U.S. dollar.
(3)	The additional borrowings were primarily used to fund construction costs.

     The Company’s bank facilities are presented below:

	Committed		Capacity		Unused
(in millions)	Capacity		Used		Capacity
Bank facilities expiring 2009(1)	$	2,250	$	208	$	2,042
Bank facilities expiring 2010(1)(2)		2,250		—		2,250
Total	$	4,500	$	208	$	4,292

(1)

These bank facilities allow for borrowings at LIBOR-based rates plus a spread, which depends on the Company’s public debt rating and can range from 0.175% to 0.575%. As of April 2, 2005, the Company had not borrowed under these bank facilities. The Company also has the ability to issue up to $500 million of letters of credit under the facility expiring in 2009, which if utilized, reduces available borrowing. As of April 2, 2005, $208 million of letters of credit had been issued under this facility.

(2)

The previously existing 364-day facility matured and was replaced with this five-year facility on February 23, 2005. The new facility was issued with substantially similar terms as the five-year facility expiring in 2009.

     The Company expects to use commercial paper borrowings up to the amount of its above unused bank facilities, in conjunction with term debt issuance and operating cash flow, to retire or refinance other borrowings before or as they come due.

     On January 18, 2005, the Company filed a universal shelf registration statement which allows the Company to borrow up to $5 billion and replaces the remaining capacity under a previously-filed $7.5 billion shelf registration. The terms of the $5 billion shelf registration are substantially similar to those of the $7.5 billion shelf. The Company subsequently established a domestic medium-term note program under this shelf, which permits issuance of $5 billion of additional debt instruments, of which none have been issued at April 2, 2005. The Company also has a Euro medium-term note program, which permits issuance of approximately $4 billion of additional debt instruments, of which $0.3 billion has been utilized at April 2, 2005.

33

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

     The Company declared a $490 million dividend ($0.24 per share) on December 1, 2004 related to fiscal 2004, which was paid on January 6, 2005 to shareholders of record on December 10, 2004. The Company paid a $430 million dividend ($0.21 per share) during the second quarter of fiscal 2004 related to fiscal 2003.

     During the six month period, the Company repurchased 15.5 million shares of Disney common stock for approximately $444 million, of which 15.1 million shares for approximately $433 million were repurchased in the second quarter. As of April 2, 2005, the Company had authorization in place to repurchase approximately 300 million additional shares.

     We believe that the Company’s financial condition is strong and that its cash balances, other liquid assets, operating cash flows, access to debt and equity capital markets and borrowing capacity, taken together, provide adequate resources to fund ongoing operating requirements and future capital expenditures related to the expansion of existing businesses and development of new projects. However, the Company’s operating cash flow and access to the capital markets can be impacted by macroeconomic factors outside of its control. In addition to macroeconomic factors, the Company’s borrowing costs can be impacted by short and long-term debt ratings assigned by independent rating agencies, which are based, in significant part, on the Company’s performance as measured by certain credit metrics such as interest coverage and leverage ratios. As of April 2, 2005, Moody’s Investors Service’s long and short-term debt ratings for the Company were Baal and P-2, respectively; and Standard & Poor’s long and short-term debt ratings for the Company were BBB+ and A-2, respectively, with stable outlook. On March 8, 2005, Moody’s upgraded the Company’s long-term rating outlook to positive and kept its short-term rating stable. The Company’s bank facilities contain only one financial covenant, relating to interest coverage, which the Company met on April 2, 2005, by a significant margin. The Company’s bank facilities also specifically exclude certain entities, including Euro Disney and Hong Kong Disneyland, from any representations, covenants or events of default.

COMMITMENTS AND CONTINGENCIES

Legal and Tax Matters

     As disclosed in the Notes 14 and 15 to the Condensed Consolidated Financial Statements the Company has exposure for certain legal and tax matters.

Aircraft leveraged lease investment

     As disclosed in Note 5 to the Condensed Consolidated Financial Statements, the Company’s $155 million aircraft leveraged lease investments are exposed to the credit risk of the carriers. As discussed in Note 5, we are closely monitoring Delta Air Lines Inc.’s (Delta) financial restructuring progress as $101 million of our lease investment is with Delta. Although Delta remains current on their lease payments to us, the inability of Delta to make their lease payments, or the termination of our lease through a bankruptcy proceeding, could result in the write-down of our investment and the acceleration of certain income tax payments.

Contractual commitments and guarantees

     See Note 14 to the Condensed Consolidated Financial Statements for information regarding the Company’s contractual guarantees.

34

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

OTHER MATTERS

Accounting Policies and Estimates

     We believe that the application of the following accounting policies, which are important to our financial position and results of operations, requires significant judgments and estimates on the part of management. For a summary of our significant accounting policies, including the accounting policies discussed below, see Note 2 of the Consolidated Financial Statements in the 2004 Annual Report.

Film and Television Revenues and Costs

     We expense the cost of film and television production and participations as well as certain multi-year sports rights over the applicable product life cycle based upon the ratio of the current period’s gross revenues to the estimated remaining total gross revenues or on a straight-line basis, as appropriate. These estimates are calculated on an individual production basis for film and television and on an individual contract basis for sports rights. Estimates of total gross revenues can change significantly due to a variety of factors, including advertising rates and the level of market acceptance of the production.

     For film productions, estimated remaining gross revenue from all sources includes revenue that will be earned within ten years of the date of the initial theatrical release. For television series, we include revenues that will be earned within 10 years of the delivery of the first episode, or if still in production, five years from the date of delivery of the most recent episode. For acquired film libraries, remaining revenues include amounts to be earned for up to 20 years from the date of acquisition.

     Television network and station rights for theatrical movies, series and other programs are charged to expense based on the number of times the program is expected to be shown. Estimates of usage of television network and station programming can change based on competition and audience acceptance. Accordingly, revenue estimates and planned usage are reviewed periodically and are revised if necessary. A change in revenue projections or planned usage could have an impact on our results of operations.

     Costs of film and television productions and programming costs for our television and cable networks are subject to valuation adjustments pursuant to applicable accounting rules. The net realizable value of the television broadcast program licenses and rights are reviewed using a daypart methodology. The Company’s dayparts are: early morning, daytime, late night, prime time, news, children and sports (includes network and cable). A daypart is defined as an aggregation of programs broadcast during a particular time of day or programs of a similar type. The net realizable values of other cable programming assets are reviewed on an aggregated basis for each cable channel. Estimated values are based upon assumptions about future demand and market conditions. If actual demand or market conditions are less favorable than our projections, film, television and programming cost write-downs may be required.

Revenue Recognition

     The Company has revenue recognition policies for its various operating segments, which are appropriate to the circumstances of each business. See Note 2 to the Consolidated Financial Statements in the 2004 Annual Report for a summary of these revenue recognition policies.

     We record reductions to revenues for estimated future returns of merchandise, primarily home video, DVD and software products, and for customer programs and sales incentives. These estimates are based upon historical return experience, current economic trends and projections of customer demand for and acceptance of our products. If we underestimate the level of returns in a particular period, we may record less revenue in later periods when returns exceed the predicted amount. Conversely, if we overestimate the level of returns for a period, we may have additional revenue in later periods when returns are less than predicted.

35

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

Pension and Postretirement Benefit Plan Actuarial Assumptions

     The Company’s pension benefit and postretirement medical benefit obligations and related costs are calculated using actuarial concepts, within the framework of Statement of Financial Accounting Standards No. 87 Employer’s Accounting for Pensions and Statement of Financial Accounting Standards No. 106, Employer’s Accounting for Postretirement Benefits Other than Pensions, respectively. Two critical assumptions, the discount rate and the expected return on plan assets, are important elements of expense and/or liability measurement. We evaluate these critical assumptions annually. Refer to the 2004 Annual Report for estimated impacts of changes in these assumptions. Other assumptions include the healthcare cost trend rate and employee demographic factors such as retirement patterns, mortality, turnover and rate of compensation increases.

