What changed in this filing

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Item 9A. Controls and Procedures

2023-11-21 compared with 2022-11-29 · 618 added, 475 removed, 1475 unchanged (43% of the section changed)

2 unchanged sentences

We have established disclosure controls and procedures to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and made known to the officers who certify the Company’s financial reports and to other members of senior management and the Board of Directors as appropriate to allow timely decisions regarding required disclosure.

Based on their evaluation as of October 1, 2022, the principal executive officer and principal financial officer of the Company have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective.

Based on their evaluation as of September 30, 2023, the principal executive officer and principal financial officer of the Company have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective.

Management’s Report on Internal Control Over Financial Reporting

1 unchanged sentence

Changes in Internal Controls

There have been no changes in our internal control over financial reporting during the fourth quarter of the fiscal year ended October 1, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no changes in our internal control over financial reporting during the fourth quarter of the fiscal year ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information

None of our directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the quarterly period covered by this report.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

1 unchanged sentence

Directors, Executive Officers and Corporate Governance

Information regarding Section 16(a) compliance, the Audit Committee, the Company’s code of ethics, background of the directors and director nominations appearing under the captions “Delinquent Section 16(a) Reports,” “The Board of Directors,” “Committees,” “Governing Documents,” “Director Selection Process” and “Election of Directors” in the Company’s Proxy Statement for the 2023 annual meeting of Shareholders is hereby incorporated by reference.

Information regarding Section 16(a) compliance, the Audit Committee, the Company’s code of ethics, background of the directors and director nominations appearing under the captions “Delinquent Section 16(a) Reports,” “The Board of Directors,” “Committees” and “Corporate Governance Documents” in the Company’s Proxy Statement for the 2024 annual meeting of Shareholders is hereby incorporated by reference.

Information regarding executive officers is included in Part I of this Form 10-K as permitted by General Instruction G(3).

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Iger, dated February 24, 2020 † Exhibit 10.1 to the Current Report on Form 8-K of the Company filed February 25, 2020

Employment Agreement Dated as of November 20, 2022, between the Company and Robert A.

E xhibit 10.1 to the Current Report on Form 8-K of the Company filed November 21, 2022

Amendment dated July 12, 2023 to Employment Agreement dated as of November 20, 2022, between the Company and Robert A.

E xhibit 10.1 to the Current Report on Form 8-K of the Company filed July 12.

Employment Agreement dated as of July 1, 2015 between the Company and Christine M.

8 unchanged sentences

McCarthy † Exhibit 10.3 to the Form 10-Q of the Company for the quarter ended January 1, 2022

10.16 Employment Agreement, dated as of July 1, 2021 between the Company and Paul J.

Richardson † Exhibit 10.1 to the Form 10-Q of the Company for the quarter ended July 3, 2021

10.18 Amendment dated June 15, 2023 to Amended Employment Agreement dated as of July 1, 2015 between the Company and Christine M.

McCarthy, as previously assigned †

E xhibit 10.1 to the Current Report on Form 8-K of the Company filed June 15, 2023

Employment Agreement, dated as of December 21, 2021 between the Company and Horacio E.

5 unchanged sentences

Gutierrez † Exhibit 10.2 to the Form 10-Q of the Company for the quarter ended July 2, 2022

10.20 Employment Agreement, dated as of January 24, 2022 between the Company and Geoffrey S.

Morrell † Exhibit 10.6 to the Form 10-Q of the Company for the quarter ended January 1, 2022

10.21 Amended and Restated General Release, dated June 23, 2022, between the Company and Geoff Morrell † Exhibit 10.5 to the Form 10-Q of the Company for the quarter ended July 2, 2022

Amendment dated April 21, 2023 to the Employment Agreement dated December 21, 2021, between Disney Corporate Services Co., LLC and Horacio E.

Gutierrez and to the Indemnification Agreement dated December 21, 2021, between the Company and Horacio E.

2 to the Form 10-Q of the Company for the quarter ended April 1, 2023

Employment Agreement, dated June 29, 2022, between the Company and Kristina K.

Schake † Exhibit 10.3 to the Form 10-Q of the Company for the quarter ended July 2, 2022

10.23 Consulting Agreement between the Company and M.

Jayne Parker † Filed herewith

Exhibit Location

Amendment dated April 18, 2023 to Employment Agreement, dated June 29, 2022 between the Company and Kristina K.

Exhibit 10.1 to the Current Report on Form 8-K of the Company filed April 20, 2023

Employment Agreement dated as of March 10, 2023, by and between the Company and Sonia L.

Exhibit 10.1 to the Form 10-Q of the Company for the quarter ended April 1, 2023

Voluntary Non-Qualified Deferred Compensation

1 unchanged sentence

Description of Directors Compensation Exhibit 10.1 to the Form 10-Q of the Company for the quarter ended January 1, 2022

10.26 Form of Indemnification Agreement for certain officers and directors † Filed herewith

Exhibit Location

Form of Indemnification Agreement for certain officers and directors † Exhibit 10.

2 6 to the Form 10-K of the Company for the fiscal year ended October 1 , 202 2

Form of Assignment and Assumption of Indemnification Agreement for certain officers and directors † Exhibit 10.1 to the Form 10-Q of the Company for the quarter ended June 29, 2019

17 unchanged sentences

Form of Performance-Based Restricted Stock Unit Award Agreement (Three-Year Vesting subject to Total Shareholder Return/ROIC Tests) † Exhibit 10.5 to the Form 10-Q of the Company for the quarter ended January 2, 2021

10.44 Form of Performance-Based Restricted Stock Unit Award Agreement (Three-Year Vesting subject to Total Shareholder Return/ROIC Tests) † Filed herewith

Exhibit Location

Form of Performance-Based Restricted Stock Unit Award Agreement (Three-Year Vesting subject to Total Shareholder Return/ROIC Tests) † Exhibit 10.44 to the Form 10-K of the Company for the fiscal year ended October 1, 2022

Form of Performance-Based Restricted Stock Unit Award Agreement (Three-Year Vesting subject to Total Shareholder Return/ROIC Tests/Section 162(m) Vesting Requirements) † Exhibit 10.6 to the Form 10-Q of the Company for the quarter ended January 2, 2021

1 unchanged sentence

Form of Performance-Based Stock Unit Award Agreement (Section 162(m) Vesting Requirement) † Exhibit 10.9 to the Form 10-Q of Legacy Disney for the quarter ended December 29, 2018

Exhibit Location

10.48 Form of Performance-Based Stock Unit Award Agreement (Three-Year Vesting subject to Total Shareholder Return/EPS Growth Tests/

Section 162(m) Vesting Requirement) † Exhibit 10.11 to the Form 10-Q of Legacy Disney for the quarter ended December 29, 2018

10.49 Form of Performance-Based Stock Unit Award Agreement (Three-Year Vesting subject to Total Shareholder Return/EPS Growth Tests) † Exhibit 10.10 to the Form 10-Q of Legacy Disney for the quarter ended December 29, 2018

Form of Non-Qualified Stock Option Award Agreement † Exhibit 10.12 to the Form 10-Q of Legacy Disney for the quarter ended December 29, 2018

10.51 Performance-Based Stock Unit Award (Four-Year Vesting subject to Total Shareholder Return Test/Section 162(m) Vesting Requirements) for Robert A.

Iger dated as of December 13, 2017 † Exhibit 10.3 to the Form 10-Q of Legacy Disney for the quarter ended December 30, 2017

10.52 Performance-Based Stock Unit Award (Four-Year Vesting subject to Total Shareholder Return Test) as Amended and Restated November 30, 2018 by and between the Company and Robert A.

Iger † Exhibit 10.2 to the Current Report on Form 8-K of Legacy Disney filed December 3, 2018

10.53 Performance-Based Stock Unit Award (Section 162(m) Vesting Requirement) for Robert A.

Iger dated as of December 13, 2017 † Exhibit 10.4 to the Form 10-Q of Legacy Disney for the quarter ended December 30, 2017

Form of Non-Qualified Stock Option Award Agreement † E xhibit 10.2 to the Form 10-Q of the Company for the quarter ended December 31, 2022

Form of Restricted Stock Unit Award Agreement (Time-Based Vesting) †

3 to the Form 10-Q of the Company for the quarter ended December 31, 2022

Performance-Based Restricted Stock Unit Award Agreement (Three-Year Vesting subject to Total Shareholder Return/ROIC tests) for Robert A.

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Form of Performance-Based Restricted Stock Unit Award Agreement (Three-Year Vesting subject to Total Shareholder Return/ROIC Tests) † Exhibit 10.1 to the Form 10-Q of the Company for the quarter ended December 28, 2019

10.57 Form of Performance-Based Restricted Stock Unit Award Agreement (Three-Year Vesting subject to Total Shareholder Return/ROIC Tests) † Filed herewith

10.58 Form of Stock Option Awards Agreement † Filed herewith

10.59 Form of Stock Option Awards Agreement † Filed herewith

10.60 Form of Stock Option Awards Agreement † Filed herewith

10.61 Form of Stock Option Awards Agreement † Filed herewith

10.62 Form of Stock Option Awards Agreement † Filed herewith

Form of Performance-Based Restricted Stock Unit Award Agreement (Three-Year Vesting subject to Total Shareholder Return/ROIC Tests) † Exhibit 10.

57 to the Form 10-K of the Company for the fiscal year ended October 1, 2022

Form of Performance-Based Restricted Stock Unit Award Agreement (Three-Year/Two-Year Vesting subject to Total Shareholder Return/ROIC Tests) †

4 to the Form 10-Q of the Company for the quarter ended December 31, 2022

Form of Stock Option Awards Agreement † Exhibit 10.

58 to the Form 10-K of the Company for the fiscal year ended October 1, 2022

Form of Stock Option Awards Agreement † Exhibit 10.

59 to the Form 10-K of the Company for the fiscal year ended October 1, 2022

Form of Stock Option Awards Agreement † Exhibit 10.

60 to the Form 10-K of the Company for the fiscal year ended October 1, 2022

Form of Stock Option Awards Agreement † Exhibit 10.

61 to the Form 10-K of the Company for the fiscal year ended October 1, 2022

Form of Stock Option Awards Agreement † Exhibit 10.

62 to the Form 10-K of the Company for the fiscal year ended October 1, 2022

Twenty-First Century Fox, Inc.

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Five-Year Credit Agreement dated as of March 4, 2022 Exhibit 10.2 to the Current Report on Form 8-K of the Company filed March 9, 2022

10.67 364-Day Credit Agreement dated as of March 4, 2022 Exhibit 10.1 to the Current Report on Form 8-K of the Company filed March 9, 2022

364-Day Credit Agreement dated as of March 3, 2023

Exhibit 10.1 to the Current Report on Form 8-K of the Company filed March 7, 2023

Support Agreement, dated as of September 30, 2022, by and among Third Point LLC and certain of its affiliates and The Walt Disney Company Exhibit 10.1 to the Current Report on Form 8-K of the Company filed September 30, 2022

Exhibit Location

21 Subsidiaries of the Company Filed herewith

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31(a) Rule 13a-14(a) Certification of Chief Executive Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith

Exhibit Location

31(b) Rule 13a-14(a) Certification of Chief Financial Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith

31(b) Rule 13a-14(a) Certification of Interim Chief Financial Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

32(a) Section 1350 Certification of Chief Executive Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002** Furnished herewith

32(b) Section 1350 Certification of Chief Financial Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002** Furnished herewith

101 The following materials from the Company’s Annual Report on Form 10-K for the year ended October 1, 2022 formatted in Inline Extensible Business Reporting Language (iXBRL):

(i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Equity and (vi) related notes Filed herewith

32(b) Section 1350 Certification of Interim Chief Financial Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002**

Furnished herewith

The Walt Disney Company Clawback Policy

Filed herewith

101 The following materials from the Company’s Annual Report on Form 10-K for the year ended September 30, 2023 formatted in Inline Extensible Business Reporting Language (iXBRL):

(i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Equity and (vi) related notes

Filed herewith

104 Cover Page Interactive Data File (embedded within the Inline XBRL document) Filed herewith

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Principal Financial and Accounting Officers

/s/ CHRISTINE M.

MCCARTHY Senior Executive Vice President

and Chief Financial Officer November 29, 2022

(Christine M.

Interim Chief Financial Officer

(Principal Financial Officer)

November 21, 2023

WOODFORD Executive Vice President-Controllership, Financial Planning and Tax November 21, 2023

ARNOLD Chairman of the Board and Director November 29, 2022

BARRA Director November 21, 2023

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MCDONALD Director November 21, 2023

PARKER Director November 29, 2022

PARKER Chairman of the Board and Director November 21, 2023

/s/ DERICA W.

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Consolidated Financial Statements of The Walt Disney Company and Subsidiaries

Consolidated Statements of Operations for the Years Ended October 1, 2022, October 2, 2021 and October 3, 2020 67

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended October 1, 2022, October 2, 2021 and October 3, 2020 68

Consolidated Balance Sheets as of October 1, 2022 and October 2, 2021 69

Consolidated Statements of Cash Flows for the Years Ended October 1, 2022, October 2, 2021 and October 3, 2020 70

Consolidated Statements of Shareholders’ Equity for the Years Ended October 1, 2022, October 2, 2021 and October 3, 2020 71

Consolidated Statements of Income for the Years Ended September 30, 2023, October 1, 2022 and October 2, 2021 81

Consolidated Statements of Comprehensive Income for the Years Ended September 30, 2023, October 1, 2022 and October 2, 2021 82

Consolidated Balance Sheets as of September 30, 2023 and October 1, 2022 83

Consolidated Statements of Cash Flows for the Years Ended September 30, 2023, October 1, 2022 and October 2, 2021 84

Consolidated Statements of Shareholders’ Equity for the Years Ended September 30, 2023, October 1, 2022 and October 2, 2021 85

Notes to Consolidated Financial Statements

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Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

Based on our evaluation under the framework in Internal Control - Integrated Framework, management concluded that our internal control over financial reporting was effective as of October 1, 2022.

The effectiveness of our internal control over financial reporting as of October 1, 2022 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is included herein.

Based on our evaluation under the framework in Internal Control - Integrated Framework, management concluded that our internal control over financial reporting was effective as of September 30, 2023.

The effectiveness of our internal control over financial reporting as of September 30, 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is included herein.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of The Walt Disney Company and its subsidiaries (the “Company”) as of October 1, 2022 and October 2, 2021, and the related consolidated statements of operations, of comprehensive income (loss), of shareholders’ equity and of cash flows for each of the three years in the period ended October 1, 2022, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of October 1, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of October 1, 2022 and October 2, 2021, and the results of its operations and its cash flows for each of the three years in the period ended October 1, 2022 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 1, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As disclosed in the consolidated statements of shareholders’ equity, the Company changed the manner in which it accounts for leases in fiscal year 2020.

We have audited the accompanying consolidated balance sheets of The Walt Disney Company and its subsidiaries (the “Company”) as of September 30, 2023 and October 1, 2022, and the related consolidated statements of income, of comprehensive income, of shareholders’ equity and of cash flows for each of the three years in the period ended September 30, 2023, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2023 and October 1, 2022, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2023 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

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Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Amortization of Production Costs

As described in Note 2 and 7 to the consolidated financial statements and disclosed by management, capitalized film and television production costs are amortized based on whether the content is predominantly monetized individually or as a group.

Production costs for content that is predominantly monetized individually is amortized based upon the ratio of the current period’s revenues to the estimated remaining total revenues (Ultimate Revenues).

For film productions, Ultimate Revenues include revenues from all sources, which may include imputed license fees for content that is used by the Company’s DTC streaming services, that will be earned within ten years from the date of the initial release for theatrical films.

For episodic television series, Ultimate Revenues include revenues that will be earned within ten years, including imputed license fees for content that is used on the Company’s DTC streaming services, from delivery of the first episode, or if still in production, five years from delivery of the most recent episode, if later.

Production costs that are predominantly monetized as a group are amortized based on projected usage (which may be, for example, derived from historical viewership patterns), typically resulting in an accelerated or straight-line amortization pattern.

For the year ended October 1, 2022, the Company recognized $10,224 million of amortization of produced content costs, which is primarily included in “Cost of services” in the consolidated statements of operations.

The principal considerations for our determination that performing procedures relating to amortization of production costs is a critical audit matter are the significant auditor effort in performing procedures and evaluating audit evidence used in the amortization calculation for production costs monetized individually and as a group, and management’s estimates of Ultimate Revenues and projected usage.

Annual Goodwill Impairment Assessment – Entertainment Linear Networks and Direct-to-Consumer (DTC) Services Reporting Units

As described in Notes 2 and 18 to the consolidated financial statements, the Company’s consolidated goodwill balance was $77.1 billion as of September 30, 2023, of which a significant portion relates to the entertainment linear networks and DTC services reporting units.

Management performs the annual test of goodwill for impairment in the fiscal fourth quarter, and if current events or circumstances require, on an interim basis.

Management bypassed the qualitative test and performed a quantitative assessment of goodwill for impairment.

