Table Of Content

1 Introduction 3 1998 Key Figure 4 Chairman's Statement 6 Managemenr Team 7 Cast Members 8 Operational Highlights + 10 The Year of Disney Classics + 12 Development of the Site + + 14 Shareholder Information 16 Condensed Consolidated Financial Statements + + y ~- 1 Th' I'"",1",1\"",1,1Cl"mp'",,;19" utl)in",,,,,,cl' I'''''' \'he"",,'h"",,, + + + f + + Disney Classics The Year of Euro DisneyS.C.A. isthe operatingcompauyofthe Disncvlnndv Paris Resort, 32 km from thecentre ofParisand complete with uniquerransporrarion facilities,Opened in April 1992, Disneyland Paris includes a Theine Park, seven rhcmed hotelswith nearly 5,~OO rooms,conference faciliri<'s, Disney®Villagennd a 27-hok golfcourse, In 199X,growrh ~H Disneyland Paris hascontinued. Revenues rose 8% to ff 5,890 million. Theme Park artcndanccof 12.51million visitorsapproximated the prior year's record levels, despite a fallin tourist visits during the Football \\forld Cup inJune andJul~'. Thestrong attendance reflectsthe sustained appealof Disneyland Parisand the 1998 DisneyClassicscnrerrainmenr programme. With theopening of a second conventioncentre in the Resort, hoteloccupancyreached a record 80.9'1.., boosted b~' strong demand for corporate cnrcrrainrncnrduring the Football \X/orld Cup period. Guest spending in the boutiquesand rcsr.iurnnrsalso improved during the year.Furthermore, results benefited from a non-recurring contribution from dcvclopnu-nr activities. The increase in revenues combined with ongoingcostcontrol. hasgenerated a strong improvement in operating margins, more than offsettingscheduled increases in leaseand financialcharges.Asa result, 199Xnerincome increased by 34% to FF290 million. In 1999, the Companywillcontinue to focuson improving itsoperating margin. Addirionullv,the Compnnyalsocontrolsthedcvcloprncnr of 1,300 hectares (3,200 acres)of undeveloped land around the Resort whichcurrentlycovers 700 hectares. Expansion ofthesite iscontinuing with new projects to broaden both tourist offeringsand the Valci'Europc urban development at thegatesofDisneyland Paris. Cousrrucrion of an inrcmarionalshopping mall,~l second R.E.R.suburban railstation (withanopeningdate for bothexpected for thesecond halfof the year2000)and the road infrastructure isnow wellunderway. Look out for rhe major event of 1999, thescheduled launch ofrhe new HUI/(!)'. IShrunk: theAudience! attraction in late March.This is the first big new attraction since the opening of Space Mountain in 1995. + + + .+ 1998 I(EY FIGURES 1998 Breakdown of Revenues 1998 Geographical Breakdown by Activity of Theme Park Visitors Other Theme Park Other 71/::, 521X, 12%, Italy/Spain 7eX. France 3HcX, UK Hotelsand 15% Di5I1ey®ViIlagc 41'X, Benelux Germany 17% 11% FiscalYear (in n,\!:milliuns) tl)'),\; /1)1)- 11)IJf) Disneyland" Paris Resort revenues" 5,890 5,477 4,968 Income before leaseand financialcharges 1,143 880 724 Net income 290 217 202 Cash flows from operating activities 593 550 311 Totaldebt",:- 15,919 15,877 15,695 Shareholders' equity and ORAs 7,337 7,040 6,815 ,;.('xcll/dill,!!.~·()Jlstrll(tiol1sales ",,-illcllldillgdel» II(theflllcullso/idatcdIlllall(ill,~ companiesaru!excllldillgthebondsredeemableill sli.tres (0 /{115) 1,140 1,018 1,°42 12·57 12.51 11.66 72.2% f eo 0) ThemePark Attendance Theme Park Spending Hotel Occupancy AverageSpending per Room Nllllrll('{"III visitor; (ill millions) perGuest (ill nu.illcllldillg l'/ln (ill I-'IU:ill,-/lIdillg VXI"! 