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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 2, 2021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________.
Commission File Number 001-38842
dis-20210102_g1.jpg

Delaware 83-0940635
State or Other Jurisdiction of I.R.S. Employer Identification
Incorporation or Organization
500 South Buena Vista Street
Burbank, California 91521
Address of Principal Executive Offices and Zip Code
(818) 560-1000
Registrant’s Telephone Number, Including Area Code
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueDISNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒Accelerated filer☐
Non-accelerated filer
☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ☐    No  ☒
There were 1,815,263,899 shares of common stock outstanding as of February 3, 2021.


PART I. FINANCIAL INFORMATION
Item 1: Financial Statements
THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited; in millions, except per share data)
 Quarter Ended
 January 2,
2021		December 28,
2019
Revenues:
Services$14,871 $18,094 
Products1,378 2,783 
Total revenues16,249 20,877 
Costs and expenses:
Cost of services (exclusive of depreciation and amortization)
(10,738)(11,395)
Cost of products (exclusive of depreciation and amortization)
(1,037)(1,639)
Selling, general, administrative and other(2,917)(3,709)
Depreciation and amortization(1,298)(1,299)
Total costs and expenses(15,990)(18,042)
Restructuring and impairment charges(113)(150)
Interest expense, net(324)(283)
Equity in the income of investees224 224 
Income from continuing operations before income taxes46 2,626 
Income taxes on continuing operations(16)(458)
Net income from continuing operations30 2,168 
Loss from discontinued operations, net of income tax benefit of $4 and $7, respectively(12)(21)   
Net income18 2,147 
Net income from continuing operations attributable to noncontrolling interests
(1)(40)
Net income attributable to The Walt Disney Company (Disney)$17    $2,107 
Earnings (loss) per share attributable to Disney(1):
Diluted
Continuing operations$0.02 $1.17 
Discontinued operations(0.01)(0.01)
$0.01 $1.16 
Basic
Continuing operations$0.02 $1.18 
Discontinued operations(0.01)(0.01)
$0.01 $1.17 
Weighted average number of common and common equivalent shares outstanding:
Diluted1,823 1,817 
Basic1,812 1,805 
(1)Total may not equal the sum of the column due to rounding.
See Notes to Condensed Consolidated Financial Statements
2

THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited; in millions)
 

 Quarter Ended
 January 2,
2021		December 28,
2019
Net income$18 $2,147 
Other comprehensive income (loss), net of tax:
Market value adjustments, primarily for hedges
(173)(107)
Pension and postretirement medical plan adjustments
150 107    
Foreign currency translation and other
277 127 
Other comprehensive income254 127 
Comprehensive income272 2,274 
Net income from continuing operations attributable to noncontrolling interests
(1)(40)
Other comprehensive income attributable to noncontrolling interests(73)(43)
Comprehensive income attributable to Disney$198    $2,191 
See Notes to Condensed Consolidated Financial Statements




3

THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited; in millions, except per share data)
January 2,
2021		October 3,
2020
ASSETS
Current assets
Cash and cash equivalents$17,068 $17,914 
Receivables14,051 12,708 
Inventories1,480 1,583 
Content advances1,423 2,171 
Other current assets852 875 
Total current assets34,874 35,251 
Produced and licensed content costs25,929 25,022 
Investments4,037 3,903 
Parks, resorts and other property
Attractions, buildings and equipment63,017    62,111    
Accumulated depreciation(36,380)(35,517)
26,637 26,594 
Projects in progress4,547 4,449 
Land1,079 1,035 
32,263 32,078 
Intangible assets, net18,642 19,173 
Goodwill77,800 77,689 
Other assets8,343 8,433 
Total assets$201,888 $201,549 
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and other accrued liabilities$16,846 $16,801 
Current portion of borrowings5,397 5,711 
Deferred revenue and other4,303 4,116 
Total current liabilities26,546 26,628 
Borrowings52,878 52,917 
Deferred income taxes7,201 7,288 
Other long-term liabilities17,205 17,204 
Commitments and contingencies (Note 12)
Redeemable noncontrolling interests9,330 9,249 
Equity
Preferred stock
— — 
Common stock, $0.01 par value, Authorized – 4.6 billion shares, Issued – 1.8 billion shares
54,663 54,497 
Retained earnings38,456 38,315 
Accumulated other comprehensive loss(8,141)(8,322)
Treasury stock, at cost, 19 million shares
(907)(907)
Total Disney Shareholders’ equity84,071 83,583 
Noncontrolling interests4,657 4,680 
Total equity88,728 88,263 
Total liabilities and equity$201,888 $201,549 
See Notes to Condensed Consolidated Financial Statements
4

THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in millions)
 Quarter Ended
January 2,
2021		December 28,
2019
OPERATING ACTIVITIES
Net income from continuing operations$30 $2,168 
Depreciation and amortization1,298    1,299 
Net gain on investments(80)3 
Deferred income taxes(105)   534 
Equity in the income of investees(224)(224)
Cash distributions received from equity investees193 219    
Net change in produced and licensed content costs and advances771 (77)
Net change in operating lease right of use assets / liabilities36 (2)
Equity-based compensation134 115 
Other90 66 
Changes in operating assets and liabilities, net of business acquisitions:
Receivables(1,324)(1,424)
Inventories94 81 
Other assets(136)(158)
Accounts payable and other liabilities(642)(714)
Income taxes(60)(256)
Cash provided by operations - continuing operations75 1,630 
INVESTING ACTIVITIES
Investments in parks, resorts and other property(760)(1,338)
Other28 (12)
Cash used in investing activities - continuing operations(732)(1,350)
FINANCING ACTIVITIES
Commercial paper borrowings (payments), net(179)1,172 
Borrowings1 51 
Reduction of borrowings(139)(46)
Proceeds from exercise of stock options209 126 
Other(225)(186)
Cash provided by (used in) financing activities - continuing operations(333)1,117 
CASH FLOWS FROM DISCONTINUED OPERATIONS
Cash provided by (used in) operations - discontinued operations9 (19)
Impact of exchange rates on cash, cash equivalents and restricted cash139 41 
Change in cash, cash equivalents and restricted cash(842)1,419 
Cash, cash equivalents and restricted cash, beginning of period17,954 5,455 
Cash, cash equivalents and restricted cash, end of period$17,112 $6,874 
See Notes to Condensed Consolidated Financial Statements
5

THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(unaudited; in millions)

 Quarter Ended
Equity Attributable to Disney
 SharesCommon Stock
Retained Earnings
Accumulated
Other
Comprehensive
Income
(Loss)		Treasury Stock
Total Disney Equity
Non-controlling
   Interests(1)
Total
Equity
Balance at October 3, 20201,810 $54,497 $38,315 $(8,322)$(907)$83,583 $4,680 $88,263 
Comprehensive income (loss)— — 17 181 — 198 (6)192 
Equity compensation activity4 165 — — — 165 — 165 
Contributions— — — — — — 5 5 
Cumulative effect of accounting change— — 110 — — 110 — 110 
Distributions and other— 1 14 — — 15 (22)(7)
Balance at January 2, 20211,814 $54,663 $38,456 $(8,141)$(907)$84,071 $4,657 $88,728 
Balance at September 28, 20191,802 $53,907 $42,494 $(6,617)$(907)$88,877 $5,012 $93,889 
Comprehensive income— — 2,107    84— 2,191 17 2,208 
Equity compensation activity3 88 — — — 88 — 88 
Dividends— — (1,587)— — (1,587)— (1,587)
Contributions— — — — — — 20 20 
Cumulative effect of accounting change—    —    197 —    — 197    —    197    
Distributions and other— — (9)— — (9)(33)(42)
Balance at December 28, 20191,805 $53,995 $43,202 $(6,533)$(907)$89,757 $5,016 $94,773 
(1)Excludes redeemable noncontrolling interests.
See Notes to Condensed Consolidated Financial Statements


6

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)
 