The quantitative assessment compares the fair value of each goodwill reporting unit to its carrying amount, and to the extent the carrying amount exceeds the fair value, an impairment of goodwill is recognized for the excess up to the amount of goodwill allocated to the reporting unit.

To determine the fair value of the Company’s reporting units, management generally uses a present value technique (discounted cash flows) corroborated by market multiples when available and as appropriate.

Significant judgments and assumptions in the discounted cash flow model relate to future revenues and certain operating expenses, terminal growth rates, and discount rates.

Based on management’s projections, the carrying amounts of the entertainment and international sports linear networks reporting units exceeded their fair values, and management recorded non-cash goodwill impairment charges of approximately $0.7 billion, of which a significant portion relates to the entertainment linear networks reporting unit.

The principal considerations for our determination that performing procedures relating to the annual goodwill impairment assessment of the entertainment linear networks and DTC services reporting units is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the entertainment linear networks and DTC services reporting units;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to future revenues and certain operating expenses, terminal growth rates, and discount rates;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to amortization of production costs, including controls over the estimation of Ultimate Revenues and projected usage.

These procedures also included, among others, (i) testing management’s process for determining the amortization of production costs, (ii) evaluating whether ultimate revenues for certain content titles were reasonable considering information such as past performance of comparable titles, future firm commitments to license programs, and current market trends, (iii) evaluating the accelerated amortization pattern for content predominately monetized as a group, and (iv) testing the completeness and accuracy of the underlying data used in the amortization calculation for certain titles and for historical viewership data used to calculate the estimate of projected usage for certain groups.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Company’s entertainment linear networks and DTC services reporting units.

These procedures also included, among others, for the entertainment linear networks and DTC services reporting units (i) testing management’s process for developing the fair value estimates;

(ii) testing the completeness and accuracy of underlying data used in the discounted cash flow models;

and (iii) evaluating the reasonableness of the significant assumptions used by management related to future revenues and certain operating expenses, terminal growth rates, and discount rates.

Evaluating management’s assumptions related to future revenues and certain operating expenses, and terminal growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the entertainment linear networks and DTC services reporting units;

(ii) the consistency with external market and industry data;

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of the discount rate assumptions.

/s/ PricewaterhouseCoopers LLP

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We have served as the Company’s auditor since 1938.

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share data)

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Equity in the income of investees 782 816 761

Income (loss) from continuing operations before income taxes 5,285 2,561 ( 1,743 )

Income from continuing operations before income taxes

4,769 5,285 2,561

Income taxes on continuing operations ( 1,379 ) ( 1,732 ) ( 25 )

Net income (loss) from continuing operations 3,553 2,536 ( 2,442 )

Net income from continuing operations

3,390 3,553 2,536

Loss from discontinued operations, net of income tax benefit of $0, $14 and $9, respectively

Net income (loss) 3,505 2,507 ( 2,474 )

— ( 48 ) ( 29 )

3,390 3,505 2,507

Net income from continuing operations attributable to noncontrolling and redeemable noncontrolling interests ( 1,036 ) ( 360 ) ( 512 )

Net income (loss) attributable to The Walt Disney Company (Disney) $ 3,145 $ 1,995 $ ( 2,864 )

Net income attributable to The Walt Disney Company (Disney)

$ 2,354 $ 3,145 $ 1,995

Earnings (loss) per share attributable to Disney (1) :

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See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

2023 2022 2021

Net income (loss) $ 3,505 $ 2,507 $ ( 2,474 )

$ 3,390 $ 3,505 $ 2,507

Other comprehensive income (loss), net of tax:

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Foreign currency translation and other 10 ( 1,060 ) 77

Other comprehensive income (loss) 2,178 1,968 ( 1,612 )

Comprehensive income (loss) 5,683 4,475 ( 4,086 )

Other comprehensive income

794 2,178 1,968

Comprehensive income

4,184 5,683 4,475

Net income from continuing operations attributable to noncontrolling interests

2 unchanged sentences

33 143 ( 86 )

Comprehensive income (loss) attributable to Disney $ 5,466 $ 3,877 $ ( 4,569 )

Comprehensive income attributable to Disney

$ 3,181 $ 5,466 $ 3,877

See Notes to Consolidated Financial Statements

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(in millions, except share data)

September 30,

2023 October 1,

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OPERATING ACTIVITIES

Net income (loss) from continuing operations $ 3,553 $ 2,536 $ ( 2,442 )

Net income from continuing operations

$ 3,390 $ 3,553 $ 2,536

Depreciation and amortization 5,369 5,163 5,111

Goodwill and intangible asset impairments — — 4,953

Impairments of produced and licensed content costs and goodwill

Net (gain)/loss on investments

( 166 ) 714 ( 332 )

Deferred income taxes ( 1,346 ) 200 ( 1,241 )

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Investments in parks, resorts and other property ( 4,969 ) ( 4,943 ) ( 3,578 )

Proceeds from sales of investments

Other, net ( 130 ) ( 117 ) 70

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Reduction of borrowings ( 1,675 ) ( 4,016 ) ( 3,737 )

Dividends — — ( 1,587 )

Proceeds from exercise of stock options 52 127 435

Contributions from / sales of noncontrolling interests 735 74 91

Acquisition of redeemable noncontrolling interests ( 900 ) — ( 350 )

Other, net ( 828 ) ( 913 ) ( 862 )

Cash provided by (used in) financing activities - continuing operations ( 4,729 ) ( 4,385 ) 8,480

Cash used in financing activities - continuing operations

( 2,724 ) ( 4,729 ) ( 4,385 )

CASH FLOWS FROM DISCONTINUED OPERATIONS

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Interests (1)

Balance at September 28, 2019 1,802 $ 53,907 $ 42,494 $ ( 6,617 ) $ ( 907 ) $ 88,877 $ 5,012 $ 93,889

Comprehensive income (loss) — — ( 2,864 ) ( 1,705 ) — ( 4,569 ) 198 ( 4,371 )

Equity compensation activity 8 590 — — — 590 — 590

Dividends — 9 ( 1,596 ) — — ( 1,587 ) — ( 1,587 )

Contributions — — — — — — 94 94

Adoption of new lease accounting guidance — — 197 — — 197 — 197

Distributions and other — ( 9 ) 84 — — 75 ( 624 ) ( 549 )

Balance at October 3, 2020 1,810 $ 54,497 $ 38,315 $ ( 8,322 ) $ ( 907 ) $ 83,583 $ 4,680 $ 88,263

Comprehensive income

— — 1,995 1,882 — 3,877 284 4,161

Equity compensation activity 8 904 — — — 904 — 904

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Comprehensive income (loss)

— — 3,145 2,321 — 5,466 ( 68 ) 5,398

Equity compensation activity 6 925 — — — 925 — 925

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Balance at October 1, 2022 1,824 $ 56,398 $ 43,636 $ ( 4,119 ) $ ( 907 ) $ 95,008 $ 3,871 $ 98,879

Comprehensive income

— — 2,354 827 — 3,181 549 3,730

Equity compensation activity 6 1,056 — — — 1,056 — 1,056

Contributions — — — — — — 806 806

Distributions and other — ( 71 ) 103 — — 32 ( 546 ) ( 514 )

Balance at September 30, 2023 1,830 $ 57,383 $ 46,093 $ ( 3,292 ) $ ( 907 ) $ 99,277 $ 4,680 $ 103,957

(1) Excludes redeemable noncontrolling interest.

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1 Description of the Business and Segment Information

The Walt Disney Company, together with the subsidiaries through which businesses are conducted (the Company), is a diversified worldwide entertainment company with operations in the Disney Media and Entertainment Distribution (DMED) and Disney Parks, Experiences and Products (DPEP) segments.

The Walt Disney Company, together with the subsidiaries through which businesses are conducted (the Company), is a diversified worldwide entertainment company with operations in three segments:

Entertainment, Sports and Experiences.

The terms “Company”, “we”, “our” and “us” are used in this report to refer collectively to the parent company and the subsidiaries through which businesses are conducted.

Impact of COVID-19

Since early 2020, the world has been, and continues to be, impacted by the novel coronavirus (COVID-19) and its variants.

COVID-19 and measures to prevent its spread have impacted our segments in a number of ways, most significantly at DPEP where our theme parks and resorts were closed and cruise ship sailings and guided tours were suspended.

In addition, at DMED we delayed, or in some cases, shortened or cancelled theatrical releases and experienced disruptions in the production and availability of content.

Operations have resumed at various points since May 2020, with certain theme park and resort operations and film and television productions resuming by the end of fiscal 2020 and throughout fiscal 2021.

Although operations resumed, many of our businesses continue to experience impacts from COVID-19, such as incremental health and safety measures and related increased expenses, capacity restrictions and closures (including at some of our international parks and in theaters in certain markets), and disruption of content production activities.

The impact of COVID-19 related disruptions on our financial and operating results will be dictated by the currently unknowable duration and severity of COVID-19 and its variants, and among other things, governmental actions imposed in response to COVID-19 and individuals’ and companies’ risk tolerance regarding health matters going forward.

We have incurred and will continue to incur additional costs to address government regulations and the safety of our employees, guests and talent.

In fiscal 2020, the Company recorded goodwill and intangible asset impairments totaling $ 5.0 billion, in part due to the negative impact COVID-19 has had on the International Channels business (see Note 18).

Segment Restructuring

In fiscal 2023, the Company reorganized into three business segments:

Entertainment, Sports and Experiences (renamed from Disney Parks, Experiences and Products).

Fiscal 2022 and 2021 segment financial information has been recast for the following:

• The prior Disney Media and Entertainment Distribution (DMED) segment has been reorganized into the Entertainment and Sports segments

• A portion of Consumer Products (a business within the Experiences segment) revenues is recognized at the Entertainment segment, which is meant to reflect royalties on merchandise licensing revenues generated on IP created by the Entertainment segment

DESCRIPTION OF THE BUSINESS

Disney Media and Entertainment Distribution

DMED encompasses the Company’s global film and episodic television content production and distribution

Content is distributed by a single organization across three significant lines of business:

Linear Networks, Direct-to-Consumer and Content Sales/Licensing.

Content is generally created/licensed by four groups:

Studios, General Entertainment, Sports and International.

The distribution organization has full accountability for the financial results of the entire media and entertainment business.

The operations of DMED’s significant lines of business are as follows:

Entertainment

The Entertainment segment generally encompasses the Company’s non-sports focused global film, television and direct-to-consumer (DTC) video streaming content production and distribution activities.

The significant lines of business within Entertainment are as follows:

• Linear Networks

◦ Domestic Channels:

ABC Television Network and eight owned ABC television stations (Broadcasting), and Disney, ESPN ( 80 % interest), Freeform, FX and National Geographic ( 73 % interest) branded domestic television networks (Cable)

◦ International Channels:

Disney, ESPN, Fox, National Geographic and Star branded television networks outside the U.S.

◦ A 50 % equity investment in A+E Television Networks (A+E), which operates a variety of cable channels including A&E, HISTORY and Lifetime

ABC Television Network;

Disney, Freeform, FX and National Geographic (owned 73 % by the Company) branded television channels;

and eight owned ABC television stations

◦ International:

Disney, Fox (which will be rebranded in fiscal 2024 primarily to FX or Star), FX, National Geographic (owned 73 % by the Company) and Star branded general entertainment television networks outside of the U.S.

◦ A 50 % equity investment in A+E Television Networks (A+E), which operates cable channels including A&E, HISTORY and Lifetime

• Direct-to-Consumer

◦ Disney+, Disney+ Hotstar, ESPN+ ( 68 % effective interest), Hulu and Star+ direct-to-consumer (DTC) video streaming services

a global DTC service that primarily offers general entertainment and family programming.

In certain Latin American countries, we offer Disney+ as well as Star+, a general entertainment service that also has sports programming

◦ Disney+ Hotstar:

a DTC service primarily in India that offers general entertainment, family and sports programming

◦ Hulu (owned 67 % by the Company):

DTC service that offers general entertainment and family programming and a digital over-the-top service that includes live linear streams of cable networks and the major broadcast networks

• Content Sales/Licensing

◦ Sale/licensing of film and television content to third-party television and subscription/advertising video-on-demand (TV/SVOD) services

◦ Sale/licensing of film and episodic content to third-party television and video-on-demand (TV/VOD) services

◦ Theatrical distribution

◦ Home entertainment distribution (DVD, Blu-ray discs and electronic home video licenses)

◦ Music distribution

◦ Home entertainment distribution:

DVD and Blu-ray discs, electronic home video licenses and video-on-demand (VOD) rentals

◦ Staging and licensing of live entertainment events on Broadway and around the world (Stage Plays)

DMED also includes the following activities that are reported with Content Sales/Licensing:

◦ Intersegment allocation of revenues from the Experiences segment, which is meant to reflect royalties on consumer products merchandise licensing revenues generated on intellectual property (“IP”) created by the Entertainment segment

◦ Music distribution

◦ Post-production services by Industrial Light & Magic and Skywalker Sound

• National Geographic magazine and online business

• A 30 % ownership interest in Tata Play Limited (formerly Tata Sky Limited), which operates a direct-to-home satellite distribution platform in India

The significant revenues of DMED are as follows:

• Affiliate fees - Fees charged by our Linear Networks to multi-channel video programming distributors (i.e.

Entertainment also includes the following activities that are reported with Content Sales/Licensing:

• National Geographic magazine and online business (owned 73 % by the Company)

• A 30 % ownership interest in Tata Play Limited, which operates a direct-to-home satellite distribution platform in India

The significant revenues of Entertainment are as follows:

• Affiliate fees - Fees charged to multi-channel video programming distributors (i.e.

cable, satellite, telecommunications and digital over-the-top (e.g.

YouTube TV) service providers) (MVPDs) and television stations affiliated with the ABC Network for the right to deliver our programming to their customers

YouTube TV) service providers) (MVPDs) for the right to deliver our programming to their customers.

Linear Networks also generates revenues from fees charged to television stations affiliated with ABC Network.

• Subscription fees - Fees charged to customers/subscribers for our DTC streaming services

• Advertising - Sales of advertising time/space on our Linear Networks and Direct-to-Consumer

• TV/SVOD distribution - Licensing fees and other revenue for the right to use our film and television productions and revenue from fees charged to customers to view our sports programming (“pay-per-view”) and fees for streaming access to films that are also playing in theaters (“Premier Access”).

TV/SVOD distribution revenue is primarily reported in Content Sales/Licensing, except for pay-per-view and Premier Access revenues, which are reported in Direct-to-Consumer.

• Theatrical distribution - Rentals from licensing our film productions to theaters

• Home entertainment - Sale of our film and television content to retailers and distributors in home video formats

• Other content sales/licensing revenue - Revenues from licensing our music, ticket sales from stage play performances and fees from licensing our intellectual properties (“IP”) for use in stage plays

• Other revenue - Fees from sub-licensing of sports programming rights (reported in Linear Networks) and sales of post-production services (reported with Content Sales/Licensing)

The significant expenses of DMED are as follows:

• Operating expenses consist primarily of programming and production costs, technical support costs, operating labor, distribution costs and costs of sales.

Programming and production costs include amortization of licensed programming rights (including sports rights), amortization of capitalized production costs, subscriber-based fees for programming our Hulu services, production costs related to live programming such as news and sports and amortization of participations and residual obligations.

Programming and production costs also include fees paid to Linear Networks from other DMED businesses for the right to air our linear networks and related services.

These costs are largely incurred across four content creation/licensing groups, as follows:

◦ Studios - Primarily capitalized production costs related to films produced under the Walt Disney Pictures, Twentieth Century Studios, Marvel, Lucasfilm, Pixar and Searchlight Pictures banners

◦ General Entertainment - Primarily internal production of and acquisition of rights to episodic television programs and news content.

Internal content is generally produced by the following television studios:

ABC Signature;

20th Television;

Disney Television Animation, FX Productions and various studios for which we commission productions for our branded channels and DTC streaming services.

◦ Sports - Primarily acquisition of professional and college sports programming rights and related production costs

◦ International - Primarily internal production of and acquisition of rights to local content outside the U.S.

• Advertising - Sales of advertising time/space

• TV/VOD distribution - Licensing fees for the right to use our film and episodic content

• Theatrical distribution - Rentals from licensing our films to theaters

• Home entertainment distribution - Sales and rentals of our film and episodic content to retailers and through distributors

• Other revenue - Revenues from licensing our music, ticket sales from stage play performances, fees from licensing our IP for use in stage plays, sales of post-production services and the allocation of consumer products merchandise licensing revenues

The significant expenses of Entertainment are as follows:

• Operating expenses, consisting primarily of programming and production costs, technology support costs, operating labor, distribution costs and costs of sales.

Programming and production costs include the following:

◦ Amortization of capitalized production costs

◦ Amortization of the costs of licensed programming rights

◦ Subscriber-based fees for programming our Hulu Live service, including fees paid by Hulu to the Sports segment and other Entertainment segment businesses for the right to air their linear networks on Hulu Live

◦ Production costs related to live programming (primarily news)

◦ Amortization of participations and residual obligations

◦ Fees paid to the Sports segment to program ESPN on ABC and certain sports content on Star+

• Selling, general and administrative costs, including marketing costs

• Depreciation and amortization

Disney Parks, Experiences and Products

The operations of DPEP’s significant lines of business are as follows:

The Sports segment generally encompasses the Company’s sports-focused global television and DTC video streaming content production and distribution activities.