3 CHAIRMAN'S STATEMENT Dear Shareholder, During 1998, the Football\'\/orld Cup focused the arrcnrion ofthe world's media on France and, in particular, on its ability to organise large events, its standing asa premier tourist destination. and ofcourse on the rulcnr ofits team! Disneyland's Paris has built on the steady growth established over previous years While the result ofthe Football World Cup has been glob;ll1~' positive for Franceand its inrcmarional image. the immediate impact on the French tourism industry was less positive, Mostof the leisureand amusement parksin Franceexperienced a slow down in their business, which has been attributed ro competition with the month-long football \'\/orld Cup sporting event and pnrticularlydifficult weatherconditions, cspccinlly in April and july, In thischallengingenvironment, Disucyiaud Paris hasconfirmed its position as the leading leisure destination in Europe. Following three ycnrs ofstrong gr()\vth, Theme Parkattendance remained stable ar the prior year record levelofmore than 12.5 million guests, At the same time. hotel OCCUI1;lIK~' reached a record levelof 80.9%., which representss(~me I()points above Ihe llc-dc-Francc region average, Our operating margin,another key factor offinancial performance. has continued ro improve asa resultof persisrenrcost control, 1998 was the first fiscalyear ro fullv benefit from our Cornpnny'srcorg.uiis.uiunefforrs and the redefinition ofpurchasing policies first initiated in 1996. As a result,costsand expenses. excluding developmentactivities, increased at halfthe rate ofour revenues. resulting in a 2I% increase in income before leasing and financial charges. In addition. as Iannounced ro you last year; 1998 benefited from a positive impact from developmentactivities, Nearly 100 million French francs offiscal year 1998 results wasderived from development activities, most of which related ro the \';11 d'Europc project, New drivers for growth After more than six years of operations, we have become increasingly more sophisticated at managing large numbers of guests, anticipating business peaks and applying optimal prices at all times. Now, our focus must beofa more qualitative nature: ro offeraneven more personalised experience ro ourguests. Service and qualityare critical ro maintaining repeat visits; in 1998, our repeat visit rate increased ro 36'1.•. Additionally,spending per guest increased at both theTheme Park and the hotels. Isee in theseexcellent results, the fruit of ourefforrs ro improve the qualityand diversity of our offer,while ensuring ro guaranteeconsistencyin service quality throughout the site. The range of our products and services is constantly changing and we are continually improving our organisational structure In 1998. cnrcrtuinmcnr programmes paid tribute to the magic of Disneyand our seasonalevent policy was expanded. In the Theme Park, it was The )'e'll'0/Disney Classics. Among other progr;lmmes, our guests were invited to participate in the largest interactive parade ever created in the Park, The \I/O/ufcl'/itl \'{!orld 0/Disney Parade. to discover at the Theatre du Chateau stage the new show dedicated to \'V'innie the Pooh and friends and to admire, during the summer nights. the new pyrorcchnic show, Tinker Bel/'s Fantasy in tlieSl.:.y Fircu.orl:s. Scasonalcvcnrs also experienced growth, In theTheme Park, specialevents wereorganised, including Soirees /~/oi/ecs and Halluu-ecn. In Disnl:~'® Village. weorganised a Cuy Fawkes celebration and French, Celtic and Latin music festivals.To cclchrarcthe FootballWorld Cup,specialevents wereorganised, combining liveconcerts and the broadcast ofthe marches ongiant SCI"L'l:ns. Over the last two vcars. our operational structure has been completelyreorganised inro a matrix structure, helping to improve service, consistency and flcxibilirv.These improvements in ourorganisation haH' been accompanied h~' investments to enhance informationsystems, the redefinitionof our purchasing policy, as wellas the implementation of numerous initiatives aimed at improving thesynergics with other Disncv entities and the kevpartner companiesof DisncylandwParis, Buraside from our operationalperformance,our best commercialasset remains the professionalism and dedication of the 10,000 