1.Principles of Consolidation
These Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. We believe that we have included all normal recurring adjustments necessary for a fair presentation of the results for the interim period. Operating results for the quarter ended January 2, 2021 are not necessarily indicative of the results that may be expected for the year ending October 2, 2021.
The terms “Company,” “we,” “us,” and “our” are used in this report to refer collectively to the parent company and the subsidiaries through which our various businesses are actually conducted. The term “TWDC” is used to refer to the parent company.
These financial statements should be read in conjunction with the Company’s 2020 Annual Report on Form 10-K.
The Fox sports media business in Mexico, along with another Fox business divested in fiscal 2020, are presented as discontinued operations in the Condensed Consolidated Statements of Income. At January 2, 2021 and October 3, 2020, the assets and liabilities of the sports media operation in Mexico are not material and are included in other assets and other liabilities in the Condensed Consolidated Balance Sheet.
Variable Interest Entities
The Company enters into relationships with or makes investments in other entities that may be variable interest entities (VIE). A VIE is consolidated in the financial statements if the Company has the power to direct activities that most significantly impact the economic performance of the VIE and has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant (as defined by ASC 810-10-25-38) to the VIE. Hong Kong Disneyland Resort and Shanghai Disney Resort (together the Asia Theme Parks) are VIEs in which the Company has less than 50% equity ownership. Company subsidiaries (the Management Companies) have management agreements with the Asia Theme Parks, which provide the Management Companies, subject to certain protective rights of joint venture partners, with the ability to direct the day-to-day operating activities and the development of business strategies that we believe most significantly impact the economic performance of the Asia Theme Parks. In addition, the Management Companies receive management fees under these arrangements that we believe could be significant to the Asia Theme Parks. Therefore, the Company has consolidated the Asia Theme Parks in its financial statements.
Redeemable Noncontrolling Interests
The Company consolidates the results of certain subsidiaries that are less than 100% owned and for which the noncontrolling interest shareholders have the rights to require the Company to purchase their interests in these subsidiaries. The most significant of these are Hulu LLC (Hulu) and BAMTech LLC (BAMTech).
Hulu provides direct-to-consumer (DTC) streaming services and is owned 67% by the Company and 33% by NBC Universal (NBCU). In May 2019, the Company entered into a put/call agreement with NBCU that provided the Company with full operational control of Hulu. Under the agreement, beginning in January 2024, NBCU has the option to require the Company to purchase NBCU’s interest in Hulu and the Company has the option to require NBCU to sell its interest in Hulu to the Company, based on NBCU’s equity ownership percentage of the greater of Hulu’s then fair value or $27.5 billion.
NBCU’s interest will generally not be allocated its portion of Hulu’s losses as the redeemable noncontrolling interest is required to be carried at a minimum value. The minimum value is equal to the fair value as of the May 2019 agreement date accreted to the January 2024 estimated redemption value. At January 2, 2021, NBCU’s interest in Hulu is recorded in the Company’s financial statements at $8.2 billion.
BAMTech provides streaming technology services to third parties and is owned 75% by the Company, 15% by Major League Baseball (MLB) and 10% by the National Hockey League (NHL), both of which have the right to sell their interests to the Company in the future.
MLB has the right to sell its interest to the Company and the Company has the right to buy MLB’s interest starting five years from and ending ten years after the Company’s September 25, 2017 acquisition date of BAMTech at the greater of fair value or a guaranteed floor value ($563 million accreting at 8% annually for eight years from the date of acquisition). The NHL
7
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)
can sell its interest to the Company in 2021 for $350 million. The Company has the right to acquire the NHL interest in 2021 for $500 million.
The MLB and NHL interests are required to be recorded at a minimum value equal to the greater of (i) their acquisition date fair value adjusted for their share (if any) of earnings, losses, or dividends (“adjusted value”) or (ii) an accreted value from the date of the acquisition to the applicable redemption date (“accreted value”). As the accreted value is generally always higher than the adjusted value, the MLB and NHL interests are not allocated their portion of BAMTech losses. Therefore, the MLB and NHL interests are accreted to the estimated redemption value as of the earliest redemption date. As of January 2, 2021, the guaranteed floor value for the MLB interest, accreted from the date of acquisition, was $724 million. As of January 2, 2021, the accreted value of the NHL interest was $325 million.
Adjustments to the carrying amount of redeemable noncontrolling interests increase or decrease income available to Company shareholders and are recorded in “Net income from continuing operations attributable to noncontrolling interests” on the Condensed Consolidated Statements of Income.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results may differ from those estimates.
Reclassifications
Certain reclassifications have been made in the fiscal 2020 financial statements and notes to conform to the fiscal 2021 presentation.
2.Description of Business and Segment Information
Our operating segments report separate financial information, which is evaluated regularly by the Chief Executive Officer in order to decide how to allocate resources and to assess performance.
Effective at the beginning of the first quarter of fiscal 2021, we changed the presentation of segment operating results as discussed below and have recast our fiscal 2020 segment operating results to align with the fiscal 2021 presentation.
Media and Entertainment Reorganization
In October 2020, the Company reorganized its media and entertainment operations, which have been previously reported in three segments: Media Networks, Studio Entertainment and Direct-to-Consumer & International. Under this reorganization, a single group is responsible for distributing all of the Company’s media and entertainment content across all platforms globally. This distribution organization will have full accountability for the financial results of the media and entertainment businesses, and content will be created by three production groups: Studios, General Entertainment and Sports.
As a result of the reorganization, effective at the beginning of the first quarter of fiscal 2021, the financial results of the media and entertainment businesses will be reported as one segment, Disney Media and Entertainment Distribution (DMED). We will report operating results for the DMED segment across three significant lines of business/distribution platforms: Direct-to-Consumer (DTC), Linear Networks and Content Sales/Licensing (primarily comprising theatrical, home entertainment and third-party television and subscription video-on-demand “TV/SVOD” distribution globally).
Intersegment Transfer Pricing
Under our previous segment structure, in certain instances production and distribution activities were in different segments. In these situations, for segment financial accounting purposes, the producer segment would recognize revenue based on an intersegment transfer price that included a “mark-up”. These transactions were reported “gross” (i.e. the segment producing the content reported revenue and the mark-up from intersegment transactions, and the required eliminations were reported on a separate “Eliminations” line when presenting a summary of our segment results). Under our new segment structure, the operating results of the production and distribution activities are reported in the same segment, and the fully loaded production cost will be allocated across the distribution platforms which are utilizing the content.
Elimination of Consumer Products Revenue Share
Under our legacy segment financial reporting, the Studio Entertainment segment received a revenue share related to the consumer products business, which is included in the Disney Parks, Experiences and Products (DPEP) segment. Under the new reporting structure, DMED will not receive a revenue share from DPEP related to the consumer products business.
8
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)