The significant lines of business within Sports are as follows:

• ESPN (generally owned 80 % by the Company)

▪ Eight ESPN branded television channels

▪ ESPN on ABC (sports programmed on the ABC Network by ESPN)

▪ ESPN+ DTC video streaming service

◦ International:

ESPN-branded channels outside of the U.S.

Star-branded sports channels in India

The significant revenues of Sports are as follows:

• Affiliate fees

• Advertising

• Subscription fees

• Other revenue - Fees from the following activities:

pay-per-view events on ESPN+, sub-licensing of sports rights, programming ESPN on ABC and licensing the ESPN brand

The significant expenses of Sports are as follows:

• Operating expenses, consisting primarily of programming and production costs, technology support costs, operating labor and distribution costs.

Programming and production costs include amortization of licensed sports rights and production costs related to live sports and other sports-related programming.

• Selling, general and administrative costs, including marketing costs

• Depreciation and amortization

The significant lines of business within Experiences are as follows:

• Parks & Experiences:

◦ Theme parks and resorts, which include:

▪ Theme parks and resorts:

• Walt Disney World Resort in Florida

• Disneyland Resort in California

▪ Experiences

• Disney Cruise Line

• Disney Vacation Club

• National Geographic Expeditions (owned 73 % by the Company) and Adventures by Disney

• Aulani, a Disney Resort & Spa in Hawaii

◦ International:

▪ Theme parks and resorts:

• Disneyland Paris

Hong Kong Disneyland Resort ( 48 % ownership interest);

and Shanghai Disney Resort ( 43 % ownership interest), all of which are consolidated in our results.

Additionally, the Company licenses our IP to a third party to operate Tokyo Disney Resort

◦ Disney Cruise Line, Disney Vacation Club, National Geographic Expeditions ( 73 % ownership interest), Adventures by Disney and Aulani, a Disney Resort & Spa in Hawaii

• Hong Kong Disneyland Resort ( 48 % ownership interest and consolidated in our financial results)

• Shanghai Disney Resort ( 43 % ownership interest and consolidated in our financial results)

• In addition, the Company licenses its IP to a third party to operate Tokyo Disney Resort

• Consumer Products:

◦ Licensing of our trade names, characters, visual, literary and other IP to various manufacturers, game developers, publishers and retailers throughout the world, for use on merchandise, published materials and games

◦ Sale of branded merchandise through online, retail and wholesale businesses, and development and publishing of books, comic books and magazines (except National Geographic, which is reported in DMED)

The significant revenues of DPEP are as follows:

The significant revenues of Experiences are as follows:

• Theme park admissions - Sales of tickets for admission to our theme parks and for premium access to certain attractions (e.g.

Genie+ and Lightning Lane)

• Parks & Experiences merchandise, food and beverage - Sales of merchandise, food and beverages at our theme parks and resorts and cruise ships

• Resorts and vacations - Sales of room nights at hotels, sales of cruise and other vacations and sales and rentals of vacation club properties

• Parks & Experiences merchandise, food and beverage - Sales of merchandise, food and beverages at our theme parks and resorts and cruise ships

• Merchandise licensing and retail:

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• Parks licensing and other - Revenues from sponsorships and co-branding opportunities, real estate rent and sales and royalties earned on Tokyo Disney Resort revenues

The significant expenses of DPEP are as follows:

• Operating expenses consist primarily of operating labor, costs of goods sold, infrastructure costs, supplies, commissions and entertainment offerings.

The significant expenses of Experiences are as follows:

• Operating expenses, consisting primarily of operating labor, costs of goods sold, infrastructure costs, supplies, commissions and entertainment offerings.

Infrastructure costs include technology support costs, repairs and maintenance, property taxes, utilities and fuel, retail occupancy costs, insurance and transportation

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Segment operating results reflect earnings before corporate and unallocated shared expenses, restructuring and impairment charges, net other income, net interest expense, income taxes and noncontrolling interests.

Segment operating income includes equity in the income of investees and excludes impairments of certain equity investments and acquisition accounting amortization of TFCF Corporation (TFCF) and Hulu assets (i.e.

intangible assets and the fair value step-up for film and television costs) recognized in connection with the TFCF acquisition in fiscal 2019 (TFCF and Hulu acquisition amortization).

Segment operating income generally includes equity in the income of investees and excludes impairments of certain equity investments and acquisition accounting amortization of TFCF Corporation (TFCF) and Hulu assets (i.e.

intangible assets and the fair value step-up for film and episodic costs) recognized in connection with the TFCF acquisition in fiscal 2019 (TFCF and Hulu acquisition amortization).

Corporate and unallocated shared expenses principally consist of corporate functions, executive management and certain unallocated administrative support functions.

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2023 2022 2021

Disney Media and Entertainment Distribution $ 55,040 $ 50,866 $ 48,350

Disney Parks, Experiences and Products 28,705 16,552 17,038

Entertainment

Third parties

$ 40,258 $ 39,231 $ 36,155

40,635 39,569 36,489

Third parties

16,091 16,429 15,302

1,020 841 658

17,111 17,270 15,960

32,549 28,085 15,961

( 1,397 ) ( 1,179 ) ( 992 )

Total segment revenues $ 88,898 $ 83,745 $ 67,418

Segment operating income

Disney Media and Entertainment Distribution $ 4,216 $ 7,295 $ 7,653

Disney Parks, Experiences and Products 7,905 471 455

Segment operating income (loss)

Entertainment

$ 1,444 $ 2,126 $ 5,196

2,465 2,710 2,690

8,954 7,285 ( 120 )

Total segment operating income (1)

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2023 2022 2021

Disney Media and Entertainment Distribution $ 838 $ 795 $ 696

Disney Parks, Experiences and Products ( 10 ) ( 19 ) ( 19 )

Entertainment

$ 685 $ 783 $ 744

( 2 ) ( 10 ) ( 19 )

Equity in the income of investees included in segment operating income 738 828 776

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Equity in the income of investees $ 782 $ 816 $ 761

(1) Restructuring and impairment charges include the impact of a content license agreement termination with A+E, which generated a gain at A+E.

The Company’s 50 % interest of this gain was $ 56 million (A+E gain).

A reconciliation of segment revenues to total revenues is as follows:

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Total revenues $ 88,898 $ 82,722 $ 67,418

(1) In fiscal 2022, the Company recognized a reduction in revenue for amounts to early terminate certain license agreements with a customer for film and television content, which was delivered in previous years, in order for the Company to use the content primarily on our direct-to-consumer services (Content License Early Termination).

Because the content is functional IP, we recognized substantially all of the consideration to be paid by the customer under the licenses as revenue in prior years when the content was made available under the agreements.

Consequently, we have recorded the amounts to terminate the license agreements, net of remaining amounts of deferred revenue, as a reduction of revenue in the current year.

(1) In fiscal 2022, the Company early terminated certain license agreements with a customer for film and episodic content, which was delivered in previous years, in order for the Company to use the content primarily on our Entertainment Direct-to-Consumer services (Content License Early Termination).

Because the content is functional IP, we had recognized substantially all of the consideration to be paid by the customer under the licenses as revenue in prior years when the content was delivered.

Consequently, we have recorded the amounts to terminate the license agreements, net of remaining amounts of deferred revenue, as a reduction of revenue.

A reconciliation of segment operating income to income from continuing operations before income taxes is as follows:

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Restructuring and impairment charges (1)

Other income, net ( 667 ) 201 1,038

( 3,836 ) ( 237 ) ( 654 )

Other income (expense), net

96 ( 667 ) 201

Interest expense, net ( 1,209 ) ( 1,397 ) ( 1,406 )

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( 1,998 ) ( 2,353 ) ( 2,418 )

Income (loss) from continuing operations before income taxes $ 5,285 $ 2,561 $ ( 1,743 )

(1) For fiscal 2022, amortization of intangible assets, fair value step-up on film and television costs and intangibles related to TFCF equity investees were $ 1,707 million, $ 634 million and $ 12 million, respectively.

For fiscal 2021, amortization of intangible assets, fair value step-up on film and television costs and intangibles related to TFCF equity investees were $ 1,757 million, $ 646 million and $ 15 million, respectively.

For fiscal 2020, amortization of intangible assets, fair value step-up on film and television costs and intangibles related to TFCF equity investees were $ 1,921 million, $ 899 million and $ 26 million, respectively.

Income from continuing operations before income taxes

$ 4,769 $ 5,285 $ 2,561

(1) Net of the A+E Gain.

(2) TFCF and Hulu acquisition amortization is as follows:

2023 2022 2021

Amortization of intangible assets

$ 1,547 $ 1,707 $ 1,757

Step-up of film and episodic costs

Intangibles related to TFCF equity investees

$ 1,998 $ 2,353 $ 2,418

Capital expenditures, depreciation expense and amortization expense are as follows:

Capital expenditures 2023 2022 2021

Disney Media and Entertainment Distribution $ 810 $ 862 $ 783

Disney Parks, Experiences and Products

Entertainment

$ 1,032 $ 802 $ 838

Domestic 2,203 2,680 1,597

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Depreciation expense

Disney Media and Entertainment Distribution $ 650 $ 613 $ 638

Disney Parks, Experiences and Products

Entertainment

$ 669 $ 560 $ 513

Domestic 2,011 1,680 1,551

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Amortization of intangible assets

Disney Media and Entertainment Distribution $ 164 $ 178 $ 175

Disney Parks, Experiences and Products 109 108 109

Entertainment

$ 87 $ 164 $ 174

Amounts included in segment operating income 196 273 286

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Identifiable assets, including equity method investments (1) and intangible assets, (2) are as follows:

October 1, 2022 October 2, 2021

Disney Media and Entertainment Distribution $ 148,129 $ 144,675

Disney Parks, Experiences and Products 43,027 41,763

September 30, 2023 October 1, 2022

Entertainment

$ 113,307 $ 117,184

25,402 24,988

42,808 41,969

Corporate (primarily fixed asset and cash and cash equivalents) 24,062 19,490

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(1) Equity method investments included in identifiable assets by segment are as follows:

October 1, 2022 October 2, 2021

Disney Media and Entertainment Distribution $ 2,633 $ 2,578

Disney Parks, Experiences and Products 2 2

September 30, 2023 October 1, 2022

Entertainment

$ 2,433 $ 2,449

Corporate 42 43

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(2) Intangible assets, which include character/franchise intangibles, copyrights, trademarks, MVPD agreements and FCC licenses (see Note 13), included in identifiable assets by segment are as follows:

October 1, 2022 October 2, 2021

Disney Media and Entertainment Distribution $ 11,981 $ 14,143

Disney Parks, Experiences and Products 2,836 2,952

September 30, 2023 October 1, 2022

Entertainment

$ 8,556 $ 9,829

Corporate 20 20

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Content License Early Termination ( 1,023 )

Segment operating income (loss)

Segment operating income

Americas $ 10,779 $ 11,099 $ 6,314

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Long-lived assets (1) by geographical markets are as follows:

October 1, 2022 October 2, 2021

September 30, 2023 October 1, 2022

Americas $ 148,567 $ 150,786

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The changes in the carrying amount of goodwill are as follows:

DMED DPEP Total

DMED Experiences

Entertainment

Balance at Oct.

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1, 2022 72,347 5,550 — — 77,897

Segment recast (1)

( 72,347 ) — 55,488 16,859 —

Goodwill impairment (2)

— — ( 425 ) ( 296 ) ( 721 )

Currency translation adjustments and other, net — — ( 32 ) ( 77 ) ( 109 )

Balance at Oct.

Balance at Sep.

30, 2023 $ — $ 5,550 $ 55,031 $ 16,486 $ 77,067

(1) Reflects the reallocation of goodwill as a result of the Company recasting its segments from the strategic reorganization during fiscal 2023.

(2) Reflects goodwill impairments at entertainment and international sports linear networks (See Note 18).

2 Summary of Significant Accounting Policies

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Fiscal 2023, 2022 and 2021 were fifty-two week years.

Fiscal 2020 was a fifty-three week year, which began on September 29, 2019 and ended on October 3, 2020.

Reclassifications

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Revenues and Costs from Services and Products

The Company generates revenue from the sale of both services and tangible products and revenues and operating costs are classified under these two categories in the Consolidated Statements of Operations.

The Company generates revenue from the sale of both services and tangible products and revenues and operating costs are classified under these two categories in the Consolidated Statements of Income.

Certain costs related to both the sale of services and tangible products are not specifically allocated between the service or tangible product revenue streams but are instead attributed to the principal revenue stream.

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For licenses with minimum guaranteed license fees, the excess of the minimum guaranteed amount over actual royalties earned (“shortfall”) is recognized straight-line over the remaining license period once an expected shortfall is probable.

• TV/SVOD distribution fixed license fees are recognized as revenue when the content is available for use by the licensee.

License fees based on the underlying sales of the licensee are recognized as revenue as earned based on the contractual royalty rate applied to the licensee sales.

For TV/SVOD licenses that include multiple titles with a fixed license fee across all titles, each title is considered a separate performance obligation.

• TV/VOD distribution fixed license fees are recognized as revenue when the content is available for use by the licensee.

License fees based on the underlying sales of the licensee are recognized as revenue based on the contractual royalty rate applied to the licensee sales.

For TV/VOD licenses that include multiple titles with a fixed license fee across all titles, each title is considered a separate performance obligation.

The fixed license fee is allocated to each title at contract inception and the allocated license fee is recognized as revenue when the title is available for use by the licensee.

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Once the minimum guaranteed license fee is exceeded, revenue is recognized as earned based on the licensee’s underlying sales.

TV/SVOD distribution contracts may limit the licensee’s use of a title to certain defined periods of time during the contract term.

TV/VOD distribution contracts may limit the licensee’s use of a title to certain defined periods of time during the contract term.

In these instances, each period of availability is generally considered a separate performance obligation.

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Advertising expense for fiscal 2023, 2022 and 2021 was $ 6.4 billion, $ 7.2 billion and $ 5.5 billion, respectively.

The decrease in advertising expense for fiscal 2023 compared to fiscal 2022 was due to lower spend for our DTC streaming services.

The increase in advertising expense for fiscal 2022 compared to fiscal 2021 was due to higher spend for our DTC streaming services and an increase in theatrical marketing costs.

The increase in advertising expense for fiscal 2021 compared to fiscal 2020 was due to higher spend for our DTC streaming services.

Cash and Cash Equivalents

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Cash and cash equivalents subject to contractual restrictions and not readily available are classified as restricted cash.

The Company’s restricted cash balances are primarily made up of cash posted as collateral for certain derivative instruments.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Consolidated Balance Sheet to the total of the amounts in the Consolidated Statements of Cash Flows.

October 1, 2022 October 2, 2021 October 3, 2020

September 30, 2023 October 1, 2022 October 2, 2021

Cash and cash equivalents $ 14,182 $ 11,615 $ 15,959

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Generally, the U.S.

dollar is the functional currency for our international film and television distribution and licensing businesses and the branded International Channels and DTC streaming services.

dollar is the functional currency for our international film and episodic content distribution and licensing businesses and the branded international channels and DTC streaming services.

Generally, the local currency is the functional currency for the Asia Theme Parks, Disneyland Paris, the Star branded channels in India, international sports channels and international locations of The Disney Store.

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For purposes of amortization and impairment, the capitalized content costs are classified based on their predominant monetization strategy as follows:

• Individual - lifetime value is predominantly derived from third-party revenues that are directly attributable to the specific film or television title (e.g.

• Individual - lifetime value is predominantly derived from third-party revenues that are directly attributable to the specific title (e.g.

theatrical revenues or sales to third-party television programmers)

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We generally classify content initially intended for theatrical release or for sale to third-party licensees as individual assets.

The predominant monetization strategy for content released prior to the beginning of fiscal 2020 (the date the Company adopted accounting guidance that was applied prospectively) was determined based on the expected means of monetization over the remaining life of the content.

Thus for example, film titles that were released theatrically and in home entertainment prior to fiscal year 2020 and are now distributed on Disney+ are generally considered group content.

The classification of content as individual or group only changes if there is a significant change to the title’s monetization strategy relative to its initial assessment (e.g.

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For film productions, Ultimate Revenues include revenues from all sources, which may include imputed license fees for content that is used on our DTC streaming services, that will be earned within ten years from the date of the initial release for theatrical films.

For episodic television series that are classified as individual, Ultimate Revenues include revenues that will be earned within ten years, including imputed license fees for content that is used on our DTC streaming services, from delivery of the first episode, or if still in production, five years from delivery of the most recent episode, if later.

For episodic series that are classified as individual, Ultimate Revenues include revenues that will be earned within ten years, including imputed license fees for content that is used on our DTC streaming services, from delivery of the first episode, or if still in production, five years from delivery of the most recent episode, if later.

Participations and residuals are expensed over the applicable product life cycle based upon the ratio of the current period’s revenues to the estimated remaining total revenues for each production.

