S&P affirms Disney ratings

Standard & Poor's said it affirmed its BBB+ corporate credit rating and other ratings on The Walt Disney Co. and removed them from CreditWatch.

The outlook is negative.

S&P said affirmation is warranted by the gradual reduction of debt leverage, which is expected to continue through the fiscal year ending Sept. 30, 2004. Lower capital spending levels have translated into higher conversion of EBITDA to discretionary cash flow - 35.6% in fiscal 2003 versus 21.5% in fiscal 2002 - and capital spending is expected to remain at lower levels.

At the same time, management has refrained from share repurchases since late 2001. Although S&P said it expects a further reduction in debt leverage in the current fiscal year, concerns regarding Walt Disney's legal and contingent exposures to Euro Disney SCA have prompted a tightening of S&P's leverage target for Walt Disney at BBB+ rating level to 2.75x from 3.00x.

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