Walt Disney Co 10-Q

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations ORGANIZATION OF INFORMATION Management’s Discussion and Analysis provides a narrative of the Company’s financial performance and condition that should be read in conjunction with the accompanying financial statements. It includes the following sections: • Consolidated Results • Current Quarter Results Compared to Prior-Year Quarter • Current Six-Month Period Results Compared to Prior-Year Six-Month Period • Seasonality • Business Segment Results • Corporate and Unallocated Shared Expenses • Financial Condition • Market Risk • Commitments and Contingencies • Other Matters • Supplemental Guarantor Financial Information CONSOLIDATED RESULTS Quarter Ended % Change Better (Worse) Six Months Ended % Change Better (Worse) (in millions, except per share data) March 28, 2026 March 29, 2025 March 28, 2026 March 29, 2025 Revenues: Services $ 22,684 $ 21,258 7 % $ 45,890 $ 43,306 6 % Products 2,484 2,363 5 % 5,259 5,005 5 % Total revenues 25,168 23,621 7 % 51,149 48,311 6 % Costs and expenses: Cost of services (exclusive of depreciation and amortization) ( 14,417 ) ( 13,378 ) (8) % ( 29,420 ) ( 27,167 ) (8) % Cost of products (exclusive of depreciation and amortization) ( 1,484 ) ( 1,432 ) (4) % ( 3,150 ) ( 3,049 ) (3) % Selling, general, administrative and other ( 4,073 ) ( 3,981 ) (2) % ( 8,194 ) ( 7,911 ) (4) % Depreciation and amortization ( 1,405 ) ( 1,324 ) (6) % ( 2,721 ) ( 2,600 ) (5) % Total costs and expenses (21,379) (20,115) (6) % (43,485) (40,727) (7) % Restructuring and impairment charges ( 239 ) ( 109 ) >(100) % ( 239 ) ( 252 ) 5 % Interest expense, net ( 240 ) ( 346 ) 31 % ( 515 ) ( 713 ) 28 % Equity in the income of investees 57 36 58 % 150 128 17 % Income before income taxes 3,367 3,087 9 % 7,060 6,747 5 % Income taxes ( 902 ) 314 nm ( 2,111 ) ( 702 ) >(100) % Net income 2,465 3,401 (28) % 4,949 6,045 (18) % Net income attributable to noncontrolling interests ( 218 ) ( 126 ) (73) % ( 300 ) ( 216 ) (39) % Net income attributable to Disney $ 2,247 $ 3,275 (31) % $ 4,649 $ 5,829 (20) % Diluted earnings per share attributable to Disney $ 1.27 $ 1.81 (30) % $ 2.61 $ 3.21 (19) % CURRENT QUARTER RESULTS COMPARED TO PRIOR-YEAR QUARTER Revenues for the quarter increased 7%, or $1.5 billion, to $25.2 billion; net income attributable to Disney decreased to $2.2 billion compared to $3.3 billion in the prior-year quarter; and diluted earnings per share (EPS) attributable to Disney decreased to $1.27 compared to $1.81 in the prior-year quarter. The net income and EPS decreases were due to the recognition of a tax benefit in the prior-year quarter related to the resolution of a tax matter. 31 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) Revenues Service revenues for the quarter increased 7%, or $1.4 billion, to $22.7 billion, which included an approximate 2 percentage point increase from the Fubo Transaction and, to a lesser extent, NFL Transaction. Aside from this impact, service revenues increased due to higher subscription and affiliate fees, growth at our parks and experiences businesses and, to a lesser extent, an increase in content sales. Product revenues for the quarter increased 5%, or $0.1 billion, to $2.5 billion due to growth at our parks and experiences businesses. Costs and expenses Cost of services for the quarter increased 8%, or $1.0 billion, to $14.4 billion, which included an approximate 3 percentage point increase from the Fubo Transaction and, to a lesser extent, NFL Transaction. Aside from this impact, cost of services increased due to higher programming and production costs and, to a lesser extent, the impact of inflation and increased volumes at our parks and experiences businesses. Selling, general, administrative and other costs increased 2%, or $0.1 billion, to $4.1 billion due to higher marketing costs. Depreciation and amortization increased 6%, or $0.1 billion, to $1.4 billion driven by higher depreciation at Experiences and Entertainment, partially offset by lower amortization of intangible assets. Restructuring and impairment charges Charges in the current quarter were $147 million for an impairment of our investment in A+E Global Media (A+E) and $92 million for severance. Charges in the prior-year quarter were $109 million for content impairments. After the current quarter impairment in A+E, our investment has a carrying value of approximately $2 billion. If the estimated fair value of our investment declines, for example by a decrease in forecasted cash flows or a transaction at an amount that is less than the carrying amount, we would be required to record an impairment charge in earnings, which could be material. Interest expense, net Interest expense, net is as follows: Quarter Ended (in millions) March 28, 2026 March 29, 2025 % Change Better (Worse) Interest expense $ (473) $ (471) — % Interest income, investment income and other 233 125 86 % Interest expense, net $ (240) $ (346) 31 % The increase in interest income, investment income and other was due to a net gain on investments in the current quarter compared to a net loss on investments in the prior-year quarter, and a favorable comparison related to pension and postretirement benefit costs, other than service cost. Equity in the Income of Investees Income from equity investees increased $21 million, to $57 million from $36 million, due to a lower loss from the India joint venture. Income Taxes Quarter Ended March 28, 2026 March 29, 2025 Income before income taxes $ 3,367 $ 3,087 Income tax expense (benefit) 902 (314) Effective income tax rate 26.8 % (10.2) % The effective income tax rate was positive 26.8% in the current quarter compared to a negative effective income tax rate of 10.2% in the prior-year quarter. Significant items impacting the change in the effective income tax rate included the following: • The current quarter included a non-cash tax charge of approximately 3 percentage points in connection with the NFL Transaction 32 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) • The prior-year quarter included a favorable impact of approximately 33 percentage points from the resolution of a tax matter Noncontrolling Interests Quarter Ended (in millions) March 28, 2026 March 29, 2025 % Change Better (Worse) Net income attributable to noncontrolling interests $ (218) $ (126) (73) % The increase in net income attributable to noncontrolling interests was primarily due to the NFL Transaction and, to a lesser extent, higher results at Shanghai Disney Resort. Net income attributable to noncontrolling interests is determined on income after royalties and management fees, financing costs and income taxes, as applicable. Certain Items Impacting Results in the Quarter Results for the quarter ended March 28, 2026 were impacted by the following: • Acquisition Amortization of $313 million • Restructuring and impairment charges of $239 million • A non-cash tax charge of $115 million resulting from the NFL Transaction Results for the quarter ended March 29, 2025 were impacted by the following: • Resolution of a prior-year tax matter of $1,016 million • Acquisition Amortization of $396 million • Restructuring and impairment charges of $109 million A summary of the impact of these items on EPS is as follows: (in millions, except per share data) Pre-Tax Income (Loss) Tax Benefit (Expense) (1) After-Tax Income (Loss) EPS Favorable (Adverse) (2) Quarter Ended March 28, 2026: Acquisition Amortization $ (313) $ 70 $ (243) $ (0.12) Restructuring and impairment charges (239) 22 (217) (0.12) Non-cash tax charge resulting from the NFL Transaction — (115) (115) (0.05) Total $ (552) $ (23) $ (575) $ (0.30) Quarter Ended March 29, 2025: Resolution of a prior-year tax matter $ — $ 1,016 $ 1,016 $ 0.56 Acquisition Amortization (396) 92 (304) (0.16) Restructuring and impairment charges (109) 25 (84) (0.05) Total $ (505) $ 1,133 $ 628 $ 0.35 (1) Tax benefit (expense) amounts are determined using the tax rate applicable to the individual item. (2) EPS is net of noncontrolling interest share, where applicable. Total may not equal the sum of the column due to rounding. CURRENT SIX-MONTH PERIOD RESULTS COMPARED TO PRIOR-YEAR SIX-MONTH PERIOD Revenues for the current period increased $2.8 billion, to $51.1 billion; net income attributable to Disney decreased $1.2 billion, to $4.6 billion; and EPS decreased to $2.61 from $3.21 in the prior-year period. The net income and EPS decreases were due to the recognition of a tax benefit in the prior-year period related to the resolution of a tax matter and, to a lesser extent, lower operating income at Entertainment. These decreases were partially offset by higher operating income at Experiences. Revenues Service revenues for the current period increased 6%, or $2.6 billion to $45.9 billion, which included an approximate 1 percentage point net favorable impact from the Fubo, NFL and Star India Transactions. Aside from this impact, service 33 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) revenues increased due to growth at our parks and experiences businesses, higher subscription and affiliate fees and, to a lesser extent, an increase in content sales. Product revenues for the current period increased 5%, or $0.3 billion, to $5.3 billion, due to growth at our parks and experiences businesses. Costs and expenses Cost of services for the current period increased 8%, or $2.3 billion, to $29.4 billion, which included an approximate 2 percentage point net favorable impact from the Fubo, NFL and Star India Transactions. Aside from this impact, cost of services increased due to higher programming and production costs and, to a lesser extent, the impact of inflation and increased volumes at our parks and experiences businesses. Selling, general, administrative and other costs increased 4%, or $0.3 billion, to $8.2 billion due to higher marketing costs, partially offset by the comparison to a legal settlement in the prior-year period. Depreciation and amortization increased 5%, or $0.1 billion, to $2.7 billion, driven by higher depreciation at Experiences and Entertainment, partially offset by lower amortization of intangible assets. Restructuring and impairment charges Charges in the current period were $147 million for an impairment of our investment in A+E and $92 million for severance. Charges in t he prior-year period were $143 million for impairment of goodwill in connection with the Star India Transaction and $109 million for content impairments. Interest expense, net Interest expense, net is as follows: Six Months Ended (in millions) March 28, 2026 March 29, 2025 % Change Better (Worse) Interest expense $ (916) $ (958) 4 % Interest income, investment income and other 401 245 64 % Interest expense, net $ (515) $ (713) 28 % The decrease in interest expense was primarily due to lower average rates. The increase in interest income, investment income and other was due to a favorable comparison of pension and postretirement benefit costs, other than service cost, and a net gain on investments in the current period compared to a net loss on investments in the prior-year period. Equity in the Income of Investees Income from equity investees increased $22 million, to $150 million from $128 million, due to a lower loss from the India joint venture, partially offset by a decrease in income from A+E. Income Taxes Six Months Ended March 28, 2026 March 29, 2025 Income before income taxes $ 7,060 $ 6,747 Income tax expense 2,111 702 Effective income tax rate 29.9 % 10.4 % The effective income tax rate was 29.9% in the current period compared to 10.4% in the prior-year period. Significant items impacting the change in the effective income tax rate included the following: • The current period included non-cash tax charges of approximately 6 percentage points in connection with the Fubo and NFL Transactions and an unfavorable impact of approximately 2 percentage points from adjustments related to prior years • The prior-year period included a favorable impact of approximately 16 percentage points from adjustments related to prior years and a non-cash tax charge of approximately 4 percentage points in connection with the Star India Transaction 34 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) Noncontrolling Interests Six Months Ended (in millions) March 28, 2026 March 29, 2025 % Change Better (Worse) Net income attributable to noncontrolling interests $ (300) $ (216) (39) % The increase in net income attributable to noncontrolling interests was primarily due to the NFL Transaction and higher results at Shanghai Disney Resort. Certain Items Impacting Results in the Six Month Period Results for the six months ended March 28, 2026 were impacted by the following: • Acquisition Amortization of $613 million • Non-cash tax charges resulting from the Fubo and NFL Transactions of $307 million and $115 million, respectively • Restructuring and impairment charges of $239 million Results for the six months ended March 29, 2025 were impacted by the following: • Acquisition Amortization of $793 million • Restructuring and impairment charges of $252 million and a non-cash tax charge of $244 million • Resolution of a prior-year tax matter of $1,016 million A summary of the impact of these items on EPS is as follows: (in millions, except per share data) Pre-Tax Income (Loss) Tax Benefit (Expense) (1) After-Tax Income (Loss) EPS Favorable (Adverse) (2) Six Months Ended March 28, 2026: Acquisition Amortization $ (613) $ 140 $ (473) $ (0.24) Non-cash tax charges resulting from the Fubo and NFL Transactions — (422) (422) (0.22) Restructuring and impairment charges (239) 22 (217) (0.12) Total $ (852) $ (260) $ (1,112) $ (0.59) Six Months Ended March 29, 2025: Acquisition Amortization $ (793) $ 184 $ (609) $ (0.32) Restructuring and impairment charges (252) (188) (440) (0.25) Resolution of a prior-year tax matter — 1,016 1,016 0.56 Total $ (1,045) $ 1,012 $ (33) $ (0.01) (1) Tax benefit (expense) amounts are determined using the tax rate applicable to the individual item. (2) EPS is net of noncontrolling interest share, where applicable. Total may not equal the sum of the column due to rounding. SEASONALITY The Company’s businesses are subject to the effects of seasonality. Consequently, the operating results for the six months ended March 28, 2026 for each business segment, and for the Company as a whole, are not necessarily indicative of results to be expected for the full year. Entertainment revenues are subject to seasonal and other cyclical advertising patterns, changes in viewership and subscriber levels, timing and performance of theatrical releases, and the timing of and demand for film and television programs. In general, domestic advertising revenues are typically somewhat higher during the fall and somewhat lower during the summer months and domestic advertising revenue is typically higher during election cycles. Subscription and affiliate fees vary with the subscriber trends of multi-channel video programming distributors (i.e. cable, satellite telecommunications and digital over-the-top service providers) and our streaming services. Theatrical release dates are determined by several factors, including competition and the timing of vacation and holiday periods. Sports revenues are subject to seasonal advertising patterns, changes in viewership and subscriber levels, and the availability of and demand for sports programming. Advertising revenues generated from sports programming and the recognition of sports rights cost amortization are also impacted by the timing of sports seasons and events, which timing may vary throughout the year or may take place periodically (e.g. biannually, quadrennially). 35 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) Experiences revenues fluctuate with changes in theme park attendance and resort occupancy resulting from the seasonal nature of vacation travel and leisure activities, the opening of new guest offerings and pricing and promotional offers. Peak attendance and resort occupancy generally occur during the summer months when school vacations occur and during early winter and spring holiday periods. In addition, theme park and resort revenues may be higher during significant celebrations such as theme park or character anniversaries and lower in the periods preceding or following such celebrations. Consumer products revenue fluctuates with consumer purchasing behavior, which generally results in higher revenues during the Company’s first and fourth fiscal quarters. In addition, licensing revenues fluctuate with the timing and performance of theatrical and game releases and direct-to-consumer content. BUSINESS SEGMENT RESULTS The Company evaluates the performance of its operating businesses based on segment revenue and segment operating income. The following table presents revenues from our operating segments: Quarter Ended % Change Better (Worse) Six Months Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 March 28, 2026 March 29, 2025 Entertainment $ 11,715 $ 10,682 10 % $ 23,324 $ 21,554 8 % Sports 4,609 4,534 2 % 9,518 9,384 1 % Experiences 9,487 8,889 7 % 19,493 18,304 6 % Eliminations (1) (643) (484) (33) % (1,186) (931) (27) % Revenues $ 25,168 $ 23,621 7 % $ 51,149 $ 48,311 6 % (1) Reflects fees paid by (a) the entertainment vMVPD services to the sports and entertainment linear networks for the right to air the networks on the Hulu Live TV and Fubo services and (b) the Entertainment segment to the Sports segment to program certain sports content on ABC Network and Disney+. The following table presents income from our operating segments and other components of income before income taxes: Quarter Ended % Change Better (Worse) Six Months Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 March 28, 2026 March 29, 2025 Entertainment operating income $ 1,336 $ 1,258 6 % $ 2,436 $ 2,961 (18) % Sports operating income 652 687 (5) % 843 934 (10) % Experiences operating income 2,615 2,491 5 % 5,924 5,601 6 % Corporate and unallocated shared expenses (380) (395) 4 % (684) (855) 20 % Equity in the loss of India joint venture (64) (103) 38 % (92) (136) 32 % Restructuring and impairment charges (239) (109) >(100) % (239) (252) 5 % Interest expense, net (240) (346) 31 % (515) (713) 28 % Acquisition Amortization (313) (396) 21 % (613) (793) 23 % Income before income taxes $ 3,367 $ 3,087 9 % $ 7,060 $ 6,747 5 % 36 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) Depreciation expense is as follows: Quarter Ended % Change Better (Worse) Six Months Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 March 28, 2026 March 29, 2025 Entertainment $ 238 $ 190 (25) % $ 443 $ 355 (25) % Sports 28 11 >(100) % 52 21 >(100) % Experiences Domestic 544 490 (11) % 1,068 951 (12) % International 217 188 (15) % 425 379 (12) % Total Experiences 761 678 (12) % 1,493 1,330 (12) % Corporate 89 78 (14) % 168 160 (5) % Total depreciation expense $ 1,116 $ 957 (17) % $ 2,156 $ 1,866 (16) % Amortization of intangible assets is as follows: Quarter Ended % Change Better (Worse) Six Months Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 March 28, 2026 March 29, 2025 Entertainment $ 13 $ 13 — % $ 26 $ 26 — % Experiences 27 27 — % 54 54 — % Acquisition amortization - intangible assets 249 327 24 % 485 654 26 % Total amortization of intangible assets $ 289 $ 367 21 % $ 565 $ 734 23 % BUSINESS SEGMENT RESULTS - Current Quarter Results Compared to Prior-Year Quarter Entertainment Operating results for Entertainment are as follows: Quarter Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Revenues Subscription and affiliate fees $ 7,801 $ 6,858 14 % Advertising 1,670 1,598 5 % Content sales 1,725 1,594 8 % Other 519 632 (18) % Total revenues 11,715 10,682 10 % Operating expenses (7,906) (7,052) (12) % Selling, general, administrative and other (2,330) (2,293) (2) % Depreciation and amortization (251) (203) (24) % Equity in the income of investees 108 124 (13) % Operating Income $ 1,336 $ 1,258 6 % Revenues - Subscription and affiliate fees Growth in subscription and affiliate fees was due to increases of 5% from the Fubo Transaction, 5% from higher effective rates, 2% from a favorable foreign exchange impact and 2% from more subscribers. Revenues - Advertising The increase in advertising revenue was primarily attributable to an increase of 8% from higher impressions, partially offset by a decrease of 6% from lower rates. 37 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) Revenues - Content sales Higher content sales revenue was due to increases of 8% from theatrical distribution and 4% from a favorable foreign exchange impact, partially offset by a decrease of 2% from TV/VOD and home entertainment distribution. The increase in theatrical distribution was attributable to the ongoing performance of Avatar: Fire and Ash and Zootopia 2 and the release of Hoppers in the current quarter compared to the ongoing performance of Mufasa: The Lion King and Moana 2 and the release of Captain America: Brave New World in the prior-year quarter . Revenues - Other The decrease in other revenue was attributable to the impact of our foreign exchange hedging program. Operating expenses Quarter Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Programming and production costs $ (6,406) $ (5,691) (13) % Other operating expenses (1,500) (1,361) (10) % $ (7,906) $ (7,052) (12) % The increase in programming and production costs was due to increases of 5% from the Fubo Transaction, 5% from streaming services and 3% from theatrical distribution. The increase in other operating expenses was primarily attributable to higher technology and distribution costs. Depreciation and amortization Depreciation and amortization increased $48 million, to $251 million from $203 million, due to a new facility and investments in technology assets. Equity in the Income of Investees Income from equity investees decreased $16 million, to $108 million from $124 million, due to lower income from A+E attributable to decreases in advertising and affiliate revenues, partially offset by an increase in program sales income. Operating Income from Entertainment Segment operating income increased $78 million, to $1,336 million from $1,258 million, due to an increase in subscription and affiliate fees, partially offset by higher programming and production costs. Items Excluded from Segment Operating Income Related to Entertainment The following table presents supplemental information for items related to the Entertainment segment that are excluded from segment operating income: Quarter Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Acquisition Amortization (1) $ (289) $ (320) 10 % Restructuring and impairment charges (2) (216) (109) (98) % (1) In the current quarter, amortization of intangible assets was $225 million and amortization of step-up on film and television costs was $64 million. In the prior-year quarter, amortization of intangible assets was $251 million and amortization of step-up on film and television costs was $66 million. (2) Charges in the current quarter were $147 million for an impairment of an equity investment and $69 million for severance. Charges in the prior-year quarter were due to content impairments. 38 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) Sports Operating results for Sports are as follows: Quarter Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Revenues Subscription and affiliate fees $ 3,251 $ 3,080 6 % Advertising 1,132 1,157 (2) % Other 226 297 (24) % Total revenues 4,609 4,534 2 % Operating expenses (3,605) (3,507) (3) % Selling, general, administrative and other (337) (347) 3 % Depreciation and amortization (28) (11) >(100) % Equity in the income of investees 13 18 (28) % Operating Income $ 652 $ 687 (5) % Revenues - Subscription and affiliate fees Growth in subscription and affiliate fees reflected increases of 6% from higher effective rates and 3% from the NFL Transaction, partially offset by a decrease of 3% from fewer subscribers. Revenues - Advertising Lower advertising revenue was due to a decrease of 4% attributable to fewer impressions. Revenues - Other The decrease in other revenue was primarily due to the comparison to Ultimate Fighting Championship (UFC) pay-per-view revenue in the prior-year quarter. Operating expenses Quarter Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Programming and production costs $ (3,357) $ (3,267) (3) % Other operating expenses (248) (240) (3) % $ (3,605) $ (3,507) (3) % Programming and production costs increased in the current quarter compared to the prior-year quarter due to contractual rate increases, costs for new sports rights and an impact from the timing of rights costs recognition as a result of contract renewals. These increases were partially offset by the absence of certain rights costs compared to the prior-year quarter, primarily for UFC content. The contract renewals resulted in an increase in college sports rights costs and a decrease in NBA rights costs in the current quarter compared to the prior-year quarter. College sports rights costs shifted from the prior-year fourth quarter and the first quarter to the current quarter and NBA rights costs shifted from the first half of the current year to the third quarter. Selling, general, administrative and other Selling, general, administrative and other costs decreased $10 million, to $337 million from $347 million, due to the benefit from a comparison to the write-off of an investment in the prior-year quarter, partially offset by higher sales and marketing costs. Depreciation and amortization Depreciation and amortization increased $17 million, to $28 million from $11 million, due to investments in technology assets. Operating Income from Sports Segment operating income decreased $35 million, to $652 million from $687 million, as an increase in revenues was more than offset by higher programming and production costs. 39 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) Items Excluded from Segment Operating Income Related to Sports The following table presents supplemental information for items related to the Sports segment that are excluded from segment operating income: Quarter Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Acquisition Amortization (1) $ (22) $ (74) 70 % Restructuring and impairment charges (5) — nm (1) Represents amortization of intangible assets. Experiences Operating results for the Experiences segment are as follows: Quarter Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Revenues Theme park admissions $ 3,092 $ 2,919 6 % Resorts and vacations 2,564 2,359 9 % Parks & Experiences merchandise, food and beverage 2,199 2,101 5 % Merchandise licensing and retail 962 937 3 % Parks licensing and other 670 573 17 % Total revenues 9,487 8,889 7 % Operating expenses (4,969) (4,669) (6) % Selling, general, administrative and other (1,115) (1,024) (9) % Depreciation and amortization (788) (705) (12) % Operating Income $ 2,615 $ 2,491 5 % Revenues - Theme park admissions Theme park admissions revenue growth was due to increases of 4% from higher average per capita ticket revenue and 1% from a favorable foreign exchange impact. Revenues - Resorts and vacations Higher resorts and vacations revenue was attributable to increases of 7% from additional passenger cruise days, reflecting the launches of the Disney Destiny in November 2025 and the Disney Adventure in March 2026, and 2% from an increase in average daily hotel room rates. Revenues - Parks & Experiences merchandise, food and beverage Parks & Experiences merchandise, food and beverage revenue growth was due to increases of 2% from higher average guest spending, 2% from a favorable foreign exchange impact and 1% from volume growth. Revenues - Merchandise licensing and retail Higher merchandise licensing and retail revenue was due to increases of 1% from merchandise licensing and 1% from retail. Revenues - Parks licensing and other The increase in parks licensing and other revenue was primarily due to an increase in co-branding revenue, the recognition of incentives received in the current quarter and higher sponsorship revenue. 40 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) Key Metrics In addition to revenue, costs and operating income, management uses the following key metrics to analyze trends and evaluate the overall performance of our theme parks and resorts, and we believe these metrics are useful to investors in analyzing the business: Domestic International (1) Quarter Ended Quarter Ended March 28, 2026 March 29, 2025 March 28, 2026 March 29, 2025 Parks Increase (decrease) Attendance (2) (1) % 2 % 4 % (5) % Per Capita Guest Spending (3) 5 % 5 % 1 % (2) % Hotels Occupancy (4) 89 % 92 % 86 % 87 % Available Hotel Room Nights (in thousands) (5) 2,552 2,546 786 786 Change in Per Room Guest Spending (6) 7 % 5 % — % 1 % (1) Per capita guest spending growth rate and per room guest spending growth rate exclude the impact of changes in foreign exchange rates. (2) Attendance is used to analyze volume trends at our theme parks and is based on the number of unique daily entries, i.e. a person visiting multiple theme parks in a single day is counted only once. Our attendance count includes complimentary entries but excludes entries by children under the age of three. (3) Per capita guest spending is used to analyze guest spending trends and is defined as total revenue from ticket sales and sales of food, beverage and merchandise in our theme parks, divided by total theme park attendance. (4) Occupancy is used to analyze the usage of available capacity at hotels and is defined as the number of room nights occupied by guests as a percentage of available hotel room nights. (5) Available hotel room nights is defined as the total number of room nights that are available at our hotels and at Disney Vacation Club (DVC) properties located at our theme parks and resorts that are not utilized by DVC members. Available hotel room nights include rooms temporarily taken out of service. (6) Per room guest spending is used to analyze guest spending at our hotels and is defined as total revenue from room rentals and sales of food, beverage and merchandise at our hotels, divided by total occupied hotel room nights. Operating expenses Quarter Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Operating labor $ (2,355) $ (2,213) (6) % Infrastructure costs (856) (856) — % Cost of goods sold and distribution costs (773) (723) (7) % Other operating expense (985) (877) (12) % $ (4,969) $ (4,669) (6) % Higher operating labor was due to inflation, new guest offerings and an unfavorable foreign exchange impact. The increase in cost of goods sold and distribution costs was attributable to volume growth. Higher other operating expense was primarily due to new guest offerings and an unfavorable foreign exchange impact. 41 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) Selling, general, administrative and other Selling, general, administrative and other costs increased $91 million, to $1,115 million from $1,024 million, primarily due to new guest offerings and inflation. Depreciation and amortization Depreciation and amortization increased $83 million, to $788 million from $705 million, primarily due to higher depreciation at Disney Cruise Line and at our international parks and experiences attributable to an increase at Disneyland Paris. Operating Income from Experiences Segment operating income increased $124 million, to $2,615 million from $2,491 million, primarily due to growth at domestic parks and experiences. Supplemental revenue and operating income The following table presents supplemental revenue and operating income detail for the Experiences segment: Quarter Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Supplemental revenue detail Parks & Experiences Domestic $ 6,917 $ 6,499 6 % International 1,596 1,441 11 % Consumer Products 974 949 3 % $ 9,487 $ 8,889 7 % Supplemental operating income detail Parks & Experiences Domestic $ 1,909 $ 1,823 5 % International 227 225 1 % Consumer Products 479 443 8 % $ 2,615 $ 2,491 5 % Items Excluded from Segment Operating Income Related to Experiences The following table presents supplemental information for items related to the Experiences segment that are excluded from segment operating income: Quarter Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Restructuring and impairment charges $ (13) $ — nm Acquisition Amortization (2) (2) — % 42 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) BUSINESS SEGMENT RESULTS - Current Period Six-Month Results Compared to the Prior-Year Six-Month Period Entertainment Operating results for Entertainment are as follows: Six Months Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Revenues Subscription and affiliate fees $ 15,051 $ 13,578 11 % Advertising 3,445 3,496 (1) % Content sales 3,661 3,179 15 % Other 1,167 1,301 (10) % Total revenues 23,324 21,554 8 % Operating expenses (15,689) (13,867) (13) % Selling, general, administrative and other (4,956) (4,587) (8) % Depreciation and amortization (469) (381) (23) % Equity in the income of investees 226 242 (7) % Operating Income $ 2,436 $ 2,961 (18) % Revenues - Subscription and affiliate fees Growth in subscription and affiliate fees was due to increases of 5% from higher effective rates, 5% from the Fubo Transaction, 1% from more subscribers and 1% from a favorable foreign exchange impact. Revenues - Advertising The decline in advertising revenue was due to decreases of 4% from lower rates and 3% from the Star India Transaction, partially offset by increases of 4% from higher impressions and 1% from the Fubo Transaction. Rates and impressions included an impact from less political advertising. Revenues - Content sales Higher content sales revenue was due to an increase of 16% from theatrical distribution attributable to the performance of Zootopia 2, Avatar: Fire and Ash and Hoppers in the current period compared to Moana 2 , Mufasa: The Lion King and Captain America: Brave New World in the prior-year period . Revenues - Other The decrease in other revenue was attributable to the impact of our foreign exchange hedging program. Operating expenses Six Months Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Programming and production costs $ (12,720) $ (11,166) (14) % Other operating expenses (2,969) (2,701) (10) % $ (15,689) $ (13,867) (13) % The increase in programming and production costs was due to increases of 7% from theatrical distribution, 4% from the Fubo Transaction and 2% from our streaming services. The increase in other operating expenses was primarily due to higher technology and distribution costs. Selling, general, administrative and other Selling, general, administrative and other costs increased $369 million, to $4,956 million from $4,587 million, due to higher marketing costs at theatrical distribution and our streaming services. Depreciation and amortization Depreciation and amortization increased $88 million, to $469 million from $381 million, due to a new facility and investments in technology assets. 43 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) Equity in the Income of Investees Income from equity investees decreased $16 million, to $226 million from $242 million, due to lower income from A+E attributable to decreases in advertising and affiliate revenues, partially offset by an increase in program sales income. Operating Income from Entertainment Segment operating income decreased $525 million, to $2,436 million from $2,961 million, driven by increases in programming and production costs and marketing costs, partially offset by an increase in subscription and affiliate fees and higher content sales revenue. Items Excluded from Segment Operating Income Related to Entertainment The following table presents supplemental information for items related to the Entertainment segment that are excluded from segment operating income: Six Months Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Acquisition Amortization (1) $ (587) $ (641) 8 % Restructuring and impairment charges (2) (216) (109) (98) % (1) In the current period, amortization of intangible assets was $459 million and amortization of step-up on film and television costs was $128 million . In the prior-year period, amortization of intangible assets was $502 million and amortization of step-up on film and television costs was $133 million. (2) Charges in the current period were $147 million for an impairment of an equity investment and $69 million for severance. Charges in the prior-year period were due to content impairments. Sports Operating results for Sports are as follows: Six Months Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Revenues Subscription and affiliate fees $ 6,234 $ 6,137 2 % Advertising 2,609 2,499 4 % Other 675 748 (10) % Total revenues 9,518 9,384 1 % Operating expenses (7,994) (7,800) (2) % Selling, general, administrative and other (645) (657) 2 % Depreciation and amortization (52) (21) >(100) % Equity in the income of investees 16 28 (43) % Operating Income $ 843 $ 934 (10) % Revenues - Subscription and affiliate fees Growth in subscription and affiliate fees reflected increases of 6% from higher effective rates and 1% from the NFL Transaction, partially offset by decreases of 4% from fewer subscribers and 1% from the temporary suspension of carriage with an affiliate in the current period. Revenues - Advertising Advertising revenue growth was due to an increase of 4% from higher rates. Revenues - Other The decrease in other revenue was due to a decrease in UFC pay-per-view revenue resulting from the expiration of UFC rights in December 2025. 44 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) Operating expenses Six Months Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Programming and production costs $ (7,489) $ (7,310) (2) % Other operating expenses (505) (490) (3) % $ (7,994) $ (7,800) (2) % Programming and production costs increased in the current period compared to the prior-year period primarily due to contractual rate increases and costs for new sports rights. These increases were partially offset by the absence of certain rights costs, primarily for UFC content, and the timing of rights costs recognition as a result of contract renewals. The renewals resulted in a decrease in NBA rights costs and an increase in college sports rights costs in the current period compared to the prior-year period. NBA rights costs shifted from the current period to the third quarter and college sports rights costs shifted from the prior-year fourth quarter to the current period. Selling, general, administrative and other Selling, general, administrative and other costs decreased $12 million, to $645 million from $657 million, due to the benefit from a comparison to the write-off of an investment in the prior-year period, offset by higher sales and marketing costs. Depreciation and amortization Depreciation and amortization increased $31 million, to $52 million from $21 million, due to investments in technology assets. Operating Income from Sports Segment operating income decreased $91 million, to $843 million from $934 million, as an increase in revenues was more than offset by higher programming and production costs. Items Excluded from Segment Operating Income Related to Sports The following table presents supplemental information for items related to the Sports segment that are excluded from segment operating income: Six Months Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Acquisition Amortization (1) $ (22) $ (148) 85 % Restructuring and impairment charges (5) — nm (1) Represents amortization of intangible assets. 45 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) Experiences Operating results for the Experiences segment are as follows: Six Months Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Revenues Theme park admissions $ 6,393 $ 6,006 6 % Resorts and vacations 4,974 4,580 9 % Parks & Experiences merchandise, food and beverage 4,547 4,282 6 % Merchandise licensing and retail 2,299 2,255 2 % Parks licensing and other 1,280 1,181 8 % Total revenues 19,493 18,304 6 % Operating expenses (9,945) (9,347) (6) % Selling, general, administrative and other (2,077) (1,972) (5) % Depreciation and amortization (1,547) (1,384) (12) % Operating Income $ 5,924 $ 5,601 6 % Revenues - Theme park admissions Theme park admissions revenue growth was due to increases of 4% from higher average per capita ticket revenue, 1% from increased attendance at our international and domestic parks and 1% from a favorable foreign exchange impact. Attendance growth at our domestic parks benefited from the comparison to the adverse impact of Hurricane Milton in the prior-year period. Revenues - Resorts and vacations Higher resorts and vacations revenue was due to increases of 7% from additional passenger cruise days and 2% from an increase in average daily hotel room rates. The increase in passenger cruise days reflected the launches of the Disney Treasure in December 2024, the Disney Destiny in November 2025 and the Disney Adventure in March 2026. Revenues - Parks & Experiences merchandise, food and beverage Parks & Experiences merchandise, food and beverage revenue growth was attributable to increases of 3% from higher average guest spending, 2% from volume growth and 1% from a favorable foreign exchange impact. Revenues - Merchandise licensing and retail Higher merchandise licensing and retail revenue was due to an increase of 2% from merchandise licensing. Revenues - Parks licensing and other The increase in parks licensing and other revenue was primarily due to an increase in co-branding revenue and higher sponsorship revenue. 46 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) Key metrics Domestic International Six Months Ended Six Months Ended March 28, 2026 March 29, 2025 March 28, 2026 March 29, 2025 Parks Increase (decrease) Attendance — % — % 5 % (1) % Per Capita Guest Spending 5 % 4 % 1 % 1 % Hotels Occupancy 88 % 88 % 87 % 87 % Available Hotel Room Nights (in thousands) 5,102 5,087 1,583 1,584 Change in Per Room Guest Spending 5 % 5 % — % 9 % Operating expenses Six Months Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Operating labor $ (4,640) $ (4,377) (6) % Infrastructure costs (1,702) (1,657) (3) % Cost of goods sold and distribution costs (1,716) (1,652) (4) % Other operating expense (1,887) (1,661) (14) % $ (9,945) $ (9,347) (6) % The increase in operating labor was due to inflation, an unfavorable foreign exchange impact and new guest offerings. Higher infrastructure costs were attributable to new guest offerings. The increase in cost of goods sold and distribution costs was due to higher volumes. Other operating expense increased primarily due to new guest offerings, higher volumes and an unfavorable foreign exchange impact. Selling, general, administrative and other Selling, general, administrative and other costs increased $105 million, to $2,077 million from $1,972 million, primarily due to new guest offerings and inflation. Depreciation and amortization Depreciation and amortization increased $163 million, to $1,547 million from $1,384 million, primarily due to higher depreciation at Disney Cruise Line and at our international parks and experiences attributable to an increase at Disneyland Paris. Operating Income from Experiences Segment operating income increased $323 million, to $5,924 million from $5,601 million, primarily due to growth at domestic parks and experiences. 47 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) Supplemental revenue and operating income The following table presents supplemental revenue and operating income detail for the Experiences segment: Six Months Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Supplemental revenue detail Parks & Experiences Domestic $ 13,827 $ 12,931 7 % International 3,349 3,087 8 % Consumer Products 2,317 2,286 1 % $ 19,493 $ 18,304 6 % Supplemental operating income detail Parks & Experiences Domestic $ 4,058 $ 3,805 7 % International 655 645 2 % Consumer Products 1,211 1,151 5 % $ 5,924 $ 5,601 6 % Items Excluded from Segment Operating Income Related to Experiences The following table presents supplemental information for items related to the Experiences segment that are excluded from segment operating income: Six Months Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Restructuring and impairment charges $ (13) $ — nm Acquisition Amortization (4) (4) — % CORPORATE AND UNALLOCATED SHARED EXPENSES Quarter Ended % Change Better (Worse) Six Months Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 March 28, 2026 March 29, 2025 Corporate and unallocated shared expenses $ (380) $ (395) 4 % $ (684) $ (855) 20 % Corporate and unallocated shared expenses for the six-month period decreased $171 million, from $855 million to $684 million, driven by the comparison to a legal settlement in the prior-year period. FINANCIAL CONDITION The change in cash and cash equivalents is as follows: Six Months Ended % Change Better (Worse) (in millions) March 28, 2026 March 29, 2025 Cash provided by operations $ 7,649 $ 9,958 (23) % Cash used in investing activities (5,469) (4,473) (22) % Cash used in financing activities (2,162) (5,553) 61 % Impact of exchange rates on cash, cash equivalents and restricted cash (28) (76) 63 % Change in cash, cash equivalents and restricted cash $ (10) $ (144) 93 % 48 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) Operating Activities Cash provided by operations decreased from $10.0 billion in the prior-year period to $7.6 billion for the current period due to higher income tax payments and, to a lesser extent, an increase in spending on content at Entertainment and Sports, partially offset by higher operating cash flows at Experiences. The current period included payment of U.S. federal and California state income tax liabilities for fiscal 2025 and a portion of fiscal 2024, which were deferred pursuant to relief related to 2025 wildfires in California. The increase in operating cash flows at Experiences was due to higher operating cash receipts attributable to higher revenue, partially offset by higher operating cash disbursements attributable to higher operating expenses. Produced and licensed programming costs The Entertainment and Sports segments incur costs to produce and license film, episodic, sports and other content. Production costs include spend on content internally produced at our studios such as live-action and animated films and episodic series. Production costs also include original content commissioned from third-party studios. Programming costs include content rights licensed from third parties for use on the Company’s sports and general entertainment networks and streaming services. Programming assets are generally recorded when the programming becomes available to us with a corresponding increase in programming liabilities. The Company’s film and television production and programming activity for the six months ended March 28, 2026 and March 29, 2025 are as follows: Six Months Ended (in millions) March 28, 2026 March 29, 2025 Beginning balances: Produced and licensed programming assets $ 33,390 $ 34,409 Programming liabilities (3,353) (3,692) 30,037 30,717 Spending: Programming licenses and rights 6,806 6,368 Produced film and television content 4,805 4,425 11,611 10,793 Amortization: Programming licenses and rights (7,835) (7,601) Produced film and television content (5,775) (5,081) (13,610) (12,682) Change in produced and licensed content costs (1,999) (1,889) Content Impairment (see Note 15 to the Condensed Consolidated Financial Statements) — (109) Other non-cash activity (18) 429 Ending balances: Produced and licensed programming assets 31,527 32,883 Programming liabilities (3,507) (3,735) $ 28,020 $ 29,148 The Company currently expects its fiscal 2026 spend on produced and licensed content, including sports rights, to be approximately $24 billion compared to fiscal 2025 spend on produced and licensed content, including sports rights, of $23 billion. 49 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) Investing Activities Investing activities consist principally of investments in parks, resorts and other property and acquisition and divestiture activity. The Company’s investing activities for the six months ended March 28, 2026 and March 29, 2025 are as follows: Six Months Ended (in millions) March 28, 2026 March 29, 2025 Investments in parks, resorts and other property: Entertainment $ (601) $ (522) Sports — — Experiences Domestic (3,575) (3,022) International (687) (561) Total Experiences (4,262) (3,583) Corporate (123) (223) Total investments in parks, resorts and other property (4,986) (4,328) Other investing activities, net (483) (145) Cash used in investing activities $ (5,469) $ (4,473) Capital expenditures at the Entertainment segment primarily reflect investments in technology and in facilities and equipment for expanding and upgrading broadcast centers, production facilities and television station facilities. Capital expenditures at the Experiences segment are principally for theme park and resort expansion, new attractions, cruise ships, capital improvements and technology. The increase in the current period compared to the prior-year period was due to higher spend on cruise ship fleet expansion and new theme park attractions. Capital expenditures at Corporate primarily reflect investments in corporate facilities, technology and equipment. The decrease in the current period compared to the prior-year period was due to lower spend on facilities. The Company currently expects its fiscal 2026 capital expenditures to be approximately $9 billion compared to fiscal 2025 capital expenditures of $8 billion. The projected increase in capital expenditures is primarily due to higher spending at Experiences, attributable to theme park and resort expansion and new attractions, partially offset by lower spending on cruise ship fleet expansion. The increase in cash used in other investing activities is primarily due to the acquisition of equity interests in different investments, partially offset by cash assumed as part of the acquisition of Fubo. Financing Activities Financing activities for the six months ended March 28, 2026 and March 29, 2025 are as follows: Six Months Ended (in millions) March 28, 2026 March 29, 2025 Change in borrowings $ 4,989 $ (2,647) Dividends (1,337) (905) Repurchases of common stock (5,500) (1,785) Other financing activities, net (1) (314) (216) Cash used in financing activities $ (2,162) $ (5,553) (1) Primarily consists of equity award activity. See Note 5 to the Condensed Consolidated Financial Statements for a summary of the Company’s borrowing activities during the six months ended March 28, 2026 and information regarding the Company’s bank facilities. The Company may use cash balances, operating cash flows, commercial paper borrowings up to the amount of its unused $12.25 billion bank facilities and incremental term debt issuances to retire or refinance other borrowings before or as they come due. See Note 10 to the Condensed Consolidated Financial Statements for a summary of dividends and share repurchases. The Company is targeting $8 billion in share repurchases in fiscal 2026. 50 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) The Company’s operating cash flow and access to the capital markets can be impacted by factors outside of its control. We believe that the Company’s financial condition is strong and that its cash balances, other liquid assets, operating cash flows, access to debt and equity capital markets and borrowing capacity under current bank facilities, taken together, provide adequate resources to fund ongoing operating requirements, contractual obligations, upcoming debt maturities, as well as future capital expenditures related to the expansion of existing businesses and development of new projects. In addition, the Company could undertake other measures to ensure sufficient liquidity, such as raising additional financing, reducing or not declaring future dividends; reducing or stopping share repurchases; reducing capital spending; reducing film and episodic content investments; or implementing further cost-saving initiatives. The Company’s borrowing costs can also be impacted by short- and long-term debt ratings assigned by nationally recognized rating agencies, which are based, in significant part, on the Company’s performance as measured by certain credit metrics such as leverage and interest coverage ratios. As of March 28, 2026, Moody’s Ratings’ long- and short-term debt ratings for the Company were A2 and P-1 (Stable), respectively, and S&P Global Ratings’ long- and short-term debt ratings for the Company were A and A-1 (Stable), respectively. The Company’s 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 28, 2026, the Company met this covenant by a significant margin. The Company’s bank facilities also specifically exclude certain entities, including the Asia Theme Parks and Fubo, from any representations, covenants or events of default. MARKET RISK The Company is exposed to the impact of interest rate changes, foreign currency fluctuations, commodity fluctuations and changes in the market values of its investments. Policies and Procedures In the normal course of business, we employ established policies and procedures to manage the Company’s exposure to changes in interest rates, foreign currencies and commodities using a variety of financial instruments. Our objectives in managing exposure to interest rate changes are to limit the impact of interest rate volatility on earnings and cash flows and to lower overall borrowing costs. To achieve these objectives, we primarily use interest rate swaps to manage net exposure to interest rate changes related to the Company’s portfolio of borrowings. By policy, the Company targets fixed-rate debt as a percentage of its net debt between minimum and maximum percentages. Our objective in managing exposure to foreign currency fluctuations is to reduce volatility of earnings and cash flows in order to allow management to focus on core business issues and challenges. Accordingly, the Company enters into various contracts that change in value as foreign exchange rates change to protect the U.S. dollar equivalent value of its existing foreign currency assets, liabilities, commitments and forecasted foreign currency revenues and expenses. The Company utilizes option strategies and forward contracts that provide for the purchase or sale of foreign currencies to hedge probable, but not firmly committed, transactions. The Company also uses forward and option contracts to hedge foreign currency assets and liabilities. The principal foreign currencies hedged are the euro, British pound, Japanese yen, Chinese yuan and Canadian dollar. Cross-currency swaps are used to effectively convert foreign currency denominated borrowings to U.S. dollar denominated borrowings. By policy, the Company maintains hedge coverage between minimum and maximum percentages of its forecasted foreign exchange exposures generally for periods not to exceed four years. The gains and losses on these contracts are intended to offset changes in the U.S. dollar equivalent value of the related exposures. The economic or political conditions in a country have reduced and in the future could reduce our ability to hedge exposure to currency fluctuations in the country or our ability to repatriate revenue from the country. Our objectives in managing exposure to commodity fluctuations are to use commodity derivatives to reduce volatility of earnings and cash flows arising from commodity price changes. The amounts hedged using commodity swap contracts are based on forecasted levels of consumption of certain commodities, such as fuel, oil and gasoline. Our objectives in managing exposures to market-based fluctuations in certain retirement liabilities are to use total return swap contracts to reduce the volatility of earnings arising from changes in these retirement liabilities. The amounts hedged using total return swap contracts are based on estimated liability balances. It is the Company’s policy to enter into foreign currency and interest rate derivative transactions and other financial instruments only to the extent considered necessary to meet its objectives as stated above. The Company does not enter into these transactions or any other hedging transactions for speculative purposes. 51 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) COMMITMENTS AND CONTINGENCIES Legal Matters As disclosed in Note 12 to the Condensed Consolidated Financial Statements, the Company has exposure for certain legal matters. Tax Matters As disclosed in Note 9 to the Consolidated Financial Statements in the 2025 Annual Report on Form 10-K, the Company has exposure for certain tax matters. Contractual Commitments See Note 14 to the Consolidated Financial Statements in the 2025 Annual Report on Form 10-K and Note 12 to the Condensed Consolidated Financial Statements. OTHER MATTERS Accounting Policies and Estimates For a discussion of each of our critical accounting estimates, including information and analysis of estimates and assumptions involved in their application, see “Critical Accounting Policies and Estimates” included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Annual Report on Form 10-K. New Accounting Pronouncements See Note 16 to the Condensed Consolidated Financial Statements for information regarding new accounting pronouncements. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION On March 20, 2019 as part of the acquisition of TFCF, The Walt Disney Company (“TWDC”) became the ultimate parent of TWDC Enterprises 18 Corp. (formerly known as The Walt Disney Company) (“Legacy Disney”). Legacy Disney and TWDC are collectively referred to as “Obligor Group”, and individually, as a “Guarantor”. Concurrent with the close of the TFCF acquisition, $16.8 billion of TFCF’s assumed public debt (which then constituted 96% of such debt) was exchanged for senior notes of TWDC (the “exchange notes”) issued pursuant to an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to an Indenture, dated as of March 20, 2019, between TWDC, Legacy Disney, as guarantor, and Citibank, N.A., as trustee (the “TWDC Indenture”) and guaranteed by Legacy Disney. On November 26, 2019, $14.0 billion of the outstanding exchange notes were exchanged for new senior notes of TWDC registered under the Securities Act, issued pursuant to the TWDC Indenture and guaranteed by Legacy Disney. In addition, contemporaneously with the closing of the March 20, 2019 exchange offer, TWDC entered into a guarantee of the registered debt securities issued by Legacy Disney under the Indenture dated as of September 24, 2001 between Legacy Disney and Wells Fargo Bank, National Association, as trustee (the “2001 Trustee”) (as amended by the first supplemental indenture among Legacy Disney, as issuer, TWDC, as guarantor, and the 2001 Trustee, as trustee). Other subsidiaries of the Company do not guarantee the registered debt securities of either TWDC or Legacy Disney (such subsidiaries are referred to as the “non-Guarantors”). The par value and carrying value of total outstanding and guaranteed registered debt securities of the Obligor Group at March 28, 2026 was as follows: TWDC Legacy Disney (in millions) Par Value Carrying Value Par Value Carrying Value Registered debt with unconditional guarantee $ 32,068 $ 32,828 $ 5,450 $ 5,408 The guarantees by TWDC and Legacy Disney are full and unconditional and cover all payment obligations arising under the guaranteed registered debt securities. The guarantees may be released and discharged upon (i) as a general matter, the indebtedness for borrowed money of the consolidated subsidiaries of TWDC in aggregate constituting no more than 10% of all consolidated indebtedness for borrowed money of TWDC and its subsidiaries (subject to certain exclusions), (ii) upon the sale, transfer or disposition of all or substantially all of the equity interests or all or substantially all, or substantially as an entirety, the assets of Legacy Disney to a third party, and (iii) other customary events constituting a discharge of a guarantor’s obligations. In addition, in the case of Legacy Disney’s guarantee of registered debt securities issued by TWDC, Legacy Disney may be released and discharged from its guarantee at any time Legacy Disney is not a borrower, issuer or guarantor under certain material bank facilities or any debt securities. 52 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued) Operations are conducted almost entirely through the Company’s subsidiaries. Accordingly, the Obligor Group’s cash flow and ability to service its debt, including the public debt, are dependent upon the earnings of the Company’s subsidiaries and the distribution of those earnings to the Obligor Group, whether by dividends, loans or otherwise. Holders of the guaranteed registered debt securities have a direct claim only against the Obligor Group. Set forth below is summarized financial information for the Obligor Group on a combined basis after elimination of (i) intercompany transactions and balances between TWDC and Legacy Disney and (ii) equity in the earnings from and investments in any subsidiary that is a non-Guarantor. This summarized financial information has been prepared and presented pursuant to the Securities and Exchange Commission Regulation S-X Rule 13-01, “Financial Disclosures about Guarantors and Issuers of Guaranteed Securities” and is not intended to present the financial position or results of operations of the Obligor Group in accordance with GAAP. Results of operations (in millions) Six Months Ended March 28, 2026 Revenues $ — Costs and expenses — Net income (loss) (1,218) Net income (loss) attributable to TWDC shareholders (1,218) Balance Sheet (in millions) March 28, 2026 September 27, 2025 Current assets $ 1,889 $ 2,295 Noncurrent assets 3,594 3,613 Current liabilities 11,395 9,592 Noncurrent liabilities (excluding intercompany to non-Guarantors) 38,381 36,314 Intercompany payables to non-Guarantors 171,134 167,091 53 Item 3. Quantitative and Qualitative Disclosures about Market Risk. See Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, Note 14 to the Condensed Consolidated Financial Statements and in Note 17 to Consolidated Financial Statements in Part II, Item 8 of the 2025 Annual Report on Form 10-K.