     The discount rate enables us to state expected future cash payments for benefits as a present value on the measurement date. The guideline for setting this rate is a high-quality long-term corporate bond rate. A lower discount rate increases the present value of benefit obligations and increases pension expense.

     To determine the expected long-term rate of return on the plan assets, we consider the current and expected asset allocation, as well as historical and expected returns on each plan asset class. A lower expected rate of return on pension plan assets will increase pension expense.

Goodwill, Intangible Assets, Long-lived Assets and Investments

     Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS 142) requires that goodwill and other intangible assets be tested for impairment at least on an annual basis. We completed our impairment testing as of September 30, 2004 and determined that there were no impairment losses related to goodwill and other intangible assets. In assessing the recoverability of goodwill and other intangible assets, market values and projections regarding estimated future cash flows and other factors are used to determine the fair value of the respective assets. If these estimates or related projections change in the future, we may be required to record impairment charges for these assets.

     SFAS 142 requires the Company to compare the fair value of each reporting unit to its carrying amount on an annual basis to determine if there is potential goodwill impairment. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the goodwill within the reporting unit is less than its carrying value. For purposes of performing the impairment test for goodwill as required by SFAS 142 we established the following reporting units: Cable Networks, Television Broadcasting, Radio, Studio Entertainment, Consumer Products and Parks and Resorts.

     To determine the fair value of our reporting units, we generally use a present value technique (discounted cash flow) corroborated by market multiples when available and as appropriate, except for the Television Network, a business within the Television Broadcasting reporting unit. The Television Broadcasting reporting unit includes the Television Network and the owned and operated television stations. These businesses have been grouped together because their respective cash flows are dependent on one another. For purposes of our impairment test, we used a revenue multiple to value the Television Network. We did not use a present value technique or a market multiple approach to value the Television Network as a present value technique would not capture the full fair value of the Television Network and there is little comparable market data available due to the scarcity of television networks. We applied what we believe to be the most appropriate valuation methodology for each of the reporting units. If we had established different reporting units or utilized different valuation methodologies, the impairment test results could differ.

     SFAS 142 requires the Company to compare the fair value of an indefinite-lived intangible asset to its carrying amount. If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized. Fair values for goodwill and other indefinite-lived intangible assets are determined based on discounted cash flows, market multiples or appraised values as appropriate.

36

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

     The Company has cost and equity investments. The fair value of these investments is dependent on the performance of the investee companies, as well as volatility inherent in the external markets for these investments. In assessing potential impairment for these investments, we consider these factors as well as forecasted financial performance of our investees. If these forecasts are not met, impairment charges may be required.

Contingencies and Litigation

     We are currently involved in certain legal proceedings and, as required, have accrued estimates of the probable and estimable losses for the resolution of these claims. These estimates have been developed in consultation with outside counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular quarterly or annual period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings. See Note 14 to the Condensed Consolidated Financial Statements for more detailed information on litigation exposure.

Income Tax Audits

     As a matter of course, the Company is regularly audited by federal, state and foreign tax authorities. From time to time, these audits result in proposed assessments. Among current audits, the Internal Revenue Service (IRS) is currently examining the Company’s federal income tax returns for 1996 through 2000. In connection with this examination, the IRS is evaluating certain of the Company’s tax positions for the years under examination. The Company believes that its tax positions comply with applicable tax law and that it has adequately provided for any reasonably foreseeable outcome of these matters. Accordingly, the Company does not anticipate any material earnings impact from their ultimate resolution. During the first quarter of fiscal 2005, there was a favorable resolution of an income tax matter that resulted in a $24 million tax reserve release.

Accounting Changes

EITF D-108

     On September 30, 2004, EITF Topic No. D-108 was issued. D-108 requires that a direct value method be used to value intangible assets acquired in business combinations completed after September 29, 2004. D-108 also requires the Company to perform an impairment test using a direct value method on all intangible assets that were previously valued using the residual method. This impairment test is required to be performed no later than the beginning of fiscal 2006 for the Company. Any impairments arising from the initial application of a direct value method would be reported as a cumulative effect of accounting change. For radio stations acquisitions subsequent to the acquisition of Cap Cities/ABC, Inc. in 1996, the Company has applied the residual value method to value its FCC licenses. The remaining net book value of FCC licenses that were valued under the residual method is approximately $550 million at April 2, 2005. The Company is in the process of evaluating what portion of this amount may be impaired upon the adoption of D-108.

SFAS 123R

     In December 2004, the FASB issued SFAS 123R. The statement requires companies to record stock option expense in its financial statements based on a fair value methodology beginning no later than the first fiscal quarter beginning after June 15, 2005. The SEC recently deferred the implementation date for SFAS 123R to the first fiscal year that begins after June 15, 2005 which is the first quarter of fiscal 2006 for the Company. The Company is evaluating the impact of the new standard and the method and timing of adoption. Although we have not completed our analysis, we anticipate that the expense would not exceed the amounts disclosed in Note 13 had the Company been expensing under the new rule.

37

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

MARKET RISK

     The Company is exposed to the impact of interest rate changes, foreign currency fluctuations and changes in the market values of its investments.

Policies and Procedures

     In the normal course of business, we employ established policies and procedures to manage the Company’s exposure to changes in interest rates, foreign currencies and the fair market value of certain investments in debt and equity securities using a variety of financial instruments.

     Our objectives in managing exposure to interest rate changes are to limit the impact of interest rate volatility on earnings and cash flows and to lower overall borrowing costs. To achieve these objectives, we primarily use interest rate swaps to manage net exposure to interest rate changes related to the Company’s portfolio of borrowings. By policy, the Company maintains fixed-rate debt as a percentage of its net debt between a minimum and maximum percentage.

     Our objective in managing exposure to foreign currency fluctuations is to reduce earnings and cash flow volatility in order to allow management to focus on core business issues and challenges. Accordingly, the Company enters into various contracts that change in value as foreign exchange rates change to protect the value of its existing foreign currency assets, liabilities, commitments and forecasted foreign currency revenues. The Company utilizes option strategies and forward contracts that provide for the sale of foreign currencies to hedge probable, but not firmly committed, transactions. The Company also uses forward contracts to hedge foreign currency assets and liabilities. The principal foreign currencies hedged are the Euro, British pound, Japanese yen and Canadian dollar. Cross-currency swaps are used to effectively convert foreign currency denominated borrowings to U.S. dollar denominated borrowings. By policy, the Company maintains hedge coverage between minimum and maximum percentages of its forecasted foreign exchange exposures generally for periods not to exceed five years. The gains and losses on these contracts offset changes in the value of the related exposures.

     It is the Company’s policy to enter into foreign currency and interest rate derivative transactions and other financial instruments only to the extent considered necessary to meet its objectives as stated above. The Company does not enter into these transactions for speculative purposes.

38

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

FORWARD LOOKING STATEMENTS

     The Private Securities Litigation Reform Act of 1995 (the Act) provides a safe harbor for “forward-looking statements” made by or on behalf of the Company. We may from time to time make written or oral statements that are “forward-looking” including statements contained in this report and other filings with the Securities and Exchange Commission and in reports to our shareholders. All forward-looking statements are made on the basis of management’s views and assumptions regarding future events and business performance as of the time the statements are made and the Company does not undertake any obligation to update its disclosure relating to forward looking matters. Actual results may differ materially from those expressed or implied. Such differences may result from actions taken by the Company, including restructuring or strategic initiatives and information technology improvements, as well as from developments beyond the Company’s control, including international, political, health concern, weather related and military developments, technological developments and changes in domestic and global economic conditions, competitive conditions and consumer preferences. Such developments may affect travel and leisure businesses generally and may, among other things, affect the performance of the Company’s theatrical and home entertainment releases, the advertising market for broadcast and cable television programming, expenses of providing medical and pension benefits, demand for our products and performance of some or all company businesses either directly or through their impact on those who distribute our products. Additional factors are set forth in the 2004 Annual Report under the heading “Factors that may affect forward-looking statements.”