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Participations and residuals are generally expensed in line with the pattern of usage.

Licensed rights to film and television content and other programs for broadcast on our Linear Networks or DTC streaming services are expensed on an accelerated or straight-line basis over their useful life or over the number of times the program is expected to be aired, as appropriate.

Licensed rights to film and television content and other programs for broadcast on our Linear Networks, domestic ESPN television network, International Sports Channels or DTC streaming services are expensed on an accelerated or straight-line basis over their useful life or over the number of times the program is expected to be aired, as appropriate.

We amortize rights costs for multi-year sports programming arrangements during the applicable seasons based on the estimated relative value of each year in the arrangement.

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Acquired film and television libraries are generally amortized on a straight-line basis over 20 years from the date of acquisition.

Acquired film and television libraries include content that was initially released three years prior to its acquisition, except it excludes the prior seasons of episodic television programming still in production at the date of its acquisition.

Acquired film and television libraries include content that was initially released three years prior to its acquisition, except it excludes the prior seasons of episodic programming still in production at the date of its acquisition.

Amortization of capitalized costs for produced and acquired content begins in the month the content is first released, while amortization of capitalized costs for licensed content commences when the license period begins and the content is first aired or available for use on our DTC services.

Amortization of content assets is primarily included in “Cost of services” in the Consolidated Statements of Operations.

Amortization of content assets is primarily included in “Cost of services” in the Consolidated Statements of Income.

The costs of produced and licensed film and television content are subject to regular recoverability assessments.

For content that is predominantly monetized individually, the unamortized costs are compared to the estimated fair value.

The fair value is determined based on a discounted cash flow analysis of the cash flows directly attributable to the title.

To the extent the unamortized costs exceed the fair value, an impairment charge is recorded for the excess.

For content that is predominantly monetized as a group, the aggregate unamortized costs of the group are compared to the present value of the discounted cash flows using the lowest level for which identifiable cash flows are independent of other produced and licensed content.

If the unamortized costs exceed the present value of discounted cash flows, an impairment charge is recorded for the excess and allocated to individual titles based on the relative carrying value of each title in the group.

If there are no plans to continue to use an individual film or television program that is part of a group, the unamortized cost of the individual title is written-off immediately.

Licensed content is included as part of the group within which it is monetized for purposes of assessing recoverability.

Production costs for content that is predominantly monetized individually are tested for impairment at the individual title level by comparing that title’s unamortized costs to the estimated present value of discounted cash flows directly attributable to the title.

To the extent the title’s unamortized costs exceed the present value of discounted cash flows, an impairment charge is recorded for the excess.

Cost of content that is predominantly monetized as a group is tested for impairment by comparing the present value of the discounted cash flows of the group to the aggregate unamortized costs of the group.

The group is established by identifying the lowest level for which cash flows are independent of the cash flows of other produced and licensed content.

If the unamortized costs exceed the present value of discounted cash flows, an impairment charge is recorded

for the excess and allocated to individual titles based on the relative carrying value of each title in the group.

If there are no plans to continue to use an individual film or television program that is part of a group, the unamortized cost of the individual title is written down to its estimated fair value.

Licensed content is included as part of the group within which it is monetized for purposes of impairment testing.

Content Production Incentives

The Company receives tax incentives from U.S.

(state and local) and foreign government agencies to encourage the production of film, episodic and streaming content.

The incentives are largely received as tax credits, which are recognized as a reduction to produced and licensed content costs when there is reasonable assurance of collection (presented as “Produced and licensed content costs” in the Consolidated Balance Sheets), resulting in a reduction to programming and production costs (presented as “Costs of services” in the Consolidated Statements of Income) over the asset’s amortization period.

Internal-Use Software Costs

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Capitalization of software development costs occurs only after the preliminary-project stage is complete, management authorizes the project and it is probable that the project will be completed and the software will be used for the function intended.

As of October 1, 2022 and October 2, 2021, capitalized software costs, net of accumulated amortization, totaled $ 1.1 billion and $ 1.2 billion, respectively.

The capitalized costs are amortized on a straight-line basis over the estimated useful life of the software up to 7 years.

As of September 30, 2023 and October 1, 2022, capitalized software costs, net of accumulated amortization, totaled $ 1.2 billion and $ 1.1 billion, respectively.

The capitalized costs are amortized on a straight-line basis over the estimated useful life of the software, generally up to 5 years.

Parks, Resorts and Other Property

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In fiscal 2022, the Company bypassed the qualitative test and performed a quantitative assessment of goodwill for impairment.

In fiscal 2023, the Company bypassed the qualitative test and performed a quantitative assessment of goodwill for impairment (see Note 18).

The impairment test for goodwill requires judgment related to the identification of reporting units, the assignment of assets and liabilities to reporting units including goodwill and the determination of fair value of the reporting units.

To determine the fair value of our reporting units, we apply what we believe to be the most appropriate valuation methodology for each of our reporting units.

We generally use a present value technique (discounted cash flows) corroborated by market multiples when available and as appropriate.

The discounted cash flow analyses are sensitive to our estimates of future revenue growth and margins for these businesses as well as the discount rates used to calculate the present value of future cash flows.

In times of adverse economic conditions in the global economy, the Company’s long-term cash flow projections are subject to a greater degree of uncertainty than usual.

To determine the fair value of our reporting units, we generally use a present value technique (discounted cash flows) corroborated by market multiples when available and as appropriate.

The discounted cash flow analyses are sensitive to our estimated projected future cash flows as well as the discount rates used to calculate their present value.

Our future cash flows are based on internal forecasts for each reporting unit, which consider projected inflation and other economic indicators, as well as industry growth projections.

Discount rates for each reporting unit are determined based on the inherent risks of each reporting unit’s underlying operations.

We believe our estimates are consistent with how a marketplace participant would value our reporting units.

If we had established different reporting units or utilized different valuation methodologies or assumptions, the impairment test results could differ, and we could be required to record impairment charges.

To test its other indefinite-lived intangible assets for impairment, the Company first performs a qualitative assessment to determine if it is more likely than not that the carrying amount of each of its indefinite-lived intangible assets exceeds its fair

If we had established different reporting units or utilized different valuation methodologies or assumptions, the impairment test results could differ.

To test other indefinite-lived intangible assets for impairment, the Company first performs a qualitative assessment to determine if it is more likely than not that the carrying amount of each of its indefinite-lived intangible assets exceeds its fair value.

If it is, a quantitative assessment is required.

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The Company has determined that there are currently no legal, competitive, economic or other factors that materially limit the useful life of our FCC licenses and trademarks, which are our most significant indefinite-lived intangible assets.

Finite-lived intangible assets are generally amortized on a straight-line basis over periods up to 40 years.

Finite-lived intangible assets are generally amortized on a straight-line basis over periods of 5 to 40 years.

The costs to periodically renew our intangible assets are expensed as incurred.

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The Company recorded non-cash impairment charges of $ 3.0 billion, $ 0.2 billion and $ 0.3 billion in fiscal 2023, 2022 and 2021, respectively.

The fiscal 2022 charges primarily related to our businesses in Russia.

The charges are recorded in “Restructuring and impairment charges” in the Consolidated Statements of Income.

The fiscal 2023 charges primarily related to content impairments resulting from a strategic change in our approach to content curation ($ 2.2 billion) and goodwill ($ 0.7 billion) at our entertainment and international sports linear networks reporting units (see Note 18).

The fiscal 2022 charges primarily related to exiting our businesses in Russia.

The fiscal 2021 charges primarily related to the closure of an animation studio and a substantial number of our Disney-branded retail stores in North America and Europe.

The fiscal 2020 impairment charges primarily related to impairments of MVPD agreement intangibles assets ($ 1.9 billion) and goodwill ($ 3.1 billion) at the International Channels business.

See Note 18 to the Consolidated Financial Statements for additional discussion of these impairment charges.

The Company expects its aggregate annual amortization expense for finite-lived intangible assets for fiscal 2024 through 2028 to be as follows:

Risk Management Contracts

Financial Risk Management Contracts

In the normal course of business, the Company employs a variety of financial instruments (derivatives) including interest rate and cross-currency swap agreements and forward and option contracts to manage its exposure to fluctuations in interest rates, foreign currency exchange rates and commodity prices.

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The Company designates and assigns the derivatives as hedges of forecasted transactions, specific assets or specific liabilities.

When hedged assets or liabilities are sold or extinguished or the forecasted transactions being hedged occur or are no longer expected to occur, the Company recognizes the gain or loss on the designated derivatives.

When hedged assets or liabilities are sold or extinguished or the forecasted transactions being hedged impact earnings or are no longer expected to occur, the Company recognizes the gain or loss on the designated derivatives.

The Company’s hedge positions are measured at fair value on the balance sheet.

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The minimum threshold is defined as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position.

The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.

Redeemable Noncontrolling Interests

The Company consolidates the results of certain subsidiaries that are less than 100% owned and for which the noncontrolling interest shareholders have the rights to require the Company to purchase their interests in these subsidiaries.

The most significant of these are Hulu LLC (Hulu) and BAMTech LLC (BAMTech).

Hulu provides DTC streaming services and is owned 67 % by the Company and 33 % by NBC Universal (NBCU).

The tax benefit to be recognized is measured as the largest amount of benefit that is greater than zero percent likely of being realized upon ultimate settlement.

Redeemable Noncontrolling Interests and Contributions from Noncontrolling Interest Holders

The Company consolidates the results of Hulu LLC (Hulu), a DTC streaming service provider, which is owned 67 % by the Company and 33 % by NBC Universal (NBCU).

In May 2019, the Company entered into a put/call agreement with NBCU that provided the Company with full operational control of Hulu.

Under the agreement, beginning in January 2024, NBCU has the option to require the Company to purchase NBCU’s interest in Hulu and the Company has the option to require NBCU to sell its interest in Hulu to the Company, in either case at a redemption value based on NBCU’s equity ownership percentage of the greater of Hulu’s then equity fair value or a guaranteed floor value of $ 27.5 billion.

NBCU’s interest will generally not be allocated its portion of Hulu’s losses, if any, as the redeemable noncontrolling interest is required to be carried at a minimum value.

The minimum value is equal to the fair value as of the May 2019 agreement date accreted to the January 2024 estimated redemption value.

At October 1, 2022, NBCU’s interest in Hulu is recorded in the Company’s financial statements at $ 8.7 billion.

BAMTech provides streaming technology services and is owned 85 % by the Company and 15 % by Major League Baseball (MLB).

MLB has the right to sell its interest to the Company and the Company has the right to buy MLB’s interest starting five years from and ending ten years after the Company’s September 25, 2017 acquisition date of BAMTech, in either case at a redemption value based on MLB’s equity ownership percentage of the greater of BAMTech’s then equity fair value or a guaranteed floor value ($ 563 million accreting at 8 % annually for eight years from the date of acquisition).

The MLB interest is required to be carried at a minimum value equal to its acquisition date fair value accreted to its estimated redemption value through the applicable redemption date.

Therefore, the MLB interest is generally not allocated its portion of BAMTech losses, if any.

As of October 1, 2022, the MLB interest was recorded in the Company’s financial statements at $ 828 million.

In November 2022, the Company purchased MLB’s 15 % interest for $ 900 million.

Our estimate of the redemption value of noncontrolling interests requires management to make significant judgments with respect to the future value of the noncontrolling interests.

We are accreting the noncontrolling interests of Hulu to its guaranteed floor value.

If our estimate of the future redemption value increased above the guaranteed floor value, we would change our rate of accretion, which would generally increase the amount recorded in “Net income from continuing operations attributable to noncontrolling interests and redeemable noncontrolling interests” and thus reduce “Net income (loss) attributable to The Walt Disney Company (Disney)” on the Consolidated Statements of Operations.

Under the agreement, NBCU has the option to require the Company to purchase NBCU’s interest in Hulu (put right) and the Company has the option to require NBCU to sell its interest in Hulu to the Company (call right) at a redemption value based on NBCU’s equity ownership percentage of the greater of Hulu’s equity fair value or a guaranteed floor value of $ 27.5 billion.

In August 2023, certain provisions under the put/call agreement were amended, including the addition of a November 2023 exercise window for the put/call, which would require assessment of Hulu’s equity fair value as of September 30, 2023.

In November 2023, NBCU exercised its put right and the Company is obligated to pay NBCU the minimum value (approximately $ 9.2 billion based on the guaranteed floor value, less the unpaid capital call contributions payable by NBCU to the Company of $ 0.6 billion) within 30 days of exercise of the put.

In accordance with the valuation procedures, Hulu’s equity fair value is not expected to be determined until sometime in calendar 2024.

If Hulu’s equity fair value is determined to be higher than the guaranteed floor value, the Company would be required to pay NBCU’s share of the difference between the equity fair value and the guaranteed floor value at that time.

Determining the estimated redemption value requires management to make significant judgments.

To the extent the fair value is deemed to exceed the guaranteed floor value, we would recognize NBCU’s share of the additional amount as a charge to “Net income from continuing operations attributable to noncontrolling interests” and thus reduce “Net income attributable to Disney” in the Consolidated Statements of Income.

In addition, the Company will share 50 % of its tax benefit from the purchase of NBCU’s interest in Hulu with NBCU, which payments are expected to be made primarily over a 15 -year period.

At September 30, 2023, NBCU’s interest in Hulu is recorded in the Company’s financial statements at $ 9.1 billion, which is reported as “Redeemable noncontrolling interest” in the Consolidated Balance Sheet.

In November 2022, the Company purchased MLB’s 15 % redeemable noncontrolling interest in BAMTech LLC (BAMTech), which holds the Company’s domestic DTC sports business, for $ 900 million (MLB buy-out).

MLB’s interest was recorded in the Company’s financial statements at $ 828 million prior to the MLB buy-out.

The $ 72 million difference was recorded as an increase in “Net income from continuing operations attributable to noncontrolling interests” in the Consolidated Statements of Income.

During the fiscal year ended 2023, Hearst Corporation (Hearst) contributed $ 710 million to the domestic DTC sports business, in part to fund its 20 % share of the MLB buy-out and in part to fund its share of the domestic DTC sports business’s operating cash requirements, which had been funded by the Company through intercompany loans.

Earnings Per Share

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Awards excluded from diluted earnings per share 24 15 4

(1) Amounts exclude all potential common and common equivalent shares for periods when there is a net loss from continuing operations.

The following table presents our revenues by segment and major source:

Entertainment

Affiliate fees $ 7,369 $ 10,590 $ — $ ( 1,084 ) $ 16,875

Subscription fees 16,420 1,517 — — 17,937

Advertising 7,594 3,920 4 — 11,518

Theme park admissions — — 10,423 — 10,423

Resort and vacations — — 7,949 — 7,949

Retail and wholesale sales of merchandise, food and beverage — — 8,921 — 8,921

Merchandise licensing 619 — 2,509 — 3,128

TV/VOD distribution licensing

2,645 347 — — 2,992

DMED DPEP Content License Early Termination Total DMED DPEP Total DMED DPEP Total

Theatrical distribution licensing 3,174 — — — 3,174

Home entertainment 931 — — — 931

Other 1,883 737 2,743 ( 313 ) 5,050

$ 40,635 $ 17,111 $ 32,549 $ ( 1,397 ) $ 88,898

Entertainment

Eliminations and Other

Affiliate fees $ 7,739 $ 10,796 $ — $ ( 1,010 ) $ 17,525

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Merchandise licensing 620 — 3,349 — 3,969

TV/SVOD distribution licensing 4,452 — ( 1,023 ) 3,429 5,266 — 5,266 6,253 — 6,253

TV/VOD distribution licensing

3,551 351 — ( 1,023 ) 2,879

Theatrical distribution licensing 1,875 — — — 1,875

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$ 39,569 $ 17,270 $ 28,085 $ ( 2,202 ) $ 82,722

Entertainment

Affiliate fees $ 8,043 $ 10,609 $ — $ ( 892 ) $ 17,760

Subscription fees 11,295 725 — — 12,020

Advertising 8,705 3,720 4 — 12,429

Theme park admissions — — 3,848 — 3,848

Resort and vacations — — 2,701 — 2,701

Retail and wholesale sales of merchandise, food and beverage — — 4,957 — 4,957

Merchandise licensing 603 — 2,995 — 3,598

TV/VOD distribution licensing

4,366 429 — — 4,795

Theatrical distribution licensing 920 — — — 920

Home entertainment 1,297 — — — 1,297

Other 1,260 477 1,456 ( 100 ) 3,093

$ 36,489 $ 15,960 $ 15,961 $ ( 992 ) $ 67,418

The following table presents our revenues by segment and primary geographical markets:

Entertainment

Americas $ 31,414 $ 16,000 $ 25,188 $ ( 1,397 ) $ 71,205

Europe 5,475 370 3,688 — 9,533

Asia Pacific 3,746 741 3,673 — 8,160

$ 40,635 $ 17,111 $ 32,549 $ ( 1,397 ) $ 88,898

DMED DPEP Total DMED DPEP Total DMED DPEP Total

Entertainment

Americas $ 30,841 $ 15,666 $ 22,890 $ ( 1,179 ) $ 68,218

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Content License Early Termination ( 1,023 )

Revenues recognized in the current and prior year from performance obligations satisfied (or partially satisfied) in previous reporting periods primarily relate to revenues earned on TV/SVOD licenses for titles made available to the licensee in previous reporting periods.

