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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

Securities Registered Pursuant to Section 12(b) of the Act:

Securities Registered Pursuant to Section 12(g) of the Act: None.

      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, and (2) has been subject to such filing requirements for the past 90 days.       Yes ü       No

Documents Incorporated by Reference

      Certain information required for Part III of this report is incorporated herein by reference to the proxy statement for the 2003 annual meeting of the Company’s shareholders.

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THE WALT DISNEY COMPANY AND SUBSIDIARIES

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PART I

      The Walt Disney Company, together with its subsidiaries, is a diversified worldwide entertainment company with operations in four business segments: Media Networks, Parks and Resorts, Studio Entertainment and Consumer Products. For convenience, the terms “Company” and “we” are used to refer collectively to the parent company and the subsidiaries through which our various businesses are actually conducted.

      Information on revenues, operating income, identifiable assets and supplemental revenue of the Company’s business segments appears in Note 1 to the Consolidated Financial Statements included in Item 8 hereof. The Company employed approximately 112,000 people as of September 30, 2002.

MEDIA NETWORKS

Domestic Broadcast Television and Radio Networks

      We also operate the ABC Radio Networks, which provide programming to more than 4,600 affiliated radio stations reaching approximately 133 million domestic listeners weekly. The ABC Radio Networks produce and distribute to affiliates a variety of programs and formats, including ABC News Radio and other news network programming, syndicated talk and music programs, ABC Sports programming and 24-hour music formats. In addition, the ABC Radio Networks produce Radio Disney, a 24-hour music and talk format intended to appeal to children and their parents. Radio Disney is carried on 51 stations, including 32 that are owned by the Company, that cover more than 57 percent of the U.S. market. ABC Radio Networks also produce the ESPN Radio format, which is carried on more than 700 stations, including 215 full-time (four of which are owned by the Company), making it the largest radio sports network in the United States.

      Generally, the television and radio networks pay the cost of producing their own programs or acquiring broadcast rights from other producers for network programming, and pay varying amounts of compensation to affiliated stations for broadcasting the programs and commercial announcements included therein. Network operations derive substantially all of their revenues from the sale to advertisers of time in network programs for commercial announcements. The ability to sell time for commercial announcements and the rates received are primarily dependent on the size and nature of the audience that the network can deliver to the advertiser as well as overall advertiser demand for time on network broadcasts.

Domestic Broadcast Television and Radio Stations

      Of the Company’s 40 radio stations located in the top 20 U.S. advertising markets, 24 carry predominantly locally originated music and talk programming, 13 carry the Radio Disney format and three carry the ESPN Radio format. Almost all of the Company’s radio stations in the non-top-20 markets carry the Radio Disney format. Our radio stations reach 16 million people weekly in the top 20 United States advertising markets.

      Markets, frequencies and other station details are set forth in the following tables:

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Television Stations

Radio Stations

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(1)	Based on Nielsen Media Research, U.S. Television Household Estimates, January 1, 2002
(2)	Based on 2002 Arbitron Radio Market Rank

Cable/ Satellite Networks and International Broadcast Operations

      Disney Channel, which has approximately 80 million domestic subscribers, is a cable and satellite television service. New shows developed for initial exhibition on Disney Channel include comedy, adventure, animated and educational series, as well as original movies and documentaries. The balance of the programming consists of products acquired from third parties and products from our owned theatrical film and television programming library.

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      Disney Channel also reaches more than 18 million subscribers outside of the United States of America via its international operations. Programming consists primarily of the Company’s theatrical film and television programming library, as well as products acquired from third parties and locally produced programming. The Disney Channels in Taiwan and the U.K. premiered in 1995, followed by the launch of the Disney Channels in Australia and Malaysia in 1996, France and the Middle East in 1997, Spain and Italy in 1998 and Germany in 1999. In 2000, regional Disney Channels were launched for both Latin America and Asia, with feed extensions in Asia now covering Malaysia, Brunei, the Philippines, Singapore and recently Indonesia and South Korea. Channels in Brazil and Portugal were launched in 2001 and Disney Channel launches in Scandinavia and Japan are planned for 2003. We continue to explore the development of the Disney Channel in other countries around the world.

      Toon Disney is intended to appeal to children and features an array of family-friendly, predominantly animated programming from third parties and the Disney library. Toon Disney reaches more than 34 million homes. It began carrying national advertising in 2000.

      SOAPnet was launched in January 2000 and reaches more than 25 million homes. SOAPnet offers a wide variety of soap opera and related programming 24 hours a day, seven days a week. SOAPnet’s primetime schedule features same-day repeat telecasts of the top-rated ABC Daytime series All My Children, General Hospital, One Life to Live and Port Charles. The service also airs the popular classic Ryan’s Hope and serial dramas such as Knots Landing, Falcon Crest, Hotel and The Colbys, as well as an original soap news series, SoapCenter, and the daily soap talk show, Soap Talk. SOAPnet began carrying national advertising in 2001.

      On October 24, 2001, the Company acquired Fox Family Worldwide, Inc. which was renamed ABC Family Worldwide, Inc. ABC Family operates the ABC Family Channel, a television programming service that currently reaches approximately 85 million cable and satellite television subscribers throughout the United States; Fox Kids Europe, which reaches more than 31 million subscribers across Europe and Fox Kids Channel in Latin America, which reaches more than 13 million subscribers. The Company has a 76% interest in Fox Kids Europe.

