What changed in this filing

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Item 1. Financial Statements

2024-08-07 compared with 2024-05-07 · 249 added, 255 removed, 879 unchanged (36% of the section changed)

3 unchanged sentences

in millions, except per share data)

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Quarter Ended Nine Months Ended

2023 June 29,

Services $ 20,836 $ 20,008 $ 61,568 $ 60,591

10 unchanged sentences

Restructuring and impairment charges — ( 2,650 ) ( 2,052 ) ( 2,871 )

Other income, net

Other income (expense), net

( 65 ) ( 11 ) ( 65 ) 96

Interest expense, net ( 342 ) ( 305 ) ( 899 ) ( 927 )

Equity in the income of investees 146 191 468 555

Income before income taxes

Income (loss) before income taxes

3,093 ( 134 ) 6,621 3,762

( 251 ) ( 19 ) ( 1,412 ) ( 1,066 )

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

Net income (loss)

2,842 ( 153 ) 5,209 2,696

Net income attributable to noncontrolling interests

11 unchanged sentences

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

Quarter Ended Nine Months Ended

2023 June 29,

Net income (loss) $ 2,842 $ ( 153 ) $ 5,209 $ 2,696

Other comprehensive income (loss), net of tax:

5 unchanged sentences

Other comprehensive income (loss) 46 ( 90 ) ( 148 ) ( 315 )

Comprehensive income

Comprehensive income (loss)

2,888 ( 243 ) 5,061 2,381

42 unchanged sentences

Preferred stock

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

Common stock, $0.01 par value, Authorized – 4.6 billion shares, Issued – 1.9 billion shares at June 29, 2024 and 1.8 billion shares at September 30, 2023

58,252 57,383

1 unchanged sentence

Accumulated other comprehensive loss ( 3,454 ) ( 3,292 )

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

Treasury stock, at cost, 42 million shares at June 29, 2024 and 19 million shares at September 30, 2023

( 3,449 ) ( 907 )

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

2024 April 1,

Nine Months Ended

OPERATING ACTIVITIES

1 unchanged sentence

Depreciation and amortization 3,705 3,960

Goodwill impairment

Goodwill impairment and impairment of produced and licensed content

Deferred income taxes ( 489 ) ( 899 )

13 unchanged sentences

Investments in parks, resorts and other property ( 3,923 ) ( 3,595 )

Proceeds from sale of investments 101 458

Purchase of investments

Other, net ( 75 ) ( 122 )

27 unchanged sentences

Interests (2)

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

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

Comprehensive income

— — 2,621 55 — 2,676 246 2,922

Equity compensation activity 4 233 — — — 233 — 233

Dividends — — 5 — — 5 — 5

Contributions — — — — — — 1 1

Common stock repurchases

1 unchanged sentence

Distributions and other — ( 9 ) ( 2 ) — ( 11 ) ( 22 ) ( 76 ) ( 98 )

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

Balance at June 29, 2024 1,816 $ 58,252 $ 49,273 $ ( 3,454 ) $ ( 3,449 ) $ 100,622 $ 4,681 $ 105,303

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

Comprehensive income (loss)

— — ( 460 ) ( 24 ) — ( 484 ) 168 ( 316 )

2 unchanged sentences

Distributions and other — 7 18 — — 25 ( 21 ) 4

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

Balance at July 1, 2023 1,830 $ 57,136 $ 45,794 $ ( 4,413 ) $ ( 907 ) $ 97,610 $ 4,446 $ 102,056

(1) Shares are net of treasury shares.