For fiscal 2022, $ 1.1 billion was recognized related to performance obligations satisfied prior to

October 2, 2021.

Entertainment

Americas 28,469 $ 14,533 $ 12,147 $ ( 992 ) $ 54,157

Europe 4,836 346 1,508 — 6,690

Asia Pacific 3,184 1,081 2,306 — 6,571

$ 36,489 $ 15,960 $ 15,961 $ ( 992 ) $ 67,418

Revenues recognized in the current and prior year from performance obligations satisfied (or partially satisfied) in previous reporting periods primarily relate to revenues earned on TV/VOD licenses for titles made available to the licensee in previous reporting periods.

For fiscal 2023, $ 0.9 billion was recognized related to performance obligations satisfied prior to October 1, 2022.

For fiscal 2020, $ 1.4 billion was recognized related to performance obligations satisfied prior to September 30, 2019.

As of October 1, 2022, revenue for unsatisfied performance obligations expected to be recognized in the future is $ 15 billion , which primarily relates to content and other IP to be delivered in the future under existing agreements with merchandise and co-branding licensees and sponsors, television station affiliates, sports sublicensees, advertisers, and DTC wholesalers.

For fiscal 2022, $ 1.1 billion was recognized related to performance obligations satisfied prior to October 2, 2021.

For fiscal 2021, $ 1.3 billion was recognized related to performance obligations satisfied prior to October 3, 2020.

As of September 30, 2023, revenue for unsatisfied performance obligations expected to be recognized in the future is $ 15 billion , which primarily relates to content and other IP to be delivered in the future under existing agreements with merchandise and co-branding licensees and sponsors, television station affiliates, DTC wholesalers, sports sublicensees and advertisers.

Of this amount, we expect to recognize approximately $ 6 billion in fiscal 2024, $ 4 billion in fiscal 2025, $ 2 billion in fiscal 2026 and $ 3 billion thereafter.

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Deferred revenues are recognized as (or when) the Company performs under the contract.

Contract assets, accounts receivable and deferred revenues from contracts with customers are as follows:

The Company’s contract assets and activity for the current and prior-year periods were not material.

Accounts receivable and deferred revenues from contracts with customers are as follows:

September 30,

2023 October 1,

Contract assets $ 32 $ 155

Accounts Receivable

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Non-current 977 927

Contract assets primarily relate to certain multi-season TV/SVOD licensing contracts.

Activity for fiscal 2022 and 2021 related to contract assets was not material.

For fiscal 2022, 2021 and 2020, the Company recognized revenues of $ 3.6 billion, $ 2.9 billion and $ 3.4 billion, respectively, that was included in the deferred revenue balance at October 2, 2021, October 3, 2020 and September 28, 2019, respectively.

Amounts deferred generally relate to DTC subscriptions, advances from merchandise licensees and TV/SVOD licenses.

In fiscal 2020, as a result of COVID-19, the Company had paid refunds for certain non-refundable deposits that were reported as deferred revenue prior to fiscal 2020, the most significant of which related to park admission tickets and deposits for vacation packages.

The balance at October 2, 2021 related to these deposits was classified in “Accounts payable and other accrued liabilities” in the Consolidated Balance Sheet.

In fiscal 2022, the Company is no longer refunding these deposits and approximately $ 1.5 billion is now classified as “Deferred revenue and other” in the Consolidated Balance Sheet.

The Company has accounts receivable with original maturities greater than one year related to the sale of film and television program rights (TV/SVOD) and vacation club properties.

For fiscal 2023, 2022 and 2021, the Company recognized revenues of $ 5.1 billion, $ 3.6 billion and $ 2.9 billion, respectively, that was included in the deferred revenue balance at October 1, 2022, October 2, 2021 and October 3, 2020, respectively.

Amounts deferred generally relate to theme park admissions and vacation packages, DTC subscriptions and advances related to merchandise and TV/VOD licenses.

The Company has accounts receivable with original maturities greater than one year related to TV/VOD sales and vacation club properties.

These receivables are discounted to present value at contract inception and the related revenues are recognized at the discounted amount.

The balance of TV/SVOD licensing receivables recorded in other non-current assets was $ 0.6 billion and $ 0.8 billion at October 1, 2022 and October 2, 2021, respectively.

The balance of vacation club receivables recorded in other non-current assets was $ 0.6 billion at both October 1, 2022 and October 2, 2021, respectively.

The balance of TV/VOD licensing receivables recorded in other non-current assets was $ 0.6 billion at both September 30, 2023 and October 1, 2022.

The balance of vacation club receivables recorded in other non-current assets was $ 0.7 billion and $ 0.6 billion at September 30, 2023 and October 1, 2022, respectively.

The allowance for credit losses and activity for fiscal 2023 and 2022 was not material.

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German FTA gain — — 126

Endemol Shine gain — — 65

Other, net ( 73 ) ( 4 ) —

Other income (expense), net $ 96 $ ( 667 ) $ 201

In fiscal 2022 and 2021, the Company recognized a non-cash loss of $ 663 million and $ 111 million, respectively, from the adjustment of its investment in DraftKings, Inc.

(DraftKings) to fair value (DraftKings gain (loss)).

In fiscal 2020, the Company recognized a $ 973 million DraftKings gain.

In fiscal 2023, the Company recognized a gain of $ 169 million on its investment in DraftKings, Inc.

(DraftKings), which was sold in the current fiscal year.

In fiscal 2022 and 2021, respectively, the Company recognized non-cash losses of $ 663 million and $ 111 million to adjust its investment in DraftKings to fair value.

In fiscal 2021, the Company recognized a $ 186 million gain from the sale of our investment in fuboTV Inc.

(fuboTV gain) and a $ 126 million gain on the sale of its 50 % interest in a German free-to-air (FTA) television network (German FTA gain).

In fiscal 2020, the Company recognized a $ 65 million gain on the sale of its 50 % interest in Endemol Shine Group (Endemol Shine gain).

5 Investments

Investments consist of the following:

September 30,

2023 October 1,

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Investments, Equity Basis

The Company’s significant equity investments primarily consist of media investments and include A+E ( 50 % ownership), CTV Specialty Television, Inc.

( 30 % ownership) and Tata Play Limited ( 30 % ownership).

As of October 1, 2022, the book value of the Company’s equity method investments exceeded our share of the book value of the investees’ underlying net assets by approximately $ 0.8 billion, which represents amortizable intangible assets and goodwill arising from acquisitions.

The Company’s significant equity investments include A+E ( 50 % ownership), Tata Play Limited ( 30 % ownership) and CTV Specialty Television, Inc.

( 30 % ownership).

As of September 30, 2023, the book value of the Company’s equity method investments exceeded our share of the book value of the investees’ underlying net assets by approximately $ 0.7 billion, which represents amortizable intangible assets and goodwill arising from acquisitions.

Investments, Other

As of October 1, 2022 and October 2, 2021, the Company had securities recorded at fair value of $ 0.3 billion and $ 1.0 billion, respectively.

As of October 1, 2022 and October 2, 2021, the Company had securities recorded at book value related to non-publicly traded securities without a readily determinable fair value of $ 0.2 billion and $ 0.3 billion, respectively.

Gains, losses and impairments on securities are generally recorded in “Interest expense, net” in the Consolidated Statements of Operations;

As of September 30, 2023 and October 1, 2022, the Company had securities in publicly and non-publicly traded investments, which were not material.

Gains, losses and impairments on securities are generally recorded in “Interest expense, net” in the Consolidated Statements of Income;

these amounts were not material for fiscal 2023, 2022 and 2021.

See Note 4 for realized and unrealized gains and losses on securities recorded in “Other income (expense), net” in the Consolidated Statements of Operations.

See Note 4 for realized and unrealized gains and losses on securities recorded in “Other income (expense), net” in the Consolidated Statements of Income.

6 International Theme Parks

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The following table summarizes the carrying amounts of the Asia Theme Parks’ assets and liabilities included in the Company’s Consolidated Balance Sheet:

October 1, 2022 October 2, 2021

September 30, 2023 October 1, 2022

Cash and cash equivalents $ 504 $ 280

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Total liabilities $ 2,420 $ 2,289

The following table summarizes the International Theme Parks’ revenues and costs and expenses included in the Company’s Consolidated Statements of Operations for fiscal 2022:

The following table summarizes the International Theme Parks’ revenues and costs and expenses included in the Company’s Consolidated Statements of Income for fiscal 2023:

Revenues $ 5,095

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Asia Theme Parks’ royalty and management fees of $ 235 million for fiscal 2023 are eliminated in consolidation, but are considered in calculating earnings attributable to noncontrolling interests.

International Theme Parks’ cash flows included in the Company’s fiscal 2022 Consolidated Statements of Cash Flows were $ 407 million provided by operating activities, $ 752 million used in investing activities and $ 240 million provided by financing activities.

International Theme Parks’ cash flows included in the Company’s fiscal 2023 Consolidated Statements of Cash Flows were $ 1,753 million provided by operating activities, $ 898 million used in investing activities and $ 114 million used in financing activities.

Hong Kong Disneyland Resort

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The Company and HKSAR have provided loans to Hong Kong Disneyland Resort with outstanding balances of $ 163 million and $ 109 million, respectively.

The interest rate on both loans is three month HIBOR plus 2 %, and the maturity date is September 2025.

The interest rate on both loans is three month HIBOR plus 2 %, and the scheduled maturity date is September 2025.

The Company’s loan is eliminated in consolidation.

The Company has provided Hong Kong Disneyland Resort with a revolving credit facility of HK $ 2.7 billion ($ 345 million), which bears interest at a rate of three month HIBOR plus 1.25 % and matures in December 2028.

The outstanding balance under the line of credit at October 1, 2022 was $ 231 million.

The outstanding balance under the line of credit at September 30, 2023 was $ 80 million.

The Company’s line of credit is eliminated in consolidation.

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HKSAR has the right to receive additional shares over time to the extent Hong Kong Disneyland Resort exceeds certain return on asset performance targets.

The amount of additional shares HKSAR can receive is capped on an annual basis and could decrease the Company’s equity interest by up to an additional 6 percentage points over a period no shorter than 10 years.

Assuming HK $ 10.9 billion is contributed in the expansion, the impact to the Company’s equity interest would be limited to 5 percentage points.

The amount of additional shares HKSAR can receive is capped on an annual basis and could decrease the Company’s equity interest by up to 6 percentage points over a period no shorter than 10 years.

Shanghai Disney Resort

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The Company has also provided Shanghai Disney Resort with a 1.9 billion yuan (approximately $ 0.3 billion) line of credit bearing interest at 8 %.

As of October 1, 2022, the total amount outstanding under the line of credit was 0.9 billion yuan (approximately $ 123 million).

As of September 30, 2023, the total amount outstanding under the line of credit was 0.1 billion yuan (approximately $ 9 million).

These balances are eliminated in consolidation.

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Shendi has also provided Shanghai Disney Resort with a 2.6 billion yuan (approximately $ 0.4 billion) line of credit bearing interest at 8 %.

As of October 1, 2022, the total amount outstanding under the line of credit was 1.2 billion yuan (approximately $ 162 million).

As of September 30, 2023, the total amount outstanding under the line of credit was 0.1 billion yuan (approximately $ 13 million).

7 Produced and Acquired/Licensed Content Costs and Advances

Total capitalized produced and licensed content by predominant monetization strategy is as follows:

As of October 1, 2022 As of October 2, 2021

As of September 30, 2023 As of October 1, 2022

Predominantly Monetized Individually Predominantly

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$ 25,266 $ 23,656 $ 20,959

(1) Primarily included in “Costs of services” in the Consolidated Statements of Operations.

Total expected amortization by fiscal year of completed (released and not released) produced, licensed and acquired film and television library content on the balance sheet as of October 1, 2022 is as follows:

(1) Primarily included in “Costs of services” in the Consolidated Statements of Income.

Fiscal 2023 amounts exclude impairment charges of $ 2.0 billion for produced content and $ 257 million for licensed programming rights recorded in “Restructuring and impairment charges” in the Consolidated Statements of Income (see Note 18).

Predominantly Monetized Individually Predominantly

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Approximately $ 2.4 billion of accrued participations and residual liabilities will be paid in fiscal 2024.

At October 1, 2022, acquired film and television library content has remaining unamortized costs of $ 3.3 billion, which are generally being amortized straight-line over a weighted-average remaining period of approximately 16 years.

At September 30, 2023, acquired film and television library content has remaining unamortized costs of $ 3.1 billion, which are generally being amortized straight-line over a weighted-average remaining period of approximately 15 years.

Content Production Incentives

Programming and production costs were reduced by $ 0.8 billion for fiscal 2023 related to the amortization of production tax incentives.

We have production tax credit receivables of $ 1.6 billion as of September 30, 2023, which, based on the expected timing of collection, are reflected in “Receivables, net” or “Other Assets” in our Consolidated Balance Sheet.

The Company’s borrowings, including the impact of interest rate and cross-currency swaps, are summarized as follows:

October 1, 2022

September 30, 2023

30, 2023 Oct.

1, 2022 Stated

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(1) The stated interest rate represents the weighted-average coupon rate for each category of borrowings.

For floating-rate borrowings, interest rates are the rates in effect at October 1, 2022;

For floating-rate borrowings, interest rates are the rates in effect at September 30, 2023;

these rates are not necessarily an indication of future interest rates.

(2) Amounts represent notional values of interest rate and cross-currency swaps outstanding as of October 1, 2022.

(2) Amounts represent notional values of interest rate and cross-currency swaps outstanding as of September 30, 2023.

(3) The effective interest rate includes the impact of existing and terminated interest rate and cross-currency swaps, purchase accounting adjustments and debt issuance premiums, discounts and costs.

(4) Includes net debt issuance discounts, costs and purchase accounting adjustments totaling a net premium of $ 1.9 billion and $ 2.1 billion at October 1, 2022 and October 2, 2021, respectively.

(5) Includes market value adjustments for debt with qualifying hedges, which reduces borrowings by $ 1.7 billion and $ 0.1 billion at October 1, 2022 and October 2, 2021, respectively.

(4) Includes net debt issuance discounts, costs and purchase accounting adjustments totaling a net premium of $ 1.8 billion and $ 1.9 billion at September 30, 2023 and October 1, 2022, respectively.

(5) Includes market value adjustments for debt with qualifying hedges, which reduces borrowings by $ 1.8 billion and $ 1.7 billion at September 30, 2023 and October 1, 2022, respectively.

Commercial Paper

At October 1, 2022, the Company’s bank facilities, which are with a syndicate of lenders and support our commercial paper borrowings, were as follows:

At September 30, 2023, the Company’s bank facilities, which are with a syndicate of lenders and support our commercial paper borrowings, were as follows:

Capacity Capacity

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Total $ 12,250 $ — $ 12,250

These facilities allow for borrowings at SOFR-based rates plus a fixed spread that varies with the Company’s debt ratings assigned by Moody’s Investors Service and Standard & Poor’s ranging from 0.755% to 1.225%.

These facilities allow for borrowings at rates based on the Secured Overnight Financing Rate (SOFR), and at other variable rates for non-U.S.

dollar denominated borrowings plus a fixed spread that varies with the Company’s debt ratings assigned by Moody’s Investors Service and Standard & Poor’s ranging from 0.655% to 1.225%.

The bank facilities contain only one financial covenant, relating to interest coverage of three times earnings before interest, taxes, depreciation and amortization, including both intangible amortization and amortization of our film and television production and programming costs.

On October 1, 2022, the Company met this covenant by a significant margin.

On September 30, 2023, the Company met this covenant by a significant margin.

The bank facilities specifically exclude certain entities, including the Asia Theme Parks, from any representations, covenants or events of default.

The Company also has the ability to issue up to $ 500 million of letters of credit under the facility expiring in March 2027, which if utilized, reduces available borrowings under this facility.

As of October 1, 2022, the Company has $ 1.9 billion of outstanding letters of credit, of which none were issued under this facility.

As of September 30, 2023, the Company has $ 1.7 billion of outstanding letters of credit, of which none were issued under this facility.

Commercial paper activity is as follows:

11 unchanged sentences

Other Activity 1 4 5

Balance at Oct.

Balance at Sep.

30, 2023 $ 289 $ 1,187 $ 1,476

1 unchanged sentence

Dollar Denominated Notes

At October 1, 2022, the Company had $ 45.1 billion of fixed rate U.S.

At September 30, 2023, the Company had $ 43.5 billion of fixed rate U.S.

dollar denominated notes with maturities ranging from 1 to 73 years and stated interest rates that range from 1.75 % to 9.50 %.

Foreign Currency Denominated Debt

Prior to fiscal 2020, the Company issued Canadian $ 1.3 billion ($ 0.9 billion) of fixed rate senior notes, which bear interest at 2.76 % and mature in October 2024.