39

PART I. FINANCIAL INFORMATION—(continued)

Item 3. Quantitative and Qualitative Disclosures about Market Risk. See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 4. Controls and Procedures

     Evaluation of Disclosure Controls and Procedure — We have established disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to the officers who certify the Company’s financial reports and to other members of senior management and the Board of Directors.

     Based on their evaluation as of April 2, 2005, the principal executive officer and principal financial officer of the Company have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

40

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

     Since our Form 10-Q filing for the quarter ended January 1, 2005, developments identified below occurred in the following legal proceedings. For information on certain other legal proceedings, see Note 14 to the Condensed Consolidated Financial Statements included in this report.

     Shamrock Holdings of California, Inc. v. Iger. On May 9, 2005, Shamrock Holdings of California, Inc., Roy Disney and Stanley Gold filed a complaint against The Walt Disney Company and Company directors Robert Iger, Michael Eisner, Judith Estrin, John Chen, Aylwin Lewis, Monica Lozano, George Mitchell and Fr. Leo O’Donovan in the Delaware Court of Chancery. The complaint alleges that the representations made by the defendants in connection with the process of selecting the Company’s next Chief Executive Officer were false and misleading, and that this led Shamrock, Disney and Gold to forego running an alternate slate of directors at the Company’s 2005 Annual Meeting. The complaint seeks an order voiding the 2005 election of directors, compelling the Company to hold another election of directors, and enjoining the defendants from changing either Eisner or Iger’s compensation or employment contracts. The plaintiffs have filed a motion seeking expedited discovery and proceedings.

     The Company, together with, in some instances, certain of its directors and officers, is a defendant or co-defendant in various other legal actions involving copyright, breach of contract and various other claims incident to the conduct of its businesses. Management does not expect the Company to suffer any material liability by reason of such actions.

41

PART II. OTHER INFORMATION —(continued)

Item 2. Issuer Purchases of Equity Securities

     The following table provides information about Company purchases of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act during the quarter ended April 2, 2005:

					Total
					Number of		Maximum
					Shares		Number of
					Purchased as		Shares that
					Part of		May Yet Be
	Total				Publicly		Purchased
	Number of		Average		Announced		Under the
	Shares		Price Paid		Plans or		Plans or
Period	Purchased (1)		per Share		Programs		Programs(2)
01/02/05 - 01/29/05		455,884	$	28.00		—	315 million
01/30/05 - 02/26/05		6,500,795	$	29.16		6,388,200	309 million
02/27/05 - 04/02/05		8,923,437	$	28.23		8,750,000	300 million
Total		15,880,116	$	28.60		15,138,200	300 million

(1)	741,916 shares were purchased on the open market to provide shares to participants in the Walt Disney Investment Plan (WDIP) and Employee Stock Purchase Plan (ESPP). These purchases were not made pursuant to a publicly announced repurchase plan or program.
(2)	Under a share repurchase program most recently reaffirmed by the Company’s Board of Directors on April 21, 1998, and implemented effective June 10, 1998, the Company was authorized to repurchase up to 400 million shares of its common stock. The repurchase program does not have an expiration date.

42

PART II. OTHER INFORMATION — (continued)

Item 4. Submission of Matters to a Vote of Security Holders

     The following matters were submitted to a vote of security holders during the Company’s annual meeting of shareholders held on February 11, 2005.

		Votes		Authority
		Cast For		Withheld
1.	Election of Directors:
	John E. Bryson		1,702,384,660		95,224,530
	John S. Chen		1,707,796,679		89,812,511
	Michael D. Eisner		1,656,558,942		141,050,248
	Judith L. Estrin		1,688,709,180		108,900,010
	Robert A. Iger		1,700,472,404		97,136,786
	Fred H. Langhammer		1,707,463,915		90,145,275
	Aylwin B. Lewis		1,707,352,786		90,256,404
	Monica C. Lozano		1,706,862,564		90,746,626
	Robert W. Matschullat		1,692,536,482		105,072,708
	George J. Mitchell		1,674,205,933		123,403,257
	Leo J. O’Donovan, S.J.		1,689,887,483		107,721,707
	Gary L. Wilson		1,702,194,264		95,414,926

								Broker
		For		Against		Abstentions		Non-Votes
2.	Ratification of PricewaterhouseCoopers LLP as registered public accountants		1,753,860,122		22,277,530		21,472,538		—
3.	Approval of 2005 stock incentive plan		1,125,475,605		281,576,169		23,495,830		367,061,585
4.	Shareholder proposal relating to greenmail		788,814,385		610,135,985		31,596,426		367,062,392
5.	Shareholder proposal relating to China labor standards		111,595,575		1,143,078,027		175,878,157		367,057,430

43

PART II. OTHER INFORMATION — (continued)

Item 5. Other Information

     On May 10, 2005, Peter E. Murphy, formerly Senior Executive Vice President and Chief Strategic Officer, and the Company entered into an Employment Agreement effective as of April 17, 2005, pursuant to which Mr. Murphy will serve as senior advisor to the Chief Executive Officer of the Company with respect to long-term strategic and technological trends. A copy of the Employment Agreement is filed as exhibit 10(b) and the terms of the Employment Agreement are incorporated herein by reference.

     The Employment Agreement provides for Mr. Murphy’s employment by the Company on a full-time basis through March 31, 2006, and thereafter on a less than full-time basis through April 1, 2007, subject to Mr. Murphy’s right to voluntarily terminate employment at any time on not less than 15 days prior written notice. Mr. Murphy’s salary shall be $950,000 per annum (the same salary previously received by him in his position as Senior Executive Vice President and Chief Strategic Officer), and his salary for the period of less than fulltime employment shall be $500,000 per annum.

     Pursuant to the Employment Agreement, 125,000 currently outstanding performance-based long-term incentive units previously granted to Mr. Murphy were scheduled to vest in their entirety upon certification of fulfillment of a specified financial performance target for the performance period ending September 30, 2006, provided Mr. Murphy’s employment continued through the date of certification. This award was modified to provide that in the event of termination of Mr. Murphy’s employment prior to the certification date, the units would vest proportionately based on the actual days of employment served by Mr. Murphy since grant of the award in April 2002, subject, however, to the performance target being met.

     The Employment Agreement sets Mr. Murphy’s bonus for fiscal 2005 at $775,000. The bonus is conditioned upon fulfillment of certain performance targets based on the Company’s performance, and is subject to reduction if and to the extent that the performance requirements applicable to the bonus are not met. The Employment Agreement also provides for early vesting of up to 39,880 restricted stock units granted to Mr. Murphy in lieu of cash bonus in fiscal years prior to fiscal 2005 if Mr. Murphy’s employment terminates prior to the originally scheduled vesting date. In addition, Mr. Murphy will receive a lump-sum payment in the amount of $950,000 if he leaves on or before March 31, 2006, subject to reduction by the amount earned by him under the agreement from and after April 1, 2006, if he leaves after that date.

     The Company has the right to terminate Mr. Murphy’s employment for gross negligence, gross misconduct, willful gross neglect or malfeasance (“good cause”), in which case the Company’s obligations generally terminate and none of the foregoing adjustments are applicable. The Company may also terminate Mr. Murphy’s employment after providing him with written notice of failure to comply with reasonable written instructions and an opportunity to cure. In the event of termination at any time of Mr. Murphy’s employment for any reason other than good cause, all of the payments referred to above become payable, subject to fulfillment of the performance conditions applicable to the long-term incentive units and, in the case of the lump-sum payment, to the execution by Mr. Murphy of a mutual release of claims.

