Euro Disney SCA - Disneyland Paris

EURO DISNEY S.C.A............................................. .................................

Annual Report

Introduction

2 1996 Key Figures

4 Chairman's Statement

6 Management Team

10 Our R o le:

to Entertain our Guests

14 Sha re ho lde r Ser vi c e s

18 Ge ra n t's Rep ort

24 Co nso Iida t ed Fi n a n c ia I

Statemen ts

E uro Disney S.C.A. and its subs id iaries opera te Disneyland" Pari s. Opened in April 1992 ,

Disneylan d Par is includes a Theme Park, seve n th emed hotels with nearl y 5,800 rooms,

Disney Village ente rta inme nt centre and a 27-hole go lf co urse .

The Group also contro ls 1,300 hectares (3,200 acres) of undeveloped land aroun d th e reso rt ,

32 km fro m th e cent re of Paris an d with exceptiona l transpo rtati on fac ilities and infrastructure

systems, enhanced by the rece nt opening of direct high speed train link s wi th Londo n,

Brussels an d the West of France.

In a difficult French tourism environment, new records were reached in 1996, with Par k attendance

at 11.7 million and hotel occupancy at 72 %, way above th e nationa l ave rage. Disneyland Paris

is today th e to p "paying" tourist ven ue in France an d we ll established as the lead ing short-break

ho liday des tination in Europe.

In 1996, th e Grou p ac hieve d 77% gro wth in net profits which reached FF 202 milli on aga inst

FF 114 million in th e pr evious year.

The Comp any has agreed, with th e local public Autho rities, to proceed with a new ph ase of

development financed princip ally by th ird-parties. This programme will above all assert Disneyland

Paris as a pr em ium leisure destinati on by doubling th e capa city of Disne y Village. It will a lso

kick-sta rt th e constructi on of th e town centre of Val d'Euro pe.

In association w ith several partners, th e Group has alrea dy started to expa nd Disneyland Pari s with

th e opening of a Plan et H ollywood restaurant in Summer 1996. A Gaumont eight-screen mu ltiplex

cinema and a second co nve ntion centre adjacent to the Newport Bay Club hotel are currently under

construction and expected to open in Spring and Autornn 1997 respectively.

Future developments include an international sho ppi ng mall , hou sing units and offices as well

as addi tiona l pu blic infrastructures.

1997 will be " the Year to be H ere ! " as Disneyland Paris celebra tes its 5th Anniversa ry.

The pro gramme for 1997 is novelty-packed with a new Hunchback of Notre Dam e Ca rniva l Parad e,

th e re-decoration of Sleep ing Beauty's Castle, a Flower Festiva l an d man y new shows an d special

events . Gu ests will have unique oppo rt unities to have fun and discover, or red iscove r,

th e magic of Disneyland Paris.

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Other 7%

I Ge;rr;;:r\ United Kingdom

10%

Franc e

41 %

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1996 Geographicbreakdown of Visitors

1996 Breakdownof Revenues by Activity

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Hotels 39 %

7'-

Benelux

20%

I~:I~/Spa i n /

~

Other

9%

occupancy at 72 %

I I .7 million

and hotel

attendance at

in 1996,with Park

NEW RECORDS

were reached,

1996 KEY FIGURES

F i s c a I ye ar ++ .++ .~+(FF in million s) 199 6 1995 199 4 72% 1,018 11.7 276 ++Theme Park and resorts revenues" 4 968 4 572 4 147 68% 10.7 248 248

60 %987Income before lease and fina ncia l cha rges 8.8

as a percentage of revenues" 15 % 10% 1% 975

Net income/(lo ss) 202 11 4 (1 797)

O pera ting cas hflow 311 308 (1 422)

To ta l debt " ':- 15 100 15 100 IS 500

Sha reho lde rs' equity 5 813 5610 5 49694 95 96 94 95 96 94 95 96 94 95 96

" exclud ing co ns truc tion sa lesu inclllding debt of the unconso lidarcd fina nci ng companies Hotel Spend Theme Park Total average

Occupancy rate per room Attendance Theme Park spend(ill FF, including VAT) Number of visitors per Visitor

(ill millions) (ill FF, including VAT)

2 3

C H A I R M A N r S 5 TAT E MEN T . ~I

+ Close to 50 MILLION guests in less than five years

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Furtherm or e, the genera l context of red uced tourist spending, the strength of the French franc relati ve to

other curre ncies and th e pri ce sens itivity of our produ ct are not allow ing us to increase prices.

Faced with these challenges we co nt inue to develop, Mr. Conrad, in pa rtnerships with investors and

we ll-k nown brand nam es. We will thus be able to increase the va lue of our site and genera te some

additiona l inco me wit hout adding to our debt.

But there is one trap we will not fall int o, that is the one of rest ing on our laurels. We mu st improve

co nsta nt ly. As Mr. Jordan will probabl y have not iced, there is a co nt inuing cha llenge to stay ahea d of the

planned increase ill o ur lease and fina ncial charges by increasing our operationa l efficiencies. Whil e we have

acquitted ourselves in th e first stage, th e second one will be particularly tou gh , since our lease and financia l

cha rges will gro w by an additiona l FF 200 million in 1997.

The expansion of Disney Village is already well on its way, as is the co nstruction of a second interna tional

co nvention cen rer planned to open at the end of 1997. An innovative, high quali ty shopping center,

the backbone of a future housing and bus iness center, has been approved by local and national authorities

and should open in the year 2000.

For the time being, we arc goi ng to co ncent rate on wh at we do best : entert ainme nt . Th e celebra tio n of our

5th anniversa ry, includ ing 36 5 days of festivities and a

whirlpoo l of event s will leave you breathless. Even if

we have almos t reached th e age of reason , we retain

th e esse nt ia l goa ls: to exc ite, to amuse and to

conti nua lly imp rove our service to the guest.

~i1iPpe BourguignonCha irma n and Chief Executive O fficer

Close to 50 million guests have visited Disneyland Paris in less than five years ! I believe th is dem on str at es

our capacity to create and develop a considerable flow of to uris ts.

Co nsequent ly, revenues increased 9% to FF 5 billion, in spite of a to ugh period for the French to uri st secto r.

Particul arl y pleasing is the 55'Yo increase of our incom e befor e lease and financia l charges .

Our net incom e also imp ro ved by 77% to FF 202 million despite a marked increase in finan cial charges

in line with the 1994 fina ncial restructur ing.

With 11.7 million guests and 72 % hotel occupancy, Disneyland Paris has reinforced its position as the number

one paying to uris t des tina tion in Europe. \Vhat is more, by attracting mo re guests between the months of

October and March, th ose vo lumes are more evenly spread th roughout the yea r. As a resu lt, we have been

able to diminish the impact of seasona l fluctu ation s on our business.

As in 1995, our volumes, our revenues and our net income are up .

Over the past year, a grea t man y of you have sha red yo ur remarks advice and enco urag ement .

Indeed, our Shareho lde rs Club, which ex ists pri marily to keep you fully informed on the progress

of your co mp;l1l y, has alread y reac hed nearly 18,000 members.

Nev ert heless I wo uld like to remind yo u of the highli ghts of the fiscal yea r and provide some an swers to

th e qu est ion s which you have posed us in your num erou s letters. M r. Tepik's for exa mple who came to

celebra te his youngest daughter 's birt hda y at the Disneyla nd" Hotel and who wishes to know how we can

co ntinue to improve the qua lity of our services; M r. Jordan 's concern on the evo lution of our lease and

financia l charges an d fina lly, M r. Conrad's wish to have mo re infor mat ion on our development pro jects.

Ladies, Gentlemen , dear Shareholders,

Let us take a look at 1996. Borrowing a phrase from the world of rugby, your company has converted

the try it sco red in 1995 . As a ma tte r of fac t, our resu lts demonstra te a remarkable co ntin uity with those

of the preceding fiscal year.

These results endorse the market ing and sa les stra teg ies which we put in place two years ago.

\X' hat an asset for the future ! First of all because those millions of gues ts are ou r best ambassadors.

Secondly, because the great majority of them intend returning to Disneyland Paris.

And they do come back in ever increasing num bers. In 1996, nearl y 30% of our gues ts were here for the

second or third time, if not mo re. T hey knew that each time they would find new shows, new parad es and

th e same ent husiasm on the pa rt of our cast members.

We have given our cas t the means to better serve our gues ts and impro ve the qu a lity o f our services still

further. A series of measures such as cutti ng out layers of management delegating respon sibility down to

the opera ting level, renderi ng working hours mor e flexi ble, increas ing investm ents in training and setting up

pro fit-sharing schemes and a co mpa ny sa vings plan have a llowed us to improve working conditions and

our cast members' moti vati on . Mr Tepik, thi s is th e way in wh ich we will increase our guests ' sati sfaction

even more. Ou r progress has a lso been recognized by our peers, for the qu ality of our ser vice, wh en we

were elected number one co mpa ny by the profession a ls of the to urist secto r in a recent sur vey.

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MANAGEMENT TEAM

DISNEYLAND®PARIS is... the Theme Park and seven themed hotels ...

FF 195FF ISO

FF 150FF 120

+ Attractive Prices:High Season

• Adults• Child renLow Season• Adu lts• Children

Christian PerdrierVice Presiden t, Hot els

+ 5 lands: Adv enr ureland,Fronricrland, Discovcryland ,Fanrasyland, Ma in Stree t U.S.A.

+ 40 attraction s of w hic h 80 %.arc cove red

Jeff ArchambaultVice President, Th em e Park

+ 11.7 milli on vis itor s in 1996 , 32,000per day o n ave rage, up 9% on 1995

+ l ea rly 50 milli on visi tors sinceO pening Day.

+ A hotel co mplex o f near ly 5,800rooms in 7 rhcm cd hot els:

The Victorian lux ur y DisneylandHotel , a t the ga tes of th e Pa rk,

Hote l New York,the Buzz of the Big Apple,

Newport Bay Club,Ocea ns of ew England Fair,

Sequoia Lodge,yo ur Yoscmire M o unta in Retr eat,

Hotel Cheyenne,a Wild \'(fest Ad venture,

Hotel Santa Fe,a ll th e Fun o f the Fiesta,

Davy Cro cke tt Ranch,a pri vat e Log Ca bin in the Woods,

+ Over 1 .5 mill ion occ upied roomsin 1996 with an avera ge of 3 peopleper room, for a 2-ni ght stay,

+ 6 million occ upie d rooms sinceO pe ning Da y.

Gilles C. PelissonPresident

and Chief O perating Officer

+ A ma jor econo mic player in France,providing 40, 000 d irectand indirect jobs

+ A site of nearl y 2,000 hectares(a pproxima tely 4 ,800 ac res)a t the hea rt o f Europe

+ The leading Theme Park in Europe

+ The 8th hotel group in France

+ Disney Village, an excitingente rta inment centre ope n untilth e ea rly hours of the morning

+ A major player in specia listretai ling with 49 boutiques,se lling 21 million articles per annu m,fea tu ring 30,000 references,of w hic h 93 % at less th an FF 100

+ O ne of th e top 10 ca te ring gro upsin Fra nce with 60 outle ts se rv ing25 million meal s in 1996 .

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MANAGEMENT TEAM +

A wealth of guests from all over E U R 0 PE, generating important revenuesserved by a truly international team and anoutstanding transport infrastructure

Xavier de MezeracChief Financia l O fficer

Michel PerchetSenior Vice President,Cast Members, Product and Q uality

Bertrand GaillochetSenior Vice President,Mar k eting & Sales

Dominique CocquetVice President,Real Estate and General Secretary

+ 35 trains per day arriving at the gatesof the Park, fro m all ove r France,Lond on and Brussels,

-+- A direct link to Par is in 40 minuteswith the RER (Regional Express Train).

+ The A4 motorway provid ingthe East/West link from Paristo German y;

+ Th e " Fra ncilienne" Paris circular,linking up all th e motorways int oParis, and providing direct access toOrly and Cha rles de Gaulle a irpo rts ;

+ 1.300 hectares of land aroundDisneylan d Par is to be develop ed.Major tour ist and ur ban developmentproj ects by th e year 20 00.

+ 11.7 million visitors in 1996of which 4 1% French, 20% Belgianand Dutch, 15 % Ger ma n, 10%British and 5 % Spanish and Ita lian,

+ More than 30% of the Paris reg ionresidents and over 17% of theFrench have been to DisneylandParis at least once.

+ 84 % were very or to tally satisfiedwith their visit,

+ 97 % will recommend their friendsto come,

+ 30% of our Guests in 1996 hadalrea dy visited to Disneylan d Par is.

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+ FF 5 billion of reven ues in 1996

+ FF 1.9 billion of purchasing of goo dsand services fro m ove r 4,000suppliers in 1996

+ 20% of tou rism currency exchangetran sactions in the Paris region

+ Over FF 4 million of cashtr ansaction s per day

+ Leading edge information system spro vidin g real time tracking of flowsat Disneyland" Paris

+ 150,000 shareholders aroundth e wo rld.

+ ea rly 8.000 permanent employees,4.000 seasonal employees recruitedeac h year

+ 800 different skills

+ An internation al team with50 nationalities represented (67 %Frenc h and 33 % othe r nation alit ies)

+ An average age of 29 years

+ An inte rna l uni versi ty whichprovided 37,000 days of trainingin fiscal yea r 1996.

I I

Fro m Janua ry 8 to April 4 , 1996,

Disneylan d Paris paid tribute to the

grea t authors of Europea n fair y ta les

as it revived the mo st enc ha nti ng ones for

th e joy of a ll our visitors: fro m th e da ily

enchanted wedding o f Sleep ing Beauty with

her Prince in front of the Castle, to Ha nsel

and Grerel's aut hentic gingerbread hou se built

in Fanrasy land, everything wa s th ere to please

yo ung and old a like .

THE

Wil~ WestFE~TIV~lF rom April 12 to June 23, 1996 , Frontierla nd clothed

itself in th e atmosphe re o f a littl e pioneer to wn.

Ever y morning, o ur gu ests we re gree ted by authentic

Cow boys and true Indians who lead th em, along with

th e " Howdy Main Street" parade, to th e gates of Fort

Co rnsroc k. T hrougho ut th e day, every one had th e

oppo rt unity to discover and admire the picturesque as pec ts

of the Wi ld West rustic life: spa rks flying as the blacksmith

hammered out his horseshoes, revolv er sho oting,

whip crac king and lasso dem onstrati on s, mu sic, mim e,

tr adition al dan ces and songs...

The Fairy Tale Festival

differ ententer tdi nment c oS t(JmeS

entertainment artists

Parades425 Cast Members

and 52 different floats

14HOURS O~ SHOW PRODUCTION

PER DAY ON AYERACE

COST UMI N G C AS T M EM BE RS

One spectacular reasonafter another forvisiting the PARK

In o ur attempt to sha re th e magic of Disneyland" Pari s with o ur guests 365 days a yea r,we do eve rything we possibly can to give th em one spectacula r reason after ano the r for

visi tin g the Park . Winter or Summer, there is a lway s something new to see and do, a wayto discover or redi scover Disneyland Pari s. It is th e minute detai l of th e sho ws depicting th e

ch aracters of the Disney film s that sets Disneyland Pari s apart from its com petito rs.

10

Pocahontas ~howFro m M ay 16 to September 8, 1996, our visitors had th e exclus ive oppo rt unity

to atte nd th e Pocah o nt as show o n th e Cha parra l Stage at Frontierl and . T he decor,

the heroes, th e ac tio n... a ll the details were there to give eve ryone the illus ion th ey

were tak ing part in th e shooting of an authent ic film.

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From April to September 1996, child ren

participated in the first interact ive parad e ever,

on M a in Street USA, as anima ted toys invited the publ ic

to join in the party in a happy cele bra tion

where ever yone becam e part

of th e wonderful wor ld of Toy Sto ry.

Toy Story Parade

PL~'''~'f OoD

"OLL"~ opening atc l996 saW th e \-\o\\yWOOO

1er 0 \ 0 pl anet1'he sum~ e of th e secon b SylvesterDisney \/l\\ag ce sponso reo Y ce Wi\\\ s,

in Fran . rer Brurestaurant lo Schwarzenegg ~ th e highly

1\rno D ar01eu,Sta\\one, -l Geraro ep . orO time .