The Company also entered into pay-floating interest rate and cross currency swaps that effectively convert the borrowing to a variable-rate U.S.

dollar denominated borrowing indexed to LIBOR.

In fiscal 2020, the Company issued Canadian $ 1.3 billion ($ 0.9 billion) of fixed rate senior notes, which bear interest at 3.057 % and mature in March 2027.

The Company also entered into pay-floating interest rate and cross currency swaps that effectively convert the borrowing to a variable-rate U.S.

dollar denominated borrowing indexed to LIBOR.

At September 30, 2023, the Company had fixed rate senior notes of Canadian $ 1.3 billion ($ 0.9 billion) and Canadian $ 1.3 billion ($ 1.0 billion) with maturities of October 2024 and March 2027, respectively, and stated interest rates of 2.76 % and 3.057 %, respectively.

The Company has entered into pay-floating interest rate and cross currency swaps that effectively convert the borrowings to a variable-rate U.S.

dollar denominated borrowings indexed to SOFR.

Cruise Ship Credit Facilities

The Company has credit facilities to finance up to 80 % of the contract price of two new cruise ships, which are scheduled to be delivered in fiscal 2025 and fiscal 2026.

Under the facilities, $ 1.1 billion is available beginning in August 2023 and $ 1.1 billion is available beginning in August 2024.

The Company has credit facilities to finance a significant portion of the contract price of two new cruise ships, which are scheduled to be delivered in fiscal 2025 and fiscal 2026.

Under the facilities, $ 1.1 billion became available beginning in August 2023 and $ 1.1 billion is available beginning in August 2024.

Each tranche of financing may be utilized for a period of 18 months from the initial availability date.

If utilized, the interest rates will be fixed at 3.80 % and 3.74 %, respectively, and the loan and interest

will be payable semi-annually over a 12-year period from the borrowing date.

If utilized, the interest rates will be fixed at 3.80 % and 3.74 %, respectively, and the loan and interest will be payable semi-annually over a 12-year period from the borrowing date.

Early repayment is permitted subject to cancellation fees.

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Shendi has also provided Shanghai Disney Resort with a 2.6 billion yuan (approximately $ 0.4 billion) line of credit bearing interest at 8 %.

As of October 1, 2022 the total amount outstanding under the line of credit was 1.2 billion yuan (approximately $ 162 million).

The following table provides total borrowings, excluding market value adjustments and debt issuance premiums, discounts and costs, by scheduled maturity date as of October 1, 2022.

The table also provides the estimated interest payments on these borrowings as of October 1, 2022 although actual future payments will differ for floating-rate borrowings:

Consolidation Asia

As of September 30, 2023 the total amount outstanding under the line of credit was 0.1 billion yuan (approximately $ 13 million).

The following table provides total borrowings, excluding market value adjustments and debt issuance premiums, discounts and costs, by scheduled maturity date as of September 30, 2023.

The table also provides the estimated interest payments on these borrowings as of September 30, 2023 although actual future payments will differ for floating-rate borrowings:

Consolidation

Theme Parks Total Borrowings Interest

7 unchanged sentences

$ 45,104 $ 1,308 $ 46,412 $ 24,918 $ 71,330

(1) In 2023, the Company has the ability to call a debt instrument prior to its scheduled maturity, which if exercised by the Company would reduce future interest payments by $ 1.1 billion.

The Company capitalizes interest on assets constructed for its parks and resorts and on certain film and television productions.

In fiscal 2023, 2022 and 2021, total interest capitalized was $ 365 million, $ 261 million and $ 187 million, respectively.

Interest expense, net of capitalized interest, for fiscal 2022, 2021 and 2020 was $ 1,549 million, $ 1,546 million and $ 1,647 million, respectively.

Interest expense (net of amounts capitalized), interest and investment income, and net periodic pension and postretirement benefit costs (other than service costs) (see Note 10) are reported net in the Consolidated Statements of Income and consist of the following:

2023 2022 2021

Interest expense $ ( 1,973 ) $ ( 1,549 ) $ ( 1,546 )

Interest and investment income 424 90 307

Net periodic pension and postretirement benefit costs (other than service costs) 340 62 ( 167 )

Interest expense, net $ ( 1,209 ) $ ( 1,397 ) $ ( 1,406 )

9 Income Taxes

Income (Loss) Before Income Taxes by Domestic and Foreign Subsidiaries

Income (Loss) Before Income Taxes 2022 2021 2020

Income Before Income Taxes

2023 2022 2021

Domestic subsidiaries (including U.S.

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1,683 ( 670 ) ( 2,680 )

Total income (loss) from continuing operations 5,285 2,561 ( 1,743 )

Total income from continuing operations

4,769 5,285 2,561

Loss from discontinued operations — ( 62 ) ( 38 )

$ 4,769 $ 5,223 $ 2,523

(1) Includes goodwill and intangible asset impairment in fiscal 2020.

Provision for Income Taxes:

9 unchanged sentences

( 1,365 ) 168 ( 1,252 )

Income tax expense from continuing operations 1,732 25 699

Income tax expense from discontinued operations ( 14 ) ( 9 ) ( 10 )

Income tax expense on income from continuing operations

1,379 1,732 25

Income tax expense on loss from discontinued operations

— ( 14 ) ( 9 )

$ 1,379 $ 1,718 $ 16

(1) Includes foreign withholding taxes.

Deferred Tax Assets and Liabilities

Components of Deferred Tax (Assets) and Liabilities October 1, 2022 October 2, 2021

Components of Deferred Tax (Assets) and Liabilities September 30, 2023 October 1, 2022

Deferred tax assets

10 unchanged sentences

entities 1,271 1,798

Right-of-use assets 676 697

Right-of-use lease assets

Investment in foreign entities 482 543

3 unchanged sentences

Net deferred tax liability $ 6,587 $ 7,727

(1) Balances as of October 1, 2022 and October 2, 2021 include approximately $ 1.5 billion and $ 1.6 billion, respectively, of International Theme Park net operating losses and approximately $ 1.0 billion at both October 1, 2022 and October 2, 2021 of foreign tax credits in the U.S.

(1) Balances at September 30, 2023 and October 1, 2022 include approximately $ 1.6 billion and $ 1.5 billion, respectively, of International Theme Park net operating losses and approximately $ 1.0 billion at both September 30, 2023 and October 1, 2022 of foreign tax credits in the U.S.

The International Theme Park net operating losses are primarily in France and, to a lesser extent, Hong Kong and China.

Losses in France and Hong Kong have an indefinite carryforward period and losses in China have a five-year carryforward period.

China theme park net operating losses of $ 0.2 billion may expire between fiscal 2023 and fiscal 2028.

China theme park net operating losses of $ 0.2 billion, if not used, expire between fiscal 2024 and fiscal 2028.

Foreign tax credits in the U.S.

have a ten-year carryforward period.

Foreign tax credits of $ 1.0 billion may expire beginning fiscal 2026.

Foreign tax credits of $ 1.0 billion, if not used, expire beginning in fiscal 2028.

The following table details the change in valuation allowance for fiscal 2023, 2022 and 2021 (in billions):

Balance at Beginning of Period Charges to Tax Expense Other Changes Balance at End of Period

Year ended October 1, 2022

Year ended September 30, 2023

$ 2.9 $ 0.2 $ 0.1 $ 3.2

9 unchanged sentences

Foreign derived intangible income ( 4.3 ) ( 3.4 ) ( 6.4 )

Excess tax benefits from equity awards — ( 5.3 ) 3.7

Tax impact of equity awards

2.1 — ( 5.3 )

Legislative changes — 1.7 ( 12.2 )

Income tax audits and reserves

1.3 2.7 ( 4.8 )

Goodwill impairment 3.5 — —

2 unchanged sentences

28.9 % 32.8 % 1.0 %

(1) In fiscal 2020, the Company had a pre-tax loss.

Positive amounts reflect tax benefits, whereas negative amounts reflect tax expense.

The effective income tax rate in fiscal 2022 was higher than the U.S.

statutory rate primarily due to higher effective tax rates on foreign earnings.

The effective income tax rate in fiscal 2021 was lower than the U.S.

statutory rate due to favorable adjustments related to prior years and excess tax benefits on employee share-based awards, partially offset by higher effective tax rates on foreign earnings.

The effective income tax rate in fiscal 2020 included an unfavorable impact of the goodwill impairment, which was not tax deductible, and the impact of higher effective tax rates on foreign earnings than the U.S.

statutory rate.

Higher effective tax rates on foreign earnings in fiscal 2022, 2021 and 2020 reflected the impact of foreign losses and, to a lesser extent, foreign tax credits for which we are unable to recognize a tax benefit.

(1) F iscal 2023 includes an adjustment related to certain deferred state taxes

Unrecognized tax benefits

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, excluding the related accrual for interest, is as follows:

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, excluding the related accrual for interest and penalties, is as follows:

2023 2022 2021

5 unchanged sentences

Balance at the end of the year $ 2,517 $ 2,449 $ 2,641

The fiscal year-end 2022, 2021 and 2020 balances include $ 1.9 billion, $ 2.0 billion and $ 2.1 billion, respectively, that if recognized, would reduce our income tax expense and effective tax rate.

Balances at September 30, 2023, October 1, 2022 and October 2, 2021 include $ 1.8 billion, $ 1.9 billion and $ 2.0 billion, respectively, that if recognized, would reduce our income tax expense and effective tax rate.

These amounts are net of the offsetting benefits from other tax jurisdictions.

At October 1, 2022, October 2, 2021 and October 3, 2020, the Company had $ 1.0 billion, $ 1.0 billion and $ 1.1 billion, respectively, in accrued interest and penalties related to unrecognized tax benefits.

During fiscal 2022, 2021 and 2020, the Company recorded additional interest and penalties of $ 157 million, $ 191 million and $ 211 million, respectively, and recorded reductions in accrued interest and penalties of $ 119 million, $ 256 million and $ 101 million, respectively, as a result of audit settlements and other prior-year adjustments.

At September 30, 2023, October 1, 2022 and October 2, 2021 accrued interest and penalties related to unrecognized tax benefits were $ 1.0 billion in each period.

During fiscal 2023, 2022 and 2021, the Company recorded additional interest and penalties of $ 210 million, $ 157 million and $ 191 million, respectively, and recorded reductions in accrued interest and penalties of $ 241 million, $ 119 million and $ 256 million, respectively.

The Company’s policy is to report interest and penalties as a component of income tax expense.

3 unchanged sentences

In the next twelve months, it is reasonably possible that our unrecognized tax benefits could change due to the resolution of open tax matters, which would reduce our unrecognized tax benefits by $ 0.3 billion.

In fiscal 2022, 2021 and 2020, the Company recognized income tax benefits of $ 2 million, $ 135 million and $ 64 million, respectively for the excess of equity-based compensation deductions over amounts recorded based on the grant date fair value.

In fiscal 2023, the Company recognized income tax expense of $ 93 million for the shortfall between equity-based compensation deductions and amounts recorded based on the grant date fair value.

In fiscal 2022 and 2021, the Company recognized income tax benefits of $ 2 million and $ 135 million, respectively, for the excess of equity-based compensation deductions over amounts recorded based on the grant date fair value.

10 Pension and Other Benefit Programs

9 unchanged sentences

Pension Plans Postretirement Medical Plans

2022 October 2,

September 30,

2023 October 1,

2022 September 30,

2023 October 1,

3 unchanged sentences

Interest cost ( 784 ) ( 500 ) ( 81 ) ( 51 )

Actuarial gain (loss) (1)

Actuarial gain (1)

757 6,159 59 595

Plan amendments and other (2)

14 39 539 ( 16 )

Benefits paid 633 629 66 63

7 unchanged sentences

Ending fair value $ 15,442 $ 14,721 $ 781 $ 749

Underfunded status of the plans $ ( 307 ) $ ( 2,879 ) $ ( 790 ) $ ( 1,232 )

Overfunded (Underfunded) status of the plans $ 752 $ ( 307 ) $ ( 180 ) $ ( 790 )

Amounts recognized in the balance sheet

4 unchanged sentences

(1) The actuarial gain for fiscal 2022 was due to an increase in the discount rate used to determine the fiscal year-end benefit obligation from the rate that was used in the preceding fiscal year.

The components of net periodic benefit cost are as follows:

(2) The decrease in fiscal 2023 was due to a change in postretirement medical benefit options.

The components of net periodic benefit cost (benefit) are as follows:

Pension Plans Postretirement Medical Plans

5 unchanged sentences

Amortization of prior-year service costs 8 7 11 — — —

Recognized net actuarial loss 585 777 544 28 30 14

Total other costs (benefits) ( 82 ) 145 — 20 22 13

Net periodic benefit cost $ 318 $ 579 $ 410 $ 29 $ 32 $ 23

In fiscal 2023, we expect pension and postretirement medical costs to decrease by $ 428 million to a net benefit of $ 81 million primarily due to lower amortization of previously deferred losses, partially offset by higher interest costs.

Recognized net actuarial loss/(gain)

19 585 777 ( 22 ) 28 30

Total other costs (benefit)

( 338 ) ( 82 ) 145 ( 2 ) 20 22

Net periodic benefit cost (benefit)

$ ( 56 ) $ 318 $ 579 $ 3 $ 29 $ 32

In fiscal 2024, we expect pension and postretirement medical costs to be a net benefit of $ 155 million compared to a net benefit of $ 53 million in fiscal 2023.

Key assumptions are as follows:

8 unchanged sentences

Year that the rate reaches the ultimate trend rate n/a n/a n/a 2042 2041 2040

AOCI, before tax, as of October 1, 2022 consists of the following amounts that have not yet been recognized in net periodic benefit cost:

AOCI, before tax, as of September 30, 2023 consists of the following amounts that have not yet been recognized in net periodic benefit cost:

Pension Plans Postretirement

Medical Plans Total

Prior service cost $ 26 $ — $ 26

Net actuarial loss 3,838 ( 93 ) 3,745

Prior service costs (benefits)

$ 15 $ ( 556 ) $ ( 541 )

Net actuarial loss (gain)

2,929 ( 137 ) 2,792

Total amounts included in AOCI 2,944 ( 693 ) 2,251

Prepaid (accrued) pension cost ( 3,696 ) 873 ( 2,823 )

Net balance sheet liability $ 307 $ 790 $ 1,097

Net balance sheet liability (asset)

$ ( 752 ) $ 180 $ ( 572 )

Plan Funded Status

As of October 1, 2022, the projected benefit obligation and accumulated benefit obligation for pension plans with accumulated benefit obligations in excess of plan assets were $ 1.2 billion and $ 1.1 billion, respectively, and the aggregate fair value of plan assets were not material.

As of October 2, 2021, the projected benefit obligation, accumulated benefit obligation and aggregate fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were $ 9.0 billion, $ 8.5 billion and $ 6.9 billion, respectively.

As of September 30, 2023, the projected benefit obligation and accumulated benefit obligation for pension plans with accumulated benefit obligations in excess of plan assets were $ 1.2 billion and $ 1.1 billion, respectively, and the aggregate fair value of plan assets was not material.

As of September 30, 2023, the projected benefit obligation for pension plans with projected benefit obligations in excess of plan assets was $ 1.2 billion and the aggregate fair value of plan assets was not material.

As of October 1, 2022, the projected benefit obligation for pension plans with projected benefit obligations in excess of plan assets was $ 1.2 billion and the aggregate fair value of plan assets was not material.

As of October 2, 2021, the projected

benefit obligation and aggregate fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets were $ 19.9 billion and $ 16.9 billion respectively.

The Company’s total accumulated pension benefit obligations at October 1, 2022 and October 2, 2021 were $ 14.1 billion and $ 19.4 billion, respectively.

Approximately 98 % was vested as of both October 1, 2022 and October 2, 2021.

The accumulated postretirement medical benefit obligations and fair value of plan assets for postretirement medical plans with accumulated postretirement medical benefit obligations in excess of plan assets were $ 1.5 billion and $ 0.7 billion, respectively, at October 1, 2022 and $ 2.1 billion and $ 0.9 billion, respectively, at October 2, 2021.

The Company’s total accumulated pension benefit obligations at September 30, 2023 and October 1, 2022 were $ 13.8 billion and $ 14.1 billion, respectively.

Approximately 98 % was vested as of both September 30, 2023 and October 1, 2022.

The accumulated postretirement medical benefit obligations and fair value of plan assets for postretirement medical plans with accumulated postretirement medical benefit obligations in excess of plan assets were $ 1.0 billion and $ 0.8 billion, respectively, at September 30, 2023 and $ 1.5 billion and $ 0.7 billion, respectively, at October 1, 2022.

A significant portion of the assets of the Company’s defined benefit plans are managed in a third-party master trust.

21 unchanged sentences

Investments that are valued using the net asset value (NAV) (or its equivalent) practical expedient are excluded from the fair value hierarchy disclosure.

NAV per share is determined based on the fair value using the underlying assets divided by the number of units outstanding.

The following is a description of the valuation methodologies used for assets reported at fair value.

The methodologies used at October 1, 2022 and October 2, 2021 are the same.

The methodologies used at September 30, 2023 and October 1, 2022 are the same.