DESCRIPTION OF BUSINESS
Disney Media and Entertainment Distribution
•Significant operations:
◦Linear Networks
▪Domestic Channels: ABC Television Network and eight owned ABC television stations (Broadcasting), and Disney, ESPN, Freeform, FX and National Geographic branded domestic television networks (Cable)
▪International Channels: Disney, ESPN, Fox, National Geographic and Star branded television networks outside the U.S.
▪A 50% equity investment in A+E Television Networks (A+E), which operates a variety of cable channels including A&E, HISTORY and Lifetime
◦Direct-to-Consumer
▪Disney+, Disney+Hotstar, ESPN+, Hulu and Star+ DTC streaming services
◦Content Sales/Licensing
▪Sale of film and television content to third-party television and subscription video-on-demand (TV/SVOD) services
▪Theatrical distribution
▪Home entertainment distribution (DVD, Blu-ray and electronic home video licenses)
•Music distribution
•Staging and licensing of live entertainment events on Broadway and around the world (Stage Plays)
•DMED also includes the following activities that are reported with Content Sales/Licensing:
◦Post-production services through Industrial Light & Magic and Skywalker Sound
◦A 30% ownership interest in Tata Sky Limited, which operates a direct-to-home satellite distribution platform in India
•Significant revenues:
◦Affiliate fees - Fees charged by our linear networks to multi-channel video programming distributors (i.e. cable, satellite, telecommunications and digital over-the-top (e.g. Hulu, YouTube TV) service providers) (MVPDs) and to television stations affiliated with the ABC Network for the right to deliver our programming to their customers
◦Advertising - Sales of advertising time/space on our networks, DTC streaming services and owned television stations
◦Subscription fees - Fees charged to customers/subscribers for our DTC services
◦TV/SVOD distribution - Licensing fees and other revenue for the right to use our film and television productions and revenue from fees charged to customers to view our sports programming (“pay-per-view”) and Premier Access content. TV/SVOD distribution revenue is primarily reported in Content Sales/Licensing, except for pay-per-view and Premier Access revenue, which is reported in Direct-to-Consumer
◦Theatrical distribution - Rentals from licensing our film productions to theaters
◦Home entertainment - Sale of our film and television content to retailers and distributors in home video formats
◦Other content sales/licensing revenue - Revenues from licensing our music, ticket sales from stage play performances and fees from licensing our intellectual properties for use in stage plays
◦Other revenue - Fees from sub-licensing of sports programming rights (reported in Linear Networks) and post-production services (reported with Content Sales/Licensing)
•Significant expenses:
◦Operating expenses consist primarily of programming and production costs. technical support costs, operating labor, distribution costs and costs of sales. Operating expenses also includes fees paid to Linear Networks from other DMED business for the right to air the linear networks feed and other services. Programming and production costs include amortization of acquired licensed programming rights (including sports rights), amortization of capitalized production costs (including participations and residuals) and production costs related to live
9
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)