Item 6. Exhibits

     See Index of Exhibits.

44

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	THE WALT DISNEY COMPANY
	(Registrant)
By:	/s/ THOMAS O. STAGGS
	(Thomas O. Staggs, Senior Executive Vice President and Chief Financial Officer)

May 11, 2005
Burbank, California

45

INDEX OF EXHIBITS

		Document Incorporated by Reference
Number and Description of Exhibit		from a Previous Filing or Filed
(Numbers Coincide with Item 601 of Regulation S-K)		Herewith, as Indicated below
4(a)	Five Year Credit Agreement dated as of February 23, 2005	Incorporated herein by reference to Report on Form 8-K filed February 25, 2005
4(b)	Letter Amendment dated as of February 23, 2005 to Five Year Credit Agreement dated as of February 25, 2004	Incorporated herein by reference to Report on Form 8-K filed February 25, 2005
10(a)	2005 Incentive Plan	Incorporated herein by reference to Annex II of the Registrant’s Proxy Statement dated January 6, 2005
10(b)	Employment Agreement, dated as of April 17, 2005 between the Company and Peter E. Murphy	Filed Herewith
31(a)	Rule 13a-14(a) Certification of Chief Executive Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002	Filed Herewith
31(b)	Rule 13a-14(a) Certification of Chief Financial Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002	Filed Herewith
32(a)	Section 1350 Certification of Chief Executive Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002*	Furnished
32(b)	Section 1350 Certification of Chief Financial Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002*	Furnished

* A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

46

EX-10.B

EXHIBIT 10(b)

As of April 17, 2005

Mr. Peter E. Murphy
1306 Wentworth Avenue
Pasadena, California 91106

Dear Peter:

This letter confirms the terms of your continuing employment by The Walt Disney Company (the “Employer”) following the restructuring of your duties as an employee of the Employer.

1.	Resignation as an Officer
	Effective as of the date hereof, you hereby resign as an officer of the Employer and as an officer and director of any of the Employer’s subsidiaries for which you serve in such capacity. Notwithstanding such resignation, you shall continue as an employee of the Employer for the period and on the terms set forth in this letter agreement (the “Agreement”).
2.	Term of Employment
	You shall continue to serve the Employer as an employee from the date hereof through April 1, 2007 or such earlier date as this Agreement shall terminate in accordance with its terms (the “Term”).
3.	Duties
	(a)  During the Term, you shall serve as a senior advisor to the Chief Executive Officer of the Employer (and to any other high-level senior executive of the Employer that the Chief Executive Officer shall specify) with respect to long-term strategic and technological trends and other projects at a comparably high level as the Chief Executive Officer shall reasonably specify from time to time. During the period through March 31, 2006 (the “Initial Service Period”), you shall be employed on an exclusive full-time basis (i.e. 40 hours per week) pursuant to which you shall devote all of your business time to the performance of your duties hereunder. From and after April 1, 2006 and through April 1, 2007, you shall be employed, on a basis equivalent to 75% of full time (i.e., thirty (30) hours

	per week); provided however, that such services shall continue to be provided on an exclusive basis.
	(b)  Notwithstanding the time commitments set forth in paragraph 3(a) hereof, you shall be permitted to search for alternative employment, including making trips to prospective employers and arranging interviews, etc., to the extent you reasonably deem necessary, provided that you shall notify Employer, if practicable, of any significant unavailability anticipated to result therefrom (it being understood that an inadvertent failure to do so shall not constitute a breach hereof by you). Employer shall timely advise you as to whether any such travel or interview arrangement should be rescheduled in order for you to continue to provide time-sensitive, critical or valuable work for Employer required by it on a “first priority” basis, it being understood, however, that Employer shall also endeavour, upon any request by you, to reschedule your work assignments to allow travel and interview arrangements to be made by you, provided that Employer shall not be required to reschedule any work which it reasonably believes must be done on a time-sensitive, “first-priority” basis.
	(c)  Employer shall provide you with an office appropriate to your seniority for your use during the Term, the location of which shall be on the Walt Disney Studios lot but which shall otherwise be determined by Employer in its sole discretion. You shall also be entitled to the continued use of your existing two assistants, who shall be provided by Employer, at their current salaries and with their current benefits; provided that if any such assistant leaves, you will be provided with a replacement.
	(d) You shall observe all reasonable rules and regulations adopted by Employer in connection with the operation of its business communicated to you in writing, including but not limited to the standards and policies set forth in “The Walt Disney Company and Associated Companies Standards of Business Conduct” booklet, and carry out to the best of your ability all instructions of Employer.
4.	Salary
	During the Initial Service Period, you shall receive a salary at a weekly rate of $18,269.23. Following the Initial Service Period, you shall receive a salary at a weekly rate of $9,615.39. Salary payments shall be made in accordance with Employer’s then prevailing payroll policy. Except as expressly provided in paragraph 5, you will not be entitled to a bonus for the Employer’s fiscal year 2005 or any period thereafter.
5.	Incentive Compensation.
	(a)  To the extent the Compensation Committee of the Board of Directors (the “Committee”) determines that all of the performance targets previously established for fiscal year 2005 applicable to the top 5 executives of the

Employer are attained, you shall receive a bonus for fiscal year 2005 (payable at the same time as annual bonuses for the 2005 fiscal year are payable to employees generally) in an amount equal to $775,000. Notwithstanding the foregoing, such amount shall be subject to reduction in the event Employer does not meet all of the performance targets and Employer awards annual bonuses for the 2005 fiscal year based on some, but not all, of such performance targets having been met (excluding any goals based on personal performance) as follows: Your $775,000 bonus will be reduced by no greater percentage than the average percentage decrease in any bonuses awarded to the executive officers of Employer (as compared to target bonuses) resulting from any such performance targets not being met.

(b)  All unexercised or unvested stock options and restricted stock units and the LTIP Award (as defined below) previously granted to you by Employer shall continue to be in effect in accordance with their respective terms (except as modified herein) and the terms of the applicable stock incentive plan of Employer during and following the Term (i.e., you shall continue to have the status of employee of Employer for the purposes of your stock options, restricted stock units and LTIP Award until the expiration or earlier termination of the Term and shall have all rights generally afforded under any such plan or award in respect of such options, restricted stock units and LTIP Award, including, without limitation, any accelerated vesting to the extent provided upon the occurrence of a termination of employment following a change of control or in the event of death or disability).

(c)  Subject to paragraph 8(b) hereof, with respect to the currently outstanding 125,000 performance-based long-term incentive units granted to you on April 24, 2002 (the “LTIP Award”), if the Committee determines that the performance criteria applicable to such LTIP Award are satisfied (using the same performance criteria applicable to all executives granted comparable performance-based awards on such date), you shall become vested at that time in that number of such outstanding long-term incentive units determined by multiplying 125,000 by the Pro-Ration Fraction. The Pro-Ration fraction shall mean a fraction (not greater than one), the numerator of which is the number of days that elapse from April 24, 2002 to the date your employment with the Employer terminates, and the denominator of which is the number of days from April 24, 2002 to the last day of the calendar month in which the Committee determines whether the applicable performance criteria have been satisfied (which shall not be later for your award than the date of determination made for the other performance-based stock units granted at the same time). Such determination is expected to be made no later than December 31, 2006.