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Six Months Ended

Nine Months Ended

Equity Attributable to Disney

7 unchanged sentences

Dividends — 4 ( 1,370 ) — — ( 1,366 ) — ( 1,366 )

Contributions — — — — — — 1 1

Common stock repurchases

1 unchanged sentence

Distributions and other — ( 1 ) 38 — ( 19 ) 18 ( 555 ) ( 537 )

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

Balance at June 29, 2024 1,816 $ 58,252 $ 49,273 $ ( 3,454 ) $ ( 3,449 ) $ 100,622 $ 4,681 $ 105,303

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

4 unchanged sentences

Distributions and other — 3 68 — — 71 ( 513 ) ( 442 )

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

Balance at July 1, 2023 1,830 $ 57,136 $ 45,794 $ ( 4,413 ) $ ( 907 ) $ 97,610 $ 4,446 $ 102,056

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

Operating results for the nine months ended June 29, 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.

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In November 2023, NBC Universal (NBCU) exercised its right to require the Company to purchase NBCU’s 33 % interest in Hulu LLC (Hulu), a direct-to-consumer (DTC) streaming service provider, 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 connection with the redemption, the Company will pay NBCU 50 % of the future tax benefits from the amortization of the purchase of NBCU’s interest in Hulu that will generally arise over a 15 -year period.

In connection with the redemption, the Company will pay NBCU 50 % of the future tax benefits from the amortization of the purchase of NBCU’s interest in Hulu as the Company’s cash tax benefits are realized, generally over a 15 -year period.

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

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.

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.

If Hulu’s equity fair value is determined pursuant to a contractual appraisal process 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.

In May 2024, the Company and NBCU entered into a confidential arbitration to resolve a dispute regarding the contractual appraisal process, in which the parties seek declaratory relief, equitable relief and unspecified damages.

The Company expects a decision in that arbitration in fiscal 2025.

The outcome of the arbitration is uncertain and we cannot reasonably estimate the impact of the arbitration on the appraisal process, and thus any impact on the determination of Hulu’s equity fair value and any additional amount we may be required to pay to acquire NBCU’s interest in Hulu.

As part of the arbitration the Company disputes the validity of aspects of NBCU’s appraisal and the corresponding process.

Consequently, completion of the appraisal process, including the manner of determining any such additional amount payable by the Company, awaits the resolution of the confidential arbitration.

During the initial phase of the appraisal process, the Company’s appraiser arrived at a valuation that falls below the guaranteed floor value, while NBCU’s appraiser arrived at a valuation substantially in excess of the guaranteed floor value.

Once the arbitration is completed, determination of the final equity fair value will take into account the valuation of a third appraiser pursuant to the appraisal process as resolved by the arbitration.

As such, if the third appraiser’s equity fair value determination were equal to or below the guaranteed floor value, the Company would not be required to pay NBCU any additional amount.

Conversely, if NBCU’s appraisal were deemed to be valid and the third appraiser’s equity fair value determination were consistent with the NBCU’s appraiser’s valuation, the Company would be required to pay NBCU an

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

additional amount of approximately $ 5 billion as its share of the difference between the equity fair value and the guaranteed floor value.

If the third appraiser’s equity fair value determination were between the valuations of the Company’s and NBCU’s appraisers, the incremental amount would likewise be between zero and approximately $ 5 billion.

Any incremental amount determined to be payable to NBCU to acquire NBCU’s interest in Hulu 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 in the period recorded.

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

1 unchanged sentence

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.

During the nine months ended July 1, 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.

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 Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Quarter Ended Nine Months Ended

2023 June 29,

Entertainment

15 unchanged sentences

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

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Quarter Ended Nine Months Ended

2023 June 29,

Entertainment $ 123 $ 174 $ 432 $ 527

2 unchanged sentences

Equity in the income of investees included in segment operating income 149 194 477 564

Amortization of TFCF intangible assets related to equity investees ( 3 ) ( 3 ) ( 6 ) ( 6 )

Amortization of TFCF intangible assets related to an equity investee

( 3 ) ( 3 ) ( 9 ) ( 9 )

Equity in the income of investees, net $ 146 $ 191 $ 468 $ 555

3 unchanged sentences

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

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Quarter Ended Nine Months Ended

2023 June 29,

Segment operating income $ 4,225 $ 3,559 $ 11,946 $ 9,887

2 unchanged sentences

— ( 2,650 ) ( 2,052 ) ( 2,871 )

Other income, net (2)

Other income (expense), net (2)

( 65 ) ( 11 ) ( 65 ) 96

Interest expense, net ( 342 ) ( 305 ) ( 899 ) ( 927 )

1 unchanged sentence

( 397 ) ( 432 ) ( 1,282 ) ( 1,569 )

Income before income taxes

Income (loss) before income taxes

$ 3,093 $ ( 134 ) $ 6,621 $ 3,762

(1) See Note 16 for a discussion of amounts in restructuring and impairment charges.