      ESPN, Inc. operates six domestic television sports networks: ESPN, reaching over 87 million households; ESPN2, approaching 85 million homes; ESPN Classic, at 47 million homes; ESPNEWS, reaching 38 million households; ESPN Now, with news and scheduling information; and ESPN Today, an interactive television sports channel. ESPN, Inc. owns, has equity interests in, or has distribution agreements with 25 international networks, reaching more than 119 million households outside the United States in more than 140 countries and territories. ESPN, Inc., owns 100% of ESPN do Brazil and ESPN Sur in Argentina, a 50% equity interest in the ESPN STAR Sports joint venture, which delivers sports programming throughout most of Asia, and a 29.92% equity interest in NetStar, which owns The Sports Network, Le Réseau des Sports, ESPN Classic Canada, Discovery Canada and WTSN, among other media properties in Canada. ESPN, Inc. also holds a 70% interest in ESPN Classic Europe, which launched its service in France and Italy during 2002 and holds a 19.99% interest in Sports-i ESPN in Japan. ESPN also has several other brand extensions, including ESPN.com, the leading Internet sports content provider; ESPN Regional Television; ESPN Radio, distributed through the ABC Radio Networks; ESPN The Magazine; SportsTicker, the leading supplier of real-time sports news and scores; B.A.S.S., the largest bass fishing organization in the world; and the ESPN Zone, sports-themed dining and entertainment facilities managed by Disney Regional Entertainment, included in the Parks and Resorts segment.

      Lifetime Entertainment Services owns Lifetime Television, which reaches nearly 86 million subscribers and is devoted to women’s lifestyle programming. During 1998, Lifetime launched the Lifetime Entertainment Services, a 24-hour digital channel that is in over 27 million homes. Lifetime Television’s sister channel Lifetime Real Women is expected to be available in 5 million homes by December 31, 2002.

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      The A&E Television Networks are television programming services devoted to cultural and entertainment programming. A&E reaches more than 86 million subscribers. The History Channel, which is owned by A&E, reaches approximately 82 million subscribers. The networks also include History International, a network that provides viewers with a window into non-U.S. perspectives, and The Biography Channel, launched in 1998, which is dedicated to exploration of the lives of exceptional people.

      E! Entertainment Television is a television programming service that reaches over 79 million cable subscribers and is devoted to the world of entertainment. E! Entertainment Television also launched a new channel, Style., in 1998, a 24-hour television service devoted to style, beauty and home design, which reaches approximately 24 million subscribers with commitments to reach more than 40 million subscribers by 2004.

      The Company’s share of the financial results of the cable/ satellite and international broadcast services, other than Disney Channel, ESPN, Inc., Toon Disney, SOAPnet and ABC Family Channel, is reported under the heading “Equity in the income of investees” in the Company’s Consolidated Statements of Income.

Television Production and Distribution

      The Company is also producing original television movies for The Wonderful World of Disney, which ABC airs on Sunday evenings, as well as for the ABC Family Channel.

      We also produce a variety of prime-time specials for exhibition on network television, as well as live-action syndicated programming, which includes Live! with Regis and Kelly and The Wayne Brady Show, daily talk shows, Ebert & Roeper, a weekly motion picture review program, and game shows such as Who Wants to Be a Millionaire.

      We also license and syndicate our television properties in foreign television markets.

Internet

      Disney.com offers family entertainment content and services relating to many of the Company’s businesses, such as Walt Disney Pictures and Radio Disney. Disney Mobile distributes Disney content to wireless devices and mobile phones. During fiscal 2002, Disney Mobile distribution was expanded to include 15 markets globally.

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      FamilyFun.com is an online parenting resource, combining editorial content with interactive elements such as chats and bulletin boards focused on practical advice and ideas for fun family activities.

      ESPN.com delivers comprehensive sports news and information to millions of fans each month. ESPN.com averages more than 11 million unique users a month.

      ABC.com, launched in January 2000, is the official Web site of the ABC Television Network, while ABCNEWS.com draws on the knowledge and expertise of ABC News correspondents throughout the world. In 2002, ABCNEWS.com launched new subscription broadband services that provide on-demand access to leading ABC News shows, such as World News Tonight with Peter Jennings and Nightline, among other content.

      Enhanced TV provides interactive television programming and advertising services during ABC and ESPN telecasts, such as Monday Night Football and Sunday Night Football, respectively.

      Movies.com was launched in May 2000 as a Web site for movie lovers, providing dedicated pages that include plot overviews, projected release dates, detailed cast and credits, production rumors, news updates and links to related official fan sites for major film productions.

Competition

      The Company’s television and radio stations are in competition with other television and radio stations, cable and satellite television programming services, videocassettes, DVDs and other advertising media such as newspapers, magazines, billboards and the Internet. Competition occurs primarily in individual market areas. A television station in one market does not compete directly with other stations in other market areas.

      The growth in the cable/ satellite industry’s share of viewers has resulted in increased competitive pressures for advertising revenues. In addition, sports and other programming costs have increased due to increased competition. The Company’s cable/ satellite networks also face competition for carriage by cable and satellite service operators and distributors.

      Internationally, ESPN’s services face significant competition from locally based competitors, which often have greater financial resources and occasionally competitive regulatory advantages.