programming such as news and sports. Programming and production costs are largely incurred across three content creation groups, as follows:
▪Studios - Primarily capitalized production costs related to feature films produced under the Walt Disney Pictures, Twentieth Century Studios, Marvel, Lucasfilm, Pixar and Searchlight Pictures banners
▪General Entertainment - Primarily acquisition of rights to and internal production of episodic television programs and news content. Internal content is generally produced by the following television studios: ABC Signature; 20th Television; Disney Television Animation, FX Productions and various studios for which we commission productions for our branded channels and DTC services
▪Sports - Primarily acquisition of professional and college sports programming rights and related production costs
◦Selling, general and administrative costs
◦Depreciation and amortization
Disney Parks, Experiences and Products
•Significant operations:
◦Parks & Experiences:
▪Theme parks and resorts, which include: Walt Disney World Resort in Florida; Disneyland Resort in California; Disneyland Paris; Hong Kong Disneyland Resort; Shanghai Disney Resort. Additionally, the Company licenses our intellectual property to a third party to operate Tokyo Disney Resort
▪Disney Cruise Line, Disney Vacation Club and Aulani, a Disney Resort & Spa in Hawaii
◦Consumer Products:
▪Licensing of our trade names, characters, visual, literary and other intellectual properties to various manufacturers, game developers, publishers and retailers throughout the world, for use on merchandise, published materials and games
▪Sale of branded merchandise through retail, online and wholesale businesses, and development and publishing of books, comic books and magazines
•Significant revenues:
◦Theme park admissions - Sales of tickets for admission to our theme parks
◦Parks & Experiences merchandise, food and beverage - Sales of merchandise, food and beverages at our theme parks and resorts and cruise ships
◦Resorts and vacations - Sales of room nights at hotels, sales of cruise and other vacations and sales and rentals of vacation club properties
◦Merchandise licensing and retail:
▪Merchandise licensing - Royalties from licensing our intellectual properties for use on consumer goods
▪Retail - Sales of merchandise at The Disney Stores and through branded internet shopping sites, as well as to wholesalers (including books, comic books and magazines)
◦Parks licensing and other - Revenues from sponsorships and co-branding opportunities and real estate rent and sales. In addition, we earn royalties on Tokyo Disney Resort revenues
•Significant expenses:
◦Operating expenses consist primarily of operating labor, costs of goods sold, infrastructure costs, supplies, commissions and entertainment offerings. Infrastructure costs include information systems expense, repairs and maintenance, property taxes, utilities and fuel, retail occupancy costs, insurance and transportation
◦Selling, general and administrative costs
◦Depreciation and amortization
SEGMENT INFORMATION
Segment operating results reflect earnings before corporate and unallocated shared expenses, restructuring and impairment charges, net other income, net interest expense, income taxes and noncontrolling interests. Segment operating income includes equity in the income of investees and excludes impairments of certain equity investments and acquisition accounting amortization of TFCF Corporation (TFCF) and Hulu assets (i.e. intangible assets and the fair value step-up for film and
10
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)

