Euro Disney Posts 1st Profit in 3 Years : Earnings: Debt repurchase and ‘interest moratorium’ play a role in the turnaround for the operator of Disneyland Paris.

In the first clear sign of turnaround at Walt Disney Co.’s chief embarrassment, the European company that operates Disneyland Paris reported its first quarterly profit Tuesday since the amusement park resort opened three years ago.

Euro Disney SCA said it earned $35.2 million for the third quarter ended June 30, contrasted with a loss last year of $113 million for the same period.

About half the earnings of Euro Disney, which is 39% owned by Burbank-based Walt Disney, came on a one-time gain from the repurchase of debt. Also, the company benefited from what one analyst called an “interest moratorium” allowed under French accounting rules, and from Walt Disney forgiving royalty payments.

Euro Disney’s comeback nevertheless is considered significant.

The park is being helped along by a 20% cut in ticket prices, a corresponding reduction in hotel rates and employee layoffs. The park also added a new attraction: an indoor roller coaster called Space Mountain From the Earth to the Moon.

“They are definitely recovering,” said David Londoner, an analyst for New York brokerage Wertheim Schroeder & Co.

Earnings, in fact, were better than expected. But the theme park resort is not expected to earn a full-year profit until fiscal 1996.

It is yet to be seen how the park performs in the fourth quarter now under way, when it is expected to receive the peak-season summer crowds.

Harold Vogel, analyst for Boston brokerage Cowen & Co., said he expects Euro Disney to take losses during the traditionally slow winter and spring quarters next year, but that it stands to meet its goal of earning a profit for the year as attendance grows.

Much has changed since the grand opening in 1992 when the French were deriding the new resort as a “cultural Chernobyl.” Even the name of the resort was transformed from Euro Disneyland to Disneyland Paris.

The changes came as Euro Disney sought to cope with billion-dollar losses echoed through then-half-owner Walt Disney, whose chairman called the resort’s financial performance “barely a D” on the “report card” for the company in 1993. “Some would call it dreadful, and in a financial sense I would be forced to agree,” Michael D. Eisner wrote in the annual report.

The fiasco peaked as Walt Disney was having to cope with diving domestic theme park attendance and had lost a public relations battle that scuttled plans for an American history-themed amusement park in Virginia.

Since then, the entertainment giant has seen its fortunes largely recover, even as Disneyland Paris is pulling out of trouble. Euro Disney raised nearly $1.2 billion in fresh capital through an offering last year that brought in Saudi Prince Al Waleed ibn Talal ibn Abdulaziz al Saud as an investor.

“Early on, they were not running it right, it was overbuilt and it was expensive,” Londoner said. “By cutting the price and getting the employees to be more courteous, the word-of-mouth is a lot better than it was.”

Shares of Walt Disney closed Tuesday at $55.75, up 75 cents, in trading on the New York Stock Exchange.