Strengths

Strengths

1. Revenues for fiscal 2013 increased 7%, or $2.8 billion, to $45.0 billion

2. Income from equity investees increased to $742 million in the current year from $627 million in the prior year due to an increase at AETN primarily due to higher advertising and affiliate revenues, partially offset by higher sales and marketing and programming costs.

3. Cash provided by operating activities for fiscal 2013 increased 19% or $1.5 billion to $9.5 billion as compared to fiscal 2012.

Opportunities

1. Shanghai Disney Resort

In fiscal 2011, the Company and Shanghai Shendi (Group) Co., Ltd (Shendi) received Chinese central government approval of an agreement to build and operate a Disney Resort (Shanghai Disney Resort) in the Pudong district of Shanghai at a planned investment of approximately 29 billion yuan ($4.7 billion). Construction of the project began in April 2011 and will include a theme park, two hotels and a retail, dining and entertainment area. The resort is owned by a joint venture in which Shendi owns 57% and the Company owns 43%, and the investment will be funded in accordance with each partner's ownership percentage. An additional joint venture, in which Disney has a 70% interest and Shendi a 30% interest, is responsible for creating, constructing and operating the resort. Shanghai Disney Resort is currently targeted to open by the end of calendar 2015.

TheShanghai Disney Resortis an upcoming theme park resort to be built by Walt Disney Parks and Resorts. This would be the first Disney Park in Mainland Chinaand the second within theGreater Chinaregion, the other being the existingHong Kong Disneyland. Carrying Disneys theming traditions, Shanghai Disneyland will be a Magic Kingdom-style Disney theme park featuring classic Disney characters and stories blended with brand new attractions and experiences specifically designed for the people of China. The park will include six themed lands, which feature unique attractions, rides and immersive experience.The opening of the Shanghai Disneyland before the end of 2015 will unlock its doors to more opportunities of profit earning in this region. As Disney Company enters this market, it is expected that it will strengthen its position there and greatly benefit from the continuous growth in their industry.The management believes that the grand opening of this spectacular, one-of-a-kind Shanghai Disney Resort promise to make 2015 one of the biggest years in Disney history and create even more extraordinary opportunities for long-term growth.

2. Growth of paid TV industries in emerging economies.

New analysis from Frost & Sullivan research firm suggests that the IPTV subscriber base in Asia-Pacific covering 13 countries reached 4.1 million in 2007 and estimates this number to reach 22.4 million by the end of 2013, at a CAGR (compound annual growth rate) of 32.7 percent (2007-2013).

Asia-Pacific accounted for about a third of the global IPTV subscriber base last year. Apart from South Korea which does not have true IPTV service, the top two Asia-Pac countries by subscribers as at end-2007 are Hong Kong with 24.9 percent (1.02 million subscribers) of the region's IPTV subscriber base and China with 22.7 percent (0.93 million). By: CircleIDReporter

At the end of the third quarter of 2013, the research from Dataxis shows that the Asia Pacific region has a whopping 538,486,593 pay TV subscribers. For the same quarter from 2012, there were a total of 476,734,798 subscribers in the Asia Pacific region. This means the growth in pay TV subscribers in a span of year has increased by 12.9%.The Asia Pacific region accounted for more than 50% market share of the world pay TV subscribers (394 million) in 2011.Considering that Disney makes money mostly out of cable networks and considering this trend in the Asia-Pacific regarding their pay TV subscription, entering these emerging markets will also give Disney added access to this region along with the opening of the Shanghai Disneyland. Disney can, most especially, reach out to China although Disney Channel was already launched a channel in mainland China. However, many of its live-action and animated series are stillsyndicatedon regional channels throughABCownedDragon Clubsince 1994.

3. Opening out of movie production to new countries

Taking into account the soon-to-be rise of Disney on this side of the region, specifically in China, every possible opportunity should be seized. The movie production may serve as a good complement to the Shanghai Disneyland which will further boost the enthusiasm which the theme park could give to avid Disney lovers especially the children. In the previous year, the movie production in China, as well as in other countries like India, have developed good quality infrastructure. This would result in lower movie production costs and more localized movies for Chinas markets.

Also, the trend in the Movie Production industry in China is expected to generate $5.21 billion in 2014, reflecting high annualized growth of 27.4% over the past five years. The rapidly rising consumption power and desire for cultural and entertainment products has fueled the industry's growth in China.

THREATS

1. Changes in technology and in consumer consumption patterns may affect demand for the companys entertainment products and the cost of producing or distributing these products.

The media and studio entertainment in which the company participates depend significantly on its ability to acquire, develop, adopt and exploit new technologies to distinguish its products and services from those of its competitors. In addition, new technologies affect the demand for its products, the manner and markets in which oits products are distributed to consumers, the sources of competing television and filmed entertainment, the time and manner in which consumers acquire and view some of its entertainment products and the options available to advertisers for reaching their desired markets.In order to respond to these developments, the company may be required to alter its business models and there can be no assurance that it will successfully respond to these changes or that the business models it develop in response to these changes will be as profitable as its current business models. As a result, the income from its entertainment offerings may decline or increase at slower rates than its historical experience or its expectations when we make investments in products.