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

(2) “Other income (expense), net” for the quarter and nine months ended June 29, 2024 reflected a charge of $ 65 million related to a legal ruling.

In the prior-year quarter and nine months ended July 1, 2023, the Company recognized a gain of $ 90 million and $ 169 million, respectively, on its investment in DraftKings, Inc.

(DraftKings Gain), which was sold in the prior-year quarter.

“Other income (expense), net” for the prior-year quarter and nine months ended July 1, 2023 also included a charge of $ 101 million related to a legal ruling.

(3) TFCF and Hulu Acquisition Amortization is as follows:

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Quarter Ended Nine Months Ended

2023 June 29,

Amortization of intangible assets $ 326 $ 361 $ 1,068 $ 1,186

Step-up of film and television costs 68 68 205 374

Intangibles related to TFCF equity investees 3 3 6 6

Intangibles related to a TFCF equity investee

$ 397 $ 432 $ 1,282 $ 1,569

The following table presents revenues by segment and major source:

Quarter Ended March 30, 2024

Quarter Ended June 29, 2024

Entertainment Sports Experiences Eliminations Total

15 unchanged sentences

tabular dollars in millions, except for per share data)

Quarter Ended April 1, 2023

Quarter Ended July 1, 2023

Entertainment Sports Experiences Eliminations Total

12 unchanged sentences

$ 10,127 $ 4,335 $ 8,198 $ ( 330 ) $ 22,330

Six Months Ended March 30, 2024

Nine Months Ended June 29, 2024

Entertainment Sports Experiences Eliminations Total

12 unchanged sentences

$ 30,357 $ 13,705 $ 25,911 $ ( 1,186 ) $ 68,787

Six Months Ended April 1, 2023

Nine Months Ended July 1, 2023

Entertainment Sports Experiences Eliminations Total

16 unchanged sentences

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

Quarter Ended March 30, 2024

Quarter Ended June 29, 2024

Entertainment Sports Experiences Eliminations Total

3 unchanged sentences

Total revenues $ 10,580 $ 4,558 $ 8,386 $ ( 369 ) $ 23,155

Quarter Ended April 1, 2023

Quarter Ended July 1, 2023

Entertainment Sports Experiences Eliminations Total

3 unchanged sentences

Total revenues $ 10,127 $ 4,335 $ 8,198 $ ( 330 ) $ 22,330

Six Months Ended March 30, 2024

Nine Months Ended June 29, 2024

Entertainment Sports Experiences Eliminations Total

3 unchanged sentences

Total revenues $ 30,357 $ 13,705 $ 25,911 $ ( 1,186 ) $ 68,787

Six Months Ended April 1, 2023

Nine Months Ended July 1, 2023

Entertainment Sports Experiences Eliminations Total

4 unchanged sentences

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 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.

For the quarter ended June 29, 2024, $ 0.3 billion was recognized related to performance obligations satisfied as of March 30, 2024.

For the nine months ended June 29, 2024, $ 0.8 billion was recognized related to performance obligations satisfied as of September 30, 2023.

For the quarter ended July 1, 2023, $ 0.3 billion was recognized related to performance obligations satisfied as of April 1, 2023.

For the nine months ended July 1, 2023, $ 0.7 billion was recognized related to performance obligations satisfied as of October 1, 2022.

As of June 29, 2024, revenue for unsatisfied performance obligations expected to be recognized in the future is $ 15 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, sports sublicensees and advertisers.