television costs) recognized in connection with the TFCF acquisition in fiscal 2019 (TFCF and Hulu acquisition amortization). Corporate and unallocated shared expenses principally consist of corporate functions, executive management and certain unallocated administrative support functions.
Segment operating results include allocations of certain costs, including information technology, pension, legal and other shared services costs, which are allocated based on metrics designed to correlate with consumption.
Impact of COVID-19
Since early 2020, the world has been, and continues to be, impacted by the novel coronavirus (COVID-19) pandemic. COVID-19 and measures to prevent its spread are impacting our segments in a number of ways, most significantly at DPEP where our theme parks have been closed or operating at significantly reduced capacity and cruise ship sailings and guided tours have been suspended. We have delayed, or in some cases, shortened or canceled, theatrical releases, and stage play performances have been suspended. Since March 2020, we have experienced significant disruptions in the production and availability of content, including the shift of key live sports programming from the third quarter of fiscal 2020 to the fourth quarter and into fiscal 2021 as well as the suspension of most film and television content late in the second quarter of fiscal 2020. Although most film and television production activities have resumed beginning in the fourth quarter of fiscal 2020, we continue to see disruption in production activities depending on local circumstances.
The impact of these disruptions and the extent of their adverse impact on our financial and operating results will be dictated by the length of time that such disruptions continue, which will, in turn, depend on the currently unknowable duration and severity of the impacts of COVID-19, and among other things, the impact of governmental actions imposed in response to COVID-19 and individuals’ and companies’ risk tolerance regarding health matters going forward. As some of our businesses have reopened, we have incurred additional costs to address government regulations and the safety of our employees, talent and guests.
Segment revenues and segment operating income are as follows:
 Quarter Ended
 January 2,
2021		December 28,
2019
Revenues:
Disney Media and Entertainment Distribution$12,661 $13,297 
Disney Parks, Experiences and Products3,588 7,580 
$16,249 $20,877 
Segment operating income (loss):
Disney Media and Entertainment Distribution$1,451 $1,474 
Disney Parks, Experiences and Products(119)  2,522   
$1,332 $3,996 

Equity in the income of investees is included in segment operating income as follows: 
 Quarter Ended
 January 2,
2021		December 28,
2019
Disney Media and Entertainment Distribution$235   $235 
Disney Parks, Experiences and Products(8)(3)
Equity in the income of investees included in segment operating income227 232   
Amortization of TFCF intangible assets related to equity investees(3)(8)
Equity in the income of investees, net$224 $224 
11
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)

A reconciliation of segment operating income to income from continuing operations before income taxes is as follows:
 Quarter Ended
 January 2,
2021		December 28,
2019
Segment operating income$1,332 $3,996   
Corporate and unallocated shared expenses(232)  (237)
Restructuring and impairment charges (see Note 15)
(113)(150)
Interest expense, net(324)(283)
TFCF and Hulu acquisition amortization(1)
(617)(700)
Income from continuing operations before income taxes$46 $2,626 
(1)For the quarter ended January 2, 2021 amortization of intangible assets, step-up of film and television costs and intangibles related to TFCF equity investees were $447 million, $167 million and $3 million, respectively. For the quarter ended December 28, 2019 amortization of intangible assets, step-up of film and television costs and intangibles related to TFCF equity investees were $486 million, $206 million, and $8 million, respectively.
Goodwill
The changes in the carrying amount of goodwill for the quarter ended January 2, 2021 are as follows:
Media
Networks		Disney Parks, Experiences and ProductsStudio
Entertainment		Direct-to-Consumer & InternationalDisney
Media and Entertainment Distribution		Total
Balance at October 3, 2020$33,991 $5,550 $17,795 $20,353 $— $77,689 
Segment recast (1)
(33,991)— (17,795)(20,353)72,139 — 
Currency translation adjustments and other, net— — — — 111 111 
Balance at January 2, 2021$— $5,550 $— $— $72,250 $77,800 
(1)Represents the reallocation of goodwill as a result of the Company recasting its segments.
3.Revenues
The Company has revenue recognition policies for its various operating segments that are appropriate to the circumstances of each business.
The following table presents our revenues by segment and major source:
Quarter Ended January 2, 2021Quarter Ended December 28, 2019
Disney
Media and Entertainment
Distribution		Disney Parks, Experiences and ProductsConsolidatedDisney
Media and Entertainment
Distribution		Disney Parks, Experiences and ProductsConsolidated
Affiliate fees$4,402$— $4,402 $4,440 $— $4,440 
Advertising3,7631 3,764 3,396 2 3,398 
Subscription fees2,546— 2,546 1,326 — 1,326 
Theme park admissions—549 549 — 2,067 2,067 
Resort and vacations—432 432 — 1,631 1,631 
Retail and wholesale sales of merchandise, food and beverage—1,163    1,163    —    2,313 2,313 
TV/SVOD distribution licensing1,169— 1,169 1,569 —    1,569    
Theatrical distribution licensing31— 31 1,408 — 1,408 
Merchandise licensing51,090 1,095 8 1,048 1,056 
Home entertainment300— 300 596 — 596 
Other445353 798 554 519 1,073 
$12,661$3,588 $16,249 $13,297 $7,580 $20,877 