Level 1 investments are valued based on reported market prices on the last trading day of the fiscal year.

6 unchanged sentences

The Company’s defined benefit plan assets are summarized by level in the following tables:

As of October 1, 2022

As of September 30, 2023

Description Level 1 Level 2 Total Plan Asset Mix

33 unchanged sentences

Total investments at fair value $ 15,470 100 %

(1) Includes 2.9 million shares of Company common stock valued at $ 273 million ( 2 % of total plan assets) and 2.9 million shares valued at $ 489 million ( 3 % of total plan assets) at October 1, 2022 and October 2, 2021, respectively.

(1) Includes 2.9 million shares of Company common stock valued at $ 235 million ( 1 % of total plan assets) and 2.9 million shares valued at $ 273 million ( 2 % of total plan assets) at September 30, 2023 and October 1, 2022, respectively.

Uncalled Capital Commitments

1 unchanged sentence

In such cases, the master trust would be contractually obligated to make a cash contribution at the time of the capital call.

At October 1, 2022, the total committed capital still uncalled and unpaid was $ 1.5 billion.

At September 30, 2023, the total committed capital still uncalled and unpaid was $ 1.3 billion.

Plan Contributions

21 unchanged sentences

The 2023 actuarial valuation assumed a 7.00 % annual rate of increase in the per capita cost of covered healthcare claims with the rate decreasing in even increments over nineteen years until reaching 4.00 %.

Sensitivity — A one percentage point change in the discount rate and expected long-term rate of return on plan assets would have the following effects on the projected benefit obligations for pension and postretirement medical plans as of October 1, 2022 and on cost for fiscal 2023:

Discount Rate Expected Long-Term

25 unchanged sentences

In fiscal 2023, 2022 and 2021, the costs of our domestic and international defined contribution plans were $ 378 million, $ 325 million and $ 254 million, respectively.

The Company paid the following dividend in fiscal 2020:

Per Share Total Paid Payment Timing Related to Fiscal Period

$ 0.88 $ 1.6 billion Second Quarter of Fiscal 2020 Second Half 2019

The Company did not pay a dividend with respect to fiscal year 2021 and 2020 operations and has not declared or paid a dividend with respect to fiscal 2022 operations.

The following table summarizes the changes in each component of accumulated other comprehensive income (loss) (AOCI) including our proportional share of equity method investee amounts:

4 unchanged sentences

AOCI, before tax

Balance at September 28, 2019 $ 129 $ ( 7,502 ) $ ( 1,086 ) $ ( 8,459 )

Balance at October 3, 2020 $ ( 191 ) $ ( 9,423 ) $ ( 1,088 ) $ ( 10,702 )

Unrealized gains (losses) arising during the period

9 unchanged sentences

( 444 ) 4 42 ( 398 )

Balance at October 1, 2022 $ 804 $ ( 3,770 ) $ ( 2,014 ) $ ( 4,980 )

Balance at September 30, 2023 $ 259 $ ( 2,172 ) $ ( 1,974 ) $ ( 3,887 )

for Hedges Unrecognized

2 unchanged sentences

and Other AOCI

Balance at September 28, 2019 $ ( 29 ) $ 1,756 $ 115 $ 1,842

Balance at October 3, 2020 $ 40 $ 2,201 $ 139 $ 2,380

Unrealized gains (losses) arising during the period

( 8 ) ( 358 ) ( 50 ) ( 416 )

Reclassifications of net (gains) losses to net income 10 ( 190 ) — ( 180 )

9 unchanged sentences

103 — ( 14 ) 89

Balance at October 1, 2022 $ ( 179 ) $ 901 $ 139 $ 861

Balance at September 30, 2023 $ ( 64 ) $ 517 $ 142 $ 595

for Hedges Unrecognized

3 unchanged sentences

AOCI, after tax

Balance at September 28, 2019 $ 100 $ ( 5,746 ) $ ( 971 ) $ ( 6,617 )

Balance at October 3, 2020 $ ( 151 ) $ ( 7,222 ) $ ( 949 ) $ ( 8,322 )

Unrealized gains (losses) arising during the period

11 unchanged sentences

( 341 ) 4 28 ( 309 )

Balance at October 1, 2022 $ 625 $ ( 2,869 ) $ ( 1,875 ) $ ( 4,119 )

Balance at September 30, 2023 $ 195 $ ( 1,655 ) $ ( 1,832 ) $ ( 3,292 )

Details about AOCI components reclassified to net income are as follows:

9 unchanged sentences

( 4 ) ( 476 ) ( 626 )

Foreign currency translation and other

Other income (expense), net ( 42 ) — —

Estimated tax

Income taxes 14 — —

Total reclassifications for the period

1 unchanged sentence

12 Equity-Based Compensation

Under various plans, the Company may grant stock options and other equity-based awards to executive, management and creative personnel.

The Company’s approach to long-term incentive compensation contemplates awards of stock options and

restricted stock units (RSUs).

Under various plans, the Company may grant stock options and other equity-based awards to executive, management, technology and creative personnel.

The Company’s approach to long-term incentive compensation contemplates awards of stock options and restricted stock units (RSUs).

Certain RSUs awarded to senior executives vest based upon the achievement of market or performance conditions (Performance RSUs).

Stock options are generally granted with a 10 year term at exercise prices equal to or exceeding the market price at the date of grant and become exercisable ratably over a three-year period from the grant date (exercisable ratably over four-year period from the grant date for awards granted prior to fiscal 2021).

Stock options are generally granted with a 10 year term at exercise prices equal to or exceeding the market price at the date of grant and become exercisable ratably over a three-year period from the grant date (exercisable ratably over a four-year period from the grant date for awards granted prior to fiscal 2021).

At the discretion of the Compensation Committee of the Company’s Board of Directors, options can occasionally extend up to 15 years after date of grant.

2 unchanged sentences

Each share granted subject to a stock option award reduces the number of shares available under the Company’s stock incentive plans by one share while each share granted subject to a RSU award reduces the number of shares available by two shares.

As of October 1, 2022, the maximum number of shares available for issuance under the Company’s stock incentive plans (assuming all the awards are in the form of stock options) was approximately 124 million shares and the number available for issuance assuming all awards are in the form of RSUs was approximately 60 million shares.

As of September 30, 2023, the maximum number of shares available for issuance under the Company’s stock incentive plans (assuming all the awards are in the form of stock options) was approximately 93 million shares and the number available for issuance assuming all awards are in the form of RSUs was approximately 44 million shares.

The Company satisfies stock option exercises and vesting of RSUs with newly issued shares.

23 unchanged sentences

Total equity-based compensation expense (1)

1,143 977 600

Tax impact ( 260 ) ( 221 ) ( 136 )

6 unchanged sentences

Outstanding at beginning of year 18 $ 121.28

Awards forfeited — 143.27

Awards granted 2 89.85

Awards exercised ( 1 ) 60.46

Awards expired/canceled ( 1 ) 111.62

Outstanding at end of year 18 $ 120.20

Exercisable at end of year 14 $ 119.78

The following tables summarize information about stock options vested and expected to vest at October 1, 2022 (shares in millions):

The following tables summarize information about stock options vested and expected to vest at September 30, 2023 (shares in millions):

Range of Exercise Prices Number of

27 unchanged sentences

(3) Excludes Performance RSUs for which vesting is subject to service conditions and the number of units vesting is subject to the discretion of the CEO.

At October 1, 2022, the maximum number of these Performance RSUs that could be issued upon vesting is 0.1 million.

At September 30, 2023, the maximum number of these Performance RSUs that could be issued upon vesting is not material.

The weighted average grant-date fair values of options granted during fiscal 2023, 2022 and 2021 were $ 33.18 , $ 46.76 and $ 57.05 , respectively, and for RSUs were $ 89.66 , $ 136.36 and $ 178.70 , respectively.

The total intrinsic value (market value on date of exercise less exercise price) of options exercised and RSUs vested during fiscal 2023, 2022 and 2021 totaled $ 829 million, $ 982 million and $ 1,175 million, respectively.

The aggregate intrinsic values of stock options vested and expected to vest at October 1, 2022 were $ 50 million and $ 0 million , respectively.

As of October 1, 2022, unrecognized compensation cost related to unvested stock options and RSUs was $ 89 million and $ 1,707 million, respectively.

The aggregate intrinsic values of stock options vested and expected to vest at September 30, 2023 were $ 4.8 million and $ 0 million , respectively.

As of September 30, 2023, unrecognized compensation cost related to unvested stock options and RSUs was $ 77 million and $ 1,774 million, respectively.

That cost is expected to be recognized over a weighted-average period of 1.1 years for stock options and 1.2 years for RSUs.

2 unchanged sentences

13 Detail of Certain Balance Sheet Accounts

Current receivables October 1,

Current receivables September 30,

2023 October 1,

13 unchanged sentences

$ 34,941 $ 33,596

Intangible assets

Intangible assets September 30,

2023 October 1,

Character/franchise intangibles, copyrights and trademarks $ 10,572 $ 10,572

9 unchanged sentences

Payroll and employee benefits 3,061 3,447

Other 561 1,055

$ 20,213 $ 20,894

Other long-term liabilities

Pension and postretirement medical plan liabilities $ 1,940 $ 4,132

Operating and financing lease liabilities 3,239 3,229

Income taxes payable

Other 209 183

1 unchanged sentence

14 Commitments and Contingencies

The Company has various contractual commitments for rights to sports, films and other programming, totaling approximately $ 75.7 billion, including approximately $ 2.6 billion for available programming as of October 1, 2022.

The Company also has contractual commitments for the construction of two new cruise ships, creative talent and employment agreements and unrecognized tax benefits.

The Company has various contractual commitments for rights to sports, films and other programming, totaling approximately $ 66.8 billion, including approximately $ 3.0 billion for available programming as of September 30, 2023.

The Company also has contractual commitments for the construction of cruise ships, creative talent and employment agreements and unrecognized tax benefits.

Creative talent and employment agreements include obligations to actors, producers, sports, television and radio personalities and executives.

1 unchanged sentence

Sports Programming (1)

Programming Other Total

Programming Other

2024 $ 10,331 $ 3,286 $ 4,055 $ 17,672

5 unchanged sentences

$ 59,359 $ 7,430 $ 10,333 $ 77,122

(1) Primarily relates to rights for NFL, college football (including bowl games and the College Football Playoff) and basketball, cricket, NBA, NHL, soccer, UFC, MLB, tennis, golf and Top Rank Boxing.

(1) Primarily relates to rights for NFL, college football (including bowl games and the College Football Playoff) and basketball, cricket, NBA, NHL, soccer, MLB, UFC, tennis, golf and Top Rank Boxing.

Certain sports programming rights have payments that are variable based primarily on revenues and are not included in the table above.

The Company has multi-year agreements to sublicense less than 5 % of our sports right.

Legal Matters

The Company, together with, in some instances, certain of its directors and officers, is a defendant in various legal actions involving copyright, breach of contract and various other claims incident to the conduct of its businesses.

On May 12, 2023, a private securities class action lawsuit was filed in the U.S.

District Court for the Central District of California against the Company, its former Chief Executive Officer, Robert Chapek, its former Chief Financial Officer, Christine M.

McCarthy, and the former Chairman of the Disney Media and Entertainment Distribution segment, Kareem Daniel on behalf of certain purchasers of securities of the Company (the “Securities Class Action”).

On November 6, 2023, a consolidated complaint was filed in the same action, adding Robert Iger, the Company’s Chief Executive Officer, as a defendant.

Claims in the Securities Class Action include (i) violations of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder against all defendants, (ii) violations of Section 20A of the Exchange Act against Iger and McCarthy, and (iii) violations of Section 20(a) of the Exchange Act against all defendants.

Plaintiffs in the Securities Class Action allege purported misstatements and omissions concerning, and a scheme to conceal, accurate costs and subscriber growth of the

Disney+ platform.

The Company intends to defend against the lawsuit vigorously.

The lawsuit is in the early stages and at this time we cannot reasonably estimate the amount of any potential loss.

Two shareholder derivative complaints have been filed.

The first, in which Hugues Gervat is the plaintiff, was filed on August 4, 2023, in the U.S.

District Court for the Central District of California.

The second, in which Stourbridge Investments LLC is the plaintiff, was filed on August 23, 2023 in the U.S.

District Court for the District of Delaware.

Each named The Walt Disney Company as a nominal defendant and alleged claims on its behalf against the Company’s Chief Executive Officer, Robert Iger;

its former Chief Executive Officer, Robert Chapek;

its former Chief Financial Officer, Christine M.

the former Chairman of the Disney Media and Entertainment Distribution segment, Kareem Daniel, and ten current and former members of the Disney Board (Susan E.

Maria Elena Lagomasino;

and Derica W.

Along with alleged violations of Sections 10(b), 14(a), 20(a), and Rule 10b-5 of the Securities Exchange Act, premised on the same allegations as the Securities Class Action, plaintiffs in both actions sought to recover for alleged breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement and waste.

On October 24, 2023, the Stourbridge action was voluntarily dismissed and, on November 16, 2023, was refiled in Delaware state court alleging equivalent theories of liability based on state law.

On October 30, 2023, the Gervat action was stayed pending a ruling on an expected motion to dismiss to be filed in the Securities Class Action.

The Company intends to defend against these lawsuits vigorously.

The lawsuits are in the early stages, and at this time we cannot reasonably estimate the amount of any potential loss.

The Company, together with, in some instances, certain of its directors and officers, is a defendant in various other legal actions involving copyright, breach of contract and various other claims incident to the conduct of its businesses.

Management does not believe that the Company has incurred a probable material loss by reason of any of those actions.

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If it is reasonably certain that a renewal or termination option will be exercised, the exercise of the option is considered in calculating the term of the lease.

As of October 1, 2022, our operating leases have a weighted-average remaining lease term of approximately 11 years, and our finance leases have a weighted-average remaining lease term of approximately 29 years.

As of September 30, 2023, our operating leases have a weighted-average remaining lease term of approximately 10 years, and our finance leases have a weighted-average remaining lease term of approximately 29 years.

The weighted-average incremental borrowing rate is 3.6 % and 6.5 %, for our operating leases and finance leases, respectively.

At October 1, 2022 total estimated future lease payments for non-cancelable leases agreements that have not commenced of approximately $ 832 million are excluded from the measurement of the right-of-use asset and lease liability.

At September 30, 2023 total estimated future lease payments for non-cancelable lease agreements that have not commenced of approximately $ 0.5 billion are excluded from the measurement of the right-of-use asset and lease liability.

The Company’s operating and finance right-of-use assets and lease liabilities are as follows:

October 1, 2022 October 2, 2021

September 30, 2023 October 1, 2022

Right-of-use assets (1)

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Total lease cost $ 1,318 $ 1,213 $ 1,329

(1) Includes variable lease payments related to our operating and finance leases and costs of leases with initial terms of less than one year, net of sublease income

(1) Includes variable lease payments related to our operating and finance leases and costs of leases with initial terms of less than one year.

Cash paid during the year for amounts included in the measurement of lease liabilities is as follows:

4 unchanged sentences

Total $ 770 $ 799 $ 970

Future minimum lease payments, as of October 1, 2022, are as follows:

Future minimum lease payments, as of September 30, 2023, are as follows:

Operating Financing

7 unchanged sentences

See Note 10 for definitions of fair value measures and the Levels within the fair value hierarchy.

Fair Value Measurement at October 1, 2022

Fair Value Measurement at September 30, 2023

Description Level 1 Level 2 Level 3 Total

Investments $ 46 $ 128 $ — $ 174

Interest rate — 1 — 1

Foreign exchange — 1,336 — 1,336

18 unchanged sentences

Fair value of borrowings $ — $ 42,509 $ 1,510 $ 44,019

The fair value of Level 2 investments are primarily determined based on an internal valuation model that uses observable inputs such as stock trading price, volatility and risk free rate.

The fair values of Level 2 derivatives are primarily determined by internal discounted cash flow models that use observable inputs such as interest rates, yield curves and foreign currency exchange rates.

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These assets are evaluated when certain triggering events occur (including a decrease in estimated future cash flows) that indicate the asset should be evaluated for impairment.

In fiscal 2020, the Company recorded impairment charges for goodwill and intangible assets as disclosed in Note 18.

The fair value of these assets was determined using estimated discounted future cash flows, which is a Level 3 valuation technique.

In the fourth quarter of fiscal 2023, the Company recorded impairment charges for goodwill as disclosed in Note 18.

The fair value of these assets was determined using estimated discounted future cash flows, which is a Level 3 valuation technique (see Note 18 for a discussion of the more significant inputs used in our discounted cash flow analysis).

Credit Concentrations

The Company monitors its positions with, and the credit quality of, the financial institutions that are counterparties to its financial instruments on an ongoing basis and does not currently anticipate nonperformance by the counterparties.

The Company does not expect that it would realize a material loss, based on the fair value of its derivative financial instruments as of October 1, 2022, in the event of nonperformance by any single derivative counterparty.

The Company does not expect that it would realize a material loss, based on the fair value of its derivative financial instruments as of September 30, 2023, in the event of nonperformance by any single derivative counterparty.