      The Internet properties are in competition for users and advertising revenues with other sports, news, family and entertainment Internet web sites, as well as Internet web portals.

Federal Regulation

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      Federal laws and FCC regulations are subject to change, and we generally cannot predict whether new legislation or regulations, or a change in the extent of application or enforcement of current laws and regulations, would have an adverse impact on the Company’s operations.

PARKS AND RESORTS

      The Company operates the Walt Disney World Resort and Disney Cruise Line in Florida, the Disneyland Resort in California, ESPN Zone facilities in several states and Anaheim Sports in California. The Company also licenses the operations of the Tokyo Disneyland Resort in Japan, and licenses and manages the Disneyland Resort Paris in France.

Walt Disney World Resort

      The entire Walt Disney World destination resort is marketed through a variety of national, international and local advertising and promotional activities. Several attractions in each of the theme parks are sponsored by other corporations through long-term participation agreements.

      Magic Kingdom – The Magic Kingdom, which opened in 1971, consists of Main Street, USA and six principal areas: Adventureland, Fantasyland, Frontierland, Liberty Square, Mickey’s Toontown Fair and Tomorrowland. These areas feature themed rides and attractions, restaurants, refreshment areas and merchandise shops.

      Epcot – Epcot, which opened in 1982, consists of two major themed areas: Future World and World Showcase. Future World dramatizes certain historical developments and addresses the challenges facing the world today through major pavilions devoted to high-tech products of the future (“Innoventions”), communication and technological exhibitions (“Spaceship Earth”), energy, transportation, imagination, life and health, the land and seas. World Showcase presents a community of nations focusing on the culture, traditions and accomplishments of people around the world. World Showcase includes as a central showpiece the American Adventure, which highlights the history of the American people. Other nations represented are Canada, China, France, Germany, Italy, Japan, Mexico, Morocco, Norway and the United Kingdom. Both areas feature themed rides and attractions, restaurants and merchandise shops.

      Disney-MGM Studios – The Disney-MGM Studios, which opened in 1989, consists of a theme park, an animation studio and a film and television production facility. The park centers around Hollywood as it was during the 1930’s and 1940’s and features Disney animators at work and a backstage tour of the film and television production facilities in addition to other attractions, themed food service and merchandise facilities. The production facility consists of three sound stages, merchandise shops and a back lot area and currently hosts both feature film and television productions. Disney-MGM Studios also features Fantasmic!, a night-time entertainment spectacular.

      Disney’s Animal Kingdom – Disney’s Animal Kingdom, which opened in 1998, consists of a 145-foot Tree of Life as the centerpiece surrounded by six themed areas: Dinoland U.S.A., Africa, Rafiki’s Planet Watch, Asia, Discovery Island and Camp Minnie – Mickey. Each themed area contains adventure attractions, entertainment shows, restaurants and merchandise shops. The park features more than 200 species of animals and 4,000 varieties of trees and plants on more than 500 acres of land.

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      Resort Facilities – As of September 30, 2002, the Company owned and operated 12 resort hotels and a complex of villas and suites at the Walt Disney World Resort, with a total of approximately 19,200 rooms and 318,000 square feet of conference meeting space. In addition, Disney’s Fort Wilderness camping and recreational area offers approximately 800 campsites and 400 wilderness homes. Currently under development is Disney’s Pop Century Resort, which will include buildings themed to different decades, from the 1900’s to the 1990’s.

      The Disney Vacation Club offers ownership interests in several resort facilities, including 531 units at Disney’s Old Key West Resort, 383 units at Disney’s BoardWalk Resort, 136 units at Disney’s Wilderness Lodge and 208 units at Disney’s Beach Club, all of which are located at the Walt Disney World Resort, as well as a 175-unit resort in Vero Beach, Florida, and a 102-unit resort on Hilton Head Island, South Carolina. A 184-unit expansion adjacent to the Disney Institute at Walt Disney World is scheduled to open in 2004. Available units at each facility are intended to be sold under a vacation ownership plan and operated partially as rental property.

      Recreational amenities and activities available at the resort include five championship golf courses, miniature golf courses, full-service spas, tennis, sailing, water skiing, swimming, horseback riding and a number of other noncompetitive sports and leisure time activities. The resort also operates two water parks: Blizzard Beach and Typhoon Lagoon.

      We have also developed a 120-acre retail, dining and entertainment complex known as Downtown Disney, which consists of the Marketplace, Pleasure Island and West Side. In addition to more than 20 specialty retail shops and restaurants, the Downtown Disney Marketplace is home to the 50,000-square-foot World of Disney retail store featuring Disney-branded merchandise. Pleasure Island, an entertainment center adjacent to the Downtown Disney Marketplace, includes restaurants, night clubs and shopping facilities. Downtown Disney West Side is situated on 66 acres on the west side of Pleasure Island and includes a DisneyQuest facility, Cirque du Soleil and several participant retail, dining and entertainment operations.

      Disney’s Wide World of Sports, which opened in 1997, is a sports complex on approximately 200 acres providing professional caliber training and competition, festival and tournament events and interactive sports activities. The complex’s venues accommodate more than 30 different sporting events, including baseball, tennis, basketball, softball, track and field, football and soccer. Its 9,000-seat stadium is the spring training site for Major League Baseball’s Atlanta Braves and home to the Orlando Rays Minor League Baseball team. The Amateur Athletic Union hosts more than 30 championship events per year at the facility.

