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Disney Earnings Down; Warnings On Fourth Quarter Revenue

Despite the strong box office performance of recent hits LILO & STITCH and THE ROOKIE, The Walt Disney Company has reported lower than expected earnings for the quarter and nine months ended June 30, 2002. Referencing the downturn in the international and domestic travel and tourism industry as well as the economy as a whole, Disney cited in particular the drop-off of attendance at its domestic theme parks and resorts, and the lack of television advertising dollars at the ABC television network. Disney reported net income of $364 million, or 18 cents per share, for its third fiscal quarter ended June 30, compared with $527 million, or 25 cents per share, a year earlier, adjusted for accounting changes. Quarterly revenue fell 3 percent to $5.8 billion from the year-ago quarter. The company warns that fourth quarter revenues will also be impacted by the decline in post-September 11 travel. However, in a press release, Walt Disney Company chairman and CEO Michael Eisner offered up the LILO & STITCH franchise as a possible future revenue stream to help the company bounce back. "Challenging times consistently create future opportunities for Disney, which has the staying power of global brands, leading market share, efficient operations and solid financials," said Eisner. "The quarter was hampered by some external factors and some performance issues that we are addressing; however, over the longer term, the Disney recipe of high quality content leveraged across our broad range of businesses forms the foundation for future growth. Our most recent example of this is the creation of a new franchise with LILO & STITCH, which introduced title characters with widespread and, we expect, enduring appeal that will foster revenue growth across our business units for years to come." Disney recently announced plans for a direct-to-video sequel and television series based on LILO & STITCH.