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

16 unchanged sentences

Non-current 888 977

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.

For the quarter and nine months ended June 29, 2024, the Company recognized revenue of $ 0.5 billion and $ 4.8 billion, respectively, that was included in the September 30, 2023 deferred revenue balance.

For the quarter and nine months ended July 1, 2023, the Company recognized revenue of $ 0.5 billion and $ 4.7 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 $ 0.4 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).

The balance of TV/VOD licensing receivables recorded in other non-current assets was $ 0.4 billion at June 29, 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 June 29, 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 June 29, 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, film and television content library 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.

The Star India Transaction is expected to close in the first half of 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.

Star India’s assets and liabilities (see table that follows) are presented as held for sale in the Condensed Consolidated Balance Sheet as of June 29, 2024.

To reflect Star India at its fair value less costs to sell, we recognized a non-cash goodwill impairment charge of $ 1.3 billion in “Restructuring and impairment charges” in the second quarter of fiscal 2024.

The measurement of this impairment charge included 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)

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:

Assets and liabilities of Star India are classified as held for sale in the Condensed Consolidated Balance Sheets as of June 29, 2024 as follows:

Receivables and other current assets $ 992

23 unchanged sentences

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

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

Balance at June 29, 2024 $ 51,878 $ 16,486 $ 5,550 $ — $ 73,914

(1) Reflects impairments related to entertainment linear networks and Star India (see Note 16).

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 $ 6,049 $ 14,235

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

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

During the nine months ended June 29, 2024, the Company’s borrowing activity was as follows:

September 30,

2023 Borrowings Payments Other

Activity March 30,

Activity June 29,

Commercial paper with original maturities less than three months (1)

$ 289 $ 25 $ — $ — $ 314

Commercial paper with original maturities greater than three months 1,187 3,717 ( 2,365 ) 6 2,545

6 unchanged sentences

$ 46,431 $ 3,874 $ ( 3,094 ) $ 373 $ 47,584

(1) Borrowings and reductions of borrowings are reported net.

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

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:

At June 29, 2024, the Company’s bank facilities, which are with a syndicate of lenders and support our commercial paper borrowings, were as follows:

Capacity Capacity

5 unchanged sentences

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.

1 unchanged sentence

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.

On June 29, 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 March 30, 2024, the Company has $ 1.6 billion of outstanding letters of credit, of which none were issued under this facility.

As of June 29, 2024, the Company has $ 1.7 billion of outstanding letters of credit, of which none were issued under this facility.

Cruise Ship Credit Facilities

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.

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

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

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 .

THE WALT DISNEY COMPANY

1 unchanged sentence

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 Operations and consist of the following:

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Quarter Ended Nine Months Ended

2023 June 29,

Interest expense $ ( 509 ) $ ( 503 ) $ ( 1,538 ) $ ( 1,472 )

18 unchanged sentences

Total liabilities $ 2,371 $ 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 $ 4,300

Costs and expenses ( 3,464 )

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.

Asia Theme Parks’ royalty and management fees of $ 232 million for the nine months ended June 29, 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 nine months ended June 29, 2024 were $ 1,219 million provided by operating activities, $ 705 million used in investing activities and $ 11 million used in financing activities.

Hong Kong Disneyland Resort

The Government of the Hong Kong Special Administrative Region (HKSAR) and the Company have a 52 % and a 48 % equity interest in Hong Kong Disneyland Resort, respectively.

THE WALT DISNEY COMPANY

1 unchanged sentence

tabular dollars in millions, except for per share data)

Hong Kong Disneyland Resort

The Government of the Hong Kong Special Administrative Region (HKSAR) and the Company have a 52 % and a 48 % equity interest in Hong Kong Disneyland Resort, respectively.

The Company and HKSAR have provided loans to Hong Kong Disneyland Resort with outstanding balances of $ 172 million and $ 115 million, respectively.