      At the Downtown Disney Marketplace Hotel Plaza, seven independently operated hotels are situated on property leased from the Company. These hotels have a capacity of approximately 3,700 rooms. Additionally, two hotels, the Walt Disney World Swan and the Walt Disney World Dolphin, with an aggregate capacity of approximately 2,300 rooms, are independently operated on property leased from the Company near Epcot.

      Under continued development is Celebration, an innovative town that combines architecture, education, health and technology in ways intended to promote a strong sense of community. Founded in 1994, Celebration is home to more than 6,000 residents, an Osceola County public school, a health facility, an 18-hole public golf course, park and recreation areas and a downtown area featuring a variety of shops, restaurants and the Celebration Hotel.

Disneyland Resort

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      The entire Disneyland Resort is marketed through international, national and local advertising and promotional activities as a destination resort. A number of the attractions and restaurants at each of the theme parks are sponsored by corporate participants.

      Disneyland – Disneyland, which opened in 1955, consists of Main Street and seven principal areas: Adventureland, Critter Country, Fantasyland, Frontierland, New Orleans Square, Tomorrowland and Toontown. These areas feature themed rides and attractions, restaurants, refreshment stands and merchandise shops.

      Disney’s California Adventure – Disney’s California Adventure which opened in 2001, celebrates and pays tribute to the history, features and activities of the state of California. The park is adjacent to Disneyland and includes four principal areas: Golden State, Hollywood Pictures Backlot, Paradise Pier and the newly opened “a bug’s land”. “A bug’s land” features five new attractions for children and families. These areas include rides, attractions, shows, restaurants, merchandise shops and refreshment stands.

      Resort Facilities – Disneyland Resort includes three Company-owned hotels: the 1,000-room Disneyland Hotel, 500-room Disney’s Paradise Pier Hotel and Disney’s Grand Californian Hotel, a deluxe 750-room hotel located adjacent to Disney’s California Adventure park.

      As part of the expansion of the Disneyland Resort, the Company also built Downtown Disney, a themed 310,000 square foot outdoor complex of entertainment, dining and shopping venues, located adjacent to Disneyland park and Disney’s California Adventure.

Tokyo Disney Resort

      Tokyo Disneyland, which opened in 1983, was the first Disney theme park to open outside the United States. Tokyo Disneyland consists of Main Street and seven principal areas: Adventureland, Critter Country, Fantasyland, Tomorrowland, Toontown, Westernland and World Bazaar.

      Tokyo DisneySea adjacent to Tokyo Disneyland, opened in 2001. The park is divided into seven unique “ports of call,” including Mediterranean Harbor, American Waterfront, Port Discovery, Lost River Delta, Mermaid Lagoon, Mysterious Island and Arabian Coast. The recent Resort expansion also includes the addition of the 502-room Hotel MiraCosta, 504-room Disney Ambassador Hotel, the Disney Resort Line monorail and the Bon Voyage merchandise location.

Disneyland Resort Paris

      Disneyland Park, which opened in 1992, consists of Main Street and four principal areas: Adventureland, Discoveryland, Fantasyland and Frontierland. These areas include themed rides, attractions, shows, restaurants, merchandise shops and refreshment stands.

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      Walt Disney Studios Park opened in March 2002 adjacent to Disneyland Park. The new park takes guests into the worlds of cinema, animation and television and includes four principal themed areas: Front Lot, Animation Courtyard, Production Courtyard and Backlot. These areas each include themed rides, attractions, shows, restaurants, merchandise shops and refreshment stands.

      Development of the site also continues with the Val d’Europe project, a newly constructed city being built near Disneyland Resort Paris. The city of Val d’Europe includes a new town center, which consists of an international shopping center; a newly opened 150 room hotel; office, commercial and residential space; and a regional train station. These newly constructed businesses are operated by third parties on land leased or purchased from Euro Disney. In addition, agreements have been signed with third party developers to provide approximately 2,250 additional on-site hotel rooms and/or time share units over the next three years, 1,450 of which are scheduled to open in 2003.

      Of the 4,800 acres comprising the site, 2,100 acres have been developed to date. The project is being developed pursuant to a 1987 master agreement between French governmental authorities and Euro Disney, a publicly held French company in which the Company currently holds a 39% equity interest and which is managed by a subsidiary of the Company. The Company earns royalties on revenues generated by the Disneyland Resort Paris theme parks and receives management fees from Euro Disney, which are both reported as revenues in the Company’s Consolidated Statements of Income. The financial results of the Company’s investment in Euro Disney are reported under the heading “Equity in the income of investees” in the Company’s Consolidated Statements of Income.

Hong Kong Disneyland

      Construction and operation of the project will be the responsibility of Hongkong International Theme Parks Limited, an entity in which the Hong Kong Government owns a 57% interest and a subsidiary of the Company owns the remaining 43%. A separate Hong Kong subsidiary of the Company is responsible for managing Hong Kong Disneyland. Based on the current exchange rate between the Hong Kong and U.S. dollars, the Company’s equity contribution obligation is limited to U.S. $315 million, payable over the next five years. As of September 30, 2002 the Company had contributed U.S. $26 million of this amount. Once Hong Kong Disneyland commences operations, Company subsidiaries will be entitled to receive management fees and royalties from project operations in addition to the Company’s equity interest.