. M ore anu teO \\1 reCDeml 0 . . waS constrUC estigioUS

. l olhce ' l most prorig1na e th y of t 1e re meter

or wor 000 squaWith a oe

c0 legenoS, th e 2, . . l forecasts.

f \-\o\\YWOO oeO itS on glnao h aS e)(Ceerestaurant

SHAREHO"LDER SERVICES

As strengtheningrelationships withshareholders is a toppriority, Euro DisneyS.C.A. has created severalcommunication tools:+The Shareholders' Club+A "Minitel" information

service (France only)+ Compuserve connection

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+ <-

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Telepho ne:Fax :

The Shareholders' Club

Since 1995 , Euro Disney S.C.A. provides its individua l shareho lders with an opport unity to jointhe Shareho lde rs ' Clu b. Eac h member receives through th e post regu lar releases on th e results ofthe Group . Two telep ho ne lines have bee n dedicated to shareho lder requ ests fo r finan cia l informationor fo r reservat ions at Disneylan d" Paris.

The Club ena bles th e Compa ny's sha reho lde rs to di scover, o r red isco ver, under privil eged co ndit ionsthe Park, the hotels, the go lf-co urse and the boutiques of Disneyland Pari s. In its first year, the Clubhas been a real success with a lready nearly 18,000 members.

To become a member, sha reho lders sho uld co ntact th e Compa ny by teleph on e on (33) I 6474 5630or by fax o n (33) 1 64745636.

M embersh ip in th e Club is free fo r sha reho lde rs with 1,000 or more sha res. For th ose wi thless th an 1,000 shares, a co nt ribution to th e a dm inistra tive costs o f FF 100 is ch arged for a membersh ipof two yea rs .

Virginia J EAN SO N, resp on sible fo r Investor Relati on s, and her team a re ava ila ble for more in formationfor exis ting sha reho lders and potentia l sha reho lde rs at th e foll owing address:Address: Euro Disney S.C.A.

Serv ice Relations Invest isseu rsB.P. 100F-77777 M arne-la-Vall ee Cedex 4(33) 1 64745855(33) 1 64745636

Euro Disney is also present on Minitel (France only) 36 15 EURO DISNEY· ACTION (FF 1.29/mn),

on Compuserve GO DLP.

The serv ices include:

• The Sha re ho lde rs' Clu b (in for ma tion an d membership )• O rde ring Annual Reports• La test pr ess releases• Reser vations and informa t ion on Disneyland Paris

.

Share Price PerformanceFF

25

• Volum e (average daily in millions)

Euro Disney S.C.A. share price, month end (in FF)

20

15

millionshnres

12

10

8

10

5

I6

_ 4

~ ~~~~~~-~~~ -~ ~~~~~~-~~~-~ ~~~~~~-~~~-~1993 1994 1995 1996

Fiscal year 1994: share pri ce adjusted for 1994 rights issue usi ng the Societe de s lIo ur scs Fran caises crefficicnr of adjusremcnr of 0 .43 1 to all sha re

prices pr ior to june 1994.

Shareholder breakdown(at September 30, 1996)

1IIIIIlb e r ofshares [million} and %

Market Capitalisation

Fiscal Year

1996 1995 1994

Number of shares (million) 765 765 765

Mark er Capitalisation (FF billion )

(at September 30) 8.8 iz.: 6.1

Sha re Price: Higb (FF) 17.40 19.90 18.70

Low (FF) 10.60 9.80 6.15

Th e Walr Disney Company"300. 239 tyo

Free-Floa t284.4

PrinceAlwalccd" "ISO.224 '1..

" via its fully-ow ned subsid ia ry EDL Hold ing Co mpany

" \"ia his fully-owned co mpany KINGDO:-' I 5·KR·1 1. l.td

Financial Services

Euro Disney S.C.A. Shares:Traded in Par is

Lond on:

Brussels

local

SEAQ

1996 daily average volume

55 1,400

42,500

498,20 0

183,500

15

SHAREHOLDER SERVICES

Registrars

FRANCEBanque Indosuez69 bo ulevard Hau ssmann75008 Paris

Euro Disney S.C.A .6.75% Co nvert ib le, 2001:

Tr ad ed in Paris

Registrars:Banque Nati on ale de Paris16 bou levard des Iraliens75009 Paris

UNITED KINGDOMRoyal Bank of Sco tla ndPO Box 82Caxron HouseRedcliffe WayBristol BS99 7NH

Euro Disney S.C.A.War ran t:

Traded in Pa ris

Registrars:Banqu e Ind osuez69 boulevard H aussman75008 Paris

BELGIUMBanque Ind osuez Belgique14 place Sainre-C uduleB-I 000 Bruxelles

Sub Registrars:Royal Bank of Sco tla ndPO Box 82Caxron H ouseRedcliffe WayBristol BS99 7NH

Corporate Governance

The Euro Disney S.C.A. st ructure int roduces under French law, a clear dis tinction betweenthe Management Team , respon sibl e for op erating the Co mpa ny, and th e Superviso ry Board, responsible

for ensuri ng th e good management of the Co mpa ny. The ro le of th e Supervi sor y Board is to sa fegua rdth e Co mpa ny's and th e shareho lders' best inte rests, and to gua ra ntee the qu ality and integrityof the information communica ted to sha reho lders.

Supe rv isory Board

Chairman of the Supervisory Board- Mr. Antoine Jeancourt-Ga lignani, President -d irecreu r genera l, AGE

M embers of the Supervisory Board- T he H on ourabl e Lord Grad e of Elstree , Chief Execut ive, Gra de Enterprises Ltd .- Mr. Philippe Labro, Vice President, Direcreur genera l, RTL.- M r. San ford M . Litvack , Senior Executive Vice President and Chief of Co rpora te O perations,

The WaIt Disney Co mpa ny.- Mr. Jens Odewald, Cha irman of the Supervisory Board, Bodenverwertungs und -verwaltungs Gmb H

an d Eurobike AG .- Mr. Jean Taittinger, President-directeur genera l, Societe du Lou vre; President d'Honneur,

Banque du Louvre; Adminis tra teur, Cie des Cris ta lleries de Baccar at.- Mr. Fra ncis Veber, President, EFVE Films, Escap e Film Productions Co.

In respon se to the recommend ati on s of th e Vienor Report published in Jul y 1995 and aimingto introduce a lar ge number of the principles of Corporate Governance into France, th e memb ersof the Superviso ry Board of th e Co mpa ny agreed in 1996 to ado pt unan imou sly a Superviso ry BoardMe mbe r's Charter. T his Cha rter dic ta tes the fun da menta l ob ligations to which all members of th e Boardsho uld co nfo rm. In pa rt icular, th e text pro vides for severa l obligatio ns that go we ll beyon d the deman dsof the by-laws of the Co mpa ny. A member of the Boa rd mu st person ally own at least 1,000 sharesin th e Compa ny. He has a mor al ob ligation to dedicate suff icient tim e and energy to his respon sibilityand therefore sho uld avoid an exc ess of dir ectorships that might prevent him fro m exe rcisinghis functions in th e best of conditions. Each member mu st mak e his best efforts to attend the AnnualGenera l Meeting and the Board M eetings. In o rde r to reinforc e this issue, th e Board has ad optedthe principle th at a part of the remuneration allocated to each member would be proportion a lto his atte nda nce at the Board meetings.

16

Gerant's Report

18

Consolidated FinancialStatements

GERANT'S REPORT ON THE GROUP

INTRODUCTION

We are pleased to pr esent to yo u the Geranr' s Report fo r the fisca l year ended September 30, 1996.

OPERATING ACTIVITIES

Dur ing fisca l yea r 1996 th e Gro up continued to foc us its ef fo rts on increas ing T heme Par k a tte ndance and hot el

occ up ancy, enha nc ing ope ra ting cfficienc ies by reducing seaso nal fluctuatio ns in th e bu siness and improvi ng the

overa ll guest exper ience. T hese effo rt s were rewa rded with new records for T heme Pa rk a ttenda nce and hotel

occupancy in fisca l yea r 1996, despite a diffi cult to uri sm enviro nment in Fra nce . As a co nseq uence, the signi ficant

imp rov em ent in fisca l yea r 1996 opera ting results more th an offset the inc rease in lease and financia l ch ar ges result ing

from the planned reduct ion of int erest for giveness fro m the 1994 finan cial restructuring (the " Financia l

Restructuring" ). Details relat ed to the imp act of the Finan cial Restructuring can be found below in th e "Lea se Rental

Expense, Royalti es and M an agem ent Fees, and Net Fina nc ia l Cha rges" section.

Them e Park a ttendance incr eased 9% to 11.7 million visito rs during fisca l yea r 1996, compared to 10.7 mill ion

visitors in fiscal year 1995. Hot el occupancy rose to 72 % in fisca l yea r 1996 from 68% in fisca l yea r 1995. These

increases, achieved pri mar ily duri ng the low seaso n, resul ted fro m the success of the Gro up's new market ing stra teg y,

new pricing pol icy, w hich was effective Apri l 1, 1995, and the ad dition of a maj or new attract ion, " Space M ounta in

fro m the Earth to the M oon" in J une 1995 .

Add ition all y, costs and expe nses increased only 3 % desp ite increase d vo lume and inte nsi ve effo rts to ma inta in,

and in man y cases further improve, the high qua lity of the gues t ex perience . T his level of cos t control was ac hieve d

thro ugh improvi ng opera ting efficienc ies and man agem ent acco untability.

Crea tio n of new pa ra des and stage show perfo rma nces along with mor e freq uent appeara nces of the Disney

characters, increased num bers o f food ven ues, and lon ger opening hours for the T hem e Park helped to pro vide th e

high qu ali ty of service expec ted by our guests, des pite the signi fican t increase in atten dance.

FINANCIAL RESULTS

Revenues

Th e Gro up's to ta l revenues were FF 5,009 milli on in fiscal yea r 1996 as co mpared to FF 4, 667 million in fisca l

yea r 1995.

The to ta l revenues of the Gro up were gene ra ted fro m th e following act ivities:Ye a r e n ded S cp t c m hCf 3 0 .

(IT in millionv) 1 9 9 6

Th eme Park 2678

Hotels 962

O the r 328

O pera t ing reven ues 4 96 8

Co nstruc tio n sa les 41

Total revenu es 5 009

1 L) 9 5

2 468

1 77 2

4 572

95

4 667

T he Gro up's ope ra ting revenues were FF 4 ,96 8 million for fisca l yea r 1996, an imp rov em ent of 9% fro m

FF 4 ,5 72 million in fisca l year 1995 .

T he incr ease in revenues represents a significant accomp lishment in 1996 given the diffic ult mar ket cond itions

that ma ny French to uris t dest inations experienced . This trend can be pa rti all y a tt ributed to the impro ved pric e

percepti on o f the Park, which has been ac hieved by lowerin g admission prices throu gh out the yea r and length ening

the " low season" peri od w here admissio n pri ces a re at their low est. These cha nges, alon g with the addi tio n o f Spac e

1 8 E U J(() I) I\ :-;F Y S .C . :\. A:-;() S lIIIS)),U IU!:S

M ounta in and th e int roducti on o f var ious specia l eve nts, assis ted in d raw ing more visito rs th rough ou t th e year,especia lly during the low seaso n,

T heme Park revenu es increased 9% to FF 2,678 million in fisca l year 1996 fro m FF 2,46X million in fisca l year

1995 , du e ma inly to the significant incr ease in atte nda nce during the low seas o n as well as high er rep eat visita tionthroughout th e yea r.

Total Them e Park spendi ng per visitor remai ned sta ble in fiscal yp:lr 1996 as co mpa red to fisca l year 1995. A

slight inc rease in me rcha ndise , foo d and beve rage spending co mbined with the overall inc rease in atte ndance, offse t

th e full year imp act o f th e red ucti on in Th em e Park ad mission prices whi ch was impleme nted in April 1995.

Hotel revenues (w hich include Disn ey Village, formerl y Festival Disney) increased I 1% to FF 1,962 milli on in

fiscal year 1996 fro m FF 1,772 million in fisca l yea r 1995 , due to increased occ upancy levels resultin g from the

success o f Disneyland Pari s sa les and marketin g progr am s.

Hotel spend ing per room increased du e to an imp ro vem ent in yield man agem ent, despite slightly lower foo d,

beverage and merchandise spend ing per ro om.

Co ns tructio n sa les relate to the sa le o f operating asse ts that ar e so ld to, and subsequent ly lea sed hack from

affiliates of T he Wait Disney Co mpany. Such co ns tructio n sa les re late ma inly to th e co nst ruction of th e Newpo rt

Convent ion Cc nrer and th e complet ion of Space M ounta in, in fisca l yea rs 1996 and 1995, respecti vely.

Costs and expenses

Costs an d expenses for the Gro up represent opera ting costs befo re lease ex penses , roya lties and man agem ent fees

and finan cia l char ges. Prin cipal co mpo nents include direct op erating cos ts, mark eti ng and sa les ex penses, gene ra l and

administ ra t ive ex penses and depreciat ion and amo rt izatio n.

Direct operating costs (w hich inclu de op era ting wa ges an d emp loyee benefi ts, co st of food , bevera ge and

merchandise sa les and other d irect expenses) increased to FF 2,900 milli on in fiscal yea r 1996, a 6 % increase fro m

FF 2.729 million in fiscal yea r 1995 . This inc rease is primar ily a result of high er a tte nda nce a nd occu pa ncy an d th e

Group's co nti nui ng emphas is on maint a in ing th e hig h qua lity of service offered to an increasi ng nu mber of gues ts .

Market ing. sa les and genera l an d admi nistra tive expenses decreased 3 % to FF 1,074 million in fiscal 1996 from

FF I, III million in fisca l yea r 1995. Thi s decrease rep resents primaril y th e impa ct of management's COSt reduction

effo rts and lower marketing and sales expenses during fiscal year 1996. During fiscal yea r 1995, marketing and sa les

ex penses were high er, primarily to pr om ot e th e opening of Space M ountain an d to adve rtise lower admiss ion prices

;1I1d th e new seaso na l pricin g policy.

Depreciation an d amortisation expense increased slightly to FF 270 mi llion in fisca l yea r 1996 compared to

FF 265 million in fiscal year 1995 .

As in prior yea rs. th e Gro up has not undertak en an y significa nt resea rch and development ac t ivities .

Income before Lease and Financial Charges

The Group 's income before lease and financial cha rges increased significanrly to FF 724 milli on in fisca l year

1996 from FF 467 million in fisca l year 1995. Th is improvement wa s mainly du e to the combina t ion o f high er

a tte nda nce and hotel occ upa ncy as well as the Gro up's ongoi ng cost co ntro l effo rts .

Lease Rental Expense, Royalties and Management Fees , and Net Financial Charges

T he Financial Rest ructur ing continues to have a significant positive impact on the Group's net incom e mainl y due to

the wai ver o f royalti es and management fees b~' Th e \'\'alt Disne y Co mpany and tempora ry inte rest forgiveness gra nted

by the Lend ers. Th e rat e o f interest forgiveness was at its peak dur ing the seco nd hal f of fiscal year 1994 and has

progressively decreased in fiscal yea rs 1995 an d 1996. Th e ra te of interest forgiveness is scheduled to dec rease throu gh

fisca l year 2003, alth ough subs ta nt ially all o f the interes t charges will have been reinsta ted b ~' the end of fiscal yea r 1998.

E UIW J)" =,, I. Y S.c. :\. A=" 1l SU IIS IIJ IA IUES ' 9

INVESTMENT, FINANCING AND LIQUIDITY

Investm ent

Tota l capi ta l ex pend itu res wer e approxima te ly ff 2 70 million for fiscal year 1996 . Thi s a mount primarily

rep resents rhe normal recurring inve stmen ts fo r rhe Them e Park and the hotel s.

Equity

Ar the end of fiscal year 1996, rhe G roup 's eq u ity increa sed ro l-F 5 .X bill ion co m pa red ro FF 5. 6 billion ur rhc

end of fiscal year 1995, due to rhe po sitive resu lts of operations fo r fiscal yea r 1996.

As of Sep te m ber 19 96 a nd 1995 , The \X'a lr Dis ney Co m pa ny, throu gh indirect who lly-owned subs id ia ries, a nd

Prince Alw a lccd , th ro ugh a who lly-owned com pa nv, held 39'1., a nd 24 % of th e Co mpa ny's sha res, respectivel y. No

othe r sha re ho lder has ind icated to rhe Co m pa ny rha r ir ho lds mo re than 5 % of the sha re ca p irul of t he Co m pa ny.