(d)  Upon termination of this Agreement for any reason other than “for cause” pursuant to paragraph 8(b) hereof, you shall immediately vest irrevocably with respect to all of the 39,880 restricted stock units previously granted to you in connection with annual bonuses to the extent they shall not have vested

	previously and such restricted stock units shall be paid to you no later than 30 days following the date of vesting, and you will also receive the Severance Payment as defined in, and calculated in accordance with, paragraph 8(c) hereof, subject to execution of the Mutual General Release as provided in paragraph 10 hereof.
6.	Expenses
	To the extent you incur necessary and reasonable business expenses in the course of your employment hereunder, you shall be reimbursed for such expenses in accordance with Employer’s policies currently in effect for the highest levels of executives regarding reimbursement of such business expenses, except to the extent any such policies applicable to the highest levels of executives of Employer are changed generally.
7.	Other Benefits
	You shall be entitled to the same benefits (including automobile and Family Income Assurance) to which you were entitled as an employee of Employer immediately prior to the execution of this Agreement, including, without limitation, health insurance, pension (qualified and supplemental) and 401(k) plan, subject to any changes in such benefits that apply generally to all similarly situated employees of the Employer who are eligible to participate in the applicable plan, program or arrangement, and subject, further, to your compliance with the terms of paragraph 3 hereof. In addition, you will be entitled to outplacement benefits in accordance with Employer’s policies as in effect from time to time.
8.	Early Termination
	(a)  Notwithstanding anything else contained herein to the contrary, the Term may be terminated earlier than the date specified in paragraph 1 hereof (A) by the Employer upon (i) written notice of termination for “good cause” under paragraph 8(b) hereof, which notice shall be effective immediately upon delivery to you, or (ii) as provided in paragraph 8(d) or 8(e) hereof, or (B) by you, for any reason or no reason, on not less than 15 days advance written notice to Employer.
	(b)  For purposes of this Agreement, good cause shall mean gross negligence, gross misconduct, willful gross neglect or malfeasance; provided, however, that in no event shall gross negligence be asserted by Employer against you or with respect to any matter arising out of the quality or quantity of your work. Upon any termination for good cause, all obligations of Employer hereunder shall, notwithholding any other term or provision hereof, immediately terminate, including, without limitation, all claims for any further payments hereunder or rights with respect to any stock option or restricted stock unit award (whether performance-based or bonus related) previously granted to you, except

for Employer’s obligation to pay you all earned but unpaid salary and unconditionally accrued benefits as of the date of termination (including, without limitation, outstanding reimbursements for business expenses in accordance with Employer’s policies).

(c)  In the event that you complete the Term or you elect to terminate your employment hereunder upon not less than 15 days written notice to Employer, or your employment hereunder terminates for any other reason, other than by Employer for “good cause” pursuant to paragraph 8(b) hereof, then, subject to your (or your estate) executing the release referred to in paragraph 10 hereof, you shall be entitled to receive a lump sum payment in the amount determined as follows: If such termination is effective on or before March 31, 2006, you shall receive $950,000. If your termination is effective after March 31, 2006, you shall receive a lump sum payment calculated by subtracting (A) an amount equal to $9,615 multiplied by the number of weeks after March 31, 2006 through the date upon which your employment terminates, from (B) $950,000 (the “Severance Payment”).

(d)  In the event of your death during the term hereof, your employment under this Agreement shall terminate and Employer shall be obligated to pay your estate or legal representative the salary provided for herein to the extent earned by you prior to such event and to receive the Severance Payment subject to execution of the release as provided for in paragraph 10 hereof. In the event you are unable to perform the services required of you hereunder as a result of any disability and such disability continues for a period of one hundred twenty (120) or more consecutive days or an aggregate of one hundred eighty (180) or more days during any twelve (12) month period during the term hereof, then at any time thereafter, but during the term of such disability or the term of any subsequent disability in excess of the foregoing maximum periods, Employer shall have the right to terminate your employment hereunder. Unless and until so terminated, during any period of disability during which you are unable to perform the services required of you hereunder, your salary hereunder shall be payable to the extent of, and subject to, Employer’s policies and practices then in effect with regard to sick leave and disability benefits. In the case of death or disability, as the case may be, your estate or you shall also be entitled to employee welfare benefits in accordance with and subject to the terms of the relevant plans and programs of Employee unconditionally earned or accrued to you at the time of your death or disability, and reimbursement for all unpaid business expenses in accordance with Employer’s policies. In addition, for the avoidance of doubt, you or your estate shall be entitled to all rights available to you or your estate with respect to any stock option grants and restricted stock units (whether performance-based or bonus related) to you to the full extent provided in the applicable plans pursuant to which such awards were made or in the terms of such awards themselves.

	(e)  In the event that you fail to comply with reasonable written instructions (which may be the same instruction given more than once) from Employer’s Chief Executive Officer regarding the performance of your duties hereunder (which instructions are not inconsistent with any of such duties), Employer may thereafter provide written notice to you specifying in reasonable detail the basis upon which it believes such failure to perform or comply with such instructions has occurred. If such instructions are not performed or complied with within ten business days of receipt by you of such notice (or if other mutually acceptable accommodation with respect thereto is not achieved in such period), Employer may at any time thereafter elect to terminate your employment hereunder upon three (3) business days notice to you. In such event you shall be entitled to receive all of the payments and benefits to which you would be entitled in the event of a termination of employment by you as of that date pursuant to, and subject to, the terms and provisions of paragraph 8(c) hereof.
	(f)  Notwithstanding any other term or provision hereof, in no event shall the termination of your employment hereunder for any reason including termination for cause pursuant to paragraph 9(b) hereof, result in the loss by you of any right which you now have or may hereafter have to claim a defense and/or indemnity for liabilities to third parties in connection with your activities as an employee of Employer pursuant to the terms of any applicable statute, under any insurance policy, pursuant to the certificate of incorporation or bylaws or established policies of Employer or any affiliate thereof or pursuant to written agreement expressly providing for such indemnity between you and Employer or any affiliate thereof. In addition, you will continue to be covered under Employer’s directors and officers insurance coverage for so long as such coverage is maintained by Employer during the Term, subject to applicable policy terms and conditions and restrictions, it being understood that the foregoing is not intended to, and shall not, limit any other rights of any nature to insurance coverage or indemnification that you may have at any time, whether before, during or after the Term, including, without limitation, any such rights you have under Employer’s current indemnification agreement with you.
9.	Protection of Employer’s Interests
	(a)  During the Term, you will not compete in any manner, directly or indirectly, whether as a principal, employee, agent or owner, with Employer or any affiliate thereof, except that the foregoing will not prevent you from holding at any time less than 5% of the outstanding capital stock of any company whose stock is publicly traded. You recognize that your services hereunder are of a special, unique, unusual, extraordinary and intellectual character giving them a peculiar value, the loss of which cannot be reasonably or adequately compensated for in damages, and in the event of a breach of this paragraph 9(a) by you, Employer shall, in addition to all other remedies available to it, be entitled to equitable relief by way of injunction and any other legal or equitable remedies.