Disney Cruise Line

Disney Regional Entertainment

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Walt Disney Imagineering

Anaheim Sports, Inc.

Competition

      The Company’s theme parks and resorts compete with all other forms of entertainment, lodging, tourism and recreational activities. The profitability of the leisure-time industry is influenced by various factors that are not directly controllable, such as economic conditions including business cycle and exchange rate fluctuations, travel industry trends, amount of available leisure time, oil and transportation prices and weather patterns. As a result, the Company’s theme park and resort operations were adversely affected during fiscal 2002 by significant reductions in domestic and international travel.

STUDIO ENTERTAINMENT

      The Studio Entertainment segment produces live-action and animated motion pictures, television animation programs, musical recordings and live stage plays. The Company is an industry leader in producing and acquiring live-action and animated motion pictures for distribution to the theatrical, television and home video/ DVD markets, and produces original animated television programming for the domestic and international television markets. Films and characters are also often promoted through the release of audiocassettes and compact discs. The Company is also engaged directly in the home video and television distribution of its film and television library.

Theatrical Films

      During fiscal 2003, we expect to distribute approximately 24 feature films under the Walt Disney Pictures and Touchstone Pictures banners and approximately 31 films under the Miramax and Dimension banners. These expected releases include several live-action family films and full-length animated films, including the large format cinema re-release of The Lion King, with the remainder

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      We distribute and market our filmed products principally through our own distribution and marketing companies in the United States and major foreign markets.

Home Entertainment

Television Production and Distribution

      The 2002/2003 Saturday morning television season returns under the new name ABC Kids on ABC. ABC Kids, formally Disney’s One Saturday Morning, is a line-up of animated series that includes Disney’s Recess and Disney’s Teamo Supremo. Disney’s Fillmore and Disney’s Kim Possible premiered in September 2002. Additionally, the Company produces first-run animated programming for UPN and for syndication. Series airing on UPN include Disney’s Recess, Disney’s The Legend of Tarzan and Disney/ Pixar’s Buzz Lightyear of Star Command.

      We also license our theatrical and television animation film library to the domestic television syndication market. Major packages of the Company’s feature films and animated television programming have been licensed for broadcast over several years.

      The Company also licenses its theatrical and animated television properties in a number of foreign television markets. In addition, we syndicate certain of our television programs abroad, including The Disney Club, a weekly series produced for foreign markets.

      The Company has licensed to the Encore pay television services, over a multi-year period, exclusive domestic pay television rights to certain films released under the Walt Disney Pictures, Touchstone Pictures, Hollywood Pictures, Miramax and Dimension banners. The Company has also entered into multi-year output deals with DirecTV and iN DEMAND for pay-per-view exhibition. In addition, the Company has licensed exclusive domestic pay television rights to certain films released under the Dimension banner to the Showtime pay television services over a multi-year period.

Audio Products and Music Publishing

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      Domestic retail sales of compact discs, audiocassettes and records are the largest source of music-related revenues.

      Our Hollywood Records subsidiary develops, produces and markets recordings from new talent across the spectrum of popular music, as well as soundtracks from certain live-action motion pictures. We also own the Nashville-based music label Lyric Street Records.

Buena Vista Theatrical Group

      Disney Theatrical’s live stage musicals are produced for stages on Broadway and around the world. The Company generally produces shows in the United States, the United Kingdom and Australia and licenses shows to local producers in other foreign territories.

      Disney’s Beauty and the Beast, which has been seen by 22 million people in 12 countries, entered its ninth year on Broadway and surpassed Grease to become the eighth longest running show in Broadway history.

      During the year, The Lion King celebrated its 2,000th performance at Broadway’s New Amsterdam Theatre. The show is also running in Tokyo, Fukuoka, London, Toronto, Los Angeles and Hamburg. A U.S. national tour launched in April 2002, and to date has visited Denver, Houston, Ft. Worth (TX), Dallas and Ft. Lauderdale. During 2003, a second U.S. touring production is scheduled to open in Chicago in April, and a production is scheduled to open in Sydney in October.

      Der Glockner von Notre Dame, the world premiere of Disney’s The Hunchback of Notre Dame, ended a three-year run in Berlin in June 2002.

      Elton John and Tim Rice’s Aida celebrated its 1,000th performance at Broadway’s Palace Theatre. The U.S. national tour and Amsterdam production is scheduled to be joined by a production in Osaka in 2003.

      Disney Live Family Entertainment continued its growth of Disney on Ice, with eight productions performing for more than 10 million guests in 2002, up from 8 million in 2001. Licensed to Feld Entertainment since 1981, Disney on Ice has brought the Disney brand to local communities in 47 countries. The newest production, Disney on Ice Princess Classics, opened in September 2002.

Competition and Intellectual Property Protection

      The Studio Entertainment businesses compete with all forms of entertainment. A significant number of companies produce and/or distribute theatrical and television films, exploit products in the home video/ DVD market, provide pay television programming services and sponsor live theater. We also compete to obtain creative and performing talents, story properties, advertiser support, broadcast rights and market share, which are essential to the success of all of our Studio Entertainment businesses.

      The Company’s ability to distribute and exploit its motion picture and television programming is affected by the strength and effectiveness of intellectual property protections in both the United States and abroad. Emerging technologies, regulatory limitations on intellectual property

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CONSUMER PRODUCTS

      The Consumer Products segment licenses the Company’s characters and other intellectual property to manufacturers, retailers, show promoters and publishers throughout the world. Character merchandising and publications licensing promotes the Company’s films and television programs, as well as the Company’s other operations. Company subsidiaries also engage in retail, direct mail and online distribution of products based on the Company’s characters and films through the Disney Store, Disney Catalog and DisneyStore.com, respectively; publish books, magazines and comics worldwide; and produce and license computer software and video games for the entertainment market.

Character Merchandise and Publications Licensing

      In addition to receiving licensing fees, the Company is actively involved in the development and approval of licensed merchandise and in the conceptualization, development, writing and illustration of licensed publications. We continually seek to create new characters to be used in licensed products.

Disney Stores

Books and Magazines

Disney Interactive

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Direct Marketing

Other Activities

Competition and Intellectual Property Protection

      The Company’s licensing businesses, as well as its studio entertainment and theme park and resort operations, are affected by the Company’s ability to exploit and protect its intellectual property, including trademarks, trade names, copyrights, patents and trade secrets, throughout the world. As a result, domestic and foreign laws promoting or limiting intellectual property rights may have significant impacts on some of the Company’s operations. In the United States, for example, the 1998 Sonny Bono Copyright Term Extension Act provided extended copyright protection for certain older properties currently licensed or otherwise exploited by the Company, which otherwise might lose such protection in the near future. The constitutionality of this Act has been challenged, however, and its validity is currently under review by the U.S. Supreme Court. If the Act is overturned, the Company would have shorter copyright protection for its intellectual properties, although in many cases trademark or other protections might still be available.

      Copyright and trademark protections are limited or even unavailable in some foreign countries, and preventing unauthorized use of the Company’s intellectual properties can be difficult even in countries with substantial legal protections. In addition, new technologies have facilitated piracy of the Company’s copyrighted works, including motion pictures, television programming and sound recordings, by such means as Internet peer-to-peer file sharing and personal video recorders that permit ad stripping and the unauthorized copying of motion pictures and television programs. The Company devotes significant resources to protecting its intellectual properties in the United States and other key world markets.

      In addition, the Company’s businesses that rely on the exploitation of intellectual property are subject to the risk of challenges by third parties claiming infringement of their proprietary rights. Irrespective of their validity, such claims may result in substantial costs and diversion of resources, which could have an adverse effect on our operations.

ITEM 2. Properties

      The Walt Disney World Resort, Disneyland Park and other properties of the Company and its subsidiaries are described in Item 1 under the caption Parks and Resorts. Film library properties are described in Item 1 under the caption Studio Entertainment. Radio and television stations owned by the Company are described under the caption Media Networks.

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      A subsidiary of the Company owns approximately 51 acres of land and 1.9 million square feet of office, studio, and warehouse space in Burbank, California, on which the Company’s studios and executive and administrative offices are located. The studio facilities are used for the production of both live-action and animated motion pictures and television products. In addition, Company subsidiaries lease approximately 1.1 million square feet of office and warehouse space and own one 400,000 square foot building in Burbank, which are used for certain studio and corporate activities.

      A subsidiary of the Company owns approximately 2.5 million square feet of office and warehouse buildings on approximately 115 acres in Glendale, California. The buildings are used for the Company’s operations and also contain space leased to third parties. Subsidiaries of the Company also lease approximately 316,000 square feet of office and warehouse space in Glendale, which is used for the Company’s operations.

      A subsidiary of the Company owns approximately 22 acres of land in Los Angeles, California, on which production, technical, and studio facilities are located. A subsidiary of the Company also has a long-term lease on a theater in Los Angeles, and owns space adjacent to the theater.

      The Company’s Media Networks segment corporate offices and technical operations are located in buildings owned by a subsidiary of the Company in New York City, totaling approximately 1.5 million square feet. Other subsidiaries of the Company also have long-term leases on a theater in New York City which is used for the Company’s live theatrical productions, and a studio facility in Times Square which is used for television broadcasting. In addition, subsidiaries of the Company lease approximately 912,000 square feet of office, studio, and warehouse space in New York City. The Company’s 80%-owned subsidiary, ESPN, Inc., owns ESPN Plaza in Bristol, Connecticut, from which it conducts its technical operations. The Company owns and leases other broadcast studios, offices, and broadcast transmitter sites elsewhere.

      Subsidiaries of the Company lease space elsewhere in the United States and Canada, including retail space for the Disney Stores and office and warehouse space for the Company’s operations. The Company’s acquisition of Fox Family Worldwide, Inc. in October 2001 included approximately 523,000 square feet of domestic owned and leased facilities.

      A U.K. subsidiary of the Company owns buildings on a four-acre parcel under long-term lease in London, England. The mixed-use development consists of office space occupied by subsidiary operations and office and retail space leased by third parties. In 2002, a subsidiary of the Company disposed of the non-Disney-occupied sections of the parcel, including a retail mall and a development site. Company subsidiaries also lease office and retail space in other parts of Europe and in Asia, Australia, and Latin America.

ITEM 3. Legal Proceedings

      In re The Walt Disney Company Derivative Litigation. William and Geraldine Brehm and 13 other individuals filed an amended and consolidated complaint on May 28, 1997 in the Delaware Court of Chancery seeking, among other things, a declaratory judgment against each of the Company’s directors as of December 1996 that the Company’s 1995 employment agreement with its former president, Michael S. Ovitz, was void, or alternatively that Mr. Ovitz’s termination should be deemed a termination “for cause” and any severance payments to him forfeited. On October 8, 1998, the Delaware Court of Chancery dismissed all counts of the amended complaint. Plaintiffs appealed, and on February 9, 2000, the Supreme Court of Delaware affirmed the dismissal but ruled also that plaintiffs should be permitted to file an amended complaint in accordance with the Court’s opinion. The plaintiffs filed their amended complaint on January 3, 2002. The Company’s directors have moved to dismiss the amended complaint.

      Similar or identical claims have also been filed by the same plaintiffs (other than William and Geraldine Brehm) in the Superior Court of the State of California, Los Angeles County, beginning

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      All Pro Sports Camps, Inc., Nicholas Stracick and Edward Russell v. Walt Disney Company, Walt Disney World Co., Disney Development Company and Steven B. Wilson. On September 16, 2002, the Company and the plaintiffs settled this previously reported lawsuit, which the plaintiffs brought in 1997 in the Circuit Court for Orange County, Florida.

      Stephen Slesinger, Inc. v. The Walt Disney Company. In this lawsuit, filed on February 27, 1991 and pending 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. The Company disputes that the plaintiff is entitled to any damages or other relief of any kind, including termination of the licensing agreement. The claim is currently scheduled for trial in March 2003. 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. However, given the number of outstanding issues and the uncertainty of their ultimate disposition, management is unable to predict the magnitude of any potential determination of the plaintiff’s claims.

      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 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 will terminate 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 will terminate by operation of law; and that, as of November 5, 2004, SSI will be entitled to no further royalties for uses of Winnie the Pooh.

      Kohn v. The Walt Disney Company et al. On August 15, 2002, Aaron Kohn filed a class action lawsuit against the Company, its Chief Executive Officer and its Chief Financial Officer in the United States District Court for the Central District of California on behalf of a putative class consisting of purchasers of the Company’s common stock between August 15, 1997 and May 15, 2002. Subsequently, at least nine substantially identical lawsuits were also filed in the same court, each alleging that the defendants violated federal securities laws by not disclosing the pendency and potential implications of the Stephen Slesinger, Inc. lawsuit described above prior to the Company’s filing of its quarterly report on Form 10-Q in May 2002. The plaintiffs claim that this alleged nondisclosure constituted a fraud on the market that artificially inflated the Company’s stock price, and contend that a decline in the stock price resulted from the May 2002 disclosure. The plaintiffs seek compensatory damages and/or rescission for themselves and all members of their defined class. Several of the plaintiffs have filed motions asking the court to appoint lead plaintiffs and counsel, and to consolidate the related actions into a single case.

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      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.

      SEC Proceeding. In August 2002, the Company filed an amendment to the Company’s Form 10-K for fiscal year 2001 reporting the employment of relatives of certain Company directors by Company subsidiaries and, in one case, an entity in which the Company has an indirect 50% interest. The Company has been notified by the U.S. Securities and Exchange Commission that the Commission is conducting an investigation into the amendment and related matters.

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

      No matters were submitted to a vote of shareholders during the fourth quarter of the fiscal year covered by this report.

Executive Officers of the Company

      At September 30, 2002, the executive officers of the Company were as follows:

1	Mr. Iger was appointed to his present position in January 2000, having served (from February 1999 until January 2000) as President of Walt Disney International and Chairman of the ABC Group. Mr. Iger previously held a number of increasingly responsible positions at ABC, Inc. and its predecessor Capital Cities/ ABC, Inc., culminating in service as President and Chief Operating Officer of ABC, Inc. from 1994 to 1999.
2	Mr. Staggs joined the Company’s strategic planning operation in 1990 and was named Senior Vice President-Strategic Planning and Development of the Company in 1995. In May 1998, he was named Executive Vice President and Chief Financial Officer. In October 1999, Mr. Staggs was promoted to Senior Executive Vice President. Mr. Staggs is also a member of the supervisory board of Euro Disney S.C.A. and chairman of the supervisory board of Fox Kids Europe N.V., a subsidiary of the Company whose shares are publicly traded in Europe.
3	Mr. Murphy joined the Company’s strategic planning operation in 1988 and was named Senior Vice President-Strategic Planning and Development of the Company in 1995. From August 1997

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	to May 1998 he served as Chief Financial Officer of ABC, Inc. In May 1998 he was named Executive Vice President and Chief Strategic Officer. In October 1999, Mr. Murphy was promoted to Senior Executive Vice President. Mr. Murphy is also a member of the supervisory board of Fox Kids Europe N.V.
4	Mr. Meisinger was named Executive Vice President and General Counsel of the Company in July 1998. Prior to joining the Company, he was a senior partner with the law firm of Troop, Meisinger, Steuber & Pasich in Los Angeles, California, a firm he co-founded in 1975. Mr. Meisinger specialized in the litigation of complex entertainment, commercial and securities matters.

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PART II

      The Company’s common stock is listed on the New York and Pacific stock exchanges under the ticker symbol “DIS”.

      On March 20, 2001, the Company converted all of its outstanding Internet Group common stock (NYSE symbol DIG) into Disney common stock. Each outstanding share of Internet Group common stock was converted into 0.19353 of a share of Disney common stock, resulting in the issuance of approximately 8.6 million shares of Disney common stock. The following sets forth the high and low composite closing sales prices for the fiscal periods indicated.

      The Company declared a dividend of $0.21 per Disney share on December 3, 2002 related to fiscal 2002, and a dividend of $0.21 per Disney share on November 27, 2001, with respect to fiscal 2001.

      As of September 30, 2002, the approximate number of record holders of common stock was 995,000.

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(In millions, except per share data)

(1)	The 2002 results include a $216 million pre-tax investment gain and a $34 million pre-tax gain on the sale of the Disney Stores in Japan. These items had a $0.07 and $0.01 impact on diluted earnings per share, respectively. See Notes 4 and 3 to the Consolidated Financial Statements.
(2)	The 2001 results include cumulative effect of accounting changes related to film and derivative accounting changes totaling $228 million and $50 million, respectively and restructuring charges of $1.5 billion. See Notes 2 and 15 to the Consolidated Financial Statements. The diluted earnings per Disney share impact of these items were $0.11, $0.02 and $0.52, respectively.
(3)	The 2000 results include pre-tax gains of $243 million, $93 million and $153 million from the sale of Fairchild Publications, Eurosport and Ultraseek, respectively. See Note 3 to the Consolidated Financial Statements. The impact of income taxes substantially offset certain of the gains. The diluted earnings per Disney share impact of these items were $0.00, $0.02 and $0.01, respectively. The results also include a $92 million restructuring and impairment charge. The diluted earnings per Disney share impact of the charge was $0.01. See Note 15 to the Consolidated Financial Statements.
(4)	The 1999 results include a gain from the sale of Starwave Corporation of $345 million, equity in Infoseek loss of $322 million and restructuring and impairment charges of $172 million. The diluted earnings per Disney share impact of these items were $0.10, ($0.09) and ($0.05), respectively.
(5)	The 1998 results include restructuring and impairment charges totaling $83 million. The diluted earnings per Disney share impact of the charges was $0.03.

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CONSOLIDATED RESULTS

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(1)	Including Disney’s retained interest in the Internet Group. Disney’s retained interest in the Internet Group reflects 100% of Internet Group losses through November 17, 1999, approximately 72% for the period from November 18, 1999 through January 28, 2001 (the last date prior to the announcement of the conversion of the Internet Group common stock) and 100% thereafter.

Consolidated Results

2002 vs. 2001

      Excluding the year-over-year impact of the non-recurring items discussed above, results for the year were driven by lower segment operating income and equity in income of investees and higher net interest expense and other. Decreased segment operating income reflected lower Media Networks and Parks and Resorts results, partially offset by higher Studio Entertainment results. Lower equity in the income of investees reflected the write-down of an investment in a Latin American cable operator, decreases at the cable investments resulting from the soft advertising market and higher advertising costs at Lifetime Television.

      Net interest expense and other is detailed below:

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      Interest expense increased to $723 million due to incremental borrowings in connection with the ABC Family acquisition. Higher interest expense was partially offset by increased investment income due to the gain on the sale of Knight-Ridder shares.

      The effective tax rate decreased from 82.5% in fiscal 2001 to 38.9% in fiscal 2002 due to nondeductible impairment charges related to intangible assets taken in fiscal 2001, and the cessation of nondeductible amortization of goodwill in fiscal 2002.

2001 vs. 2000

      Excluding the charges and gains mentioned above, earnings per share attributed to Disney common stock was $0.63 and $0.56 for the fiscal 2001 and 2000, respectively. Results for fiscal 2001 also reflected lower amortization of intangible assets and net interest expense and other, and higher equity in the income of investees, partially offset by decreased segment operating income and higher corporate and unallocated shared expenses. Lower amortization of intangible assets reflected the write-off of intangible assets associated with the closure of the GO.com portal business in the second quarter of fiscal 2001, certain intangible assets becoming fully amortized in the first quarter of fiscal 2001 and a reduction in intangible assets related to the sale of Fairchild Publications, Ultraseek and Eurosport in fiscal 2000. Decreases in net interest expense and other were due to lower interest rates and lower average debt balances throughout most of fiscal 2001, partially offset by increased investment income due to gains on the sale of certain investments. Higher equity in the income of investees reflected improved results from cable equity investments including Lifetime Television, The History Channel and A&E Television and certain international cable equity investments, partially offset by start-up losses incurred in connection with new investments. Decreased segment operating income reflected lower Media Networks and Parks and Resorts results, partially offset by improvements at Studio Entertainment and Consumer Products. Increased corporate and unallocated shared expenses were driven by costs associated with several strategic initiatives designed to improve overall company-wide efficiency and promote the Disney brand.

      The effective tax rate increased from 61.0% in fiscal 2000 to 82.5% in fiscal 2001 primarily due to nondeductible impairment charges related to intangible assets taken in fiscal 2001.

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Restructuring and Impairment Charges

      The $111 million of costs associated with the workforce reduction consist primarily of severance costs and write-offs of idled facilities. As of September 30, 2002, the Company had substantially completed its workforce reduction.

PRO FORMA RESULTS OF OPERATION

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      Management believes that pro forma operating results provide additional information useful in analyzing the underlying business results. However, pro forma operating results should be considered in addition to, not as a substitute for, as-reported results of operations.

CONSOLIDATED RESULTS