The Company generally enters into derivative transactions only with counterparties that have a credit rating of A- or better and requires collateral in the event credit ratings fall below A- or aggregate exposures exceed limits as defined by contract.

In addition, the Company limits the amount of investment credit exposure with any one institution.

The Company does not have material cash and cash equivalent balances with financial institutions that have below investment grade credit ratings and maintains short-term liquidity needs in high quality money market funds.

At October 1, 2022, the Company did not have balances (excluding money market funds) with individual financial institutions that exceeded 10% of the Company’s total cash and cash equivalents.

The Company’s trade receivables and financial investments do not represent a significant concentration of credit risk at October 1, 2022 due to the wide variety of customers and markets in which the Company’s products are sold, the dispersion of our customers across geographic areas and the diversification of the Company’s portfolio among financial institutions.

At September 30, 2023, the Company did not have balances (excluding money market funds) with individual financial institutions that exceeded 10% of the Company’s total cash and cash equivalents.

The Company’s trade receivables and financial investments do not represent a significant concentration of credit risk at September 30, 2023 due to the wide variety of customers and markets in which the Company’s products are sold, the dispersion of our customers across geographic areas and the diversification of the Company’s portfolio among financial institutions.

17 Derivative Instruments

The Company manages its exposure to various risks relating to its ongoing business operations according to a risk management policy.

The Company manages its exposure to various financial risks relating to its ongoing business operations according to a risk management policy.

The primary risks managed with derivative instruments are interest rate risk and foreign exchange risk.

The Company’s derivative positions measured at fair value are summarized in the following tables:

As of October 1, 2022

As of September 30, 2023

Liabilities Other Long-

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Net derivative positions $ 98 $ 94 $ ( 290 ) $ ( 40 )

(1) In fiscal 2023, the Company entered into a licensing and promotional arrangement and received warrants to purchase equity that are accounted for as a derivative asset.

The warrants are recorded in investments at their fair market value of $ 128 million at September 30, 2023.

As of October 1, 2022

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Net derivative positions $ 38 $ 168 $ ( 64 ) $ ( 65 )

Reference Rate Reform

In fiscal 2023, the Company amended its interest rate and cross-currency swap agreements to implement modifications related to changing the reference rates from LIBOR to SOFR and from the Canadian Dollar Offered Rate to the Canadian Overnight Repo Rate Average.

In connection with these amendments, the Company applied the hedge accounting relief provided by the Financial Accounting Standards Board (FASB) in ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting to preserve the fair value hedge designation of the interest rate and cross-currency swaps.

Interest Rate Risk Management

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The Company primarily uses pay-floating and pay-fixed interest rate swaps to facilitate its interest rate risk management activities.

The Company designates pay-floating interest rate swaps as fair value hedges of fixed-rate borrowings effectively converting fixed-rate borrowings to variable-rate borrowings indexed to LIBOR.

As of October 1, 2022 and October 2, 2021, the total notional amount of the Company’s pay-floating interest rate swaps was $ 14.5 billion and $ 15.1 billion, respectively.

The Company designates pay-floating interest rate swaps as fair value hedges of fixed-rate borrowings effectively converting fixed-rate borrowings to variable-rate borrowings.

The total notional amount of the Company’s pay-floating interest rate swaps as of September 30, 2023 and October 1, 2022, was $ 13.5 billion and $ 14.5 billion, respectively.

The following table summarizes fair value hedge adjustments to hedged borrowings:

Carrying Amount of Hedged Borrowings Fair Value Adjustments Included in Hedged Borrowings

October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022

Current $ 1,439 $ 997 $ ( 59 ) $ ( 3 )

1 unchanged sentence

$ 12,187 $ 13,355 $ ( 1,753 ) $ ( 1,736 )

The following amounts are included in “Interest expense, net” in the Consolidated Statements of Operations:

The following amounts are included in “Interest expense, net” in the Consolidated Statements of Income:

2023 2022 2021

2 unchanged sentences

Borrowings hedged with pay-floating swaps 14 1,635 603

Benefit associated with interest accruals on pay-floating swaps 31 143 28

Benefit (expense) associated with interest accruals on pay-floating swaps

( 510 ) 31 143

The Company may designate pay-fixed interest rate swaps as cash flow hedges of interest payments on floating-rate borrowings.

1 unchanged sentence

The unrealized gains or losses from these cash flow hedges are deferred in AOCI and recognized in interest expense as the interest payments occur.

The Company did not have pay-fixed interest rate swaps that were designated as cash flow hedges of interest payments at October 1, 2022 or at October 2, 2021, and gains and losses related to pay-fixed swaps recognized in earnings for fiscal 2022, 2021 and 2020 were not material.

The Company did not have pay-fixed interest rate swaps that were designated as cash flow hedges of interest payments at September 30, 2023 or at October 1, 2022, and gains and losses related to pay-fixed swaps recognized in earnings for fiscal 2023, 2022 and 2021 were not material.

Foreign Exchange Risk Management

The Company transacts business globally and is subject to risks associated with changing foreign currency exchange rates.

The Company’s objective is to reduce earnings and cash flow fluctuations associated with foreign currency exchange rate changes, enabling management to focus on core business issues and challenges.

The Company enters into option and forward contracts that change in value as foreign currency exchange rates change to protect the value of its existing foreign currency assets, liabilities, firm commitments and forecasted but not firmly committed foreign currency transactions.

The Company transacts business globally and is subject to risks associated with foreign currency exchange rates.

The Company’s objective is to reduce earnings and cash flow fluctuations associated with changes in foreign currency exchange rates, enabling management to focus on core business operations.

The Company enters into option and forward contracts to protect the value of its existing foreign currency assets, liabilities, firm commitments and forecasted but not firmly committed foreign currency transactions.

In accordance with policy, the Company hedges its forecasted foreign currency transactions for periods generally not to exceed four years within an established minimum and maximum range of annual exposure.

5 unchanged sentences

The Company designates foreign exchange forward and option contracts as cash flow hedges of firmly committed and forecasted foreign currency transactions.

As of October 1, 2022 and October 2, 2021, the notional amounts of the Company’s net foreign exchange cash flow hedges were $ 7.4 billion and $ 6.9 billion, respectively.

As of September 30, 2023 and October 1, 2022, the notional amounts of the Company’s net foreign exchange cash flow hedges were $ 8.3 billion and $ 7.4 billion, respectively.

Mark-to-market gains and losses on these contracts are deferred in AOCI and are recognized in earnings when the hedged transactions occur, offsetting changes in the value of the foreign currency transactions.

Net deferred gains recorded in AOCI for contracts that will mature in the next twelve months total $ 704 million.

Net deferred gains recorded in AOCI for contracts that will mature in

the next twelve months total $ 488 million.

The following table summarizes the effect of foreign exchange cash flow hedges on AOCI:

5 unchanged sentences

The Company designates cross currency swaps as fair value hedges of foreign currency denominated borrowings.

The impact of the cross currency swaps is recorded to “Interest expense, net” to offset the foreign currency impact of the foreign currency denominated borrowing.

As of October 1, 2022 and October 2, 2021, the total notional amounts of the Company’s designated cross currency swaps were Canadian $ 1.3 billion ($ 0.9 billion) and Canadian $ 1.3 billion ($ 1.0 billion), respectively.

The following amounts are included in “Interest expense, net” in the Consolidated Statements of Operations:

2022 2021 2020

Gain (loss) on:

Cross currency swaps $ ( 84 ) $ 47 $ 53

Borrowings hedged with cross currency swaps 84 ( 47 ) ( 53 )

The impact from the change in foreign currency on both the cross currency swap and borrowing is recorded to “Interest expense, net”.

The impact from interest rate changes is recorded in AOCI and is amortized over the life of the cross currency swap.

As of both September 30, 2023 and October 1, 2022, the total notional amounts of the Company’s designated cross currency swaps were Canadian $ 1.3 billion ($ 1.0 billion), respectively.

The related gains or losses recognized in earnings were not material for the fiscal years ended 2023, 2022 and 2021.

Foreign exchange risk management contracts with respect to foreign currency denominated assets and liabilities are not designated as hedges and do not qualify for hedge accounting.

The notional amounts of these foreign exchange contracts at October 1, 2022 and October 2, 2021 were $ 3.8 billion and $ 3.5 billion, respectively.

The following table summarizes the net foreign exchange gains or losses recognized on foreign currency denominated assets and liabilities and the net foreign exchange gains or losses on the foreign exchange contracts we entered into to mitigate our exposure with respect to foreign currency denominated assets and liabilities by the corresponding line item in which they are recorded in the Consolidated Statements of Operations:

The notional amounts of these foreign exchange contracts at September 30, 2023 and October 1, 2022 were $ 3.1 billion and $ 3.8 billion, respectively.

Costs and Expenses Interest expense, net Income Tax Expense

9 unchanged sentences

Mark-to-market gains and losses on these contracts are deferred in AOCI and are recognized in earnings when the hedged transactions occur, offsetting changes in the value of commodity purchases.

The notional amount of these commodities contracts at October 1, 2022 and October 2, 2021 and related gains or losses recognized in earnings were not material for fiscal 2022, 2021 and 2020.

The notional amount of these commodities contracts at September 30, 2023 and October 1, 2022 and related gains or losses recognized in earnings were not material for fiscal 2023, 2022 and 2021.

Risk Management – Other Derivatives Not Designated as Hedges

1 unchanged sentence

These contracts, which include certain total return swap contracts, are intended to offset economic exposures of the Company and are carried at market value with any changes in value recorded in earnings.

The notional amount of these contracts at both October 1, 2022 and October 2, 2021 was $ 0.4 billion, respectively.

The notional amount of these contracts at both September 30, 2023 and October 1, 2022 was $ 0.4 billion, respectively.

The related gains or losses recognized in earnings were not material for fiscal 2023, 2022 and 2021.

4 unchanged sentences

If the Company’s or the counterparty’s credit ratings were to fall below investment grade, such counterparties or the Company would also have the right to terminate our derivative contracts, which could lead to a net payment to or from the Company for the aggregate net value by counterparty of our derivative contracts.

The aggregate fair values of derivative instruments with credit-risk-related contingent features in a net liability position by counterparty were $ 1,507 million and $ 244 million at October 1, 2022 and October 2, 2021, respectively.

The aggregate fair values of derivative instruments with credit-risk-related contingent features in a net liability position by counterparty were $ 1,587 million and $ 1,507 million at September 30, 2023 and October 1, 2022, respectively.

18 Restructuring and Impairment Charges

Goodwill and Intangible Asset Impairment

Prior to a reorganization of the Company’s operations in October 2020, a former segment, Direct-to-Consumer & International, included the International Channels reporting unit, which comprised the Company’s international television networks.

In fiscal 2020, the Company tested this former reporting unit’s goodwill and long-lived assets (including intangible assets) for impairment.

This resulted in non-cash impairment charges of $ 1.9 billion relating primarily to our MVPD agreement

intangible assets and $ 3.1 billion to fully impair the reporting unit’s goodwill.

These charges were recorded in “Restructuring and impairment charges” in the Consolidated Statements of Operations in fiscal 2020.

As of October 1, 2022, the remaining balance of our international MVPD agreement intangible assets was $ 1.6 billion, primarily related to our channel businesses in Latin America and India.

TFCF Integration

The Company’s restructuring plan implemented in connection with the 2019 acquisition of TFCF to realize cost synergies was completed in fiscal 2021.

To date, we have recorded restructuring charges primarily related to DMED of $ 1.8 billion including $ 1.4 billion related to severance (including employee contract terminations) and $ 0.3 billion of equity based compensation costs, primarily for TFCF awards that were accelerated to vest upon the closing of the acquisition.

The changes in restructuring reserves related to the TFCF integration, including amounts recorded in “Restructuring and impairment charges” in the Consolidated Statements of Operations in fiscal 2021 and 2020, are as follows (activity in fiscal 2022 and the balance at October 1, 2022 were not material):

Balance at September 28, 2019 $ 676

Additions in fiscal 2020

Payments in fiscal 2020

Balance at October 3, 2020 357

Additions in fiscal 2021

Payments in fiscal 2021

Balance at October 2, 2021 $ 50

In fiscal 2022, the Company recorded charges of $ 0.2 billion, primarily due to asset impairments related to our businesses in Russia.

Content Impairment

As a result of our strategic change in approach to content curation, we removed content from our Entertainment Direct-to-Consumer services and terminated certain third-party license agreements for the right to use content primarily on our Entertainment Direct-to-Consumer platforms.

We recorded charges of $ 2.6 billion in fiscal 2023, including a $ 2.0 billion write-off of produced content costs and $ 0.6 billion to terminate license agreements.

We paid approximately $ 0.4 billion of cash to terminate these license agreements.

The charges are recorded in “Restructuring and impairment charges” in the Consolidated Statements of Income.

Goodwill Impairment

In the fourth quarter of fiscal 2023, the Company performed a quantitative goodwill impairment test under both the previous segment reporting structure and the new segment reporting structure.

There were no goodwill impairments under the previous reporting structure.

The change in reporting structure requires judgment to identify new reporting units, allocate goodwill to these reporting units (based on relative fair values) and assign other recorded assets and liabilities to these reporting units.

See Note 2 for additional information regarding the quantitative goodwill impairment assessment.

Our future cash flows are based on internal forecasts for each reporting unit, which consider projected inflation and other economic indicators, as well as industry growth projections.

Significant judgments and assumptions in the discounted cash flow model relate to future revenues and certain operating expenses, terminal growth rates and discount rates.

Discount rates for each reporting unit are determined based on the inherent risks of each reporting unit’s underlying operations.

We believe our estimates are consistent with how a marketplace participant would value our reporting units.

If we had established different reporting units or utilized different valuation methodologies or assumptions, the impairment test results would differ.

Based on our projections, the carrying amounts of our entertainment and international sports linear networks reporting units exceeded their fair values, and we recorded non-cash goodwill impairment charges of approximately $ 0.7 billion in “Restructuring and impairment charges” in the Consolidated Statement of Income.

Goodwill, net of impairments recorded was $ 77.1 billion as of September 30, 2023

In fiscal 2023, the Company recorded charges of $ 0.4 billion of severance, $ 0.1 billion for an impairment of an investment and $ 0.1 billion for exiting our businesses in Russia.

In fiscal 2022, the Company recorded charges of $ 0.2 billion, primarily due to asset impairments related to exiting our businesses in Russia.

In fiscal 2021, the Company recorded restructuring and impairment charges of $ 0.7 billion, primarily related to the planned closure of an animation studio and a substantial number of our Disney-branded retail stores in North America and Europe as well as severance at our parks and experiences businesses.

In fiscal 2020, the Company recorded restructuring and impairment charges of $ 0.3 billion, primarily for severance at our parks and experiences businesses.

These charges are reported in “Restructuring and impairment charges” in the Consolidated Statements of Operations.

These charges are reported in “Restructuring and impairment charges” in the Consolidated Statements of Income.

19 New Accounting Pronouncements

Accounting Pronouncements Adopted in Fiscal 2023

Simplifying the Accounting for Income Taxes

In December 2019, the Financial Accounting Standards Board (FASB) issued guidance which simplifies the accounting for income taxes.

The guidance amends the rules for recognizing deferred taxes for investments, performing intraperiod tax allocations and calculating income taxes in interim periods.

It also reduces complexity in certain areas, including the accounting for transactions that result in a step-up in the tax basis of goodwill and allocating taxes to members of a consolidated group.

The Company adopted the new guidance in the first quarter of fiscal 2022.

The adoption did not have a material impact on our financial statements.

Facilitation of the Effects of Reference Rate Reform

In March 2020, the FASB issued guidance which provides optional expedients and exceptions for applying current GAAP to contracts, hedging relationships, and other transactions affected by the transition from the use of LIBOR to an alternative reference rate.

The guidance is applicable to contracts entered into before January 1, 2023.

The Company adopted the new guidance in the first quarter of fiscal 2022.

The adoption did not have a material impact on our financial statements.

Accounting Pronouncements Not Yet Adopted

Disclosures by Business Entities about Government Assistance

In November 2021, the FASB issued guidance requiring annual disclosures about transactions with a government that are accounted for by analogizing to a grant or contribution accounting model.

The new guidance requires the disclosure of the nature of the transactions, the accounting for the transactions, and the effect of the transactions on the financial statements.

The guidance is effective for annual periods beginning with the Company’s 2023 fiscal year.

While the guidance will not have an effect on the Company’s Consolidated Statements of Operations or Consolidated Balance Sheets upon adoption, the Company may need to disclose the effects on the financial statements of incentives related to the production of content, which is the most significant type of government assistance we receive.

In November 2021, the FASB issued guidance requiring annual disclosures about transactions with a government that are accounted for by analogizing to a grant or contribution accounting model, including:

the nature of the transactions, the accounting for the transactions and the effect of the transactions on the financial statements.

The Company adopted the new guidance prospectively in the fourth quarter of fiscal 2023.

The adoption did not have a material impact on our financial statements other than additional disclosures related to content production incentives.

See Notes 2 and 7 for additional information.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures