What changed in this filing

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Item 1. Financial Statements

2024-05-07 compared with 2024-02-07 · 524 added, 209 removed, 610 unchanged (55% of the section changed)

1 unchanged sentence

THE WALT DISNEY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

in millions, except per share data)

Quarter Ended

2023 December 31,

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Services $ 19,757 $ 19,586 $ 40,732 $ 40,583

10 unchanged sentences

Restructuring and impairment charges ( 2,052 ) ( 152 ) ( 2,052 ) ( 221 )

Other expense, net

Other income, net

Interest expense, net ( 311 ) ( 322 ) ( 557 ) ( 622 )

2 unchanged sentences

657 2,123 3,528 3,896

( 441 ) ( 635 ) ( 1,161 ) ( 1,047 )

Net income 216 1,488 2,367 2,849

1 unchanged sentence

( 236 ) ( 217 ) ( 476 ) ( 299 )

Net income attributable to Disney $ 1,911 $ 1,279

Earnings per share attributable to Disney:

Net income (loss) attributable to The Walt Disney Company (Disney)

$ ( 20 ) $ 1,271 $ 1,891 $ 2,550

Earnings (loss) per share attributable to Disney:

Diluted $ ( 0.01 ) $ 0.69 $ 1.03 $ 1.39

5 unchanged sentences

THE WALT DISNEY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Quarter Ended

2023 December 31,

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Net income $ 216 $ 1,488 $ 2,367 $ 2,849

2 unchanged sentences

Pension and postretirement medical plan adjustments

( 24 ) 56 ( 45 ) 57

Foreign currency translation and other

Other comprehensive loss

( 119 ) 115 55 342

Other comprehensive income (loss) ( 28 ) 89 ( 194 ) ( 225 )

Comprehensive income

188 1,577 2,173 2,624

Net income attributable to noncontrolling interests

( 236 ) ( 217 ) ( 476 ) ( 299 )

Other comprehensive income attributable to noncontrolling interests ( 44 ) ( 45 )

Comprehensive income attributable to Disney $ 1,701 $ 920

Other comprehensive income (loss) attributable to noncontrolling interests

21 — ( 23 ) ( 45 )

Comprehensive income (loss) attributable to Disney

$ ( 27 ) $ 1,360 $ 1,674 $ 2,280

See Notes to Condensed Consolidated Financial Statements

35 unchanged sentences

Preferred stock

Common stock, $0.01 par value, Authorized – 4.6 billion shares, Issued – 1.9 billion shares at December 30, 2023 and 1.8 billion shares at September 30, 2023

Common stock, $0.01 par value, Authorized – 4.6 billion shares, Issued – 1.9 billion shares at March 30, 2024 and 1.8 billion shares at September 30, 2023

58,028 57,383

1 unchanged sentence

Accumulated other comprehensive loss ( 3,509 ) ( 3,292 )

Treasury stock, at cost, 19 million shares

Treasury stock, at cost, 27 million shares at March 30, 2024 and 19 million shares at September 30, 2023

( 1,916 ) ( 907 )

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Quarter Ended

2023 December 31,

Six Months Ended

2024 April 1,

OPERATING ACTIVITIES

1 unchanged sentence

Depreciation and amortization 2,485 2,616

Goodwill impairment

Deferred income taxes ( 211 ) ( 46 )

10 unchanged sentences

Income taxes ( 1,784 ) 416

Cash provided by (used in) operations

2,185 ( 974 )

Cash provided by operations

INVESTING ACTIVITIES

7 unchanged sentences

Reduction of borrowings ( 645 ) ( 1,000 )

Contributions from / sale of noncontrolling interest — 178

Acquisition of redeemable noncontrolling interest ( 8,610 ) ( 900 )

Dividends ( 549 ) —

Repurchases of common stock ( 1,001 ) —

Contributions from noncontrolling interests

Acquisition of redeemable noncontrolling interests

( 8,610 ) ( 900 )

Other, net ( 194 ) ( 188 )

15 unchanged sentences

Interests (2)

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

Balance at December 30, 2023 1,834 $ 57,640 $ 47,490 $ ( 3,502 ) $ ( 907 ) $ 100,721 $ 4,780 $ 105,501

Comprehensive income (loss) — — ( 20 ) ( 7 ) — ( 27 ) 181 154

1 unchanged sentence

Dividends — 4 ( 826 ) — — ( 822 ) — ( 822 )

Contributions — — — — — — 1 1

Common stock repurchases

( 9 ) — — — ( 1,001 ) ( 1,001 ) — ( 1,001 )

Distributions and other — 1 5 — ( 8 ) ( 2 ) ( 451 ) ( 453 )

Balance at March 30, 2024 1,826 $ 58,028 $ 46,649 $ ( 3,509 ) $ ( 1,916 ) $ 99,252 $ 4,511 $ 103,763

Balance at December 31, 2022 1,826 $ 56,579 $ 44,955 $ ( 4,478 ) $ ( 907 ) $ 96,149 $ 3,986 $ 100,135

Comprehensive income

— — 1,271 89 — 1,360 147 1,507

Equity compensation activity 1 345 — — — 345 — 345

Contributions — — — — — — 9 9

Distributions and other — ( 5 ) 10 — — 5 ( 445 ) ( 440 )

Balance at April 1, 2023 1,827 $ 56,919 $ 46,236 $ ( 4,389 ) $ ( 907 ) $ 97,859 $ 3,697 $ 101,556

(1) Shares are net of treasury shares.

(2) Excludes redeemable noncontrolling interests.

See Notes to Condensed Consolidated Financial Statements

THE WALT DISNEY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Six Months Ended

Equity Attributable to Disney

Common Stock Retained Earnings

Comprehensive

(Loss) Treasury Stock Total Disney Equity

Non-controlling Interests (2)

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

Comprehensive income (loss) — — 1,891 ( 217 ) — 1,674 310 1,984

Equity compensation activity 5 633 — — — 633 — 633

Dividends — 4 ( 1,375 ) — — ( 1,371 ) — ( 1,371 )

Contributions — — — — — — 1 1

Common stock repurchases

( 9 ) — — — ( 1,001 ) ( 1,001 ) — ( 1,001 )

Distributions and other — 8 40 — ( 8 ) 40 ( 480 ) ( 440 )

Balance at March 30, 2024 1,826 $ 58,028 $ 46,649 $ ( 3,509 ) $ ( 1,916 ) $ 99,252 $ 4,511 $ 103,763

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

Comprehensive income (loss)

— — 2,550 ( 270 ) — 2,280 131 2,411

Equity compensation activity 3 525 — — — 525 — 525

1 unchanged sentence

Distributions and other — ( 4 ) 50 — — 46 ( 492 ) ( 446 )

Balance at December 31, 2022 1,826 $ 56,579 $ 44,955 $ ( 4,478 ) $ ( 907 ) $ 96,149 $ 3,986 $ 100,135

Balance at April 1, 2023 1,827 $ 56,919 $ 46,236 $ ( 4,389 ) $ ( 907 ) $ 97,859 $ 3,697 $ 101,556

(1) Shares are net of treasury shares.

8 unchanged sentences

We believe that we have included all normal recurring adjustments necessary for a fair statement of the results for the interim period.

Operating results for the quarter ended December 30, 2023 are not necessarily indicative of the results that may be expected for the year ending September 28, 2024.

Operating results for the six months ended March 30, 2024 are not necessarily indicative of the results that may be expected for the year ending September 28, 2024.

The terms “Company,” “Disney,” “we,” “us,” and “our” are used in this report to refer collectively to the parent company, The Walt Disney Company, as well as the subsidiaries through which its various businesses are actually conducted.

2 unchanged sentences

The Company enters into relationships with or makes investments in other entities that may be variable interest entities (VIE).

A VIE is consolidated in the financial statements if the Company has the power to direct activities that most significantly impact the economic performance of the VIE and has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant (as defined by ASC 810-10-25-38) to the VIE.

Hong Kong Disneyland Resort and Shanghai Disney Resort (together the Asia Theme Parks) are VIEs in which the Company has less than 50% equity ownership.

A VIE is consolidated in our financial statements if the Company has the power to direct activities that most significantly impact the economic performance of the VIE and has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant (as defined by ASC 810-10-25-38) to the VIE.

Hong Kong Disneyland Resort and Shanghai Disney Resort (together the Asia Theme Parks, see Note 7) are VIEs in which the Company has less than 50% equity ownership.

Company subsidiaries (the Management Companies) have management agreements with the Asia Theme Parks, which provide the Management Companies, subject to certain protective rights of joint venture partners, with the ability to direct the day-to-day operating activities and the development of business strategies that we believe most significantly impact the economic performance of the Asia Theme Parks.

5 unchanged sentences

In December 2023, the Company paid NBCU $ 8.6 billion, which reflected the guaranteed floor value less NBCU’s unpaid capital call contributions.

Based on valuation procedures agreed upon by NBCU and the Company, Hulu’s equity fair value for purposes of determining the redemption payment is not expected to be finalized until later in calendar 2024.

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

The Company is required to accrete NBCU’s interest to the estimated redemption value and has accreted to the guaranteed floor value.

If the redemption value is higher than the guaranteed floor value, we would record the increment as “Net income attributable to noncontrolling interests” and thus reduce “Net income attributable to Disney” in the Condensed Consolidated Statements of Income.

Any incremental amount would be recorded as “Net income attributable to noncontrolling interests” and thus reduce “Net income attributable to Disney” in the Condensed Consolidated Statements of Operations.

Estimating the redemption value prior to its final determination requires management to make significant judgments related to assessing the fair value of Hulu.

1 unchanged sentence

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 attributable to noncontrolling interests” in the Condensed Consolidated Statements of Income.

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

During the three months ended December 31, 2022, Hearst Corporation (Hearst) contributed $ 178 million to the domestic DTC sports business to fund its 20 % share of the MLB buy-out.

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

In addition, Hearst Corporation contributed $ 178 million to the domestic DTC sports business to fund its 20 % share of the MLB buy-out.

Use of Estimates

1 unchanged sentence

Actual results may differ from those estimates.

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

Reclassifications

11 unchanged sentences

Segment revenues and segment operating income are as follows:

Quarter Ended

2023 December 31,

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Entertainment

1 unchanged sentence

Intersegment 105 97 205 188

9,796 10,309 19,777 20,984

Third parties 3,999 3,957 8,535 8,340

Intersegment 313 269 612 526

4,312 4,226 9,147 8,866

Experiences 8,393 7,646 17,525 16,191

8 unchanged sentences

(1) Equity in the income of investees is included in segment operating income as follows:

Quarter Ended

2023 December 31,

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Entertainment $ 138 $ 160 $ 309 $ 353

Sports 6 16 19 19

Experiences — — — ( 2 )

6 unchanged sentences

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

Quarter Ended

2023 December 31,

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Segment operating income $ 3,845 $ 3,285 $ 7,721 $ 6,328

1 unchanged sentence

Restructuring and impairment charges (1)

Other expense, net (2)

( 2,052 ) ( 152 ) ( 2,052 ) ( 221 )

Other income, net (2)

Interest expense, net ( 311 ) ( 322 ) ( 557 ) ( 622 )

4 unchanged sentences

(1) See Note 17 for a discussion of amounts in restructuring and impairment charges.

(2) See Note 4 for a discussion of amounts in other expense, net.

(2) See Note 5 for a discussion of amounts in other income, net.

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

Quarter Ended

2023 December 31,

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Amortization of intangible assets $ 362 $ 408 $ 742 $ 825

1 unchanged sentence

Intangibles related to TFCF equity investees 3 3 6 6

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

Entertainment Sports Experiences Total

Balance at September 30, 2023 $ 55,031 $ 16,486 $ 5,550 $ 77,067

Currency translation adjustments and other, net ( 1 ) — — ( 1 )

Balance at December 30, 2023 $ 55,030 $ 16,486 $ 5,550 $ 77,066

$ 434 $ 558 $ 885 $ 1,137

The following table presents revenues by segment and major source:

Quarter Ended March 30, 2024

Entertainment Sports Experiences Eliminations Total

Subscription fees $ 4,805 $ 417 $ — $ — $ 5,222

Affiliate fees 1,759 2,678 — ( 299 ) 4,138

Advertising 1,771 950 — — 2,721

Theme park admissions — — 2,806 — 2,806

Resort and vacations — — 2,101 — 2,101

Retail and wholesale sales of merchandise, food and beverage — — 2,266 — 2,266

Merchandise licensing 136 — 652 — 788

TV/VOD distribution licensing

480 70 — — 550

Theatrical distribution licensing 123 — — — 123

Home entertainment 189 — — — 189

Other 533 197 568 ( 119 ) 1,179

$ 9,796 $ 4,312 $ 8,393 $ ( 418 ) $ 22,083

THE WALT DISNEY COMPANY

1 unchanged sentence

tabular dollars in millions, except for per share data)

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

Quarter Ended December 30, 2023

Quarter Ended April 1, 2023

Entertainment Sports Experiences Eliminations Total

Affiliate fees $ 1,766 $ 2,669 $ — $ ( 293 ) $ 4,142

Subscription fees $ 4,225 $ 380 $ — $ — $ 4,605

Affiliate fees 1,925 2,766 — ( 277 ) 4,414

Advertising 1,782 781 1 — 2,564

9 unchanged sentences

$ 10,309 $ 4,226 $ 7,646 $ ( 366 ) $ 21,815

Quarter Ended December 31, 2022

Six Months Ended March 30, 2024

Entertainment Sports Experiences Eliminations Total

Subscription fees $ 9,312 $ 832 $ — $ — $ 10,144

Affiliate fees 3,525 5,347 — ( 592 ) 8,280

Advertising 3,768 2,301 — — 6,069

Theme park admissions — — 5,788 — 5,788

Resort and vacations — — 4,219 — 4,219

Retail and wholesale sales of merchandise, food and beverage — — 4,743 — 4,743

Merchandise licensing 328 — 1,619 — 1,947

TV/VOD distribution licensing

1,016 127 — — 1,143

Theatrical distribution licensing 374 — — — 374

Home entertainment 398 — — — 398

Other 1,056 540 1,156 ( 225 ) 2,527

$ 19,777 $ 9,147 $ 17,525 $ ( 817 ) $ 45,632

Six Months Ended April 1, 2023

Entertainment Sports Experiences Eliminations Total

Subscription fees $ 8,086 $ 759 $ — $ — $ 8,845

Affiliate fees 3,798 5,419 — ( 543 ) 8,674

Advertising 3,962 2,043 2 — 6,007

9 unchanged sentences

$ 20,984 $ 8,866 $ 16,191 $ ( 714 ) $ 45,327

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

Quarter Ended December 30, 2023

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

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

Quarter Ended March 30, 2024

Entertainment Sports Experiences Eliminations Total

3 unchanged sentences

Total revenues $ 9,796 $ 4,312 $ 8,393 $ ( 418 ) $ 22,083

Quarter Ended December 31, 2022

Quarter Ended April 1, 2023

Entertainment Sports Experiences Eliminations Total

3 unchanged sentences

Total revenues $ 10,309 $ 4,226 $ 7,646 $ ( 366 ) $ 21,815

Six Months Ended March 30, 2024

Entertainment Sports Experiences Eliminations Total

Americas $ 15,228 $ 8,473 $ 13,341 $ ( 817 ) $ 36,225

Europe 2,792 254 1,845 — 4,891

Asia Pacific 1,757 420 2,339 — 4,516

Total revenues $ 19,777 $ 9,147 $ 17,525 $ ( 817 ) $ 45,632

Six Months Ended April 1, 2023

Entertainment Sports Experiences Eliminations Total

Americas $ 16,091 $ 8,323 $ 12,901 $ ( 714 ) $ 36,601

Europe 2,904 204 1,723 — 4,831

Asia Pacific 1,989 339 1,567 — 3,895

Total revenues $ 20,984 $ 8,866 $ 16,191 $ ( 714 ) $ 45,327

Revenues recognized in the current and prior-year periods 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 the quarter ended December 30, 2023, $ 0.3 billion was recognized related to performance obligations satisfied as of September 30, 2023.

For the quarter ended December 31, 2022, $ 0.3 billion was recognized related to performance obligations satisfied as of October 1, 2022.

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

As of December 30, 2023, revenue for unsatisfied performance obligations expected to be recognized in the future is $ 14 billion, primarily for IP or advertising time to be made available in the future under existing agreements with merchandise and co-branding licensees and sponsors, television station affiliates, DTC wholesalers, advertisers and sports sublicensees.

For the quarter ended March 30, 2024, $ 0.3 billion was recognized related to performance obligations satisfied as of December 30, 2023.

For the six months ended March 30, 2024, $ 0.6 billion was recognized related to performance obligations satisfied as of September 30, 2023.

For the quarter ended April 1, 2023, $ 0.7 billion was recognized related to performance obligations satisfied as of December 31, 2022.

For the six months ended April 1, 2023, $ 0.5 billion was recognized related to performance obligations satisfied as of October 1, 2022.

As of March 30, 2024, revenue for unsatisfied performance obligations expected to be recognized in the future is $ 14 billion, primarily for IP or advertising time to be made available in the future under existing agreements with merchandise and co-branding licensees and sponsors, television station affiliates, DTC wholesalers, advertisers and sports sublicensees.

Of this amount, we expect to recognize approximately $ 4 billion in the remainder of fiscal 2024, $ 5 billion in fiscal 2025, $ 3 billion in fiscal 2026 and $ 2 billion thereafter.

4 unchanged sentences

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

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

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

7 unchanged sentences

Non-current 910 977

For the quarter ended December 30, 2023, the Company recognized revenue of $ 3.4 billion that was included in the September 30, 2023 deferred revenue balance.

For the quarter ended December 31, 2022, the Company recognized revenue of $ 3.4 billion that was included in the October 1, 2022 deferred revenue balance.

For the quarter and six months ended March 30, 2024, the Company recognized revenue of $ 0.9 billion and $ 4.4 billion, respectively, that was included in the September 30, 2023 deferred revenue balance.

For the quarter and six months ended April 1, 2023, the Company recognized revenue of $ 0.9 billion and $ 4.3 billion, respectively, that was included in the October 1, 2022 deferred revenue balance.

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

3 unchanged sentences

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

The balance of TV/VOD licensing receivables recorded in other non-current assets was $ 0.5 billion at December 30, 2023 and $ 0.6 billion at September 30, 2023.

The balance of vacation club receivables recorded in other non-current assets was $ 0.7 billion at both December 30, 2023 and September 30, 2023.

The allowance for credit losses for TV/VOD licensing and vacation club receivables and related activity for the periods ended December 30, 2023 and September 30, 2023 were not material.

The balance of TV/VOD licensing receivables recorded in other non-current assets was $ 0.4 billion at March 30, 2024 and $ 0.6 billion at September 30, 2023.

The balance of vacation club receivables recorded in other non-current assets was $ 0.7 billion at both March 30, 2024 and September 30, 2023.

The allowance for credit losses for TV/VOD licensing and vacation club receivables and related activity for the periods ended March 30, 2024 and September 30, 2023 were not material.

On February 28, 2024, Star India Private Limited (Star India), a subsidiary of the Company, entered into a binding definitive agreement with Reliance Industries Limited (RIL) and Viacom 18 Media Private Limited (Viacom 18), which is majority owned and controlled by RIL, to form a joint venture that will combine the businesses of Viacom18 and Star India consisting of entertainment and sports pay TV and free-to-air networks, DTC services, library content and certain production businesses (the Star India Transaction).

RIL will have an effective 56 % controlling interest in the joint venture with 37 % held by the Company, and 7 % by Bodhi Tree Systems, a third party investment company.

The Star India Transaction is expected to close in the first half of calendar year 2025, subject to customary closing conditions, including regulatory approvals and government consents.

If closing has not occurred by February 28, 2026, Star India or RIL may terminate the transaction.

Star India’s assets and liabilities (see table that follows) are presented as held for sale in the Condensed Consolidated Balance Sheets.

The carrying amount of Star India exceeded its fair value and we recognized a non-cash goodwill impairment charge of $ 1.3 billion in “Restructuring and impairment charges” in the Condensed Consolidated Statements of Operations to reflect Star India at its fair value less costs to sell.

The measurement of this impairment charge includes non-cash cumulative foreign currency translation losses of approximately $ 0.8 billion.

THE WALT DISNEY COMPANY

1 unchanged sentence

tabular dollars in millions, except for per share data)

Other Expense, net

Other expense, net is as follows:

Quarter Ended

2023 December 31,

DraftKings loss $ — $ ( 70 )

Other expense, net

In the prior-year quarter, the Company recognized a $ 70 million non-cash loss to adjust its investment in DraftKings, Inc.

Assets and liabilities of Star India are classified as held for sale in the Condensed Consolidated Balance Sheets as of March 30, 2024 as follows:

Receivables and other current assets $ 821

Content advances 63

Total current assets 884

Produced and licensed content costs 667

Property and equipment, net 67

Intangible assets, net 760

Goodwill 1,110

Other assets 680

Total assets (1)

Accounts payable and other accrued liabilities $ 430

Deferred revenue and other 86

Total current liabilities 516

Other long-term liabilities 382

Total liabilities (1)

(1) Total current assets and non-current assets held for sale are included in “Other current assets” and “Other assets,” respectively, in the Condensed Consolidated Balance Sheets.

Total current liabilities and non-current liabilities held for sale are included in “Deferred revenue and other” and “Other long-term liabilities” in the Condensed Consolidated Balance Sheets.

These assets and liabilities are subject to change through closing.

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

Entertainment Sports Experiences Star India Total

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

Allocation to Star India ( 2,445 ) — — 2,445 —

Impairment (1)

( 703 ) — — ( 1,335 ) ( 2,038 )

Reclassification to held for sale — — — ( 1,110 ) ( 1,110 )

Currency translation adjustments and other, net ( 5 ) — — — ( 5 )

Balance at March 30, 2024 $ 51,878 $ 16,486 $ 5,550 $ — $ 73,914

(1) Reflects impairments related to entertainment linear networks and Star India (see Note 17).

Other Income, net

Other income, net is as follows:

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

DraftKings gain $ — $ 149 $ — $ 79

Other income, net

$ — $ 149 $ — $ 107

In the prior-year quarter and six months ended April 1, 2023, the Company recognized a non-cash gain of $ 149 million and $ 79 million, respectively, to adjust its investment in DraftKings, Inc.

(DraftKings) to fair value.

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

Cash, Cash Equivalents, Restricted Cash and Borrowings

5 unchanged sentences

Total cash, cash equivalents and restricted cash in the statement of cash flows $ 6,726 $ 14,235

During the quarter ended December 30, 2023, the Company’s borrowing activity was as follows:

During the six months ended March 30, 2024, the Company’s borrowing activity was as follows:

September 30,

2023 Borrowings Payments Other

Activity December 30,

Activity March 30,

Commercial paper with original maturities less than three months $ 289 $ 417 $ — $ ( 1 ) $ 705

8 unchanged sentences

(1) The other activity is attributable to market value adjustments for debt with qualifying hedges.

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

At March 30, 2024, the Company’s bank facilities, which are with a syndicate of lenders and support our commercial paper borrowings, were as follows:

Capacity Capacity

Facility expiring March 2024 $ 5,250 $ — $ 5,250

Facility expiring February 2025

$ 5,250 $ — $ 5,250

Facility expiring March 2027 4,000 — 4,000

Facility expiring March 2029

3,000 — 3,000

Total $ 12,250 $ — $ 12,250

In March 2024, the Company refinanced two bank facilities with committed capacity of $ 5.25 billion and $ 3.0 billion, which were scheduled to expire in March 2024 and March 2025, respectively.

The new bank facilities are set to expire in February 2025 and March 2029, respectively.

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 and Poor’s ranging from 0.655% to 1.225%.

The bank facilities contain

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

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

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 March 30, 2024, 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 December 30, 2023, the Company has $ 1.7 billion of outstanding letters of credit, of which none were issued under this facility.

As of March 30, 2024, the Company has $ 1.6 billion of outstanding letters of credit, of which none were issued under this facility.

Cruise Ship Credit Facilities

2 unchanged sentences

Each tranche of financing may be utilized within 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

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

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 .

Interest expense, net

Interest expense (net of amounts capitalized), interest and investment income, and net periodic pension and postretirement benefit costs (other than service costs) (see Note 9) are reported net in the Condensed Consolidated Statements of Income and consist of the following:

Quarter Ended

2023 December 31,

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 Condensed Consolidated Statements of Operations and consist of the following:

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Interest expense $ ( 501 ) $ ( 504 ) $ ( 1,029 ) $ ( 969 )

18 unchanged sentences

Total liabilities $ 2,340 $ 2,420

The following table summarizes the International Theme Parks’ revenues and costs and expenses included in the Company’s Condensed Consolidated Statements of Operations for the six months ended March 30, 2024:

Revenues $ 2,789

Costs and expenses ( 2,321 )

Asia Theme Parks’ royalty and management fees of $ 153 million for the six months ended March 30, 2024 are eliminated in consolidation, but are considered in calculating earnings attributable to noncontrolling interests.

International Theme Parks’ cash flows included in the Company’s Condensed Consolidated Statements of Cash Flows for the six months ended March 30, 2024 were $ 733 million provided by operating activities, $ 464 million used in investing activities and $ 12 million used in financing activities.

THE WALT DISNEY COMPANY

1 unchanged sentence

tabular dollars in millions, except for per share data)

The following table summarizes the International Theme Parks’ revenues and costs and expenses included in the Company’s Condensed Consolidated Statements of Income for the quarter ended December 30, 2023:

Revenues $ 1,362

Costs and expenses ( 1,123 )

Asia Theme Parks’ royalty and management fees of $ 67 million for the quarter ended December 30, 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 Condensed Consolidated Statements of Cash Flows for the quarter ended December 30, 2023 were $ 352 million provided by operating activities, $ 239 million used in investing activities and $ 12 million used in financing activities.

Hong Kong Disneyland Resort

3 unchanged sentences

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 ($ 346 million), which bears interest at a rate of three month HIBOR plus 1.25 % and matures in December 2028.

The line of credit was fully repaid during the quarter ended December 30, 2023.

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

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

The line of credit does not have a balance outstanding.

Shanghai Disney Resort

2 unchanged sentences

The Company has provided Shanghai Disney Resort with loans totaling $ 982 million, bearing interest at rates up to 8 % and maturing in 2036, with early repayment permitted.

The loan is eliminated in consolidation.

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 %.

The line of credit was fully repaid during the quarter ended December 30, 2023.

These balances are eliminated in consolidation.

The line of credit does not have a balance outstanding.

Shendi has provided Shanghai Disney Resort with loans totaling 8.9 billion yuan (approximately $ 1.2 billion), bearing interest at rates up to 8 % and maturing in 2036, with early repayment permitted.

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

The line of credit was fully repaid during the quarter ended December 30, 2023.

The line of credit does not have a balance outstanding.

Produced and Acquired/Licensed Content Costs and Advances

5 unchanged sentences

subscription revenue for a DTC service or affiliate fees for a cable television network)

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

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

As of December 30, 2023 As of September 30, 2023

Predominantly Monetized Individually Predominantly Monetized

as a Group Total Predominantly Monetized Individually Predominantly Monetized

As of March 30, 2024 As of September 30, 2023

Predominantly

Individually Predominantly

as a Group Total Predominantly

Individually Predominantly

as a Group Total

9 unchanged sentences

Non-current portion $ 32,590 $ 33,591

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

Amortization of produced and licensed content is as follows:

Quarter Ended

2023 December 31,

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Produced content

1 unchanged sentence

Predominantly monetized as a group 1,752 1,952 3,546 4,112

2,363 2,958 4,925 6,275

Licensed programming rights and advances 3,366 3,196 7,956 7,735

1 unchanged sentence

$ 5,729 $ 6,154 $ 12,881 $ 14,010

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

Unrecognized Tax Benefits

The Company’s gross unrecognized tax benefits (before interest and penalties) at both December 30, 2023 and September 30, 2023, were $ 2.5 billion.

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

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

Deferred Tax Assets and Liabilities

The Company records deferred income tax assets and liabilities with respect to temporary differences in accounting treatment of items for financial reporting purposes and income tax purposes.

The Company’s deferred tax assets and liabilities by major category as of March 30, 2024 and September 30, 2023 were as follows:

March 30, 2024 September 30, 2023

Deferred tax assets

Net operating losses and tax credit carryforwards (1)

$ ( 3,465 ) $ ( 3,841 )

Accrued liabilities ( 1,289 ) ( 1,335 )

Lease liabilities ( 820 ) ( 852 )

Licensing revenues ( 110 ) ( 115 )

Other ( 684 ) ( 623 )

Total deferred tax assets ( 6,368 ) ( 6,766 )

Deferred tax liabilities

Depreciable, amortizable and other property 7,266 7,581

Investment in subsidiaries / equity investees (2)

Right-of-use lease assets

Total deferred tax liabilities 9,605 10,166

Net deferred tax liability before valuation allowance 3,237 3,400

Valuation allowance 3,017 3,187

Net deferred tax liability $ 6,254 $ 6,587

(1) Balances at March 30, 2024 and September 30, 2023 include approximately $ 1.5 billion and $ 1.6 billion, respectively, of International Theme Park net operating losses and include approximately $ 0.8 billion and $ 1.0 billion, respectively, 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 $ 0.1 billion, if not used, expire between fiscal 2025 and fiscal 2028.

Foreign tax credits of $ 0.8 billion in the U.S.

have a ten-year carryforward period and, if not used, expire beginning in fiscal 2028.

(2) Deferred tax liabilities on investment in subsidiaries / equity investees are, in part, due to the tax status of these entities.

If the Company were to change the tax status of certain legal entities, a significant portion of these deferred taxes may reverse.

THE WALT DISNEY COMPANY

1 unchanged sentence

tabular dollars in millions, except for per share data)

Valuation Allowance

The Company records deferred income tax assets and liabilities with respect to temporary differences in the accounting treatment of items for financial reporting purposes and for income tax purposes.

Where, based on the weight of available evidence, it is more likely than not that some amount of recorded deferred tax assets will not be realized, a valuation allowance is established for the amount that, in management’s judgment, is sufficient to reduce the deferred tax asset to an amount that is more likely than not to be realized.

The Company’s valuation allowance decreased by $ 0.2 billion, from $ 3.2 billion at September 30, 2023 to $ 3.0 billion at March 30, 2024.

Unrecognized Tax Benefits

The Company’s gross unrecognized tax benefits (before interest and penalties) decreased $ 0.1 billion, from $ 2.5 billion at September 30, 2023 to $ 2.4 billion at March 30, 2024.

Pension and Other Benefit Programs

1 unchanged sentence

Pension Plans Postretirement Medical Plans

Quarter Ended Quarter Ended

2023 December 31,

2022 December 30,

2023 December 31,

Quarter Ended Six Months Ended Quarter Ended Six Months Ended

Service costs $ 63 $ 63 $ 125 $ 128 $ — $ 2 $ — $ 3

6 unchanged sentences

Net periodic benefit cost (income) $ ( 6 ) $ ( 22 ) $ ( 13 ) $ ( 42 ) $ ( 34 ) $ 3 $ ( 65 ) $ 3

During the quarter ended December 30, 2023, the Company did not make any material contributions to its pension and postretirement medical plans and does not currently expect to make any material contributions for the remainder of fiscal 2024.

During the six months ended March 30, 2024, the Company did not make any material contributions to its pension and postretirement medical plans and does not currently expect to make any material contributions for the remainder of fiscal 2024.

Final minimum funding requirements for fiscal 2024 will be determined based on a January 1, 2024 funding actuarial valuation, which is expected to be received in the fourth quarter of fiscal 2024.

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

Earnings Per Share

1 unchanged sentence

A reconciliation of the weighted average number of common and common equivalent shares outstanding and the number of Awards excluded from the diluted earnings per share calculation, as they were anti-dilutive, are as follows:

Quarter Ended

2023 December 31,

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Shares (in millions):

3 unchanged sentences

Awards excluded from diluted earnings per share 27 25 30 25

On November 30, 2023 , the Board of Directors declared a cash dividend of $ 0.30 per share ($ 549 million) with respect to the second half of fiscal 2023, which was paid in January 2024 to shareholders of record as of December 11, 2023 .

On February 7, 2024 , the Board of Directors declared a cash dividend of $ 0.45 per share with respect to the first half of fiscal 2024, which will be paid on July 25, 2024 to shareholders of record as of July 8, 2024 .

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

On November 30, 2023 , the Board of Directors declared a cash dividend of $ 0.30 per share ($ 0.5 billion) with respect to the second half of fiscal 2023, which was paid in January 2024 to shareholders of record as of December 11, 2023 .

On February 7, 2024 , the Board of Directors declared a cash dividend of $ 0.45 per share (estimated at $ 0.8 billion) with respect to the first half of fiscal 2024, which will be paid on July 25, 2024 to shareholders of record as of July 8, 2024 .

Effective February 7, 2024, the Board of Directors authorized a new share repurchase program for the Company to repurchase a total of 400 million shares of its common stock.

The Company plans to target repurchases of $ 3 billion in fiscal 2024.

During the quarter and six months ended March 30, 2024, the Company repurchased 9 million shares of its common stock for $ 1.0 billion (amount excludes the one percent excise tax on stock repurchases imposed by the Inflation Reduction Act of 2022).

As of March 30, 2024, the Company had remaining authorization in place to repurchase approximately 391 million additional shares.

The repurchase program does not have an expiration date.

3 unchanged sentences

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

Market Value Adjustments for Hedges Unrecognized

for Hedges Unrecognized

Postretirement

2 unchanged sentences

AOCI, before tax

First quarter of fiscal 2024

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

Quarter Ended December 30, 2023:

Second quarter of fiscal 2024

Balance at December 30, 2023 $ ( 158 ) $ ( 2,199 ) $ ( 1,837 ) $ ( 4,194 )

Quarter Ended March 30, 2024:

Unrealized gains (losses) arising during the period 244 ( 6 ) ( 107 ) 131

Reclassifications of realized net (gains) losses to net income ( 92 ) ( 24 ) — ( 116 )

Balance at March 30, 2024 $ ( 6 ) $ ( 2,229 ) $ ( 1,944 ) $ ( 4,179 )

Second quarter of fiscal 2023

Balance at December 31, 2022 $ 111 $ ( 3,769 ) $ ( 1,826 ) $ ( 5,484 )

First quarter of fiscal 2023

Quarter Ended April 1, 2023:

Unrealized gains (losses) arising during the period 7 71 125 203

Reclassifications of realized net (gains) losses to net income ( 116 ) 1 — ( 115 )

Balance at April 1, 2023 $ 2 $ ( 3,697 ) $ ( 1,701 ) $ ( 5,396 )

Six months ended fiscal 2024

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

Six Months Ended March 30, 2024:

Unrealized gains (losses) arising during the period ( 33 ) ( 9 ) 30 ( 12 )

Reclassifications of realized net (gains) losses to net income ( 232 ) ( 48 ) — ( 280 )

Balance at March 30, 2024 $ ( 6 ) $ ( 2,229 ) $ ( 1,944 ) $ ( 4,179 )

Six months ended fiscal 2023

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

Quarter Ended December 31, 2022:

Six Months Ended April 1, 2023:

Unrealized gains (losses) arising during the period ( 468 ) 71 271 ( 126 )

Reclassifications of realized net (gains) losses to net income ( 334 ) 2 42 ( 290 )

Balance at December 31, 2022 $ 111 $ ( 3,769 ) $ ( 1,826 ) $ ( 5,484 )

Market Value Adjustments for Hedges Unrecognized

Balance at April 1, 2023 $ 2 $ ( 3,697 ) $ ( 1,701 ) $ ( 5,396 )

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

for Hedges Unrecognized

Postretirement

1 unchanged sentence

and Other AOCI

First quarter of fiscal 2024

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

Quarter Ended December 30, 2023:

Second quarter of fiscal 2024

Balance at December 30, 2023 $ 34 $ 523 $ 135 $ 692

Quarter Ended March 30, 2024:

Unrealized gains (losses) arising during the period ( 58 ) — 9 ( 49 )

Reclassifications of realized net (gains) losses to net income 21 6 — 27

Balance at March 30, 2024 $ ( 3 ) $ 529 $ 144 $ 670

Second quarter of fiscal 2023

Balance at December 31, 2022 $ ( 28 ) $ 901 $ 133 $ 1,006

First quarter of fiscal 2023

Quarter Ended April 1, 2023:

Unrealized gains (losses) arising during the period — ( 16 ) ( 10 ) ( 26 )

Reclassifications of realized net (gains) losses to net income 27 — — 27

Balance at April 1, 2023 $ ( 1 ) $ 885 $ 123 $ 1,007

Six months ended fiscal 2024

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

Six Months Ended March 30, 2024:

Unrealized gains (losses) arising during the period 8 — 2 10

Reclassifications of realized net (gains) losses to net income 53 12 — 65

Balance at March 30, 2024 $ ( 3 ) $ 529 $ 144 $ 670

Six months ended fiscal 2023

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

Quarter Ended December 31, 2022:

Six Months Ended April 1, 2023:

Unrealized gains (losses) arising during the period 100 ( 16 ) ( 2 ) 82

Reclassifications of realized net (gains) losses to net income 78 — ( 14 ) 64

Balance at December 31, 2022 $ ( 28 ) $ 901 $ 133 $ 1,006

Balance at April 1, 2023 $ ( 1 ) $ 885 $ 123 $ 1,007

THE WALT DISNEY COMPANY

1 unchanged sentence

tabular dollars in millions, except for per share data)

Market Value Adjustments for Hedges Unrecognized

for Hedges Unrecognized

Postretirement

2 unchanged sentences

AOCI, after tax

First quarter of fiscal 2024

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

Quarter Ended December 30, 2023:

Second quarter of fiscal 2024

Balance at December 30, 2023 $ ( 124 ) $ ( 1,676 ) $ ( 1,702 ) $ ( 3,502 )

Quarter Ended March 30, 2024:

Unrealized gains (losses) arising during the period 186 ( 6 ) ( 98 ) 82

Reclassifications of realized net (gains) losses to net income ( 71 ) ( 18 ) — ( 89 )

Balance at March 30, 2024 $ ( 9 ) $ ( 1,700 ) $ ( 1,800 ) $ ( 3,509 )

Second quarter of fiscal 2023

Balance at December 31, 2022 $ 83 $ ( 2,868 ) $ ( 1,693 ) $ ( 4,478 )

First quarter of fiscal 2023

Quarter Ended April 1, 2023:

Unrealized gains (losses) arising during the period 7 55 115 177

Reclassifications of realized net (gains) losses to net income ( 89 ) 1 — ( 88 )

Balance at April 1, 2023 $ 1 $ ( 2,812 ) $ ( 1,578 ) $ ( 4,389 )

Six months ended fiscal 2024

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

Six Months Ended March 30, 2024:

Unrealized gains (losses) arising during the period ( 25 ) ( 9 ) 32 ( 2 )

Reclassifications of realized net (gains) losses to net income ( 179 ) ( 36 ) — ( 215 )

Balance at March 30, 2024 $ ( 9 ) $ ( 1,700 ) $ ( 1,800 ) $ ( 3,509 )

Six months ended fiscal 2023

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

Quarter Ended December 31, 2022:

Six Months Ended April 1, 2023:

Unrealized gains (losses) arising during the period ( 368 ) 55 269 ( 44 )

Reclassifications of realized net (gains) losses to net income ( 256 ) 2 28 ( 226 )

Balance at December 31, 2022 $ 83 $ ( 2,868 ) $ ( 1,693 ) $ ( 4,478 )

Balance at April 1, 2023 $ 1 $ ( 2,812 ) $ ( 1,578 ) $ ( 4,389 )

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

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

1 unchanged sentence

Affected line item in the Condensed Consolidated Statements of Operations:

Quarter Ended

2023 December 31,

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Market value adjustments, primarily cash flow hedges Primarily revenue $ 92 $ 116 $ 232 $ 334

Estimated tax Income taxes ( 21 ) ( 27 ) ( 53 ) ( 78 )

71 89 179 256

Pension and postretirement medical expense Interest expense, net 24 ( 1 ) 48 ( 2 )

Estimated tax Income taxes ( 6 ) — ( 12 ) —

18 ( 1 ) 36 ( 2 )

Foreign currency translation and other Restructuring and impairment charges — — — ( 42 )

1 unchanged sentence

Total reclassifications for the period $ 89 $ 88 $ 215 $ 226

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

Equity-Based Compensation

Compensation expense related to stock options and restricted stock units (RSUs) is as follows:

Quarter Ended

2023 December 31,

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Stock options $ 20 $ 20 $ 37 $ 39

RSUs 347 280 638 531

Total equity-based compensation expense (1)

$ 367 $ 300 $ 675 $ 570

Equity-based compensation expense capitalized during the period $ 58 $ 37 $ 102 $ 73

(1) Equity-based compensation expense is net of capitalized equity-based compensation and estimated forfeitures and excludes amortization of previously capitalized equity-based compensation costs.

Unrecognized compensation cost related to unvested stock options and RSUs was $ 137 million and $ 2.8 billion, respectively, as of December 30, 2023.

During the quarters ended December 30, 2023 and December 31, 2022, the weighted average grant date fair values for options granted were $ 32.06 and $ 34.71 , respectively, and for RSUs were $ 93.87 and $ 91.89 , respectively.

During the quarter ended December 30, 2023, the Company made equity compensation grants consisting of 2.7 million stock options and 15.7 million RSUs.

Unrecognized compensation cost related to unvested stock options and RSUs was $ 115 million and $ 2.4 billion, respectively, as of March 30, 2024.

During the six months ended March 30, 2024 and April 1, 2023, the weighted average grant date fair values for options granted were $ 32.10 and $ 34.72 , respectively, and for RSUs were $ 94.25 and $ 92.07 , respectively.

During the six months ended March 30, 2024, the Company made equity compensation grants consisting of 2.7 million stock options and 16.1 million RSUs.

Commitments and Contingencies

4 unchanged sentences

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.

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

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.

Plaintiffs seek unspecified damages, plus interest and costs and fees.

The Company intends to defend against the lawsuit vigorously and filed a motion to dismiss the complaint for failure to state a claim on December 21, 2023.

Plaintiffs filed their opposition on February 5, 2024, and the Company may file a reply brief by March 5, 2024.

The lawsuit is in the early stages and at this time we cannot reasonably estimate the amount of any potential loss.

Plaintiffs filed their opposition on February 5, 2024, and the Company filed its reply brief on March 5, 2024.

The lawsuit is in the early stages and at this time we cannot reasonably estimate the amount of any possible loss.

Three shareholder derivative complaints have been filed.

11 unchanged sentences

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.

Along with alleged violations of Sections 10(b), 14(a), 20(a), and Rule 10b-5 of the Securities Exchange Act, premised on similar allegations as the Securities Class Action, plaintiffs seek to recover under various theories including 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 analogous theories of liability based on state law.

On October 30, 2023, the Gervat action was stayed pending a ruling on the motion to dismiss filed in the Securities Class Action.

The Stourbridge action was likewise stayed under an order entered December 12, 2023.

The Stourbridge action was likewise stayed under an order entered December 12, 2023 and the McAdams action was stayed under an order entered February 20, 2024.

The actions seek declarative and injunctive relief, an award of unspecified damages to The Walt Disney Company and other costs and fees.

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 lawsuits are in the early stages, and at this time we cannot reasonably estimate the amount of any possible loss.

On November 18, 2022, a private antitrust putative class action lawsuit was filed in the U.S.

District Court for the Northern District of California against the Company on behalf of a putative class of certain subscribers to YouTube TV (the “Biddle Action”).

The plaintiffs in the Biddle Action asserted a claim under Section 1 of the Sherman Act based on allegations that Disney uses certain pricing and packaging provisions in its carriage agreements with virtual multichannel video distributors (“vMVPDs”) to increase prices for and reduce output of certain services offered by vMVPDs.

On November 30, 2022, a second private antitrust putative class action lawsuit was filed in the U.S.

District Court for the Northern District of California against the Company on behalf of a putative class of certain subscribers to DirecTV Stream (the “Fendelander Action”).

The plaintiffs in the Fendelander Action asserted a claim under Section 1 of the Sherman Act based on substantially similar allegations as the Biddle Action.

The Company filed motions to dismiss for failure to state a claim in both the Biddle Action and Fendelander Action on January 31, 2023.

The plaintiffs in both cases filed their oppositions on April 7, 2023, the Company filed reply briefs on May 12, 2023, and the court heard oral argument on the Company’s motions to dismiss on July 13, 2023.

On September 30, 2023, the court issued an order granting in part and denying in part the Company’s motions to dismiss both cases and, on October 13, 2023, the court issued an order consolidating both cases.

On October 16, 2023, plaintiffs filed a consolidated amended putative class action complaint (the “Consolidated Complaint”).

The Consolidated Complaint asserts claims under Section 1 of the Sherman Act and certain Arizona, California, Florida, Illinois, Iowa, Massachusetts, Michigan, Nevada, New York, North Carolina, and Tennessee antitrust laws based on substantially similar allegations as the Biddle Action and the Fendelander Action.

The Consolidated Complaint seeks injunctive relief, unspecified money damages and costs and fees.

The Company intends to defend against the lawsuits vigorously and filed a motion to dismiss the Consolidated Complaint for failure to state a claim on December 1, 2023.

The plaintiffs filed their opposition on January 5, 2024, the Company filed its reply brief on February 2, 2024, and the court heard oral argument on the Company’s motion to dismiss on February 15, 2024.

A decision on the Company’s motion to dismiss the Consolidated Complaint remains pending.

The consolidated lawsuit is in the early stages, and at this time we cannot reasonably estimate the amount of any possible loss.

On February 20, 2024, a private antitrust lawsuit was filed in the U.S.

District Court for the Southern District of New York against the Company (including affiliates ESPN, Inc., ESPN Enterprises, Inc., and Hulu, LLC), Fox Corporation, and Warner Bros.

Discovery, Inc.

(collectively, “Defendants”), by fuboTV Inc.

and fuboTV Media Inc.

(together, “Fubo”).

Fubo asserts claims under Section 1 of the Sherman Act, Section 7 of the Clayton Act, and New York antitrust law based on the theories that (a) a planned joint venture between ESPN, Inc., Fox Corporation, and Warner Bros.

Discovery, Inc., which will distribute certain of Defendants’ linear networks to consumers (the “Sports Streaming JV”), will harm competition in an alleged market for the licensing of networks that offer live sports content, (b) certain alleged practices by which the Company and Fox Corporation license their networks to vMVPDs as a bundle increase prices and reduce output for services offered by vMVPDs,

THE WALT DISNEY COMPANY

1 unchanged sentence

tabular dollars in millions, except for per share data)

and (c) certain alleged pricing provisions in Defendants’ carriage agreements with YouTube TV and Hulu + Live TV increase prices for services offered by vMVPDs.

On April 8, 2024, Fubo filed a motion for a preliminary injunction against Defendants to prevent the formation of the Sports Streaming JV.

Defendants may file their opposition to Fubo’s motion for preliminary injunction by July 25, 2024, and Fubo may file a reply by August 1, 2024, with the hearing on Fubo’s motion for preliminary injunction scheduled to begin on August 7, 2024.

Fubo further seeks injunctive relief, unspecified money damages and costs and fees.

The Company filed a motion to dismiss Fubo’s complaint on April 10, 2024.

On April 29, 2024, Fubo filed an amended complaint to add allegations of a purported market for “skinny sports bundles”, which Fubo claims the Sports Streaming JV will monopolize after its launch.

The court has stayed the Defendants’ obligation to answer or move to dismiss Fubo’s amended complaint until after resolution of Fubo’s motion for a preliminary injunction.

The Company intends to defend against the lawsuit vigorously.

The lawsuit is in its early stages, and at this time we cannot reasonably estimate the amount of any possible 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.

In April 2024, the Company acquired an incremental 5 % interest in Epic Games, Inc.

(“Epic”), a video game and software developer and publisher, in exchange for $ 1.0 billion.

The Company is committed to acquire an additional 2 % interest for $ 0.5 billion in July 2024, which will bring the Company’s total interest in Epic to approximately 8 %.

Fair Value Measurements

6 unchanged sentences

The Company’s assets and liabilities measured at fair value are summarized in the following tables by fair value measurement Level:

Fair Value Measurement at December 30, 2023

Fair Value Measurement at March 30, 2024

Level 1 Level 2 Level 3 Total

5 unchanged sentences

Other — ( 540 ) — ( 540 )

Other — ( 539 ) — ( 539 )

Total recorded at fair value $ — $ ( 1,555 ) $ — $ ( 1,555 )

Fair value of borrowings $ — $ 41,956 $ 1,448 $ 43,404

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

Fair Value Measurement at September 30, 2023

9 unchanged sentences

Fair value of borrowings $ — $ 40,123 $ 1,333 $ 41,456

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

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.

1 unchanged sentence

Counterparty credit risk, which is mitigated by master netting agreements and collateral posting arrangements with certain counterparties, had an impact on derivative fair value estimates that was not material.

The Company’s derivative financial instruments are discussed in Note 16.

Level 2 other liabilities are primarily arrangements that are valued based on the fair value of underlying investments, which are generally measured using Level 1 and Level 2 fair value techniques.

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The carrying values of these financial instruments approximate the fair values.

Non-recurring Fair Value Measure

The Company also has assets that may be required to be recorded at fair value on a non-recurring basis.

These assets are evaluated when certain triggering events occur (including a decrease in estimated future cash flows) that indicate their carrying amounts may not be recoverable.

In the second quarter of fiscal 2024, the Company recorded impairment charges for goodwill as disclosed in Notes 4 and 17.

The fair value of these assets were determined using their estimated discounted future cash flows, which is a Level 3 valuation technique (see Note 17 for a discussion of the more significant inputs used in our discounted cash flow analysis).

Derivative Instruments

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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 December 30, 2023

Assets Investments/Other Assets

Other Current Liabilities Other Long-

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

The Company’s derivative positions measured at fair value (see Note 15) are summarized in the following tables:

As of March 30, 2024

Assets Investments/

Other Assets Other Current

Liabilities Other Long-

Derivatives designated as hedges

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Net derivative positions $ 112 $ 126 $ ( 311 ) $ ( 4 )

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

As of September 30, 2023

Assets Investments/Other Assets

Other Current Liabilities Other Long-

Assets Investments/

Other Assets Other Current

Liabilities Other Long-

Derivatives designated as hedges

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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 at both December 30, 2023 and September 30, 2023 was $ 13.5 billion.

The total notional amount of the Company’s pay-floating interest rate swaps at both March 30, 2024 and September 30, 2023 was $ 13.5 billion.

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

The following table summarizes fair value hedge adjustments to hedged borrowings:

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2024 September 30,

2023 December 30,

2023 March 30,

2024 September 30,

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$ 12,558 $ 12,187 $ ( 1,395 ) $ ( 1,753 )

The following amounts are included in “Interest expense, net” in the Condensed Consolidated Statements of Income:

Quarter Ended

2023 December 31,

The following amounts are included in “Interest expense, net” in the Condensed Consolidated Statements of Operations:

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Gain (loss) on:

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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 December 30, 2023 or at September 30, 2023, and gains and losses related to pay-fixed interest rate swaps recognized in earnings for the quarters ended December 30, 2023 and December 31, 2022 were not material.

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

The Company did not have pay-fixed interest rate swaps that were designated as cash flow hedges of interest payments at March 30, 2024 or at September 30, 2023, and gains and losses related to pay-fixed interest rate swaps recognized in earnings for the quarters ended March 30, 2024 and April 1, 2023 were not material.

Foreign Exchange Risk Management

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The Company designates foreign exchange forward and option contracts as cash flow hedges of firmly committed and forecasted foreign currency transactions.

As of December 30, 2023 and September 30, 2023, the notional amounts of the Company’s net foreign exchange cash flow hedges were $ 9.5 billion and $ 8.3 billion, respectively.

As of March 30, 2024 and September 30, 2023, the notional amounts of the Company’s net foreign exchange cash flow hedges were $ 9.8 billion and $ 8.3 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.

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The following table summarizes the effect of foreign exchange cash flow hedges on AOCI:

Quarter Ended

2023 December 31,

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Gain (loss) recognized in Other Comprehensive Income $ 237 $ 15 $ ( 27 ) $ ( 487 )

Gain (loss) reclassified from AOCI into the Statements of Operations (1)

93 116 234 338

(1) Primarily recorded in revenue.

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

The Company designates cross currency swaps as fair value hedges of foreign currency denominated borrowings.

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 December 30, 2023 and September 30, 2023, the total notional amount of the Company’s designated cross currency swaps was Canadian $ 1.3 billion ($ 1.0 billion).

The related gains or losses recognized in earnings were not material for the quarters ended December 30, 2023 and December 31, 2022.

As of both March 30, 2024 and September 30, 2023, the total notional amount of the Company’s designated cross currency swaps was Canadian $ 1.3 billion ($ 1.0 billion).

The related gains or losses recognized in earnings were not material for the quarters ended March 30, 2024 and April 1, 2023.

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 net notional amounts of these foreign exchange contracts at December 30, 2023 and September 30, 2023 were $ 2.9 billion and $ 3.1 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 Condensed Consolidated Statements of Income:

Costs and Expenses Interest expense, net Income Tax Expense

The net notional amount of these foreign exchange contracts at both March 30, 2024 and September 30, 2023 was $ 3.1 billion, respectively.

Costs and expenses

Interest expense, net Income taxes

Quarter Ended:

2023 December 31,

2022 December 30,

2023 December 31,

2022 December 30,

2023 December 31,

2024 April 1,

2023 March 30,

2024 April 1,

2023 March 30,

2024 April 1,

Net gains (losses) on foreign currency denominated assets and liabilities $ ( 103 ) $ 15 $ 21 $ ( 2 ) $ 7 $ ( 21 )

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Net gains (losses) $ ( 16 ) $ ( 32 ) $ ( 2 ) $ ( 1 ) $ ( 13 ) $ ( 4 )

Six Months Ended:

Net gains (losses) on foreign currency denominated assets and liabilities $ ( 68 ) $ 160 $ ( 2 ) $ ( 20 ) $ ( 39 ) $ ( 109 )

Net gains (losses) on foreign exchange risk management contracts not designated as hedges ( 39 ) ( 260 ) ( 2 ) 19 22 87

Net gains (losses) $ ( 107 ) $ ( 100 ) $ ( 4 ) $ ( 1 ) $ ( 17 ) $ ( 22 )

Commodity Price Risk Management

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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 December 30, 2023 and September 30, 2023 and

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

related gains or losses recognized in earnings for the quarters ended December 30, 2023 and December 31, 2022 were not material.

The notional amount of these commodities contracts at March 30, 2024 and September 30, 2023 and related gains or losses recognized in earnings for the quarters ended March 30, 2024 and April 1, 2023 were not material.

Risk Management – Other Derivatives Not Designated as Hedges

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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 amounts of these contracts at December 30, 2023 and September 30, 2023 were $ 0.5 billion and $ 0.4 billion, respectively.

The related gains or losses recognized in earnings were not material for the quarters ended December 30, 2023 and December 31, 2022.

The notional amounts of these contracts at March 30, 2024 and September 30, 2023 were $ 0.5 billion and $ 0.4 billion, respectively.

The related gains or losses recognized in earnings were not material for the quarters ended March 30, 2024 and April 1, 2023.

Contingent Features and Cash Collateral

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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 $ 1.5 billion and $ 1.6 billion at December 30, 2023 and September 30, 2023, respectively.

The aggregate fair values of derivative instruments with credit-risk-related contingent features in a net liability position by counterparty were $ 1.3 billion and $ 1.6 billion at March 30, 2024 and September 30, 2023, respectively.

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

Restructuring and Impairment Charges

In the prior-year quarter ended December 31, 2022, the Company recognized restructuring charges of $ 69 million related to exiting our businesses in Russia.

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

New Accounting Pronouncements

Goodwill Impairments

In the second quarter of fiscal 2024, as a result of Star India assets and liabilities being classified as held for sale (see Note 4), they have been removed from the entertainment goodwill reporting units along with a proportional amount of goodwill.

As a result, we evaluated the residual goodwill at our entertainment DTC services and linear networks reporting units for impairment.

Star sports was a standalone reporting unit which did not have any goodwill.

The evaluation resulted in a $ 0.7 billion non-cash charge for impairment of goodwill at our entertainment linear networks reporting unit.

Goodwill was not impaired at the entertainment DTC services reporting unit.

The impairment evaluation compares the reporting unit’s carrying value to its fair value, which is based on estimated discounted future cash flows.

These future cash flows are based on internal forecasts, 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 are determined based on the inherent risks of the underlying operations.

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

In addition, we recorded a $ 1.3 billion non-cash goodwill impairment charge related to the Star India Transaction (see Note 4 for additional information).

Both of these charges were recorded in “Restructuring and impairment charges” in the Condensed Consolidated Statements of Operations.

Other Restructuring

In the prior-year quarter ended April 1, 2023, the Company recognized restructuring charges of $ 152 million primarily for severance costs.

The six months ended April 1, 2023 included charges of $ 221 million primarily for severance costs and costs related to exiting our businesses in Russia.

These charges are recorded in “Restructuring and impairment charges” in the Condensed Consolidated Statements of Operations.

New Accounting Pronouncements and Other Disclosure Rules

Improvements to Reportable Segments Disclosures

In November 2023, the FASB issued guidance that enhances reportable segment disclosures by requiring the disclosure of significant expenses that are regularly provided to the chief operating decision maker (CODM) and included in the segment’s measure of profit or loss.

In November 2023, the FASB issued guidance to enhance reportable segment disclosures by requiring the disclosure of significant expenses that are regularly provided to the chief operating decision maker (CODM) and included in the segment’s measure of profit or loss.

It also requires an explanation of how the CODM uses the segment’s measure of profit or loss to assess segment performance and allocate resources.

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Improvements to Income Tax Disclosures

In December 2023, the FASB issued guidance that enhances income tax disclosures.

The new guidance requires an expanded rate reconciliation and the disaggregation of cash taxes paid by U.S.

In December 2023, the FASB issued guidance to enhance income tax disclosures.

The new guidance requires an expanded effective tax rate reconciliation, the disclosure of cash taxes paid segregated between U.S.

federal, U.S.

state and foreign jurisdictions and eliminates certain disclosures related to uncertain tax benefits.

state and foreign, with further disaggregation by jurisdiction if certain thresholds are met and eliminates certain disclosures related to uncertain tax benefits.

The guidance is effective for annual periods beginning with the Company’s 2026 fiscal year (with early adoption permitted).

The Company is currently assessing the impacts of the new guidance on its financial statement disclosures.

Enhancement and Standardization of Climate-Related Disclosures

In March 2024, the Securities and Exchange Commission adopted new rules that will require disclosure of:

• Certain climate-related information including climate-related risks, targets, and goals that are reasonably likely to have a material impact, as applicable, on a company’s strategy, business, results of operations or financial condition;

• Certain greenhouse gas emissions, if material;

• Certain financial information regarding the effects of severe weather events and other natural conditions, within the notes to the financial statements

The new rules are applicable to annual reporting periods and will be phased in beginning with the Company’s 2026 fiscal year.

In April 2024, given pending legal challenges, the Securities and Exchange Commission issued an order to voluntarily stay the new rules.

The Company is evaluating the impacts of the new rules on its financial statement disclosures.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

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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-Q

Item 1. Financial Statements