In j u ne 1994, th e Co m pa ny's sha re ho lders a pp roved rhc irnpl ernenrarion of a n emplo yee sto ck o prion plan

authori sing rhc issuance of st ock optio ns for up to 2 .5 % of th e Co m pa ny's oursrandin g common stock Ia p prox ima rc lv

19 million sha res) . Du ring fiscal yea r 1995, rhe Group granted 16.55 million options ut a we igh red average exe rc ise

price of FF ';1. 66 per sha re. In fisca l yea r 1996, the Group gra nte d an addition a l 2 75 ,000 option s a r an ex erc ise pri ce

of FF 13. 72 pe r share.

Debt

T hrough t he Fina ncia l Restru ctu ring a nd nota bly th e FF 5.95 bi llio n right s issue, th e G ro up reduced irs ro ra l

principa l inde bted ness (incl ud ing th e unco nso lidared Fina ncing Co mpa n ies) fro m FF 2 0 .3 bi llion prior to th e Fina nc ia l

Rest ruct u ring ro FF 15 .5 billion at Sep tem ber 30, 1994 . Dur ing fiscal year I ';195, the Group's ro ra l principal

indebtedness W;lS red uced again through the rep urchase of a portion of its o ursrund ing Co nvert ible Bonds ro

FF 15. 1 billi on ur September 30, 1995 a nd remained sta ble a r Septe m ber 30, 1996 .

The G ro up's o uts ta nd ing debr (excl ud ing the uncon solidurcd Financing Com pa nies . acc rue d interest and bond

redemption premi um ) wa s app roxirnarcly Fl' 6 .9 bill ion ar Septem be r 30, 1996 and 1995 vers us FF 7 .3 billion a t

Sep tember 30, [ 994 and l-F 7.X bi llion prior ro th e Fin ancial Restru ctu ring .

As part of the Fina nc ia l Rest ru ct uring, pri ncipal payments were deferred for three years from their orig ina l du e

dare, a nd uccord ing ly, no p rincip a l repaymen ts were mad e d uri ng fisca l ycn rs 1996 or 1995.

Ad dit io nully. the Fina ncia l Rest ru cturing ag ree me nts include cove na nts w ith respect to th e rest ru ctured financ ing

arrangeme nts between rhc Gro up a nd rhc Len der s. These covena nts include rest rict ions on add it io na l indebtedness

a nd cap ital expend itures, the provision o f certai n financia l informa tion and compliance w ith certain fina ncia l rat io

th resh olds which were modified by subse q ue nt agree me nts in 1996 w ith th e Lenders.

Liquidity

Gro up cash flows from op era tions amounted to fF 3 1 I mill ion in fisca l ~ 'Car 1996 co mpa red to FF 3DX million

in th e p rior yea r.

Cas h a nd short term invest me nts a mo unted to approxim urcly FF 1.2 billio n ar th e end o f fiscal ~ 'ear 19 ';1 6

com pa red ro FF 1.1 billion a t the end o f fisca l yea r 1995 . As of fisca l yea r I ';194 , th e G ro up a lso has uvai la blc fro m

T he W;l lt Disn e,: Co m pa ny an un used l-F 1. 1 billi on lO-vcar unsecured revo lving credi t fnc ilirv a t P[BOR .

Based o n curre nt pr ojection s, M a nugcmcnr be lieves that it ha s th e reso urces nece ssary ro meet funding

req uire men ts arisi ng in fisca l ye;lr 1997. H owever, lo ng-ter m liq uid irv req uirem ents o f the Co m pa ny include th e

red empt io n and/or refi nancing of the remaining 6. 75 % Co nvert ible Bonds up on marurirv on O ctober I, 2 00 I.

E IW DI ' N l: Y S.c. r\ . AN Il S UB S I D IA R IE S 2]

GERANT'S REPORT ON THE GROUP

Dividends

No d ivid end a llocatio n is proposed w it h resp ect to fisca l yea r 1996, a nd no d ividends wer e pa id with respect to

fisca l yea rs 1995 a nd 1994.

Financial instruments and exposure to interest rate risk

In th e normal co u rse of bu sin ess, t he G ro u p em ploys a vari ety of o ff-ba lance sheet fina nc ia l inst rum ents to man age

its exposure to fluctuatio ns in inter est a nd for eig n cu rre nc y excha nge rates, incl ud ing inte rest ra te swa p agreem ent s,

for wa rd ra te ag ree me nts, co lla r ag reem ents, fore ign CU rre!1C~' fo rwa rd exchange contract s a nd fo re ign excha nge

o ptions.

The Gro up 's debt (incl ud ing th e unco nso lida rcd Finan cing Com pa n ies) a t Septe m be r 30, 1996 is a pprox ima te ly

70 '){, ba sed on fix ed ra tes , a nd 30 % based o n varia ble rates, including th e effect o f th e fina ncia l instr uments noted

a bo ve a nd the inter est forgiveness pro vision s of the Fina ncia l Restructu ring. Accord ingly, the G ro up d oes not ex pect

interest ra te mo vem en ts to significa ntly a ffect its fin a ncial sta tements in th e foreseeable fut ur e.

The G ro u p co ntin ua lly mo n ito rs its posi tions w ith, a nd th e cr ed it qua lity o f, major int erna tion a l fin an cial

institution s w hich a re co unrer pa rries to its off-ba la nce shee t fina nc ia l instruments and does not a ntic ipa te fa ilure to

perfo rm b~' such insti tu tions .

Effect of Inflation

M a nagement bel ieve s th a t th e impact o f infla tio n ha s nor been ma terial to the G ro up 's reven ues or o pe ra ti ng

resul ts fro m O pen ing Day, Ap ril 12, 1992 , t hr o ugh t he peri od of o pe ra tio ns ended Sept em be r 3 0, 1996.

OUTLOOK

Development

T he Gro up is co nt inuing its de velopment, w it h ma ny new p ro ject s th at w ill not o nly a dd excit ing new features

to th e D isn eyla nd Pa ris Reso rt but w ill also se rve as a ca ta lys t for th e deve lo pm en t of th e urba n ce ntre of Va l d' Eu ro pe.

•Mo st of this development will be fin a nced by th ird parties .

T he Disney Villa ge ex pa ns io n has sta rte d with the o pe ning in J uly 19 96 o f a Plan et Holl yw o od resta ura nt. An

eight-scr een m ult ipl ex Ga umo nr cinem a is cur rently und er con str uction a nd is ex pec ted to o pen in Spring 199 7. O t her

projects are being nego tiated to furt he r st re ng the n th e Gro up 's ente rt a inme nt offering and, as a co nseq uence , pa ve

the wa y for addi tio na l restaura nts a nd re tai l sho ps.

A second co nve nt io n centre is a lso under con struct io n a nd is expecte d to o pe n in Aut um n 199 7. Ad jacent to both

th e New po rt Bay C lu b hotel a nd t he ex pa nsion s ite for Disney Village, th is new ce ntre wi ll double cur re nt co nvent io n

ca pacity a nd ass ist in furt her esta blishing D isn eylan d Pa ris as a prem ium loc a tio n for a wide ran ge of co nvention

act ivit ies . T he fina nc ing of the co ns t ru ctio n of th e p roject ha s been p ro vided by The \Xla lt Disn ey Com pa ny in th e

form of a leasin g ag ree men t.

The G ro up has o ffic ia lly no tified th e Publ ic Authori ties of its int ention to la unch th e develo p ment o f th e urban

ce nt re of Val cl'E uro pc. Vario us gove rn ment a p prova ls are ex pected to be fina lised by Ma y 19 97. T his pro jec t includes

th e co ns t ruc tio n o f reta il space, co m bin ing a tradit io nal shopp ing centre and an upsca le fac tory o utlet vi llage ca lled

" Pavilio ns de la M od e " .

C o m me rcia l rea l es ta te master develo pm ent o n t he site is a lso well under wav: a first phase around th e to w n o f

Bai llv- Ro mai nvillie rs is now co m pleted . The nex t phase w ill invo lve ho using within a nd a rou nd th e go lf co ur se as

w ell as in the u rba n cent re o f Va l d ' Euro pc.

Business Outlook

Duri ng fisca l year 1996 th e Gro up was ab le to subs tantia lly increase T heme Park attendance and hot el occupancy

whi le co nti nuing to co ntrol costs.

In fisca l yea r 1997, the Gro up's plan to provide more new ente rta inment, focuse d this yea r arou nd th e

5th Anni versary Ce lebrat ion, and maint ain affo rda ble prices w ill cont inue to be key elements in maintain ing posit ive

att end ance an d occupancy t rends, pa rt icula rly in th e low season . T hese eleme nts co mbined wi th impro ved yield

management and persistent cost contro l sho uld help in th e Gro up's effo rts to maint a in the posi t ive opera tio na l

mom entum esta blished ove r the last two years .

Nevert heless, market cond ition s rem ain d ifficu lt and lease and financia l cha rges a re est imated to inc rease by

FF 200 million in fisca l yea r 1997 du e to th e plan ned red uction of int erest forg iveness fro m th e Fina ncia l

Restructu rin g. As a resul t, Ma nage ment believes th at fisca l 1997 wi ll be a mor e cha llenging year fo r th e Gro up.

In fisca l yea r 1998, lease and financial expe nses are estima ted to increase by an additiona l FF 120 million and

ce rta in of th e projects not ed a bove includ ing th e opening of the new conventi on cent re will begin to benefit th e

Group's resu lts.

Chessy, ove rn ber 27, 1996

T he Cera nr, Euro Disney S.A.

Ph ilip pe Bourguigno n, Cha irma n and Chief Execut ive Officer

E URO D I \ ;>; E)' S .C: . :\ . ,\ ;>; IJ S UII S I D IA IUES

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETSe p te mb e r .1 0 .

[FF in million..) N o t c s " 19 9 6 19 9 5 199 4

Fixe d Assets

Int angible asset s 94 116 145

Ta ngible assets 3 3050 3039 , 140. )

Lon g-term receiva bles 4 9 514 9 525 9 56S

12 658 12 680 \2 853

C urrent Asse rs

Invent o ries 5 180 166 184

Acco unt s receivable:

Tra de 6 291 270 27 1

O rher 7 526 402 763

Shorr-re rm investments 8 9 13 799 899

Cas h 3 16 308 308

2 226 945 2425

Defer red Cha rge s 9 382 4 10 448

Tora l Asse rs IS 266 15 035 IS 726

Shareho lde rs' Equity

Sha re ca pita l 10 3 827 3 X25 3 S25

Share pr emium 10 888 I 887 2 S18

Accum ularcd ea rni ngs (deficit) 10 98 (1(2 ) ( I 147)

58 13 5 6 10 5 4%

Bo nds Red eem abl e in Sha res (" O RAs ") 11 I 002 I 002 002

Provisio ns fo r Risk s and Charges \2 25 1 379 392

Borrowings \3 6 .B I 6 3 \0 66ll)

C urrent Liabil it ies

Paya ble to relat ed companies \4 179 156 77

Acco unts payab le and accr ued lia bilities 15 I 358 3 14 X5 3

I 537 I 470 930

Defer red Reven ues 16 332 264 228

Total Shareho lde rs' Equity and Lia bi lities 15 266 IS 035 15 726

::'Sl'l' l'\tl tl'S to Con so lid.ued linan cinl Sr.u vrncnts

24 Eun o D ISi' E)' S.C. /\ . A:-: Il S UI', S IIl IAIUE S

rl

CONSOLIDATED STATEMENT OF INCOME

(FF in millions)

Revenu es

T heme Par k and reso rts

Constr uctio n sa les and related services

Cosrs and Expenses

T heme Par k a nd resorts

Cos t of construction sa les and related services

Incom e Befo re Lea se and Fina nci al Charges

Lease renta l ex pense

Financia l incom e

Fina nc ia l cxpense

Incom e / (Loss) Before Exceptional Irems

Exce ptiona l income / (loss) , ner

Ne t Income / (Loss)

"Sl't' NOIl' ''' to Co nso lida ted Fina ncial Starcmcnrs

N o tes ,.

17

I , 18

17

25

19

Ye a r e n ded Se p te m ber .1 0 ,

19 9 6 1 9 9 5 ' 9 9 4

4 96 8 4 572 4 147

41 95 114

5 009 4 667 4 261

(4 244) (4 105) (4 106)

(41) (95 ) ( 11 4 )

724 467 4 1

(428) (285) (889)

302 309 538

(442) (489) (972)

(568 ) (46 5) ( 1 323)

156 2 ( I 282 )

46 112 (5 15)

202 114 ( I 797)

E U llO DI ~ N EY S.c.r\. A N D S U IIS II J IAR IES 2.5

CONSOLIDATED STATEMENT OF INCOME

(FF in mill ion s]

Reve nues

T heme Pa rk and resorts

Co ns t ruction sa les a nd rela ted services

Cos ts and Expe nses

T heme Park and resorts

Cost o f co nst ruct ion sa les and related services

Income Before Lease and Financial Charges

Lease rental ex pense

Financia l incom e

Finan cial ex pe nse

Incom e / (Loss) Before Exceptiona l Items

Excep tiona l incom e / (loss), net

Net Inc om e / (Loss)

'"' St.'l· :\'() [l.'~ [ 0 Co n-o lida n-d Fina ncial St ;l( l.·I11 l'IH ~

N o tes 1;-

17

I , 18

17

25

19

Year e nd c d S e p l e m b e r .1 0 •

199 6 19 9 5 ' 9 9 4

4 96 8 4572 4 147

41 95 11 4

5 009 4 667 426 1

(4 244 ) (4 105) (4 106)

(4 1) (95) ( 11 4)

724 467 4 1

(428) (285) (889 )

302 309 538

(442) (489) (972)

(568 ) (465) ( I 323 )

156 2 ( I 282 )

46 11 2 (5 15)

202 114 ( I 797)

E UR O D1S:->EY S.C :\ . A:W Su as io L\ l tl ES 2 5


CONSOLIDATED STATEMENT OF CASH FLOWSYear end ed S epte mher .I o ,

(FF in millions) N o t e s " 1 9 9 6 19 9 5 199 4

Ca sh Flow s from/(uscd in ) Operating Activiti es 311 308 (1 422 )

Cas h Flow s from Investing Activit ies:

Proc eeds from the sa le of tangible fixed assets 7 38 1 44 7

Ca pita l expe nd itu res for tangible fixed asse ts (256) (171 ) (797)

Inc rease/(decrease) in defe rred charges (2) 37

Increa se in int an gibl e asset s ( 13 ) (8) (20 )

Decr ease in long-term recei vab les 9 42 48

Cash Flows fro m/ (used in ) Invest ing Acti viti es (255) (99) 715

Cas h Flows from Financing Activities :

Repurchase of Co nve rti ble Bonds 13 ( 100 ) (3 11)

Ne t proceeds from issuance o f new shares 2 5 776

Proceed s fro m issuan ce o f ORAs 2 I 00 2

Proceeds from sale of inte res t rate hedging inst ruments 22 59

Prep ayment o f borrowings 2 - 13 ( I 54 9)

Incr ease in borrowings 100 700

Repayment of interim fina nc ing 2 (698)

Incr ease in loans to Financing Co mpa nies 2 (4 227)

Decrease/ (increase) in debt secur ity dep osit 4,

2 (294).)

O ther -I

Ca sh Flows from/(uscd in ) Financing Acti viti es 66 (309) 710

Cha nge in Cash and Cash Equi valents 122 ( 100) 3

Cash and Cas h Equiva lent s, begi nnin g of per iod 107 I 20 7 1 204

Cash and Cash Equivalents, end o f period 229 1 107 1 20 7

Ad justments to reconcile Ne t Inc om c/ (Lo ss) to

et Cash Flows from Operati ng Acti vitie s:

Ne t Income/(Loss) 202 114 ( I 797)

Add ba ck/Isubtract ]

Dep reciati on an d amo rt isa tio n 18 270 26 5 291

Ga in on repurch ase of Co nve rt ible Bonds 13 (15 ) (84)

Red uction in carrying value of certa in assets 1 206

Payabl e forgiven ess 2 ( I 208)

O ther 66 76 6 1

Changes in :

Receivab les ( 145) 359 262

Inventories (15 ) 18 37

Parabl es and othe r acc rued liabiliti es (52) (440) (27 4 )

Cash Flows from/(used in ) Operating Activiti es 3 11 308 (1 422 )

Supplemental Cash Flow Information:

Int erest pa id 3 18 33 4 554

Non-cas h Financing Activities:

Offset of accum ulated share premiu m agai nst accu mulated def icit 10 93 1 5 713

"See No tes to Consolidated Financial Stat ements

2. 6 EUHO DI ' NE\' S.C. l\. AN Il SU I\, l l l !A IU ES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 Description of the Business and Summary of Significant Accounting Policies

Description of the Business

Euro Disney S.C. A. (the " Company" ) and its wh olly-own ed subsidia ries (co llectively, the " Grou p" ) co mmenced

o pera tio ns o n Apri l 12 , 1992 , with the off icia l opening of Disneyland Paris. T he Gro up operates the Disneyland

Paris Reso rt , which includes the Disneyland Paris T heme Pa rk (the "T heme Park " ), seven rherned hot els, the Festiva l

Disney enterta inment centre, rena med " Disney Village", and a golf co urse (collectively, the " Resort" ) a t M arne-la

Vallee, France. In ad di tio n, the Gro up manages the real esta te develop ment and expansion of the related infra structure

of the prop ert y. Th e Group owns the Disneyland Hot el, Davy Crockctr Ran ch, golf co urse and land for the hotels

and leases th e Th eme Park and Phase IB Facilities fro m Euro Disney Associes S.N .C. (" EDA SNC" ) and the Financing

Co mpa nies (see term s defined below ).

Th e Co mpa ny, a publicly held French co mpany, is owned 39 % by indirect, wh olly-owned subsidia ries of T he

Wa it Disney Co mpa ny ("T WDC") at September 30, 1996 an d 1995, and ma nage d by Eur o Disney S.A. (the

Company's Gera nr), an ind irect, 99 %-owned subsidiary of TWDC.

Entities included in the consolidated financial sta tements and their primary operations/activities are as follows:

C o m pa n y

Euro Disney S.C.A .

EDL Hotels S.C.A .

~';' of controland ownership

99.9

P rim a r y 0 per a ( i n g a c ( i v i t y

Operator of the Theme Park, Disneyland Hotel, Davy CrockerrRanch and golf course, and ma nager of real estate development

Operator of the Phase IB hotels and Disney Village entertainmentcentre

Centre de Divert issement s S.A.Newpo rt Bay Club S.A.Cheyc nne Hotel S.A.Hotel Ne w Yo rk S.A.Seq uoia Lod ge S.A.Hot el Santa Fe S.A.

EDL Services S.A.

EDL Hin d s Participarion s S.A.

Euro Disney Vacances S.A.

Euro Disney Vacaciones S.A.

Euro Disney Finance S.A.ED Reso rt S.C.A .Val d'Europe Pro motion S.A.ED Resort Services S.C.A .

99.899.899 .899.899 .899 .8

99. 8

99.9

99.9

99 .9

99 .899.999.899.9

Special pur pose leasing com pa nies, all subsidiaries of ED L HotelsS.C.A ., which were crea ted in connection with th e leasing andfinancing of the Phase IB Facilities

Management compan y of th e Phase IB Fina ncing Co mpanies

Genera l Partn er of EDL Hotels S.C.A ., ED Resort S.C.A .,ED Resort Services S.C.A.

Tour operator that sells holiday packages to th e Disneylan d ParisResort , pr incipally to guests fro m Germa ny, Ita ly an d T heNe therla nds

Spanish subsidiary of Euro Disney Vacances S.A.

Companies created for anticipated second phase financing

S.E.T.E .M .O. Imagineering S.A. R.L. 100.0 Studies and supervision of construction for the new attractionsof the Th eme Park added after Opening and the possible secondtheme pa rk

ED Spectacles S.A.R.L.·

Debit de Tabac S.N. C.

80 .0 Operator o f Buffalo Bill's Wild West Sho w

100 .0 To bacco reta iler at Disney Village

• Included in the consolidated financial srarcmcnrs since 1995.

b i RO DI,:-: EY S.C. A. .vx n Il ID I.\RIE 2.7


Phase I Financing

The Gro up origi nall y had va rio us arrangeme nts wit h Euro Dis ney lan d S.N .C. for the fina nci ng of Phase lA, a nd

with the six co m pa nies (" SN Cs") rha r were esta blishe d for the fina nci ng of Phase IB of th e Disn eyland Pa ris Resort

(the " Phase IB fi nanci ng Co m pan ies") , as described below. As pa rt of the fin anc ia l Restructu ring (see No te 2 ), t he

Com pa ny cance lled its origi na l arrangement wit h Euro Disncv land S.N.C. an d esta bli shed certai n new arra ngement s

with res pect to subsrunrial lv all of the T hem e Pa rk assets wi th EDA SN C, an indirect, wholl y-owned affilia te of

T\,\ 'DC, as further descr ibed below. The G ro up ha s no o w ne rship int erest in these SN Cs. Refer ence to the "Financing

Compa nies or SN Cs" incl udes Eur o Disneyland S.N .C. a nd th e Phase IB financin g Co m pa nies .

Phase lA In Novem be r 1989, var io us agreement s were signe d be tween th e Co m pa ny a nd Euro D isneyla nd S.N.C.

for the deve lop ment an d fina nci ng of the T he me Par k. Pu rsu a nt to a sa le/ lease back ag ree me nt , a ll of th e asse ts of

th e T heme Park were so ld by th e Com pa ny to Euro Disncylaud S.N.C. and wer e being leased back to the Co m pa ny.

As part of th e fi na ncia l Restructuring (see Note 2 ). a new leas ing structure was im plemented a nd th e or igin a l lease

w ith Euro D isn eyland S.N .C. was ca ncelled . Under th is new lease struc tu re, Euro Disneyland S.N .C. is leasin g

sub sta nt ia lly all o f the Theme Park asset s to ED A SN C, which in turn is sub leas ing the Theme Park asset s to th e

Corn pnny, In add itio n, pur sua nt to .1 sa le/ lea seback agreement (sec Note 2 ), certai n o ther asse ts of the Theme Pa rk

were so ld bv th e Co m pa ny a nd Eu ro Disneyland S.N .C. to EDA SN C .I S part of the Fina ncia l Rest ructu ring, a nd a re

a lso being leased back to th e Com pa ny.

Phase IB In M arch 19 9 1. various ag ree me nts w ere sig ned for th e development a nd finan cing o f five hotels a nd

th e Disn ey Village ente rta inme nt cent re (the "Phase IB Facilities" ). Pu rsua nt to sa le/ leas eba ck agr eem ents. th e Phase

IB fa cil ities were so ld b~' the Co rn pa uy to th e Pha se IB Financing Com pa n ies a nd a re being lea sed back ind irectl y

through specia l purpose leasing companies to the operator, ED L Hotels S.C.A.

Other

NeW/JO lt Convention Centre In M a y 1996, var io us agreeme nts were sig ne d fo r th e development a nd fina ncing of

th e Ne w po rt Conve ntion Ce nt re. Pursu ant to sa le- leaseback ag ree me nts , the asse ts of th e New po rt Con ventio n

Cent re, w h ich a re currently und er constructio n, are sol d as rhev are co nstructed by EDL Hote ls S.C. A. to Ce nt re de

Co ngrcs N ewpo rt 5.A.S. ("Cent re SAS " ), a n indi rect w ho lly-ow ned affi liate o f TWDC a nd w ill be lea sed back to

th e o pe ra tor, EDL H otels S.C.A.

Summary of Significant Accounting Policies

Basis of Preparation T he Gro up 's conso lidated fina ncial sta te ments a rc pr epared in co nformity with acc o unti ng

p rincip les gene ral ly accepted in France, a nd incl ude th e acco unt s of Euro Disne y S.C.A . a nd its su bsid ia ries . All

significa nt intercompany ac co unts and tr an sacti on s ha ve been elimi na ted .

Fixed Asse ts Intangible asset s co ns ist of softwa re costs a nd licen see rights and are ca rried a t cos t. Am orti sation

is computed o n th e st ra ight-line method o ver tw o to ten yea rs .

Tan gibl e fixed asset s arc carri ed at cos t. Depreciation is computed o n the stra ight-line method based up on

es tima ted useful lives, as fo llows:

Bui ldings 20 to 33 yea rs

In fras tru ct u re and leaseh ol d improvements 1() to 33 years

furn iture, fix tu res a nd equi pme n t 4 to 10 years

Interest costs incurred fo r th e co nst ruct io n of tan gibl e fixed ass ets a nd th e acqu isiti on and development of land

a re cap itali sed. Pro ject s under dev elopment a re capitali sed to the extent technica l and economic fea sibili ty ha s been

es ta blished.

Leased Asse ts The G ro up lea ses a s ign ifica nt portion o f the Them e Park and Phase IB faci litie s. Pur sua nt ro

o ptio ns a va ilab le under Fre nch ac cou nt ing principles, th e G ro up ac co unts for th ese tr an sactions as o pera ting lea ses.

2.8 E U RO DI SN EY S . C .A . A N D S U IIS IIl IA IUES

.

Debt Issue Costs Di rec t co sts of the issuan ce of deb t ar e capi ta lised a nd am ortised o n a stra ight- line basis o ver

th e life of the related debt. Upon co nversion of the co nvert ib le debt, th e pr o rata am ount of un amortised issue costs

is offset ag ain st the sha re premiu m ari sing from the issu an ce of the related sha res , and upon repurchase and/or

retir em ent, a pr o ra ta a mo unt o f th e un am o rt ised issue cos ts is expenscd an d included as part of th e ga in or loss

resulting from the transaction.

Adve rtising Costs Advertising costs a re ex pense d as incu rred .

lnu entories Invento ries ar e stated at the lower o f cos t or market va lue, on a weighted a verage CO~ 1 basi s.

Costs and expenses The principal co mpo nent s of Theme Park and resort costs and ex pe nses include direct

operati ng costs, marketi ng a nd sa les expenses, general and ad mi nistra tive ex pe nses, depreciati on a nd a mort isation.

Direc t opera t ing costs include operating wa ges and emp loyee benefits, and cost of food, beverage a nd merchandise

sa les and o ther costs suc h as utilities, maintenance, insurance a nd o pera ting ta xes.

Cash and Cash Equiualents Cash and cash eq uiva lents co ns ist of ca sh on hand a nd sho rt- term investme nt s wi th

ori gi na l rnnruriries of three months o r less. Short- ter m investm ents ar e sta ted at the lo wer of cost o r market va lue.

Earnings per share Earnings per share o f common sto ck is compu ted on the basi s of the weighted av erag e number

of sha res o ursra ndi ng dur ing the fisca l year.

In come Taxes The G roup files a co nsol idated tax ret urn. The Gro up provides for deferred income ta xes on

temporary d ifferences between financia l a nd tax rep orting. The Group uses th e lia bility method under which deferred

ta xes are ca lcu la ted a pp l ~'i ng legislated tax rates ex pected to be in effect w hen th e tempo ra ry di ffer en ces will reverse.

Part icipant Reuenu e fees bi lled to companies (" Part icipa nt s") w hic h ent er into long-term marketing agr eements

with the G ro up for th e spo nso rship of attractions are reco gnised as revenue rat eably over th e per iod o f th e appl icabl e

ag reements com me ncing with rhe opening o f th e attraction.

Convert ible Bond Redemption Premium Th e liability for th e convertible bond red emption premium is pro vided

fo r o n a stra ight-line ba sis over the term o f th e bonds, depending o n th e pr obability th at the prem ium will be pa id .

Finan cial lnstn nncnts In the normal co urse of bu siness, the Gro up em ploy s a var iety of o ff-ba la nce-sheet finan cia l

instruments to manage its exposure to fluctu ati on s in int eres t and foreign currency exc ha nge rates, includ ing interest

rat e swa p ag ree me nts , forward rate agree me nts, coll a r agreements and fo reign curren cy forwa rd exc ha nge contracts .

T he Group de signa tes interest ra te ins truments as hedges of debt o bliga tio ns, and accrues the differenti a l to be paid

o r received under the agreeme nt s as int erest rates change o ver th e lives o f th e contracts. Ga ins and losses a rising

from fo re ign currency ins truments ar e defer red a nd recogn ised in incom e as offsets of gains an d losses resu lt ing fro m

the underly ing hed ged transaction s.

T he Group co nti nua lly monitors its positions wi th, a nd th e cre di t qual ity of , the financi a l inst itutio ns w hich a re

counrerpartics to its off-ba lance-sheet financial ins truments and does not ant icipate non -performance by th e

co unrer pn rries . The G roup would not reali se a mat erial loss in th e event of non -p er forman ce by co unrerp nrtics. T he

Group exclusively enters into off-bal ance-she et tran sactions with financia l inst itution co unrerpa rries wh ich ha ve a n

IBC A lon g term cred it rat ing of single A - o r be tter (o r eq uiva lent rati ng fro m another g lo ba lly recogn ised cred it

rating agency).

The G ro up est ima tes th e fair va lue of its financial instru me nt s. The method used a nd va lues obtai ned are ex plai ned

in the notes related to th e specific fina ncia l ins tr uments (see Notes S, 22 a nd 28 ).

Foreign Currency Transactions Transaction s den omina ted in forei gn currencies are recorded in Fren ch fra ncs a t

the exchange rate prevailing at the month-end prior to the transactio n dat e. Asse ts and liab iliti es den o minat ed in

foreig n currencie s a re sta ted at th eir eq uiva lent va lue in French fra ncs at the exchange rate prevail ing as of the balance

sheet dat e. Net exc ha nge ga ins o r losses resu lting from th e tran slat ion of assets a nd liab ilities in fo reign currencies

a t the ba lan ce sheet date are deferred as trans lation ad justm ents. Provi sion is made for a ll unrea lised exc ha nge losses

to the exten t not hed ged,

E UIW I) I S:-:EY ' ,C. A . A1': 1J S UIl ~ IIJ IAR IE ~ 2. 9


2 Financial Restructuring

In J uly 1993, the Co mpany anno unced that it, together w ith TWDC, was engagi ng in a thorough revie w of the

Group's fina nc ia l st ru cture. Subseq uently, discu ssions began between the Co mpa ny, T W DC, certai n o f the fina nc ia l

instituti on s and co mpanies th a t a re credi to rs o f the Co mpa ny (the "Lenders" ) and th e Fina ncin g SN Cs to ex plore a

restructuring of the Gro up's finances.

On M ay 20, 1994, th e Co mpa ny, T \X1DC, the Fina nci ng SNCs and the Lenders executed agreeme nts related to

a fina ncial rest ructur ing (the "Fi na nc ia l Rest ruct ur ing " ) subjec t to shareholde r approva l. At an ex traordi nary genera l

meeting on June S, 1994, shareho lders a pproved resolution s for the Finan cial Restructuring and by August 10, 1994,

a ll agreements rela ted to th e Fina ncia l Rest ru ctu ring had been executed. T he Finan cial Restructur ing was esse ntia lly

co mprised of co ncessions and co ntri butio ns mad e by th e Len ders and T \\fDC and th e prep ayment o f ce rta in

outs tanding loan ind ebted ness o f the Gro up and th e Financing SNCs w ith the net proce eds of th e Right s Offering

(defined below). T he significa nt co mpo ne nts o f th e Finan cia l Restruc turing a re set fo rt h below.

Rights Offering, Use of Proceeds and other Capital Transactions

Issuance of new shares and use ofp roceeds In connect ion wi th th e Finan cial Restructu ring, th e Compa ny T\X1DC,

and the Lenders completed an underw rit ing of 595 million new shares in th e fo rm of a right s offering (the "Righ ts

Offering " ), the gross proceeds of w hich we re FF 5,950 million . T W DC subscr ibed a nd pa id cas h fo r 49 % of th e

Righ ts Offering. T he remai ning 5 1% of th e shares were sold pursuant to an underwriting commi tme nt organised by

the Lenders.

Ne t proceeds fro m the Rights Offering amounted to FF 5,776 m illion, af ter applicable issuance costs and ex penses.

of w hic h FF 1,54 9 million was used to prepay a po rtion of th e Compa ny's senior debt and th e remaini ng proceed s

of FF 4,22 7 mi llion were loaned directly to Euro Disn eyland S.N.C. and th e Phase IB Finan cin g Co mpanies wh ich,

in turn , prepaid outs ta nding borrowings.

Distributio n of warrants to ex isting shareholders As part of the Financial Rest ructu ring, the Com pany distrib uted

170 million warra nts to shareholders of record on June 14, 1994. One warrant wa s distributed per share of common

stock held, ena bling th e holders of such warrants to subscribe for one newly-issued sha re of th e Co mpany's common

stoc k a t a pri ce o f FF 40 for every three warrants held . T he warrants have a term o f ten years and may be exe rcised

betw een Ja nuary 1996 and Ju ly 2004 .

Capital reduc tio n In connectio n wi th th e Financia l Restructuring , the Co mpany's shareho lders approved the offset

of the Co mpany's acc um ula ted deficit of FF 4,863 milli on as of September 30, 1993 aga inst existi ng share prem ium.

In addition, shareho lde rs approved th e reducti on of th e Co mpa ny's share cap ital fro m FF 1,700 million to

FF 850 milli on , by redu cin g th e nominal share value fro m FF la to FF 5. T he sha re ca pita l redu ctio n o f FF 850 million

was reco rd ed to a spec ia l equity reser ve acc ount enti tled " Rese rve - Reducti on o f Ca pita l" an d was used to partiall y

absorb loss es a rising in fisca l yea r 1994. Sub sequ entl y, during M arch 1995, th e sha reho lde rs approved certa in fisca l

year 1994 losses in excess of FF 850 mi llion to be applied aga ins t sha re premium gene ra ted by th e Rights Offering,

wh ich resulted in a FF 93 1 milli on reduct ion of sha re premi um.

Lenders' Concessions

Redu ction of interest payments In co nnection w ith th e Fina ncia l Rest ruct uring, the Lende rs agreed to wa ive

agg rega te interest ch ar ges payab le by th e Grou p and th e Fina nc ing SNCs on o uts ta nd ing de bt having a net present

va lue as of October I, 1993 of FF 1,600 million (d isco unt ed at a ra te of 7.5 % fro m October 1,1 993).

Deform ! of principal rcpavn tcnts As part o f th e Financi al Restructuring, th e Lender s agr eed to defer fo r three

yea rs fro m th e o rigina l du e dates principa l payments du e by th e Gro up and the Financing SNCs on certai n o utstandi ng

ind ebtedness.

.3 0 E UIW D I >" I, Y S.c." . A ' Il Su g S 1Il l.\IU 1'5

The Wait Disney Company's Concessions and Contributions

Reduction of royalties under license agreement In connect ion with the Financia l Restructuring, T\X'DC ag reed to

waive all royalties payable by the Company from Oc to ber 1, 1993 to September 30, 1998. Commencing October 1,

1998, royal ties will be reinstat ed at one-half the origina l ra te and beginning October 1, 2003, royal ties will be restoredto their origina l ra tes.

Reduction of base managentent fees As pa rt of the Fina ncial Rest ructu ring, T\X'DC ag reed to waive base

man agement fees payabl e by th e Co mpa ny from October 1, 1993 to September 30, 1998. In add ition , T \X'DC ha s

per manent ly waived base man agement fees payable for the years 1992 and 1993 . Co mmencing Oc to ber 1, 1998,

base man agement fees will be rein sta ted at I % of total net revenu es and will escala te over time to a maximum o f

6% on October 1, 2018. Th e am ount and paym ent of base mana gement fees are sub ject to cert a in limitation s.

Modifica tioll of ntanagetnent incent ive fees Beginning October I, 1993, the formula used to co mpute th e

man agem ent incent ive fees payable by the Co mpany has been mod ified to reflect , on an ongoing basis, cha nges in

the asse t levels o f the Gro up and the Financing SNCs.

Subscription for ORAs ill OnA offerillg T\X'DC subscri bed for 99.3 % of FF 1,000 million of subordina ted

obliga tio ns redee ma ble in sha res (O bligations subordonnees Rernboursables en Act ion s) issued by th e Company

(remaining 0.7 % was subscribed by the public ). T hese O RAs have a face va lue of FF 400 per O RA, a term of 10 years,

a one percent coupon per annum and will be redeemable at maturity into 25 million shares of the Company's common

stock.

Provision of interim [inancing From January through March 1994 , TW DC pro vided FF 698 million of interim

financing to the Grou p while restructuring disc ussions proceeded. T his deb t was offse t agai nst amounts payable by

TWDC in con nection wit h its subscription of O RAs, as described above.

Cancellation of receivable As pa rt of the Financial Restructur ing, T\X'DC and certai n of its subsid iaries ca ncelled

ex isting receivab les du e fro m the Co mpa ny of approx ima tely FF 1,200 million in respect of services rende red 111

co nnection with th e techn ical an d adm inistrati ve supp ort activities that were provided to the Co mpany

Salc/lcascbacl: of certain fixed assets EDA SNC agreed to purchase cert ain assets, prin cipall y Th eme Par k

attractions for their book valu e o f 1-= 1-= l A billion. Th ese assets were subsequent ly leased back to th e Company by

EDA S C for period o f 12 year s for a fixed annual lease payment of FF 14 million und er the term s described in

Note 25.

Provision of liquidity [acility TWDC agree d to make ava ilab le, upon requ est by the Company, a subordina ted

unsecured FF 1, I00 mill ion ten -year sran dby revolving credit facility to the Group which bears inte rest at a ra te equa l

to the 3- mo nth Par is Inrerbank Offering Rate (" PIBO R") . Repayments of amounts drawn und er the faci lity will be

deferred for so long as amounts due and payable under the Phase lA, Phase IB or CDC Loans remain unpaid . As of

September 30, 1996, the Co mpany had no t yet req uested T\X'DC to establish this facility.

Futu re dcuelopment fee p"y,cble to The \'(1alt Disney Company At such time as the Group launches a second

phase of its development a t the Disneyland Par is Resort and commi tments for the necessary financing thereof have

been obta ined, th e Co mpa ny sha ll pay T\VD C a develop ment fee equal to FF 1,200 million, subjec t to the cancellatio n

of 38 .3 million of the warra nts issued to T\X'DC in co nnection wi th the distribution of warrants to exis ting

shareholders.

Concessions to Lenders and to The Wait Disney Company

Issuance of bonds with uiarrants Th e Co mpa ny issued to the Lend ers FF 2 mill ion of ten-yea r, subo rdinated bonds

beari ng interest at one percent per annum with warrants attached entitling them to subscribe for 40 mi llion newly

issued shares o f th e Compan y's common stock at a price of FF 40 per share. Th e warrants arc exe rcisable fro m

Januar y 1996 to Jul y 2004 .

•

E UR O D I S:\ EY S.C.A. A:"U U BS I D IA RI E 3 I


jv!argills increase The margins applicable ro variabl e int erest rare debt will be increased from October I. 1996 ro

Septe m be r 30 . 2003 on rhc Pha se IA cred it fac ilirv and from O cto ber I. 1997 ro Septembe r 30 . 2003 on rhe Phase

IB cred it fac iliry, b~' 0.2 75 'X, and 0.334 % per annum. res pective ly, The net present value of these margin increa ses

as o f O cto be r I, 1993 was upproximarclv l-F 50 million (d isco uurcd a t a ra re o f 7.5% ).

M odificatioll of debt covenants The financial Rcsrrucruring agreements include co vena nts w ith res peer ro the

restructu red financing a rrangem ents between the G ro up and th e Lender s as described in Note 13 .

Neio Theme Park leasing structure In connect ion with th e Financial Rcsrrucruring, the Co m pa ny entered into a

nc vv lease s tructure [or the Theme Park wirh Euro Disncyl nud S,N.c:. a nd EDA SN C (see N o te 25 ),

3 Tangible Fixed AssetsS e p t e m h e r Sept emh er

(IT in milli on s} 3 0 • 19 9 5 Ad dilion, Dedu ctions T r a n v I c r v 3 o , 1 9 9 6

Land and seco nd urv infrastructure 359 15 (2 ) 16 388

Buildings 430 43 un 43 I 508

Lea seh old improv em ents,fur niture and fix tu res - )~ 33 (25) 53 588J _ /

O ther 36 2 11 (28) 5 350

Subroral 3 678 102 (63) 11 7 3 834

Cons tr uction in p rogress 148 154 ( 11 7 ) 185

Acc umulated depreciation (787 ) (234) - ) (96 9)s:

3039 3 050

Tan gible fixe d asset s include capitali sed inr er esr costs of FF 205 mill ion ar Scprcmhcr 30 . 1996 co mpa red to

Ff 204 milli on a r September 30. 1995 .

4 Lon g-Term Receivables

(FF in milli on s]

Euro Disn cylund S.N .c:. (a)

Phase IB financin g Co m pa nies (b)

O ther (c)

6626

256 1

32 7

9514

Se p te m b e r .1 0.1 t) 9 5

6626

2 561

33S

9 525

(a) Euro Disneyland S.N.C. Pu rsu ant ro th e original T heme Pa rk financing ugrecmcnrs. th e Co m pa ny p ro vid ed

lon g-te rm su bordi na ted loan s o f Fl- 3,849 milli on ro Euro Disneyla nd S.N.C. . w hich was red uce d ro FF 3,738 m illion

d ur ing 1994. As pa rr of th e f inancial Restructu ring. th e Co mpa ny also provided FF 2, 888 m ill ion ro Euro Disneyla nd

S.N .C. in th e form of a subo rdi na ted loan . The lo an s bea r interest ar PIIIOR w hic h. ar Septe m be r 30. 1996. wa s

3.56 % . As parr o f th e Fin anci al Restructuring, in teres t cha rge s o n the o uts ta nd ing balan ce were reduced b~' 100%

during the seco nd ha lf o f fisca l year 1994 and pr ogr essively inc rea se throu gh fiscal yea r 2003 , Beginning in fisca l

yea r 2004. th e applicab le in terest rar e wi ll return ro pr e-rcsrrucruring levels. Principa l payments on t he o rigina l

ba lance of l-F 3, 738 mi llion co m me nce March 3 1, 1999 and co nt in ue rhrough the yea r 20 15. Pri nc ipa l pnymcnt s

on t he re mai ni ng FF 2,888 mi llion w ill begin March 3 1, 1998 and continue rh ro ug h Septem be r 30 , 20 16. Ar

September 30, 1996 a nd J 995, th er e wa s no acc rue d int erest o n thes e loan s.

.3 2. E 1( 0 DI ~ =" EY S.C.:\. A7' t> S U B" ID I :\ JU I:5

(b) Phase IB Financing Companies Pur suant to th e original Phase IB financing agreements, the Group provided

lo ng- term su bo rdina ted loans of rr 1,45 0 m ill ion to th e Phase IB Fina nci ng Companies, w hich was reduced to

FF 1.2 22 mi llion duri ng 19 94 . As part of the Fina ncia l Rest ructu r ing , the Company provided FF 1,33 9 million to

the Ph ase IB Fina nci ng Companies and a t the same time modified the interest ra te to a fixed rate of 6 1Yt, on bo th

loan rra uch es. Also d ue to th e Fina nc ial Rest ructu r ing, interest charges on the entire ou ts tandi ng ba la nce we re reduced

hy 100 % during th e second half of fisca l year 1994 a nd progressively increase th ro ugh fiscal year 20 03 . Begi nni ng

in fisca l year 2 004 , the interes t ra te w ill return to the fixed ra te of 6 IYtr , Repa yment of th is ha lance co m me nces in

199 X a nd co nti n ues through 2 0 16 . At Septe m be r 30, 19 96 a nd 1995 , th er e w as no accrued inte res t o n these loans.

(e) Cn her Other co ns isrs p r im ari ly o f lon g term depo sits. In accordan ce w ith certa in cond itions st ip u la te d in t he

Fina ncial Restr uct u rin g , the Gro up is requ ired to m a inta in a security deposi t as a p led ge tor the benefit o f rhc Ph ase

lA a nd IB lend er s. The deposit amounts a re interest bea ring a nd an: not ava ila b le to the Gro up un til a ll o f the se n io r

dehr pur s uant to the bank de br ag ree me nts ha ve been pa id an d o ther o b liga t io ns by both th e lend ers and the G ro u p

ha ve been sa t is fied . At September 30, 1996 an d 19 95 , th e deposit a mo unts included ac cr ue d intere st o i FF 2 m ill ion

a nd FF 4 mi llion, resp ect ivel y,

5 InventoriesS ep te m be r .I o ,

tFF in million",) 19 9 6 ' 9 95

Xlc rc ha nd ise. iood a nd beverage 115 II I

Supplies 89 86

2 04 197

Allowance (24) (3 1)

18 0 166

6 Trade accounts receivable

T ra de acco un ts receiva b le a re d ue prima rily fro m to ur o pera to rs, agen ts a nd travel gro ups , ar ising fro m sa les of

T heme Pa rk e n t ra nce rickets, hotel roo ms a nd a m eni ties, as we ll as b illin gs fo r Pa rt ic ipant fees. At Septe m ber 30,

19 96 a nd 19 95 , FF 25 mi llion a nd FF 3 9 m illio n, respectively, w er e provided fo r porcntia lly uncol lccrihlc acco unt s.

All a m o unt s a re du e within o ne yea r.

7 Other accounts receivableSe p te m be r .1 0 ,

VAT

Other

All amounts are d ue within one year,

332

194

526

199 5

222

18 0

4 02

8 Short-term investments

Sho rr- re rm inv est ments incl ude m on ey ma rket ins t rume n ts a nd cerri ficares of dep os it, ca rr ied a t cost , which

a p prox im a te d market va lue at Sep tem be r 30, 1996 a nd 1995 . At Sep te m be r 30, 1996 , no a mo unts w er e p ledged

pursu ant to th e Gro up's fin ancing ag ree ment s as g uara n tees fo r fut ure co ns t ructio n pa yment s, la nd acq uisi tio ns, a nd

other fina ncia l rra nsacrions .

[ CRO D ' S:-." EY S.c.;\ . A:-."D SUB ' D' A RI L


9 Deferred chargesS e p t e m b e r 3 0,

(n: i ll l11 i11 iOI1'i )

Finan cia l conrrih uti on sto publ ic in frastructure (a)

O ther

334

48

382

1 9 9 5

35 4

56

4 10

('1) Fina ncial contributions to public iufrastntcture T his p rim a rily co nsists of a payment o f FF 232 milli o n mad e

by the Group to th e S.N.C.F. (Societe Na tionu le de C hemins de fer Franca is), t he French nat ional ra ilway co mpa ny.

as parr of its fina ncia l co mm it ment to the con struct ion o f the T G.V. (T ra in ~l C ru ndc Viresse) ra ilwa y sta tio n located

wi thi n the Resort. Th is contribution is being a mo rtised o ver rwcn ry yea rs a nd co m me nced o n th e o pe n ing of th e

TG.V. sta tio n in ;'\'lay 1994 . Cont rib ut ions to publ ic infras tr ucture arc sta ted net of ac cum ula ted am ortisati on o f

FF 6 1 millio n a nd FF 41 millio n a t Septe m ber 30. 1996 a nd 1995 . rcsp ccr ivcly.

10 Shareholders ' equity

Balance at Sep tember 30 , 1994

Reduct io n o f sha re pr emiu m

Net incom e

Balan ce at Septe m be r 30, 1995

Allocati on to Ge ne ra l Pa rtn er

Exercise of wa rra nrsa nd emp loyee stock o ptio ns

Ne t Inco me

Bal an ce a t Sep te mbe r 30, 1996

(in t1w m.lI1J, )

S h a res

765 039

765 039

3 20

765 359

(IT in mill ion v!

S h a reCa p i t a I

3 825

3 825

2

3 827

(FF in mill ion sl

S h ,H cP r C 111i urn

2 8 1S

(93 1)

1 SS7

1 888

IFF in million..l:\ ( c u m u l a t e d

E a r n i ng,( D e f i c i t)

( I 147 )

93 1

114

( 10 2 )

(2)

20 2

98

The number o f shares above, w hic h have a no mi nal val ue o f FF 5 pe r share. rep resent th e Com pany's issu ed an d

o utsta ndi ng sha res . a t the respect ive da tes.

As pa rr of the Financia l Restructu ring, United Saud i Co m mercia l Ba nk (" USC B" ) a nd its C ha irma n, Prince

Alwa lccd Bin Ta la l Bin Abd ulaziz AI Saud (" Prince Alwa leed " ), ex ecuted va rio us ag ree me nts a nd suhscq ucnt ly

acq u ired approxima tely 24 % of the o uts tan di ng com mo n stock of the Co m pa ny or 1SS.5 mill ion sha res . of w hic h

74 .5 mill ion wer e pu rch ased fro m ED L Ho ld ing Co. , a n indi rect. w ho lly-o w ned subsid ia ry o f T \VD C. In OCto her

1994 , thi s tr an saction red uced TWDC s percentage owne rs hi p in th e Co m pa ny fro m 4 9 'Y., to a pprnxi ma rcly 39'){, .

D uring fisca l year 1994 , th e Corn pa ny used a FF 850 million reserv e acco unt resulting fro m the red ucti on in th e

no minal per sha re va lue o f th e Co m pa ny's co mmon stoc k to ab so rb a porrion of th e losses a rising in fisca l yea r 1994 .

In fisca l yea r 1995. th e rem ain ing fisca l year 1994 losses of FF 93 1 millio n wer e a pplied aga inst share pr emi um .

At Sep tem ber 30, 1996 , the Co m pa ny 's acc um ulated ea rn ings includ es a legal rese rve of FF 44 mill ion which is

no t ava ila ble for di stribution .

No d ivid ends were paid relating to fisca l yea rs 1996 , 1995 or 1994.

Earn ings per sha re relat ed to fiscal yea rs 1996 a nd 1995 is as fo llo ws:

1 9 9 5

Ne t incom e (FF in millio ns)

Average num ber o f com mo n sha reso utsta nd ing (in m illion s)

Ea rn ings per sha re (FF)

3 4 E U IW 1) 1' ;-': 1'.)' S . c. :\ . A NIl S U IIS IIl LlH IF S

202

765

0 .26

114

76 5

0 . 15

11 Bonds red eemable in shares ("ORAs")

As part of th e finan cial Rest ructu ring, 2, 500,1 2 1 O RAs each wi th a nominal val ue o f FF 400 we re issued o n

Jul y 11, 19 94. T he O RAs ha ve a coupon o f I 'X, per a nn um and have a ten -year term . Upo n maturity, each O RA

w ill be redee m a ble by th e issuan ce o f ten sha res o f th e Co mpa ny's co m mo n stock. T he a cc rued co upo n o n these

O RAs at Septe m ber 30, 1996 was a pprox ima te ly Fl- 2 million .

12 Provisions for risks and charges

At Septe m be r 30, 19 95, pro vision s for risks a nd cha rges primaril y incl ud ed prov isions for va rio us cla ims,

es ti mated costs on em ployee ho usin g a nd the rema in ing costs rela ted to co nso lidation of all staff a t one site.

During fisca l yea r 1996 , cert ai n prov isions fo r risks a nd cha rges de cr eased , either as costs were inc urr ed or as

the risks were re-eval uated based upo n updated fac ts and circums ta nces, a nd wer e primarily related to employee

housin g, conso lidat ion of staff a nd vario us risks a nd clai ms.

At Septem ber 30, 1996, pro vision s fo r risks a nd cha rges primari ly incl udes p ro vision s for various clai ms a nd

litigat io ns.

13 BorrowingsSe p te m be r j o ,

Conv erti b le bonds (a )

C DC (b)

Phase lA cr edit faci lity (c)

Phase IB cr edit facility (d)

Other

3 897

1 118

98 2

196

138

6331

1 99 5

39S7

111 4

977

195

37

6 3 10

At Septe mber 30, 19 96 a nd 19 95 , bo rro w ings incl ude acc rued int erest of FF 254 m illion a nd FF 25 1 m illion a nd

bond red em pt ion pr em ium of fF 178 milli on a nd FF 14 8 milli on , res pectively.

(a) Co nvert ible bonds O n .J uly 15 , 199 1, th e Com pany issued 28, 35 0, 000 un secured co n vert ible bonds Il1 the

aggrega te principal a mo unt of FF 3 ,969 million, w ith a par va lue of Fl' 140 . Int erest is pa yable a nn ua lly at 6 .75 %

each O ctober I. At Septe m be r 30, 1996 an d 1995, th e a bove bo rrow ing a mounts include accrued inte res t o f

FF 235 m illion a nd FF 243 mill ion, resp ec tively. Eac h bo nd is co nvertible int o 1.361 sha res of th e Co mpa ny's co m mo n

stock. Th rough Septe m be r 30, 19 96, 9,597 bon ds have been co nve rte d . Add ition al ly, during fisca l yea rs 199 6 a nd

1995, th e Com pa ny pu rch ased a nd retired a total of 3, 453,000 co nve rti b le bonds w ith a face va lue of FF 4 83 milli on.

In corm ccrion with th ese repu rcha ses, gai ns of FF 15 milli on a nd Ff 84 m illio n ha ve been reco gni sed in ex cep tiona l

inco me for th e fisca l years 1996 a nd 1995, respe ct ive ly. As of September 30 , 1996 , th ere were 24 ,88 7,403 bonds

ou ts ta nd ing . Un less prev io us ly co nver ted, red eem ed o r pu rch ased by th e Co mpa ny, th e bonds will be redeemed a t

I 10 '1., o f th eir pr incipal am ount o n October I, 20 01.

(b) Caissc des Deputs et Consignations (" CD C ") 10a1l In Ma y 1992 , the Co mpa ny borrowed FF 1,403 mi llio n

from rhe C DC, o f which 40 % was sen io r debt and 60 % was su bo rd ina ted debt (" prcts pa rricip arifs" ), maturing

20 years fro m rhc d rawing dare, As part o f the fi na ncia l Rest ru ctu rin g, FF 295 mi llion of th e sen ior C DC debt was

p repai d in fisca l year 19 94 . T his lo an hea rs int erest at a fixed ra te o f 7.85%, ho wever und er th e ter ms o f the Financia l

Restru cturing th e int erest was reduced by 100 % during th e second half o f fisca l yea r 1994 , a nd pr ogr essively increases

throu gh fisca l yea r 2003 . Beginn ing in fisca l yea r 2004, all o utsta nd ing ba lances will bea r interes t a t pr o-restructuring

leve ls. The se n ior debr is sec ured by th e underlyin g land a nd asse ts of th e T he me Pa rk, Disneyla nd Hotel an d Davy

C rockctr Ran ch . T he sub ord ina te d debt is un secured . Pu rsu a nt to the terms of th e f ina ncia l Restructuri ng, init ia l

pr incipal rep ayments ha ve been deferr ed to 2002 .

El!IW I) 1SN E Y S.c. " . A N IJ Su lIS I J) 1A IU E S 3 5


(c) Phase lA credit facility In December 1992, th e Co m pa uy borrowed FF 1,295 mi llio n pur su a nt ro a cred it

agreement in o rder ro finance costs as sociated with the Phase lA facilities beari ng inrcresr a r PIBOR plus 1% (4.56'1..

:H September 30 , 1996). In Ma rch 1993, th e Com pa ny borro wed a n addi rio nn l FF 730 m illion under th e sa me credi t

agreeme nt , w hic h bea rs inr crcsr ra nging fro m PIBOR plus 0.24 % (3.80 % a r Sep tem ber 30, 19% ) ro PIBOR plus

\ % (4.56 % ar September 30, 1996). As parr of the Financia l Rest ru ct uring. th e Co m pa ny a pp lied a porrio n of rhe

proceeds from rhc Rights Offering ro prepay approximnrel y FF 1,049 million of o uts ta nd ing borrowings und er rhis

faci lity. In add it ion , interest cha rges o n the o uts ta nd ing balance fo llowi ng the pr epa vm cnr were reduced by 100%

during t he seco nd ha lf of fiscal ye:l r 1994 a nd pr ogressively increased rh ro ug h fisca l yea r 1996. Beginning in fisca l

yea r 1997. the applicabl e inrcrcsr ra tes will rerum ro pre-rc srrucruring levels plus an addit ional margi n of 0.275 %

per an num rh ro ugh 2003 . T he obl iga tions un der th e credi t taci lirv a re secured by rh e Pha se lA assets . Prin cipal

rcpaym cn rs we re in iti a lly sc hedu led ro commen ce in 1997 w ith a ll debt balances ma turing in 2006, however, pursuant

ro rhe terms of the Financial Restru ctu ring initial principa l rc pnyrncnrs have been defer red ro 2000 w ith a ll debt

balances matu ring in 200 9.

(d) Phase IB credit [acility Prior ro fiscal year 1994, the Co m pa ny borrowe d FF 400 m illion pu rsu a nt ro a credit

ag reement entered inro by EDL Hotels S.C.A ., bea ring interest at PIBOR plus 1% (4.56% ar Sep tember 30 , 1996 ).

As parr o f the Financial Res rrucru rin g. t he Co m pa ny applied a portion of th e proceeds from the Righrs Offering ro

pr epay app ro ximarcly FF 205 milli on of oursrund ing borrowings under rhi s faciliry. In addi tion, interest charges o n

rhe outsta ndi ng balance fo llow ing th e prep a ym ent were reduced b~' 100% during th e second hal f of fiscal yea r 1994

and progressively incr ease th rou g h fisca l year 1997. Beginn ing in fisca l year 1998. the applica ble inreresr ra re wi ll

rerum ro p re-resr rucru ring levels plu s a n increa se o f 0.334% per annum rh ro ug h September 30 . 2003 . The o bliga tio ns

under rhe cred it fnciliry arc secured b~' the Pha se IB assets. Principal rep uvmcnts were iniriallv sc hed uled ro be made

beginn ing fisca l yea r 1995. Pur suant to th e term s of t he Finan cia l Rcstru cru ring, initial pri nc ipa l rc puvmcnrs ha ve

been deferred ro 1998 with a ll debt balances maturing in 2012.

The Group 's bo rrowings at Sep te m ber 30 , 1996 ha ve the foll owing sche d u led rnar uri rics:

F i sca l year

\ 997

1998

1999

2000

200 1

Thcrcafrer

Accrued int er est

(IT in million... )

3

110

2 1

5 942

6 07 7

254

633 \

As parr o f th e Financial Rest ru ct uri ng, T \X'DC ha s agree d ro mak e av a ila ble, upon th e request of rhe Co m pa ny,

an un secured FF I, I00 mi llion rcn-ycar sra nd by revol ving cred it facility which bears inrcresr at PIIIOR . Rcp a ymcnr

o f amoun ts dra wn under rh is fac ilirv w ill be defer red for so lo ng as a mo unt s d ue a nd payab le under th e Pha se lA,

Phase IB and C DC loan s rema in u npa id. Ar September 30 , 1996, th e Co m pa ny ha d no r yet requ est ed TWDC ro

es ta blish rhi s faci lity ,

Fixed ass ets wirh a ne t book value of FF 1A03 milli on at Septe m ber 30, 1996, are ei ther mortgaged or p ledged

as sec uri ty under the lo a n agreements.

The Financia l Rest ructu rin g ag reements incl ud e covc nan rs wi rh respect ro rhe rest ruct ured fin an ci ng a rra nge me nts

between th e Group and the Lenders. These covenants include restrictions o n a dd itio na l indebtedness and capital

ex pendi tures, the p ro visio n of ce rtain fina ncia l info rmation a nd complia nce wi th ce rtai n fina nc ia l ra tio th res ho lds

w hich were modifi ed by su bse quent ag ree ments w irh the Lender s in 1996.

36 Euuo 1) 151':1')" S . c. ,\ . A NI> SU II\ I I >lA IU I'S

..

14 Payable to related companies

The Group ha s outst anding ce rta in pa yabl es to th e finan cin g compani es which represent rent pa yabl e pursua nt

to th e Theme Park and resort leases and sublease (see No te 25 ). All a mo unts ar c d ue within on c yea r.

15 Accounts payable and accrued liabilities

(FF in mill ionc !

Supp liers

Pa yr oll an d emp loye e benefit s

VAT

Other

All amounts a re du e with in o ne year.

16 D eferred revenues

655

169

134

100

1 358

S c ptc m bc r .10 .19 9 5

700

3 14

These consist primaril y o f land gr a nts, parncipnnr revenues a nd ga ins o n th e sa le o f as se ts which a rc bein g

recogn ised as incom e over the term during whi ch the ass ets a rc leased ba ck to th e Gro up.

17 Construction sales and related services

Duri ng fisca l yca r 1996, cOStS o f the construction o f the New po rt Co nvent io n Ce nt re were so ld to Ce nt re SAS

for FF 38 mi llio n. a nd wi ll be lea sed hack to ED!. H ot els S.C.A. upon co mpletion (sec Note I ).

For th e yea rs ended Septem be r 30. 1996 and 19 95. pursuant to the terms of the Financia l Restructuring, costs

to co m plete certa in asse ts o f the Them e Park were so ld to EDA SNC for FF 3 million a nd FF 95 milli on respectively.

These asse ts ha ve been subseq uen tly lea sed hack to th e Co m pa ny by EDA SN C (see Note 2 ).

18 Theme park and resort costs and expensesS cptem b cr .10 .

(FF in milliunvl

Direct operati ng co sts

:vla rk eting. sa les . ge ne rala nd a d m in ist ra tive expenses

Depreciati on a nd a mo rrisarion

1900

1074

170

4144

1 995

2 729

I 11 I

265

4 105

19 Exceptional income

(FF in milli on s}

Yc a r ended Scp te mbcr .10 .1996 1 9 9 5

15 84Gain o n repurchase o f Co nve rti b le Bonds (a)

Ta x reimbursement s (h)

Pro vision s for ris ks and charges (c)

Othe r

31

46

7 1

(2 8)

( 15 )

11 2

(a) Gain Oil rep urc lrasc of Conoert ible BOllds As descr ibed in Note 13. th ese a moun ts represent the ne t gains o n

the repurchase of portions of the Co mpa ny's Co nve rt ible Bonds.

E UR O DI S:-IEY s.c.t\. A:-ID S UII S ID IAIU E S 37

CONSOLIDATED FINANCIAL STATEMENTS,

(b) Tax rcinthurscnients T his amount represents loca l ta x reimb ursernen rs rela ted to previous years.

(c) Provisions {or risk s and cha rges For the yea r end ed Septem ber 30, 1996, thi s amoun t pri mari ly represent s the

imp act of Ma nagement's decision to reta in employee housing facilit ies, wh ich had been previously held for sa le.

For the year ended September 30, 1995 , this am ount primar ily includes provision s for va rio us claims an d costs

relating to the staff reduction a nd office con solidation .

20 Income taxes

At Septe mber 30 , 1996, unu sed and unrecogn ised ta x loss curryforwa rds were FF 6.3 billio n, the majo rity of

wh ich ex pire between 1997 and 1999. Du e to the uncerta inty o f the ult imate rea lisa tion of these ta x benefits, the

Gr ou p has not recorded any defer red tax asse ts .

21 Stock options

In Ju ne 1994, th e Co m pa ny's shareholde rs ap proved the imple mentatio n of a n employee stock optio n plan

autho rising the issuance o f stock options for acq uisition of up to 2.5 '1.. of th e Com pnny's o uts tanding Co mmon Stock

(a pproximately 19 million sha res). Duri ng the yea rs ended Sept ember 30, 1996 and 1995 , the Company granted

275, 000 and 16,55 0,000 optio ns respectively (to acqui re o ne share of Co mmo n Stoc k each) to certa in man ager s and

em ployees at a market exercise pr ice which represen ted the average clo sing ma rket pr ice ove r th e preced ing 20 trad ing

days. Th e options a rc valid for 10 year s and becom e exercisa ble over 5 yea rs in equa l instal ments begin ning one yea r

from the dat e o f gra nt . A sumrnnry o f the Co mpany's stock option acriviry is as follows:

Outstandi ng at Sep tember 30, 1994

Options granted

O ption s exercised

O pt ions cancelled

Balance at Sep te mber 30, 1995

Exe rcisab le at September 30, 1995

O ptio ns grante d

Option s exercised

O ptio ns ca ncelled

Bala nce at September 30, 1996

Exerci sab le at September 30 . 1996

(in thnu vanclc] ( in IT ):'\ 11 111 h L' r of Sha r es R a n g L' o r E x c r c i s c Pr i c L'

16 550 7.95 - 16.15

( 1 505 ) 7.95

15 04 5 7.95 - 16.15

1 ~ - 13.72i r :

(3 19) 7.9 5 - 12.61

( 1 05 ~ ) 7.95 - 16. 15

13 943 7.95 - 16.1 5

2478 7.95 - 16.15

Upo n term ination of employment, any un vested options a rc ca ncelled . O ption s th a t ar c exe rcisable as o f the dat e

of ter minat ion , must be exercised with in a speci fied period o f time or they ar c ca ncelled .

-' H E U I,( ) DI ~ XI , Y S . c. :\ . .\ X I> S UJ\ ~ II>L\ I(lI '~

. + .

22 Interest rate risk management transactions

T he G ro up uses interest ra te swaps an d o ther inst ruments to manage its exposur e to changes in inte rest rates and

to lower its o vera ll borrowing cost s. The impact o f changes in intere st ra tes a ffec ts both th e fina ncia l income a nd

expense of th e Group as well as th e lease ren ral ex pe nse (sec Note 25) .

The fo llowi ng rab ic sum ma rises by notiona l amounts t he activity for ea ch major ca teg o ry of in terest rate contract

o utsta ndi ng duri ng the pe rio d :

I n t c r e s t(Fi= in millio uv) R a t c S wa p,

Ba lance at September 30, 1994 850

Add itions/Ad jusrrn enrs 3 5DO

M a tu riries/Amo rri sa rion (650)

Te rm ina rions (450)

Balance at September 30, 1995 3 250

Additions/Adjusrmenrs 200

Mar urirics/Amort isatio n

Termina rions (3 250)

Bala nce at Sep tember 30, 1996 l OO

Co 11a rA gr e em ent

I 000

1 000

1 000

F nr war d R at eA gr e em en t s

500

2000

(500)

2 000

I 250

(2 .'lOO )

(750 )

o

The notional amounts abo ve ref lect incr cmcnral cha nges in t he G ro up's investment in each class o f financial

ins t ru me nt. Roll forward ac tivity, wh ich represe nts ren ewal of ex ist ing positi on s, is ex cl ude d.

The G ro up had th e foll owing inte rest rar e co ntrac ts o uts ta ndi ng during th e yea rs ende d Septe m be r 3D, 1996 a nd

1995:

• interest rate swaps w hich co nve rted specific bond iss ue lia bilities fro m fixed to variable int erest ra tes. D uri ng

1996, Fl: 3,250 milli on o f these co ntracts we re term inated prior to th eir o rig ina lly sche d uled maturity dates

w ith a gain of Ff 59 m illion wh i ·h has been deferred a nd wi ll be recogn ised as inco me over th e rem a in ing te rm

of th e cont ra cts th rough Nove mber 1997. During 1996, th e G ro up entered into an add it io na l FF 200 milli on

interest rate swa p co ntract wi th a ter m of 1 yea r which co nverts th e return o n certain sho rt-te rm inv estments

fro m dai ly ov ern ight rates to PIBOR. Under th is contrac t th e G ro up received int er est duri ng the yea r at a n

;1\'cr age PIBOR ra te o f 4.03 % and paid interest a t a n average ra re o f 3 .8 I % .

• a co lla r ag ree me nt w h ich limits rhe fluc tua tion o f PIBOR based inte res t ra tes to a ra nge bet ween 5 .75'){, a nd

8.75 % (o n a qu artcrl y money mark er basis). Ar September 3D, 1996 thi s contract had a notional amount o f

FF I,000 mill ion a nd mature s in N ovember 1997. During 1996, the rII30R ra te w hich ap pli ed to rhis co nt rac t

averaged 4 .59% .• for w ard ra re ag ree me nts wh ich co nvert vari able porrions o f inter est rare swa ps into kn own coupons. Ar

Septe m ber 30 . 1995, th e nor ional va lue of these ins tr umen ts was FF 2,000 milli on. During 1996 , FF 750 milli on

of th ese contracts were rcrminar ed pri or to th eir o rigina lly sched uled maruriry dar es a r a loss o f ff 3 milli on ,

an d FF 1,250 mi llion of th ese co nrracrs wer e effective ly neutra lised by ent ering into add itional forward rate

ag ree me nts for th e sa me notional amount in an o ff-se t t ing positi on . During rhe yea r wi th resp ect to o pe n

co ntr ac ts , th e G ro up paid inter est a t an ave rag e rar e o f 6.0 1'Yc, (o n a qu arterly mon ey ma rk et ba sis ) a nd recei ved

inrcres r ar an av era ge ra te of 5. 63% .The interest rare diffe rentia l resulting from these contracts red uced inter est expense by approxi rnarelv

FF 15 mil lion d ur ing both the fiscal years end ing Sep tember 3D, 1996 and 1995.

The fai r va lue of th ese contr acts is est imated to be rhe sa me as th e cost or ga in to th e Group to term inate its

inter est rate hed ging cont racts . At September 30 , 1996 ta k ing into accou nt th e prevai ling inte res t rate envi ro n me nt

and credi t worth ine ss of countcrparries, th is am ou nt w ould represent a los s of Ff 21 milli on .

E UHO D l s :-:FY S.C.A. AXlJ S UI\<; ID IAR IE<; 3 9


:vlanagemenr believes no significant concentration of credit risk exists wit h respect to the Gro up's fina ncia l

insrrumcnrs. The Gro up utilises a va ricry of off-ba lance sheet inst rum ents for hedging purposes. At September 30,

199(, and 1995, neither the Gro up nor th e counrcrparries were required to co llurcra lizc their respect ive obligation s

und er the term s of these hedging contract s.

A 1'X, increase or decrease in interest rat es wo uld not have resulted in a material impact to the financ ial srurcmcnrs.

23 Currency risk management transactions

T he Gro up's po licy is to protect itself to the extent practical from the effects of fluctuati ons in the foreign exchange

markers. Th e Gro up's ex pos ure to foreign CUITenC)' risk relates to variations in th e value of the U.S. do llar and certai n

Euro pea n currencies.

At Septem ber 30 , 1996 and 1995, the Gro up had FF 239 million and FF 52 million, respectively, of foreign

CUITeIK)' hedge co ntrac ts oursrunding. co nsisting of for ward excha nge co nt racts and opt ions. No mat erial imp act to

the financial statements resulted fro m foreign CU ITL'IKY hedging opera tions in 199(, or 1995.

24 Commitments and contingencies

T here are vario us legal proceedi ngs and claims against the Gro up related to co nst ruction and ot her act ivities

incident to th e cond uct o f irs business. Managemen t has csra hlishcd provisions for such mutters and does not expect

th e Gro up to suffer an)' mat erial add itional liab iliry b~' reason of such actions, nor does it ex pect that such ac tions

will have a marcr ial effect on its liqu idity or opera ting results.

The Company is joinrly liable for all Euro Disneyla nd S.N .C. ob ligarions under the Phase lA cred it agreemenr

with a syndicare of inrern arion al banks co nsisting of a ma in tacilirv of FF 2, 100 million .

EDL Hotel s S,C.A. has gua r.mrccd ;111 o f th e obligations of the Phase IB Finan cing Companies und er the Phase

IB senior credit facilirv with a syndicate of ban ks, co nsisting of ;1 m ain tacilirv of FF 1,100 mill ion .

25 Leased assets

The Gro up has ente red into lease ag reements with EOA SN C, the Finan cing Companies and Centre SAS for the

Th eme Park and the Pha se IB Faciliti es. Pursuant to options ava ilable under French ncco unrinu principles, the Gro up

has not capi ta lised these leases and has acco unte d for them as op erat ing leases. Th e rental expe nse under these leases

co nsists o f the Finan cing SNC's opera ting cos ts (primurily prop erty ta xes) and related deb t service payment s including

principal an d interest a mo unts which are contrac ruullv du e to the Company as rcpa vmcn r of certa in lon g term loan s

(as descr ibed in Note 4 ). Thus, lease renta l ex pense will fluctu ate principall y with varia ble interes t ra te changes a nd

prin cipal repayment s.

T he origina l leases for th e Th eme Park and th e Phase lB Faci lities co mmenced April 12, 1992 and \\TIT to end

when the underlying bor rowings ;1I1d int erest \\TIT repa id in full bv the Finan cing SNCs; however, a new leasing

struct ure for subsru ntiallv all of the T heme Par k asse ts has been implemen ted pursuant to the term s of the Finan ciul

Restr ucturing, Previously, the Company leased th e Th eme Park d irectly fro m Euro Disnevland S.N.C. under a credit

bai l (financial lease) with a te rm of a pproxi ma tely 20 years . Under th e new lease structure, effective june 30 , 1994,

the or igina l cred it-bai l was ca ncelled and a new credi t-ba il estab lished where by Euro Disneyland S.N .C. leases the

Th eme Par k to EOA SNC with te rms simila r to the o rigina l cred it-ba il. Th e Company in turn, is suhlcusing the Th eme

Park from EOA SNC for a term of 12 years wit h ren t equa l to the net am ount invoiced hy Euro Disncylnnd S.N.C.

to EDA SNC plus a 0.5 'X, margin on th e net amo unt invoiced , At the end of the sublease term, the Co mpa ny will

ha ve the option to acq uire the leasehold posit ion of EOA SNC. If the Company does not exercise rhis optio n and

th ereby elects to discont inue leasing the Th eme Park , EDA SNC may co ntinue to lease the asse ts, with an ongo ing

option to purchase them for an amo unt app roxim ating the balan ce of Euro Disneyland S.N .c:. 's then o utsta nd ing

debt. Alte rna tive ly, EDA SN C co uld term inate the lease, in which case EDA SN C wo uld pa y Euro Disneyland S.N.C.

an amo unt eq ua l to 75 % of its rhcn-our sranding debt; EDA SN C could then sell or lease the assets on behalf o f Euro

Disncvland S.N .C. , in o rder to satisfy the rema ining debt, with a ny excess proceeds payab le to EDA SNC. Under the

new lease structure, th e long term subord inated loan s pro vided by the Co mpa ny to Euro Disneyland S.N .C. (as

descr ibed in No te 4 ) a re pledged as securi ty.

4 0 E URO D IS N EY S ,C.A . AN IJ SU IIS Ill L\ IU ES

In addition, as part of the fi na nci a l Restr uct uring, EDA SNC purchased ce rt a in ta ngib le fixed asse ts, pr in cip all y

T he me Pa rk a tt ract io ns , fo r their book va lue of FF 1,1 33 m illion as w ell as th e esti mated cos t to co m plete certa in

asse ts und er co nst ruct ion for FF 26 7 m illion a nd su hscq ucnt ly leased the asset s back to the Com pa ny fo r a perio d

of 12 yea rs for a fixed a nn ua l lea se pa yme nt o f FF 14 million . At the e nd o f the leas e term, the Co mpa ny wi ll have

the o ptio n to purcha se the ass ets for FF 1,400 m illion , If th is o pt ion is exercised, T W D C ha s ag reed to pr o vide

fina ncing ove r a n eight yea r term a t a n interest rate o f I 'Y<, per a nn um, As a n a lte rna t ive to thi s purchase option , th e

Co m pa ny may ente r into a financial lea se fo r th ese assets at the end o f th e ori gi nal lea se term under a new 1 2 - ~Ta r

credit-hai l w ith terms subs ta ntia lly sim ila r to those o f the fina ncing fo r th e purchase option described a bove. Unde r

the new cr edit-bai l, t he Com pa ny will a lso have th e o ptio n o f purchasin g the leased asse ts a t the end of th e lease

term for a no m inal a mo unt.

Lease rent a l ex pe nse was FF 4 28 mi llio n a nd FF 285 million fo r the yea rs ende d Septe m be r 30, 19 % a nd 1995 ,

rcspcc rive ly,

The fo llowing tabl e su m ma rises th e gross am ount o f future minimum rent a l comm itm ents (excl ud ing o pe ra ti ng

cos ts ) du e to th e Finan cin g Com pa nies , ED A SNC an d Ce ntre SAS un d er non can cell abl c o pe rati ng leases, a nd th e

p rinc ipal an d interes t a mo unts du e to th e Grou p us rep aym ent on the lo ng term loa ns to th e Fina nci ng SNCs.

In fo rmati on as of Septem ber 30, 1996 is as fo llows:

Ph a s c I IIThem e Pa rk Faci l i t i es To ta l L ea se L oan Ne t

(FF in million..) Le as es L eases Co m m i t m e n t R epay men ts Co m mi t m e n t

199 7 5 93 110 703 (357) 346

199 5 747 225 972 (5 12) 460

1999 S0 9 J - , I 06 2 (58 1) 4 8 1- ) .)

2000 854 276 I 13 0 (626) 504

20 0 1 956 29 1 24 7 (679 ) 568

Be~'ond 200 I 5 804 60 12 11 8 16 (6 5 03 ) 5 313

Tora l 9763 7 167 16 930 (9 258 ) 7672

In the event th e Co mpa ny decide s to acquire th e leasehold posit ion o f EDA SN C at th e co m pletio n of th e 12 yea r

lease te rm, the Co m pa ny wo uld ha ve ;1 net co m m itme nt of FF 8,33 4 milli on in optio n and fut ure rental pa yrncn ts

ov er the su bseq uent ten ~·eMS .

Futu re co m mi tments a rc based o n a n a vera ge PIBOR ass umption of 6 %.

As o perati ng leases. t he cost a nd depreciati on o f th e a sets are nor include d in the Gro u p's consolida ted financ ia l

sta tements , These amo unts, w hich a rc ca rried by the Fina nci ng SNCs, a re su mma rise d as foll o ws:

1FF in million..'

Land a nd seco nda ry infrnsr ru crurc

Bui ld ings, rides a nd attractio ns

Furn it ur e, fixtures &: eq u ipment

Ne t Boo kV a I u c at

A c cu mu l a ted S ept ember _1 0 . Est i ma tedC o s t D ep reci atio n 1 9 9 6 Us ef u l I. i v c s

2036 (34 1) 1 69 5 10 to 25 years

13 529 (2 758) 10 77 1 25 to 33 yea rs

I 243 (35 2) 891 4to I0 yea rs

16 808 (3 45 1) 13 357

Deprec iat ion a bove is co mp ute d o n th e stra ight- line meth od ba cd up on estima ted u eful live , Deprecia tio n

ex pe nse was FF 806 milli on and FF 790 milli on for th e yea rs ende d Sep tem ber 30, 1996 a nd 1995, respect ively.

At Septe m ber 30 , 1996, bo rrowings and accr ued interest spec ific to th ese asse ts were FF 19, 02 7 m illion, includ ing

FF 9, 187 million due to th e G roup .

T he G ro up has ot her o pe ra ti ng leases, pri ma rily fo r offi ce a nd co mputer equ ipment a nd vehic les. fo r w hich tota l

re nta l expe nse was FF 171 m illion a nd FF 178 milli on for the yea rs ended September 30 , 19 96 a nd 1995 resp ect ively.

E URO DI S]'; EY S ,C,;\ , .II'D S U IISlDIA IUES '1- 1

· CONSOLIDATED FINANCIAL STATEMENTS

Futu re minimum renta l commitment s und er these non-c unccllabl c operating leases as of September 30 , 1996 ar e as

follows:

(FF in mill ion..)

1997

1998

1999

2000

2001

Th ereafter

26 Employees

Th e numb er of cas t members employed by the Group wa s:

18

16

14

14

49

138

Scp t c m h c r 3 0 .I \) \) (i 1 9 95

Cadres

no n-cadres

1 60 2

8 236

9838

1 443

7 876

93 19

Tota l employee cos ts for year s ended Septemb er 30, 1996 and 1995 were FF 1,72 0 million and FF 1,583 million,

respecrively.

All cast members participat e in pensio n plan s in acco rdan ce with French laws an d regulations. Ca dre cas r memb ers

also participate in a supplementa l defined conrriburion pension plan . Co ntributio ns to all plan s, w hich are sha red

by the cast memb er and the Gro up, are based on gross wages and arc expenscd as incurr ed. Th e Gro up has no turure

co rn mirmenrs with respect to these pla ns.

A ret irement indemnity is pa id to cast memb ers who ret ire from the Gro up afte r co mpleting a defi ned numbe r

of service years, in an am ount nor to exceed 1.5 months of gross wages. No pro vision in this respect was recor ded

as of September 1996 or 1995 as any am ounts event ua lly due a re con sider ed to be insignifica nt.

Dur ing fiscal year 1996, the Co mpany signed two major ag reements with uni on rep resentati ves for Euro Disncv

S.C.A.·s employees. Th ese agreements resulted in the imp lementat ion of a profit sharing plan wh ereby emp loyees will

receive a bon us of 0.5 % to 4'1.. of the ir annua l sa lary, if incom e befor e lease and financial charges reach es certai n

pre-established levels. A company savings plan was also implemented whereby the Co mpany will march 20'X. of each

employee's conrriburion to the savings plan up to a maximum of FF 4,000 per annum.

27 Directors' fees

During the yea rs ended September 30, 1996 and 1995, fees paid to memb ers of the Company's Supe rvisory Board

were FF 1,350,000 and FF 950,000, resp ectively,

28 Summary of Differences Between Accounting Principles Adopted by the Company andGenerally Accepted Accounting Principles in the U.S. and Supplemental Disclosures

Reconciliation to U.S. GAAP

As a result of the Rights Offeri ng descri bed in Note 2, Euro Disney S.C.A. is req uired to file an annual report

with the Securit ies and Excha nge Commission ("SEC" ) in the United States within six months of September 30 each

veal'.

As expla ined in the summary of significa nt acco unt ing pol icies, the co nso lida ted financial statements have been

prepa red in accord a nce wi th accounti ng pr inciples genera lly accepted in France (" French GI\I\ I''' ). Frenc h GAA P

4.2. E UH(l I) , , :-:I-Y S.c. :\ . ,\ :--: 1> SU I\S I 1>L \ H I I-'

(FF in mill ion..)

+

va ries in ce rta in s ignifica nt respect s from accounting princip les ge nera lly accepted in th e Uni ted Sta tes (" U.s. GA AP" )

particul arl y th ose related to th e asset s o f th e T hem e Pa rk a nd Phase IB fac iliti es, w hic h a re bein g fina nced und er

lease a rra ngeme nts a nd are ac counted for as o pe ra ti ng leas es in acco rdance w ith o ne o f th e optio ns a llowed by French

GAA P ra th er tha n being capi tal ised . Ad ditiona lly, in co nnect io n w ith the Fina nc ial Rest ruct ur ing, the Co m pa ny's

com p utat io n of interest ex pense di ffe rs sign ifica ntly between Frenc h GA AP a nd U.S. GAA P.

T he reconcilia t io ns o f net inco me (loss) a nd eq uity bet ween Frenc h a nd U.S. GA AP a re sho w n below fo llowed

by a co ndensed co nso lida ted bal an ce sheet prepared under U.S. GA AP. A descriptio n o f the acco unting princi ples

w hic h materi all y di ffe r fo llows:

Year e n de d Se p le m her 30.1 9 9 6 199 5

- - - - - - ------ - - - ---- - - - - --- - - - - -Re concili ation o f Net Income (Lo ss )

N et Inco me, as rep o rted under Frencl GAA P

Lease an d in ter est adj ust ments

O ther

Net Loss under U.S. G AAP

(IT in millio ns ]

Reconciliation o f Sha reho lde rs' Equ ity

Sha reholde rs' Eq ui ty, as reported under Fren ch GA AP

C u m ula tive lease a nd interest adj usrrnenrs

Effec t of reva lui ng the O RAsan d sa le/ leaseba ck tra nsact ion s

O t he r

Shareholde rs ' Eq ui ty under U.S. G AA P

(FF in million..)

Bala nce Sheer Under U.S. GA AP

Cas h a nd sho rt te rm investme nts

Recei vabl es

Fixe d asse ts

Other assets

Tota l Asse ts

Acco unts pa ynhl c an d o the r lia bilit ies

Bo rro w ings

Shareho lders' Eq uity

Total Lia bi lities and Eq uity

20 2

(1 2 15)

(8)

(1 021 )

5 813

(4 660)

1 168

(35)

2286

1 540

830

18 185

1 140

2 1 695

3523

15 886

2286

21 69 5

Sep l emh er 30,

S e p t e m h e r ,I °.

114

( I 2 13)

(7)

( I 1( 6)

1 9 9 5

56 10

(3 446)

168

(27)

3305

1 9 9 5

4 ' ,JJ

1 022

18 99 1

85 1

22 297

3 165

15 827

3 305

22 29 7

Lease and interest adjusttncnts A majority o f t he G ro up' s assets , includi ng the T heme Park a nd Phase lB Faci lit ies,

a re leased under var iou s a rr a nge ments . Under Frenc h GAA P, the Group ha s nor capital ised th ese leases a nd is

acco unt ing for th em as opera ti ng leases. Unde r U.S. GA AP, t he und er lying asset s and liabi lit ies and re la ted

deprecia ti on a nd in terest ex pe nse are reflec ted in th e G ro up 's fina ncia l sta rcmc nrs.

Add it io nall y, th e Com pa ny co mp lete d a FF 1,400 mi llio n sa le/leas eba ck agr eement wi th EDA SN C (as de scribe d

in I ores 2 a nd 25 ), which under French GAA P ha s been reco rd ed as a sa le of certain T heme Pa rk asset s a nd an

o perating lease. Fo r U.S. G AAP, th is transa ction is considered a fina nc ing arrangcm cn r a t a ra te below ma rket levels,

E UIW DI S:-lEY S.c. ,\ . .-\1\() S UII SIIJIA IU ES -1 3

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eo -obligor on rhis facili ty, lnreresr rates on the different rranches range bcrwccn PIBUR plus D,75 ';{, (4.3 1" " ;11

September 30, 1996) and a fixed rare of 9.D'Y.,. Principal repayments com mence in 199X,

(c) Drawn against a faciliry of fF 2,300 million from a syndicare of hanks and secured h ~' the fin' Phase IB 110lClsand cnrerrainmcnr centre . The debr hears inrcrcsr ar PIBOR plus 1.0% (4.56% ;11 September 30, 1996), l' r incip.i lrepaymen ts commence in 1995.

(d) Relat ed to Phase lA assets. T he two rru nches of dehr hear interest ar PIBOI{ plus 4,5 'X, (X.D6% ;11 Scprcm lx-r

30 , 1996) and a fixed rare of 3.0% . Principa l repayments a rc sched uled to commence in 20 I0,

(e) Senior dcbr related to Phase IB asse ts co llarcru lized hy Phase IB buildings and fixtures , Th e differ elH tr.uiclu-s

o f deht hear int erest ra nging fro m a fixed rare of 3.0% to PIBOR plu s 1,13% (4.(,')% ;11 Scptcmlx-r 3D, 199(, ).

Principal repuyrncurs a re scheduled to commence in 200 6. T his amount includes FF 124 million of hank horrowiuu«.

Under rhe terms of the Fina ncia l Rcsrrucruring, the interest rate s on these oursranding horrowings were reduced

h~' 100% during the second half of fiscal yea r 1994 and progressivelv increase over varyi m; period s rhro ugh fisc;11year 2003 [see No tes 2 and 13).

Th ese outsta nd ing bo rrowings have the following scheduled rnarurir ies as o f Scprcmlx-r 3D, 1996;

(1+ in milliunc}

1997

1995

1999

2000

200 1

T hereafter

Accrued interes t

14

5 1

I I (,

') 175

9 23 1

Fair va lue of borro ioings As a result of rhe pr ogr essive phase o ur of rhe interest forgiveness provi sion s of the

Financia l Restructuring and lowe r PIBOR the fair value of the Group's oursranding bo rrow ings tincludinu rhe

unconsolida red financing SN Cs) incrca:cd and ma rc do ely approximated its carrying values in fisc;l l year 19 ';1 (, ;I S

com pa red to fisca l year 1995.

Th e fair value of th e Convert ible Bonds hased upon ma rker qu ot es as o f Septe mber 3D, 199(j a nd 1995, cxc ludina

the impac t o f accr ued interest. was approx ima rcly FF 3,5 1Xmillion an d FF 3,(J9(j million. respectively, T he estimated

fair value of the rema ining bo rrow ings based upon rhe presen t value of [ururc cash flow s discounted using current

ma rker inte rest ra res was app roximarelv FF I 1,21 X million and FF 9,003 million as of September 30, 1996 and 1995.

respectively,

New Accounting Pronouncements

In Ma rch 1995, Sraremenr of Financ ial Accounting Standard s 121 (" FAS 121" ), " Account ing for the lmp airm cnr

of Lon g-Lived Assets and for Lo ng-Lived Assets to he Disposed Of", was issued. Thi s srarcm cnr requires rhar lon g

lived assets held and used by an em ir)' be reviewed for impa irmcnr wh enever even ts or cha nges in circumstances

indic ate rhar the carrying value of an asset may nor he recove rable . lmplcmcura rio n of thi s srarcmcnr is requ ired in

fiscal year 1997, and manugernenr does nor anticipate rhar implcmenrarion will ha ve a mat eria l impac t on the financ ial

posi tion or resu lts of operations of the Group ,

I-t RO 1)1 ,-';LY ,< ..\ . .I'd' '>1:11'11' 1.1101 -1 5

GENERAL REPORT OF THE STATUTORY AUDITORS r.ON THE CONSOLIDATED FINANCIAL STATEMENTS ~.

Yea re il d c d Se p ( C 111h e r .\ o , I \) \) h

To th e Shareho lders of EU RO DISN EY S.c.r\.

In co m pliance with the assignment eu rrus rcd to us by yo ur Shareholders' Annual Ccnera l M eeti ng. we have

cond uct ed o ur audit of the uccompnnying co nso lidated fina ncia l srurerne nrs of Euro Disney S.C.A. as a t September 30,

11.) % .

T hese co nso lidurcd finan cia l sta tements have been app rov ed by Eu ro Disney S.A ., Gcm nr of Euro Disney S.c.i\ .

Our ro le is tu exp ress an opin ion on these conso lidated financial su uc mc ut« based U II o ur a udi t.

\'(le co nd ucte d our au d its of these conso lida ted fina ncia l statements in accorda nce w ith genera lly accepted a udi ting

sta nda rds in Fru nce which req uire tha t we pla n a nd perform the a ud it to obtai n reason abl e ass u ra nce abo ut wh eth er

th e conso lidated financia l s ta tements are free of marcria l missrarcm cnr . An au dit incl ud es, exa mini ng on a test ba sis,

evid ence suppo rt ing the amounts ;1I1d d isclosures in the consolidated financ ial sta teme nts . An audit a lso includes

assessing the acco unti ng pr inciples used a nd sig ni fica nt es tima tes made, as well as eva lua t ing th e o vera ll financ ial

srurc ruc n r pr esentati on. W/e belie ve th at o ur a ud its provide a reasonable basis for o ur o pinio n.

In o ur o pin ion, the con sol idured financial sta teme nts give a true and fair view of th e Group's financial po sit ion

a nd its ass ets a nd liabil ities as of Septem ber 30, 1996 and th e res ults o f o pe ra tio ns and cash flows o f th e compani es

inclu ded in the co nso lida tio n fo r th e yea r th en ende d .

\'(le ha ve also ca rr ied o u t th e ver ifica tio ns of th e info rma tio n pro vided in th e Ge ra nr's re po rt o n th e Group. Wie

ha ve no comment to mak e as to its fai r pre sentation a nd its co n for mity w ith the conso lida ted fina nci a l sta teme nts .

Pari s, Novem ber 2 8, 1996

T he Statutory Auditors

lk fec - Pr ice \\101 rcrho use

Brian Towhill Fran co is M arti n

ENERAL REPORT OF THE SUPERVISORY BOARD ONTHE MANAGEMENT OF THE EURO DISNEY S.C .A GROUP

Ladi es and Ge nr leme n,

\VIe are pleased ro pr esent you o ur Ge ne ra l Rep orr on th e manage me nr of rhe Euro Disn ey S.c:.A. Group

(rhe " G roup" ) fo r th e yea r ended September 30, 199 6.

W/e do nor ha ve a ny pa rticular co mme nts o n th e M an ugcm cnr Rep o rt of rhe Gcrnn t on the Group, which we

have reviewed and w hic h ha ve be en su bm itted to yo u.

T he net conso lidated income of the G ro up for th e yea r is FF 202 mil lion , which includes:

• inco me before exceptio na l item s o f Ff 15 6 m illion , a nd

• exceptiona l inco me of Fl: 4 6 m illio n .

During th e fiscal year ende d Septe m be r 30, 19 96, Disneylan d Pa ris welcomed 1l.7 mil lion guesrs ro the T heme

Park a nd ac hieved an a verage occupancy ra re of 72 'X. in th e hotels.

T he im p ro vem ent in th e Gro u p's resu lts for fisca l year 19 96 ref lects the o ngo ing tren ds of th e pr eceding fisL'a l

year. As in 19 95 , Them e Park atten dan ce a nd horel occupancy co ntin ued to increase. Total spend per guesr remained

stable a nd rhe Gro up mai ntai ne d a sr ric r conrrol o n costs. All t hese achievements have ha d a significant impact on

rhe Group's income before lease and financial cha rges a nd ha ve more rh an co mpe nsa ted th e 10 3 m illion increase in

lease a nd financia l ex penses essentia lly d ue ro the Financia l Rcstru cturi ng. T hese ex penses wer e S(,X m illion francs

in fiscal yea r 19 96 a nd wi ll co n t in ue ro increa se during th e nexr fiscal yea rs - by a pp roxi mn rcly an add irio na l

FF 20 0 m illion in fiscal yea r 199 7 a nd a n ad d irio na l FF 120 mill ion in fiscal yea r 1998. From fisca l year 199 9, rill'

pa ym enr of ro yalti es a nd mun agerncr r fees ro The \X1a lr D isney Com pany wi ll begi n to ha ve a signifi cant im pact on

th e Co mpa ny's resu lts.

Since re ly yours,

Pari s, November 28 , 199 6

The Supe rv isory Board

Anroine j ean cou rr- C a lign an i

El' Il 0 IJ , .,;.; L Y " . ( .. \ . .\ :\ 1I "( ' (1"") 1.\ (U I -I 7

PARENT COMPANY INFORMATION

FIVE YEAR FINANCIAL REVIEW( I' a r e n l C n lll l' a n r . E ur n Di,n e r S .C.A . l

1 9 9 5Fiscal rea r

1 9 9 4 1 9 9 3 1 9 91.

Ca pita l at th e endof the period (in FF)

Sha re Ca pita l 3826793 615 3 X25 195 3 10 3825 193 930 1 700 082 120 700 073 OXO

34 957 X33 3X 57 1 567

765 039 062 765 038 IX6N um be r of outstandingordinary shnrcs

Maximurn amo unto f sha res w hichcan he cr eated hv wav of:convers ion of bonds .

co nversion of O RAs

exe rci se of wa rra n ts

exercise o f employeestock options

Results o f the peri odtin IT million )

765 358 723

33 87 1 755

25001 210

90975428

13 943 000

25 00 I 2 10

90 975 42 8

15 045 000

25 0012 10

96 669 42 X

170 OOX 212

2834 1788

170 007 308

28342692

Sa les (Ne t o f VAT )

Inco 111L'I(Lo ss) beforeincome taxes, depreciationan d p ro visio ns

Income tnxcs/Irux bcncfir)

Ne t lncn rnc/ ]Loss)

Divid end s Disr ribured

4707 4 482 4 320 5 8 19 9 I X7

272 30 9 (378) (4 (05 ) J - ,_ ,) .1

(127) ( I X7) ( 149)

242 24 1 ( I IX I ) (5 297) X

173

Ea rn ings /( Loss)per sha re (in IT )

Eurni uus/fl.oss] per sha rebefo re depreciationand provi sionshut after income taxes

Ea rni ng s/(Loss) pe r sha rea frcr incom e ruxcsa nd d epreciati on a nd p rov isio ns

Net dividend per sha re

Per so nnel

0.52

0.32

0.65

0.32

(0.50)

(2 .33 )

(27 .09 )

(3 1.16)

2.3 7

0.0 5

0.68

Average N um hcr o f Em plovccs 10 307 9 356 10 94 1 12 177

Tota l l' a yrull Costs tin IT million ] 1 210 I 104 309 I 468

Total Emplo yee Benefit Costs (in H milli o n] 476 454 543 640

16 177

349

57 1

RENAULT6 PHILlPS

rz: F T II~ ranee le eeom

•

Di sneyland~ Pari s I S proud to b e as sociated with the followin g c o r po ra te p artn er s :

--------- -------- - ---- -- -----_.---- '-

lI)NooooNN

ooN

....lI)

'"eoVIUer:.s""5oE::Jo'".'"'"E

.~

.S

© Disney, Euro Disney S.c.A. Societe en Commandite par actions au capital de 3.825.186.395 F, RCS Meaux B 334 173 887.Gerant: Euro Disney SA Licence Number ES 77 00 68 and 77 070.

See you next year for our fifth anniversary .. .The magic never ends!

Euro Disney SCA - Disneyland Paris

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