cast members that make up the Disneyland Pariscast. In I99l:;, the Company dedicated over4% of its payroll costs to training, which represents42,000 trainingdays for nearly l:;0 different programs. Continued professional development ofourcast members is becoming more important since Disncylund Paris iscurrentlygoing through a substantialexpansion phase, "1999, expanding for the future Various major developments were launched in 1991:; rhar, we hope, will impact fiscal 1999,just recently enclosed, the 1,200 scat ChaparralThcurer now providesan additionalrhearercapacity in winter,Thestage at Videopolis has beenenlarged hyover 100 m-'and equipped with new giant screens to receivethe new show M///,lII.The Legend.inspired hy Disney's36thanimated featureand China's ancestralarts and traditions, Finallv,\\"L' areactivelyprepnring the major event of 1999, theopening of Ho//cy. / Shrunk: Tbc /sudicncc', This new arrracrion, which includes srare-of-rhe-arr technologyand inrcrucrivespecialeffects. will be the first major new arrraction in theTheme Park since 1995. In Disnl:Y®Village, \\T have just inaugurated a new ~vIcDonald's® rcsrauranr, and in ;1 fell' months a Rainforest Cafercsraurunrand seven addirioualscreens in the Gaumonrmultiplexcinema arescheduled to open, Addirionallv. thedevelopment of an urbancentre. located just three kilometres from Disneyland Paris, where priority isgiven to communirv,quality oflife and respect for theenvironment, is\\'l:1I undcrwny. The ValdEurope urban centre willultimatelyincludean inrcrnurionulshoppingcentre. Archirecrurallv inspired bythe I-Lllks Baltard, the residentialareasaredesigned in the tradition ofthe Briard rcgio», a business park and a second R,E.R,suburban metro station, However, 1999 willalso bring newchnllcnges. Inaddition to anincreaseinleasel:xpensl:, wewillhl:ginto pa~'The\\'alt DisneyCompanyrovulriesand managemcnrfees. Keepingthesecomminnenrs,madein 1994,isfundamental toour financialcredihiliry \X'l:can now look forward to the ncvv millennium and the vcnr 2002, theTheme Park's tenth anniversary. The crossing has begun. Ihave full trust in the ship's sturdiness and the crew's experience. \\le willwork together to continue offering our guests an incrcusinglycompetent, warm and alwayssurprising welcome that is, in one word, \b gic! Gilles Pelisson (J'.1I1"111.111.unl ("/.'I,{ Ixrrutu, ( )/ii,"<'l" M ANAGEMENT TEAM o GlllES PElISSON 0 JEFFARCHAMBAUlT 0 PHllIPPESPIETIE CbainrunandCbio]ExecutiveOft/ca ·p,'ci.dPro)....ts .\leTch.uu/isc.Purchasing, Logistics JAMESRASUlO 0 LAURENCE BERMAN·ClEMENT ~ MARCROBINO ChiefOper,ltillgOlileer Strategyand Corporate'Alliances Food0""B(,I't'.,.I!:e m 0 DOMINIQUECOCQUET MICHElPERCHET Rc.11Est.ucandGenera!Secretary CISt.\lembasandQII.dity 0 PHllIPPE MISTElI ~ CHRISTIAN PERDRIER Fil1.111(.""t Resort Serrices 0 JAYSMITH YANN CAlllERE* Entertainment Hotels andDisllc)QJ \'ill"ge 0 *joinedtheExecutiveCommittee BERTRANDGAlllOCHET PHllIPPELAFLANDRE* illNovember /99 [notpictured} M,lrkctillg .:;' Sales Theme Park CAST MEMBERS Professiona ism Dedication Whether on stage or back stage, Disneyland's Paris cast members have continued to concentrate their efforts on improving the quality of the Disneyland Paris experience and, in particular, increasing the personalised welcome to each and every visitor. In 1998, the Company dedicated 4.6'1., of its labor costs to training. Disney University provided over 42,000 days of training for nearly 80 different programmes, most of which were related to the tourism profession. European recruitment campaigns were intensified and new information systems were put in place. Better mobility ofcompetency within the Company and a more precise measurement ofthe individual performance of the cast members contributed to a more favourable and flexible work organisation. .Q:' ~ V) >-.) .<" en \..1..' o Cf) 7-< ~ ~ .~