	(b)  To the extent permitted by law, all rights worldwide with respect to any and all intellectual or other property of any nature produced, created or suggested by you during the Term resulting from your services shall be deemed to be a work made for hire and shall be the sole and exclusive property of Employer. You agree to execute, acknowledge and deliver to Employer at Employer’s request, such further documents consistent herewith as Employer finds appropriate to evidence Employer’s rights in such property. Any confidential and/or proprietary information of Employer or any affiliate thereof shall not be used by you or disclosed or made available by you to any person except as required in the course of your employment, and upon expiration or earlier termination of the Term, you shall return to Employer all such information that exists in written or other physical form (and all copies thereof) under your control. Without limiting the generality of the foregoing, you acknowledge signing and delivering to Employer The Walt Disney Company and Associated Companies Confidentiality Agreement and The Walt Disney Company and Associated Companies Statement of Policy Regarding Conflicts of Interest and Business Ethics and Questionnaire Regarding Compliance and you agree that all terms and conditions contained therein, and all of your obligations and commitments provided for therein, shall be deemed, and hereby are, incorporated into this Agreement as if set forth in full herein. The provisions of this paragraph 9 shall survive the expiration or earlier termination of this Agreement.
10.	Mutual General Release
	You and the Company each agree to execute, on or within three (3) business days following the last day of the Term hereof, the Mutual General Release attached hereto as Exhibit A; provided, however, that if your employment is terminated by Employer under paragraph 8(b) hereof for “good cause,” neither party shall be required to execute such release.
11.	Confidential Information
	You understand and agree that in the course of your employment with the Employer, you have acquired and/or had access to confidential information, trade secrets, proprietary data and/or non-public information concerning the business, professional and/or personal affairs, activities and operations of the Employer, the Employer’s subsidiaries and affiliates and/or the officers, employees and/or representatives of any of them (collectively, the “Employer Companies”) and the Employer Companies’ plans, methods of doing business and practices and procedures, as well as confidential information disclosed to any of the Employer Companies from time to time by third parties, any or all of which (the “Information”) You understand and agree that it would be extremely damaging to the Employer Companies if the Information were disclosed to a competitor or made available to any other person or corporation. You understand and agree that the Information has been divulged to you in

	confidence, and you further understand and agree that you have obtained the Information in a fiduciary relationship of trust and confidence, that you will keep the Information strictly and completely secret and confidential for all time, both now and hereafter, and that you will not disclose in any way, directly or indirectly, or otherwise use for your benefit or for the benefit of any third party any part or all of the Information. In addition, you agree to continue to honor all confidentiality commitments to the Employer known to him to any third parties. The obligations of this paragraph 11 not to disclose the Information shall not apply to (i) information that is or becomes known to the public other than directly or indirectly by you in violation of your confidentiality obligations to Employer, (ii) to the extent necessary to defend your rights under this Agreement or (iii) to the extent that you are required by law to respond to any demand for the Information from any court, governmental entity or governmental agency. If you are required by law to so respond, you agree to provide the Employer with prompt notice thereof so that the Employer may seek a protective order or other appropriate remedy, and in any proceeding to defend any of your rights under this Agreement, you agree at Employer’s sole cost and expense to seek a protective order as reasonably requested by Employer. In view of the nature of your employment and the information and trade secrets that you have received during the course of your employment, you also agree that the Employer would be irreparably harmed by any violation or threatened violation of this paragraph and that, therefore, the Employer shall be entitled to an injunction prohibiting you from any violation or threatened violation of this Agreement. The undertakings set forth in this paragraph 11 shall survive the termination of other arrangements contained in this Agreement. You agree that, on or prior to seven (7) days from the date of which the Term hereof ends, you shall turn over to the Employer all files, memoranda, records, credit cards and other documents and physical or personal property that you have received from the Employer or that you generated in connection with your employment by the Employer or that are the property of the Employer, except that you may retain the personal and office computers, that have been made available for your use after any information related to the Employer has been removed therefrom.
12.	Post-Termination Obligations
	After the termination of your employment hereunder for any reason whatsoever you shall not either alone or jointly, with or on behalf of others, either directly or indirectly, whether as principal, partner, agent, shareholder, director, employee, consultant or otherwise, at any time during a period of two years following such termination, solicit the employment or engagement of, or otherwise entice away from the employment of Employer or any affiliated entity, either for your own account or for any other person, firm or company, any person (other than your two current assistants or any replacement assistant) who is employed by Employer or any such affiliated entity, whether or not such person would commit any breach of his contract of employment by reason of his leaving the service of Employer or any affiliated entity.

13.	Entire Agreement; Amendments; Waiver, Etc.
	(a)  This Agreement supersedes all prior or contemporaneous agreements and statements, whether written or oral, concerning the terms of your employment, and no amendment or modification of this Agreement shall be binding against your or Employer unless set forth in a writing signed by both you and Employer and delivered to you. No waiver by either party of any breach by the other party of any provision or condition of this Agreement shall be deemed a waiver of any similar or dissimilar provision or condition at the same or any prior or subsequent time.
	(b)  Nothing herein contained shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision of this Agreement and any present or future statute, law, ordinance or regulation, the latter shall prevail, but in such event the provision of this Agreement affected shall be curtailed and limited only to the extent necessary to bring it within legal requirements. Without limiting the generality of the foregoing, in the event any compensation or other monies payable hereunder shall be in excess of the amount permitted by any statute, law, ordinance, regulation or wage guideline which may be in effect at any time or from time to time, payment of the maximum amount then allowed thereby shall constitute full compliance by Employer with the payment requirements of this Agreement.
	(c)  This Agreement does not constitute a commitment of Employer with regard to your employment, express or implied, other than to the extent expressly provided for herein. Upon termination of this Agreement, it is the contemplation of both parties that your employment with Employer shall cease, and that neither Employer nor you shall have any obligation to the other with respect to continued employment. In the event that your employment continues for any period of time following the stated expiration date of this Agreement, unless and until agreed to in a new subscribed written document, such employment or any continuation thereof is “at will,” and may be terminated without obligation at any time by either party’s giving notice to the other.
	(d)  This Agreement shall be governed by and construed in accordance with the laws of the State of California. In accordance with the Immigration Reform and Control Act of 1986, employment hereunder is conditioned upon satisfactory proof of your identity and legal ability to work in the United States.
	(e)  To the extent permitted by law, you will keep the terms of this Agreement confidential, and you will not disclose any information concerning this Agreement to anyone other than your immediate family and professional representatives (provided they also agree to keep the terms of this Agreement confidential).

14.	Excise Tax Limit
	In the event that the all payments and the value of any other benefits received or to be received by you hereunder would result in all or a portion of such payments and benefits being subject to excise tax under Section 4999 of the Code, then your payments hereunder shall be either (A) the full amount thereof or (B) such lesser amount that would result in no portion of the payments being subject to excise tax under Section 4999 of the Code (the “Excise Tax”), whichever of the foregoing amounts, taking into account the applicable Federal, state, and local employment taxes, income taxes, and the Excise Tax, results in the receipt by you , on an after-tax basis, of the greatest amount of the payment notwithstanding that all or some portion of the payment may be taxable under Section 4999 of the Code. All determinations required to be made under this Section 14 shall be made by PricewaterhouseCoopers or any other nationally recognized accounting firm which is Employer’s outside auditor immediately prior to the event triggering the payments that are subject to the Excise Tax, which firm must be reasonably acceptable to you (the "Accounting Firm"). You and Employer or your or Employer’s respective advisors shall have a right of reasonable consultation with such auditors regarding any determinations pursuant to this paragraph 14. Employer shall cause the Accounting Firm to provide detailed supporting calculations of its determinations to Employer and you. Notice must be given to the Accounting Firm within fifteen (15) business days after an event entitling you to a payment under this Agreement. All fees and expenses of the Accounting Firm shall be borne solely by Employer. The Accounting Firm’s determinations must be made with substantial authority (within the meaning of Section 6662 of the Code). For the purposes of all calculations under Section 280G of the Code and the application of this paragraph 16, Company and you hereby elect and agree to make all determination as to present value using 120 percent of the applicable Federal rate (determined under Section 1274(d) of the Code) compounded semiannually, as in effect on the date of this Agreement. Employer agrees to reimburse you (on an after-tax basis) for your reasonable legal and other professional expenses of pursuing any reasonable contest, claim or cause of action (including any claim of tax refund) on your own behalf that may arise (notwithstanding the application of the foregoing provisions of this paragraph 16) as a result of (i) the Internal Revenue Service seeking to impose an Excise Tax on you or (ii) Employer (or any successor) withholding or seeking to withhold any Excise Tax from any payment or benefit to you without your consent; provided, however, reimbursement will only be provided under this subsection (ii) if you prevail (excluding a settlement).
15.	Arbitration
	The parties agree that any and all disputes, claims or controversies arising out of or relating to this Agreement that are not resolved by their mutual agreement shall be submitted to final, binding and confidential arbitration before the Judicial Arbitration and Mediation Service (“JAMS”), or its successor, pursuant to the

	United States Arbitration Act, 9 U.S.C. Sec. 1 et seq. Either party may commence the arbitration process called for in this Agreement by filing a written demand for arbitration with JAMS, with a copy to the other party. The arbitration will be conducted in accordance with the provisions of JAMS’ Streamlined Arbitration Rules and Procedures in effect at the time of filing of the demand for arbitration. The parties will cooperate with JAMS and with one another in selecting an arbitrator from a JAMS’ panel of neutrals and in scheduling the arbitration proceedings. The parties covenant that they will participate in the arbitration in good faith, and that they will share equally in its costs, except that the prevailing party shall be entitled to be reimbursed for its costs and reasonable outside attorney fees. The provisions of this paragraph 15 may be enforced by any court of competent jurisdiction, and the party seeking enforcement shall be entitled to an award of all costs, fees and expenses, including reasonable outside attorneys’ fees arising from the enforcement proceeding, to be paid by the party against whom enforcement is ordered. Notwithstanding the foregoing, if a party, in its sole discretion, deems it necessary to protect any of its rights and interests pending arbitration, then such party may, at any time, seek preliminary equitable relief from a court of competent jurisdiction in aid of arbitration.
	NOTICE: By signing this Agreement you are agreeing to have all disputes, claims or controversies arising out of or relating to this Agreement decided by neutral arbitration, and you are giving up any rights you might possess to have those matters litigated in a court or jury trial. By signing this Agreement you are giving up your judicial rights to discovery and appeal except to the extent that they are specifically provided for under this Agreement. If you refuse to submit to arbitration after agreeing to this provision, you may be compelled to arbitrate under federal or state law. Your agreement to this arbitration provision is voluntary. You acknowledge and agree that you have read and understand the foregoing.
16.	Notices
	All notices that either party is required or may desire to give the other shall be in writing and given either personally or by depositing the same in the United States mail addressed to the party to be given notice as follows:
		To Employer:	500 South Buena Vista Street Burbank, California 91521 Attn:Executive Vice President and General Counsel
		To you:	at the address shown for you on the first page hereof.
	Either party may by written notice designate a different address for giving of notices. The date of mailing of any such notices shall be deemed to be the date on which such notice is given.

17.	Headings
	The headings set forth herein are included solely for the purpose of identification and shall not be used for the purpose of construing the meaning of the provisions of this Agreement.

If the foregoing accurately reflects our mutual agreement, please sign where indicated.

	THE WALT DISNEY COMPANY
/s/ Peter E. Murphy	By:	/s/ Robert A. Iger
Peter E. Murphy

Dated: May 10, 2005 Dated: May 10, 2005

EXHIBIT A

MUTUAL GENERAL RELEASE

WHEREAS, Peter E. Murphy (hereinafter referred to as “Executive”) and The Walt Disney Company (hereinafter referred to as “Company”) are parties to an Employment Agreement , dated May 10, 2005 (the “Employment Agreement”), which provided for Executive’s employment with Company on the terms and conditions specified therein; and

WHEREAS, pursuant to paragraph 10 of the Employment Agreement, Executive and the Company have agreed to execute mutual releases of the type and nature set forth in this Agreement;

NOW, THEREFORE, in consideration of the premises and mutual promises herein contained and for other good and valuable consideration received in accordance with the terms of the Employment Agreement, it is agreed as follows:

1. (a) Upon the later of (i) the execution hereof by Company and Executive, and (ii) the passage of seven days following execution hereof by Executive without Executive’s having exercised the revocation rights referred to in paragraph 14 hereof, Company shall make a payment for the full amount of the Severance Payment (as defined in paragraph 8(c) of the Employment Agreement, less amounts required to be withheld by law or authorized by Executive to be withheld. Such payment shall be made by check payable to Executive. The covenants and commitments of Employer referred to herein (including, specifically, but without limitation, any and all benefits conferred upon Executive pursuant to the Employment Agreement) shall be in lieu of and in full and final discharge of any and all obligations to Executive for compensation, severance payments, or any other expectations of payment, remuneration, continued coverage of any nature or benefit on the part of Executive arising out of or in connection with Executive’s employment with Company, or under any agreement, arrangement, commitment, plan, program, practice or policy of Company, or otherwise, other than as expressly provided in the Employment Agreement.

(b) Notwithstanding any other term or provision hereof, Executive shall be entitled to such rights as are vested in Executive as of the last day of his employment under the Employment Agreement or as are provided in the Employment Agreement (including, without limitation, his home and office computers provided by Company and unreimbursed business expenses and employment benefits as provided for in the Employment Agreement, under and subject to the terms of (i) any applicable retirement plan to which Executive may be subject, (ii) any applicable stock incentive plan of Company to which Executive may be subject, (iii) any right which Executive now has or may hereafter have to claim a defense and/or indemnity for liabilities to third parties in connection with his activities as an employee of Company or any of its affiliates pursuant to the terms of any applicable statute, under any insurance policy, pursuant to

the certificate of incorporation or bylaws or established policies of Company or any affiliate thereof or pursuant to written agreement, if any, expressly providing for such indemnity between Executive and Company or any affiliate thereof, and (iv) any other applicable employee welfare benefit plans to which Executive may be subject. Further, Executive shall be entitled to such continuation of health care coverage as is required under, and subject to, applicable law, of which Executive shall be notified in writing after the Termination Date, provided Executive timely exercises Executive’s rights in accordance therewith. Executive understands and acknowledges that all payments for any such continued health care coverage he may elect will be paid by him.

2. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under law. Should there be any conflict between any provision hereof and any present or future law, such law will prevail, but the provisions affected thereby will be curtailed and limited only to the extent necessary to bring them within the requirements of law, and the remaining provisions of this Agreement will remain in full force and effect and be fully valid and enforceable.

3. Executive represents and agrees (a) that Executive has to the extent he desires discussed all aspects of this Agreement with his attorney, (b) that Executive has carefully read and fully understands all of the provisions of this Agreement, and (c) that Executive is voluntarily entering into this Agreement.

4. Excluding enforcement of the covenants, promises or rights reserved herein on in the Employment Agreement, Executive hereby irrevocably and unconditionally releases, acquits and forever discharges Company and each of Company’s owners, stockholders, predecessors, successors, assigns, agents, directors, officers, employees, representatives, attorneys, divisions, subsidiaries, affiliates (and agents, directors, officers, employees, representatives and attorneys of such companies, divisions, subsidiaries and affiliates) and all persons acting by, through, under or in concert with any of them (collectively “Company Releasees”), or any of them, from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys’ fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected, including, but not limited to, rights arising out of alleged violations of any contracts, express or implied, any covenant of good faith and fair dealing, express or implied, or any tort or any legal restrictions on Company’s right to terminate employees, or any Federal, state or other governmental statute, regulation or ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964, as amended, the Federal Age Discrimination In Employment Act of 1967, as amended, and the California Fair Employment and Housing Act that Executive now has, or has ever had, or ever will have, against each or any of the Releasees, by reason of any and all acts, omissions, events, circumstances or facts existing or occurring up through the date of Executive’s execution hereof (any of the foregoing being an “Executive Claim” or, collectively, the “Executive Claims”).

