Walt Disney Attractions
Our Attractions division is the unquestioned leader in its industry. We are currently
implementing cost-effective strategies to make it even stronger.
For example, last year we introduced the Rock `n' Roller Coaster, an all-new attraction at the Disney-MGM Studios at Walt Disney World. It puts guests in these special stretch limos, then hurtles them from zero to 60 miles per hour in 2-1/2 seconds, speeding them through three inverted loops, passing a number of Hollywood landmarks as they go ... all to the throbbing beat of the music of Aerosmith. This is definitely a Disney attraction, featuring strong storytelling and a one-of-a-kind visceral experience ... but it is also a cost-effective attraction, since it was built by integrating some components from an outside contractor. As a result, our Imagineers did not have to reinvent the loop, so to speak, and were able to create a true E Ticket ride at substantially less than the usual E Ticket cost.
Then there is a new invention we call FASTPASS. It is an advance booking system that enables guests to essentially get a reservation to bypass long lines on our most popular rides. So much of business is common sense ... and, when it comes to our theme park business, common sense dictates that if we eliminate lines, we accomplish two things -- we can attract people who haven't been coming because they just hate standing in line, and we get our guests to put their time to better use now that they're not spending hours waiting for the next ride.
We have also been bringing cost-effective strategies to the development of entirely new theme parks. There are currently four of them in development.
Disney's California Adventure will open in just 12 months adjacent to Disneyland. Several attractions are being built by integrating third-party-provided technologies with Disney showmanship, two will be highly successful 3-D attractions from Disney World, and the rest will be novel rides that we have designed from the ground up. All of it is rapidly coming together to form a completely original entertainment experience that celebrates the best of the Golden State.
Tokyo DisneySea is scheduled to open in 18 months across from Tokyo Disneyland, which is our most popular theme park of all. As with Tokyo Disneyland, we are tying up no capital in this project and will be receiving sizeable cash flow from license fees from the day the park opens.
In 24 months, we will open the Disney Studios theme park at Disneyland Paris. This park will feature a number of the most popular attractions already in operation at the Disney-MGM Studios in Florida. The majority of the capital is being provided by Euro Disney investors and finance partners.
Each of these parks complements an already existing Disney theme park, thereby transforming these great single-day tourist attractions into true multi-day destination resorts ... in much the same way that Epcot transformed Walt Disney World back in 1982. We firmly believe that, thanks to the wonders of synergy, one plus one will equal far more than two, both in terms of guest satisfaction and earnings growth.
The fourth new park location is in Hong Kong and will open in 2005. Most of the funds for the park's construction will be provided by our local partner, and it will showcase many favorite attractions from our existing parks. Hong Kong Disneyland will be something of a beachhead for our company in the world's largest nation, with enormous implications for our future international growth.
And now, let's talk cash flow. From 1994 to 1999, our Attractions division was a net consumer of cash, totaling about $750 million. By contrast, between 2002 and 2003, we anticipate that Attractions will deliver more than $2 billion in after-tax free cash flow, while at the same time growing earnings. This is not only good news in itself, but this tremendous flow of cash can then be utilized in other potential-laden, high-return areas.
Another effort underway to optimize our company's performance is our Strategic Sourcing initiative, a top-to-bottom review of our purchasing practices. Within five years, we expect to be saving more than $300 million annually from Strategic Sourcing. Since we'd all rather I talk about movies, let's put this in terms of movies: $300 million is the equivalent of earning the combined ultimate profits of "The Rock," "Ransom" and "The Waterboy" each and every year.