Operating expenses included an increase of $121 million in film cost amortization, from $1,685 million to $1,806 million, driven by more significant titles in theatrical release in the current year, including the two feature animation releases, and higher TV/SVOD revenues. Other significant titles in release included Iron Man 3, Oz The Great and Powerful, The Lone Ranger, Monsters University and Lincoln in the current year compared to Marvel's The Avengers, Brave, John Carter and The Muppets. These increases were partially offset by the impact of lower home entertainment unit sales and lower film impairments. Lower film impairments were due to the write-down of The Lone Ranger in the current year compared to the write-down of John Carter and higher development costs write-offs in the prior year. Operating expenses also include distribution costs and cost of goods sold, which decreased $17 million from $1,223 million to $1,206 million driven by a decline in home entertainment unit sales, partially offset by the inclusion of Lucasfilm's special effects business in the current year.

The increase in selling, general, administrative and other costs was primarily due to higher theatrical marketing expenses driven by two Disney feature animation releases in the current year compared to none in the prior year, partially offset by a decrease in home entertainment marketing. The increase in depreciation and amortization was due to amortization of intangible assets resulting from the acquisition of Lucasfilm.

2. Sustained increases in costs of pension and postretirement medical and other employee health and welfare benefits may reduce the companys profitability.With approximately 175,000 employees, the organizations profitability is substantially affected by costs of pension benefits and current and postretirement medical benefits. It may experience significant increases in these costs as a result of macro-economic factors, which are beyond the companyscontrol, including increases in the cost of health care. In addition, changes in investment returns and discount rates used to calculate pension expense and related assets and liabilities can be volatile and may have an unfavorable impact on its costs in some years. These macroeconomic factors as well as a decline in the fair value of pension and postretirement medical plan assets may put upward pressure on the cost of providing pension and postretirement medical benefits and may increase future funding contributions. Although it has actively sought to control increases in these costs, there can be no assurance that it will succeed in limiting cost increases, and continued upward pressure could reduce the profitability of our businesses.

In the table above, we can see how volatile the discounts rates used in calculating the pension expense and the related assets and liabilities are. They change everytime without the control of the company. Also, these changes could have a huge effect on the companys profitability and financial position.

As stated above although the company has actively sought to control increases in the costs of Pension and Postretirement Plans, there is still no guaranteed that it will succeed on limiting these increases and the companys profitability is still at stake.

3. The Companys acquisition of Lucasfilm is expected to cause short-term dilution in earnings per share and there can be no assurance that anticipated improvements in earnings per share will be realized.

On December 21, 2012, the Company acquired Lucasfilm Ltd. LLC in a merger transaction in which the Company distributed 37.1 million shares and paid $2.2 billion in cash. It expects that the merger will initially result in lower earnings per share than it would have earned in the absence of the merger. The company expects that over time the merger will yield benefits to the combined company such that the merger will ultimately be accretive to earnings per share. However, there can be no assurance that the increase in earnings per share expected in the long term will be achieved. In order to achieve increases in earnings per share as a result of the merger, the combined company will, among other things, need to effectively continue the successful operations of Lucasfilm after the merger, develop successful new content (including future feature films) based on Lucasfilms intellectual property and successfully integrate Lucasfilms products into the combined company various distribution channels.

The acquistion of the Lucasfilm may as well have an adverse effect on the companys costs and expenses. For example:

Operating expenses also include distribution costs and cost of goods sold, which decreased $17 million from $1,223 million to $1,206 million driven by a decline in home entertainment unit sales, partially offset by the inclusion of Lucasfilm's special effects business in the current year.

The increase in depreciation and amortization was due to amortization of intangible assets resulting from the acquisition of Lucasfilm.

The increase in selling, general, administrative and other costs was primarily due to the inclusion of Lucasfilm and higher technology development costs.The increase in depreciation and amortization was due to amortization of intangible assets resulting from the acquisition of Lucasfilm.

Operating expenses included an $80 million increase in cost of sales from $252 million to $332 million and a $5 million decrease in product development costs from $331 million to $326 million. Higher cost of sales was due to the release of Disney Infinity and the inclusion of Lucasfilm.The Company recorded $214 million, $100 million and $55 million of restructuring and impairment charges in fiscal years 2013, 2012 and 2011, respectively. Charges in fiscal 2013 were due to severance, contract and lease termination costs and intangible and other asset impairments. The charges include amounts incurred in connection with the acquisition of Lucasfilm.

The net income attributable to disney for the fiscal year 2013 was impacted by Restructuring and Impairment charges totalling $214 million and this amount includes those incurred in connection with the acquisition of Lucasfilm. It has an effect on the EPS of the company as seen on the table above.

Holy Angel UniversityCollege of Business and AccountancyYSTRATMA

Submitted by:David, Lemmuel JeremiahFacundo, ShilleileeGesmundo, Nikka RoseGonzales, Ann BeatrizSibug, Regina

A-431

Submitted to:Mrs. Carmi Y. Lao

November 25, 2014