5. Executive expressly waives and relinquishes all rights and benefits afforded by California Civil Code Section 1542 and does so understanding and acknowledging the significance of such specific waiver of Section 1542. Section 1542 states as follows:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

Thus, notwithstanding the provision of Section 1542, and for the purpose of implementing a full and complete release and discharge of the Releasees, Executive expressly acknowledges that this Agreement is intended to include in its effect, without limitation, all Executive Claims that Executive does not know or suspect to exist in Executive’s favor at the time of execution hereof, and that this Agreement contemplates the extinguishment of any such Executive Claim or Executive Claims.

6. Excluding enforcement of the covenants, promises and/or rights reserved herein or in the Employment Agreement, and except as otherwise provided in the proviso at the end of this sentence, the Company, hereby irrevocably and unconditionally releases, acquits and discharges Executive, and Executive’s heirs, assigns, legal representatives and successors in interest (“Executive Releasees”) from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorney’s fees and costs actually incurred), of any nature whatsoever, known or unknown, suspected or unsuspected, including, but not limited to, rights arising out of alleged violations of any contracts, express or implied, any covenant of good faith and fair dealing, express or implied, or any tort, that Company now has, or has ever had, or ever will have, against Executive and/or the Executive Releasees, by reason of any and all acts, omissions, events, circumstances or facts existing or occurring up through the date of Company’s execution hereof, that directly or indirectly arise out of, relate to, or are connected with, occasioned by, involve information obtained in connection with, or as a result of, or have any nexus of any nature whatsoever with, Executive’s services to, or employment by Company or any affiliate thereof or the termination of Executive’s employment (hereinafter referred to as a “Claim” or collectively, the “Claims”); provided, however, that, notwithstanding any other term or provision hereof, any Claim or Claims rising out of, or resulting from, in part or whole, (i) any illegal or fraudulent act(s) or illegal or fraudulent omission(s) to act of Executive or (ii) any action(s) or omission(s) to act which would constitute self-dealing or a breach of Executive’s confidentiality obligations to Company or any affiliate thereof, or a breach of The Walt Disney Company and Associated Companies Confidentiality Agreement executed by Executive, are hereby expressly excluded in their entirety from the foregoing release, acquittal and discharge and are unaffected thereby (any Claim or Claims not so excluded pursuant to this proviso being hereinafter referred to as a “Company Claim” or, collectively, as the “Company Claims”).

7. Except as expressly reserved herein, Company expressly waives and relinquishes all rights and benefits afforded by California Civil Code Section 1542 and does so understanding and acknowledging the significance of such specific waiver of Section 1542. Section 1542 states as follows:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

Thus, notwithstanding the provisions of Section 1542, and for the purpose of implementing a full and complete release, acquittal and discharge of the Executive Releasees with respect to the Company Claims only, Company expressly acknowledges that this Agreement is intended to include in its effect, without limitation, all Company Claims that Company does not know or suspect to exist in Company’s favor at the time of execution hereof, and that this Agreement contemplates the extinguishment of any such Company Claim or Company Claims.

8. Executive understands that Executive has been given a period of 21 days to review and consider this Agreement before signing it pursuant to the Age Discrimination In Employment Act of 1967, as amended. Executive further understands that Executive may use as much of this 21-day period as Executive wishes prior to signing.

9. Executive acknowledges and represents that he understands that he may revoke the waiver of his rights under the Age Discrimination In Employment Act of 1967, as amended, effectuated in this Agreement within 7 days of signing this Agreement. Revocation can be made by delivering a written notice of revocation to General Counsel, The Walt Disney Company, 500 South Buena Vista Street, Burbank, California 91521. For this revocation to be effective, written notice must be received by Mr. Braverman no later than the close of business on the seventh day after Executive signs this Agreement. If Executive revokes the waiver of his rights under the Age Discrimination In Employment Act of 1967, as amended, Company shall have no obligations to Executive hereunder, and this Agreement and the Employment Agreement shall have no further force and effect.

10. Executive and Company respectively represent and acknowledge that in executing this Agreement neither of them is relying upon, and has not relied upon, any representation or statement not set forth herein made by any of the agents, representatives or attorneys of the Company Releasees or of the Executive Releasees with regard to the subject matter, basis or effect of this Agreement or otherwise.

11. This Agreement shall not in any way be construed as an admission by any of the Company Releasees or Executive Releasees, respectively, that any Company Releasee or Executive Releasee has acted wrongfully or that Company or Executive has any rights whatsoever against any of the Company Releasees or Executive

Releasees except as specifically set forth herein, and each of the Company Releasees and Executive Releasees specifically disclaims any liability to any party for any wrongful acts. Executive represents that Executive has not filed any complaints or charges or lawsuits of any kind whatsoever against any of the Company Releasees with any governmental agency or any court with regard to the Executive Claim(s) and further represents and agrees that Executive will not do so at any time hereafter with regard to any Executive Claim(s); provided, however, that this shall not limit Executive from filing a lawsuit for the sole purpose of enforcing Executive’s rights under this Agreement. Company represents that Company has not filed any complaints or charges or lawsuits of any kind whatsoever against any of the Executive Releasees with any governmental agency or any court with regard to the Company Claim(s) and further represents and agrees that Company will not do so at any time hereafter with regard to any Company Claim(s); provided, however, that this shall not limit Company from filing a lawsuit for the sole purpose of enforcing Company’s rights under this Agreement.

12. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California. This Agreement is binding on the successors and assigns of, and sets forth the entire agreement between, the parties hereto; fully supersedes any and all prior

agreements or understandings between the parties hereto pertaining to the subject matter hereof; and may not be changed except by explicit written agreement to that effect subscribed by the parties hereto.

PLEASE READ CAREFULLY. THIS SETTLEMENT AGREEMENT AND GENERAL RELEASE INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

Executed at ______________________________ , California.

PETER E. MURPHY 

Dated:

Executed at ______________________________ , California.

THE WALT DISNEY COMPANY
By:
	Title:
	Dated:

EX-31.A

Exhibit 31(a)

RULE 13a-14(a) CERTIFICATION IN
ACCORDANCE WITH SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Michael D. Eisner, Chief Executive Officer of The Walt Disney Company (the “Company”), certify that:

1.	I have reviewed this quarterly report on Form 10-Q of the Company;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 11, 2005

By:	/s/ MICHAEL D. EISNER
	Michael D. Eisner
	Chief Executive Officer

EX-31.B

Exhibit 31(b)

RULE 13a-14(a) CERTIFICATION IN
ACCORDANCE WITH SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas O. Staggs, Senior Executive Vice President and Chief Financial Officer of The Walt Disney Company (the “Company”), certify that:

1.	I have reviewed this quarterly report on Form 10-Q of the Company;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 11, 2005

By:	/s/ THOMAS O. STAGGS
	Thomas O. Staggs
	Senior Executive Vice President and Chief Financial Officer

EX-32.A

Exhibit 32(a)

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*

     In connection with the Quarterly Report of The Walt Disney Company (the “Company”) on Form 10-Q for the fiscal quarter ended April 2, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael D. Eisner, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

By:	/s/ MICHAEL D. EISNER
	Michael D. Eisner
	Chief Executive Officer
	May 11, 2005

* A signed original of this written statement required by Section 906 has been provided to The Walt Disney Company and will be retained by The Walt Disney Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.B

Exhibit 32(b)

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*

     In connection with the Quarterly Report of The Walt Disney Company (the “Company”) on Form 10-Q for the fiscal quarter ended April 2, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas O. Staggs, Senior Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

By:	/s/ THOMAS O. STAGGS
	Thomas O. Staggs
	Senior Executive Vice President and Chief Financial Officer
	May 11, 2005

* A signed original of this written statement required by Section 906 has been provided to The Walt Disney Company and will be retained by The Walt Disney Company and furnished to the Securities and Exchange Commission or its staff upon request.