21 unchanged sentences

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

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

As of June 29, 2024 As of September 30, 2023

Predominantly

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Amortization of produced and licensed content is as follows:

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Quarter Ended Nine Months Ended

2023 June 29,

Produced content

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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

The Company’s deferred tax assets and liabilities by major category as of June 29, 2024 and September 30, 2023 were as follows:

2024 September 30,

Deferred tax assets

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Net deferred tax liability

(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.

$ 6,029 $ 6,587

(1) Balances at June 29, 2024 and September 30, 2023 include approximately $ 1.5 billion and $ 1.6 billion, respectively, of International Theme Park net operating losses.

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

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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.

Balances at both June 29, 2024 and September 30, 2023 also include approximately $ 1.0 billion of foreign tax credits in the U.S., which have a ten-year carryforward period and, if not used, expire beginning in fiscal 2028.

(2) Amounts related to Investment in subsidiaries / equity investees are, in part, due to the tax status of these entities.

If the tax status of certain legal entities changes, a significant portion of this balance may reverse.

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

THE WALT DISNEY COMPANY

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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.

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.

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.

The Company’s gross unrecognized tax benefits (before interest and penalties) decreased $ 0.5 billion, from $ 2.5 billion at September 30, 2023 to $ 2.0 billion at June 29, 2024.

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 $ 1.0 billion.

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Pension Plans Postretirement Medical Plans

Quarter Ended Six Months Ended Quarter Ended Six Months Ended

Quarter Ended Nine Months Ended Quarter Ended Nine Months Ended

Service costs $ 62 $ 65 $ 187 $ 193 $ 1 $ 1 $ 1 $ 4

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Net periodic benefit cost (income) $ ( 6 ) $ ( 21 ) $ ( 19 ) $ ( 63 ) $ ( 30 ) $ — $ ( 95 ) $ 3

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.

During the nine months ended June 29, 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.

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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 Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Quarter Ended Nine Months Ended

2023 June 29,

Shares (in millions):

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Awards excluded from diluted earnings per share 15 23 25 24

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

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

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 .

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

Share Repurchase Program

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.

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.

During the quarter and nine months ended June 29, 2024, the Company repurchased 14 million and 23 million shares of its common stock for $ 1.5 billion and $ 2.5 billion, respectively (amount excludes the one percent excise tax on stock repurchases imposed by the Inflation Reduction Act of 2022).

As of June 29, 2024, the Company had remaining authorization in place to repurchase approximately 377 million additional shares.

The repurchase program does not have an expiration date.

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AOCI, before tax

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 )

Third quarter of fiscal 2024

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 )

Quarter Ended April 1, 2023:

Quarter Ended June 29, 2024:

Unrealized gains (losses) arising during the period 235 ( 2 ) ( 22 ) 211

Reclassifications of realized net (gains) losses to net income ( 109 ) ( 24 ) — ( 133 )

Balance at June 29, 2024 $ 120 $ ( 2,255 ) $ ( 1,966 ) $ ( 4,101 )

Third quarter of fiscal 2023

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

Six months ended fiscal 2024

Quarter Ended July 1, 2023:

Unrealized gains (losses) arising during the period 85 — ( 44 ) 41

Reclassifications of realized net (gains) losses to net income ( 73 ) 1 — ( 72 )

Balance at July 1, 2023 $ 14 $ ( 3,696 ) $ ( 1,745 ) $ ( 5,427 )

Nine months ended fiscal 2024

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

Six Months Ended March 30, 2024:

Nine Months Ended June 29, 2024:

Unrealized gains (losses) arising during the period 202 ( 11 ) 8 199

Reclassifications of realized net (gains) losses to net income ( 341 ) ( 72 ) — ( 413 )

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

Six months ended fiscal 2023

Balance at June 29, 2024 $ 120 $ ( 2,255 ) $ ( 1,966 ) $ ( 4,101 )

Nine months ended fiscal 2023

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

Six Months Ended April 1, 2023:

Nine Months Ended July 1, 2023:

Unrealized gains (losses) arising during the period ( 383 ) 71 227 ( 85 )

Reclassifications of realized net (gains) losses to net income ( 407 ) 3 42 ( 362 )

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

Balance at July 1, 2023 $ 14 $ ( 3,696 ) $ ( 1,745 ) $ ( 5,427 )

THE WALT DISNEY COMPANY

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and Other AOCI

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

Third quarter of fiscal 2024

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

Second quarter of fiscal 2023

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

Quarter Ended April 1, 2023:

Quarter Ended June 29, 2024:

Unrealized gains (losses) arising during the period ( 54 ) — ( 1 ) ( 55 )

Reclassifications of realized net (gains) losses to net income 26 6 — 32

Balance at June 29, 2024 $ ( 31 ) $ 535 $ 143 $ 647

Third quarter of fiscal 2023

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

Six months ended fiscal 2024

Quarter Ended July 1, 2023:

Unrealized gains (losses) arising during the period ( 19 ) — 9 ( 10 )

Reclassifications of realized net (gains) losses to net income 17 — — 17

Balance at July 1, 2023 $ ( 3 ) $ 885 $ 132 $ 1,014

Nine months ended fiscal 2024

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

Six Months Ended March 30, 2024:

Nine Months Ended June 29, 2024:

Unrealized gains (losses) arising during the period ( 46 ) — 1 ( 45 )

Reclassifications of realized net (gains) losses to net income 79 18 — 97

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

Six months ended fiscal 2023

Balance at June 29, 2024 $ ( 31 ) $ 535 $ 143 $ 647

Nine months ended fiscal 2023

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

Six Months Ended April 1, 2023:

Nine Months Ended July 1, 2023:

Unrealized gains (losses) arising during the period 81 ( 16 ) 7 72

Reclassifications of realized net (gains) losses to net income 95 — ( 14 ) 81

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

Balance at July 1, 2023 $ ( 3 ) $ 885 $ 132 $ 1,014

THE WALT DISNEY COMPANY

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AOCI, after tax

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 )

Third quarter of fiscal 2024

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 )

Quarter Ended April 1, 2023:

Quarter Ended June 29, 2024:

Unrealized gains (losses) arising during the period 181 ( 2 ) ( 23 ) 156

Reclassifications of realized net (gains) losses to net income ( 83 ) ( 18 ) — ( 101 )

Balance at June 29, 2024 $ 89 $ ( 1,720 ) $ ( 1,823 ) $ ( 3,454 )

Third quarter of fiscal 2023

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

Six months ended fiscal 2024

Quarter Ended July 1, 2023:

Unrealized gains (losses) arising during the period 66 — ( 35 ) 31

Reclassifications of realized net (gains) losses to net income ( 56 ) 1 — ( 55 )

Balance at July 1, 2023 $ 11 $ ( 2,811 ) $ ( 1,613 ) $ ( 4,413 )

Nine months ended fiscal 2024

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

Six Months Ended March 30, 2024:

Nine Months Ended June 29, 2024:

Unrealized gains (losses) arising during the period 156 ( 11 ) 9 154

Reclassifications of realized net (gains) losses to net income ( 262 ) ( 54 ) — ( 316 )

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

Six months ended fiscal 2023

Balance at June 29, 2024 $ 89 $ ( 1,720 ) $ ( 1,823 ) $ ( 3,454 )

Nine months ended fiscal 2023

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

Six Months Ended April 1, 2023:

Nine Months Ended July 1, 2023:

Unrealized gains (losses) arising during the period ( 302 ) 55 234 ( 13 )

Reclassifications of realized net (gains) losses to net income ( 312 ) 3 28 ( 281 )

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

Balance at July 1, 2023 $ 11 $ ( 2,811 ) $ ( 1,613 ) $ ( 4,413 )

THE WALT DISNEY COMPANY

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Affected line item in the Condensed Consolidated Statements of Operations:

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Quarter Ended Nine Months Ended

2023 June 29,

Market value adjustments, primarily cash flow hedges Primarily revenue $ 109 $ 73 $ 341 $ 407

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

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Quarter Ended Nine Months Ended

2023 June 29,

Stock options $ 18 $ 19 $ 55 $ 58

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(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 $ 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.

Unrecognized compensation cost related to unvested stock options and RSUs was $ 93 million and $ 2.1 billion, respectively, as of June 29, 2024.

During the nine months ended June 29, 2024 and July 1, 2023, the weighted average grant date fair values for options granted were $ 32.10 and $ 34.70 , respectively, and for RSUs were $ 94.28 and $ 91.98 , respectively.

During the nine months ended June 29, 2024, the Company made equity compensation grants consisting of 2.7 million stock options and 16.1 million RSUs.

Commitments and Contingencies

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

A hearing on the motion to dismiss is scheduled for September 10, 2024.

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

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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 Company’s motion to dismiss the Consolidated Complaint was granted in part and denied in part on June 25, 2024.

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

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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

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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.

Corporation license their networks to vMVPDs as a bundle increase prices and reduce output for services offered by vMVPDs, 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.

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

In May 2024, the Company and NBCU entered into a confidential arbitration to resolve a dispute regarding the contractual appraisal process related to the determination of Hulu’s equity fair value, in which the parties seek declaratory relief, equitable relief and unspecified damages.

See Note 1 for a more detailed discussion of the arbitration and the determination of Hulu’s equity fair value.

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.

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(“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 %.

The Company acquired an additional 2 % interest for $ 0.5 billion in July 2024, which increased the Company’s interest in Epic to approximately 8 %.

In fiscal year 2024, the Company entered into several multi-year contracts with total commitments of approximately $ 42 billion of which the significant majority relates to professional basketball and college football programming and includes, to a lesser extent, fleet expansion.

Payments for these agreements in fiscal 2024 and fiscal 2025 are not significant, and are approximately $ 2 billion, $ 4 billion and $ 4 billion in fiscal 2026, fiscal 2027 and fiscal 2028, respectively .

Fair Value Measurements

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Level 3 - Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

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 March 30, 2024

Fair Value Measurement at June 29, 2024

Level 1 Level 2 Level 3 Total

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Fair value of borrowings $ — $ 42,691 $ 1,373 $ 44,064

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

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Level 3 borrowings include the Asia Theme Park borrowings, which are valued based on the current borrowing cost and credit risk of the Asia Theme Parks as well as prevailing market interest rates.

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

The Company’s financial instruments also include cash, cash equivalents, receivables and accounts payable.

3 unchanged sentences

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).

In the second quarter of fiscal 2024, the Company recorded impairment charges as disclosed in Notes 4 and 16.

Fair value was determined using estimated discounted future cash flows, which is a Level 3 valuation technique (see Note 16 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 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 14) are summarized in the following tables:

As of March 30, 2024

As of June 29, 2024

Assets Investments/

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The Company’s objective is to mitigate the impact of interest rate changes on earnings and cash flows and on the market value of its borrowings.

In accordance with its policy, the Company targets its fixed-rate debt as a percentage of its net debt between a minimum and maximum percentage.

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.

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.

In accordance with its policy, the Company targets its fixed-rate debt as a percentage of its net debt between a

THE WALT DISNEY COMPANY

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tabular dollars in millions, except for per share data)

minimum and maximum percentage.

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.

The total notional amount of the Company’s pay-floating interest rate swaps at both June 29, 2024 and September 30, 2023 was $ 13.5 billion.

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

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2024 September 30,

2023 March 30,

2023 June 29,

2024 September 30,

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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,

Quarter Ended Nine Months Ended

2023 June 29,

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 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.

The Company did not have pay-fixed interest rate swaps that were designated as cash flow hedges of interest payments at June 29, 2024 or at September 30, 2023, and gains and losses related to pay-fixed interest rate swaps recognized in earnings for the quarter and nine-month periods ended June 29, 2024 and July 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 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.

As of June 29, 2024 and September 30, 2023, the notional amounts of the Company’s net foreign exchange cash flow hedges were $ 10.7 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 WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

the value of the foreign currency transactions.

Net deferred gains recorded in AOCI for contracts that will mature in the next twelve months total $ 397 million.

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

Quarter Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Quarter Ended Nine Months Ended

2023 June 29,

Gain (loss) recognized in Other Comprehensive Income $ 235 $ 89 $ 208 $ ( 398 )

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(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 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.

As of both June 29, 2024 and September 30, 2023, the total notional amount of the Company’s designated cross currency swaps was Canadian $ 1.3 billion ($ 0.9 billion).

The related gains or losses recognized in earnings for the quarter and nine-month periods ended June 29, 2024 and July 1, 2023 were not material .

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

The net notional amount of these foreign exchange contracts at June 29, 2024 and September 30, 2023 were $ 3.4 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 Operations:

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Quarter Ended:

2024 April 1,

2023 March 30,

2024 April 1,

2023 March 30,

2024 April 1,

2023 June 29,

Net gains (losses) on foreign currency denominated assets and liabilities $ ( 89 ) $ ( 61 ) $ 10 $ ( 19 ) $ 17 $ ( 15 )

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Net gains (losses) $ ( 29 ) $ ( 61 ) $ ( 2 ) $ ( 2 ) $ 8 $ 4

Six Months Ended:

Nine Months Ended:

Net gains (losses) on foreign currency denominated assets and liabilities $ ( 157 ) $ 99 $ 8 $ ( 39 ) $ ( 22 ) $ ( 124 )

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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 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.

The notional amount of these commodities contracts at June 29, 2024 and September 30, 2023 and related gains or losses recognized in earnings for the quarter and nine-month periods ended June 29, 2024 and July 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 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.

The notional amounts of these

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

contracts at June 29, 2024 and September 30, 2023 were $ 0.5 billion and $ 0.4 billion, respectively.

The related gains or losses recognized in earnings for the quarter and nine-month periods ended June 29, 2024 and July 1, 2023 were not material.

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 $ 1.3 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)

The aggregate fair values of derivative instruments with credit-risk-related contingent features in a net liability position by counterparty were $ 1.2 billion and $ 1.6 billion at June 29, 2024 and September 30, 2023.

Restructuring and Impairment Charges

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.

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 were 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.

The evaluation resulted in a $ 0.7 billion non-cash goodwill impairment charge at our entertainment linear networks reporting unit in the second quarter of fiscal 2024.

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.

The impairment evaluation compares the reporting unit’s carrying amount 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.

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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.

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) in the second quarter of fiscal 2024.

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

Content Impairment

As part of the Company’s reorganization announced in February 2023, we reviewed our content for alignment with a strategic change in our approach to content curation, and, during the third quarter of fiscal 2023, we removed content from our DTC services and terminated certain third-party license agreements for the right to use content primarily on our DTC platforms.

Accordingly, we recorded charges of $ 2.4 billion in the quarter ended July 1, 2023 (Content Impairment), of which $ 2.0 billion was related to the write-off of produced content and $ 0.4 billion was related to the termination of the license agreements.

We paid approximately $ 0.3 billion of cash to terminate these third-party license agreements.

The 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.

In the prior-year quarter ended July 1, 2023, the Company recognized restructuring charges of $ 210 million primarily for severance costs.

The nine months ended July 1, 2023 included charges of $ 431 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.

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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.

The guidance is effective for the Company beginning in fiscal year 2025 for annual periods and beginning in fiscal year 2026 for interim periods and requires retrospective adoption (with early adoption permitted).

The guidance is effective for the Company for annual periods beginning in

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

tabular dollars in millions, except for per share data)

fiscal year 2025 and for interim periods beginning in fiscal year 2026 and requires retrospective adoption (with early adoption permitted).

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

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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