12
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)

The following table presents our revenues by segment and primary geographical markets:
Quarter Ended January 2, 2021Quarter Ended December 28, 2019
Disney
Media and Entertainment
Distribution		Disney Parks, Experiences and ProductsConsolidatedDisney
Media and Entertainment
Distribution		Disney Parks, Experiences and ProductsConsolidated
Americas$10,291 $2,456 $12,747 $10,417 $5,878 $16,295 
Europe1,293    487    1,780    1,563    933    2,496    
Asia Pacific1,077 645 1,722 1,317 769 2,086 
Total revenues$12,661 $3,588 $16,249 $13,297 $7,580 $20,877 
Revenues recognized in the current and prior-year quarter from performance obligations satisfied (or partially satisfied) in previous reporting periods primarily relate to revenues earned on TV/SVOD and theatrical distribution licensee sales on titles made available to the licensee in previous reporting periods. For the quarter ended January 2, 2021, $0.4 billion was recognized related to performance obligations satisfied as of October 3, 2020. For the quarter ended December 28, 2019, $0.5 billion was recognized related to performance obligations satisfied as of September 28, 2019.
As of January 2, 2021, revenue for unsatisfied performance obligations expected to be recognized in the future is $16 billion, which primarily relates to content to be delivered in the future under existing agreements with television station affiliates and TV/SVOD licensees. Of this amount, we expect to recognize approximately $5 billion in the remainder of fiscal 2021, $5 billion in fiscal 2022, $3 billion in fiscal 2023 and $3 billion thereafter. These amounts include only fixed consideration or minimum guarantees and do not include amounts related to (i) contracts with an original expected term of one year or less (such as most advertising contracts) or (ii) licenses of IP that are solely based on the sales of the licensee.
When the timing of the Company’s revenue recognition is different from the timing of customer payments, the Company recognizes either a contract asset (customer payment is subsequent to revenue recognition and subject to the Company satisfying additional performance obligations) or deferred revenue (customer payment precedes the Company satisfying the performance obligations). Consideration due under contracts with payment in arrears is recognized as accounts receivable. Deferred revenues are recognized as (or when) the Company performs under the contract. Contract assets, accounts receivable and deferred revenues from contracts with customers are as follows:
January 2,
2021		October 3,
2020
Contract assets$44 $70 
Accounts receivable
Current12,544   11,340   
Non-current1,705 1,789 
Allowance for credit losses(319)(460)
Deferred revenues
Current3,853 3,688 
Non-current559 513 
Contract assets primarily relate to certain multi-season TV/SVOD licensing contracts. Activity for the current and prior-year quarters related to contract assets was not material. The allowance for credit losses decreased from $460 million at October 3, 2020 to $319 million at January 2, 2021 due to the adoption of new accounting guidance on the measurement of credit losses (see Note 16).
For the quarter ended January 2, 2021, the Company recognized revenues of $1.5 billion, primarily related to licensing and publishing advances and content sales included in the deferred revenue balance at October 3, 2020. For the quarter ended December 28, 2019, the Company recognized revenues of $2.1 billion primarily related to theme park admissions, vacation packages and licensing advances included in the deferred revenue balance at September 28, 2019.
We evaluate our allowance for credit losses and estimate collectability of current and non-current accounts receivable based on historical bad debt experience, our assessment of the financial condition of individual companies with which we do business, current market conditions, and reasonable and supportable forecasts of future economic conditions. In times of economic turmoil, including COVID-19, our estimates and judgments with respect to the collectability of our receivables are subject to greater uncertainty than in more stable periods.
13
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)

The Company has accounts receivable with original maturities greater than one year related to the sale of film and television program rights and vacation club properties. These receivables are discounted to present value at contract inception and the related revenues are recognized at the discounted amount.
The balance of film and television program sales receivables recorded in other non-current assets, net of an immaterial allowance for credit losses, was $1.0 billion as of January 2, 2021. The activity in the allowance for credit losses for the quarter ended January 2, 2021 was not material.
The balance of mortgage receivables recorded in other non-current assets, net of an immaterial allowance for credit losses, was $0.7 billion as of January 2, 2021. The activity in the allowance for credit losses for the quarter ended January 2, 2021 was not material.
4.Cash, Cash Equivalents, Restricted Cash and Borrowings
Cash, Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Condensed Consolidated Balance Sheet to the total of the amounts reported in the Condensed Consolidated Statements of Cash Flows.
January 2,
2021		October 3,
2020
Cash and cash equivalents$17,068 $17,914 
Restricted cash included in:
Other current assets3    3    
Other assets41 37 
Total cash, cash equivalents and restricted cash in the statement of cash flows$17,112 $17,954 
Borrowings
During the quarter ended January 2, 2021, the Company’s borrowing activity was as follows: 
October 3,
2020		BorrowingsPaymentsOther
Activity		January 2,
2021
Commercial paper with original maturities greater than three months$2,023 $50 $(229)$2 $1,846 
U.S. dollar denominated notes(1)
52,736 — — (34)52,702 
Asia Theme Parks borrowings(2)
1,303    —    (70)   61    1,294    
Foreign currency denominated debt and other(3)
2,566 1 (69)(65)2,433 
$58,628 $51 $(368)$(36)$58,275 
(1)The other activity is primarily due to the amortization of purchase price adjustments on debt assumed in the TFCF acquisition and debt issuance fees.
(2)The other activity is due to the impact of changes in foreign currency exchange rates.
(3)The other activity is due to market value adjustments for debt with qualifying hedges, partially offset by the impact of changes in foreign currency exchange rates.
At January 2, 2021, the Company’s bank facilities, which are with a syndicate of lenders, were as follows:
Committed
Capacity		Capacity
Used		Unused
Capacity
Facility expiring March 2021$5,250 $— $5,250 
Facility expiring April 20215,000    —    5,000    
Facility expiring March 20234,000    —    4,000    
Facility expiring March 20253,000 — 3,000 
Total$17,250 $— $17,250 
These bank facilities (other than the facility expiring April 2021) support commercial paper borrowings. All of the facilities allow for borrowings at LIBOR-based rates plus a spread depending on the credit default swap spread applicable to the
14
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)

Company’s debt, or a fixed spread in the case of the facility expiring in April 2021, subject to a cap and floor that vary with the Company’s debt rating assigned by Moody’s Investors Service and Standard and Poor’s. The spread above LIBOR can range from 0.18% to 1.80%. The bank facilities specifically exclude certain entities, including the Asia Theme Parks, from any representations, covenants or events of default. The bank facilities contain only one financial covenant, which is 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 January 2, 2021 the financial covenant was met by a significant margin. The Company also has the ability to issue up to $500 million of letters of credit under the facility expiring in March 2023, which if utilized, reduces available borrowings under this facility. As of January 2, 2021, the Company has $1.2 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 up to 80% of the contract price of three new cruise ships, which are scheduled to be delivered in 2022, 2024 and 2025. Under the facilities, $1.0 billion in financing is available beginning in October 2021, $1.1 billion is available beginning in August 2023 and $1.1 billion is available beginning in August 2024. Each tranche of financing may be utilized for a period of 18 months from the initial availability date. If utilized, the interest rates will be fixed at 3.48%, 3.80% and 3.74%, respectively, and the loan and interest will be payable semi-annually over a 12-year period from the borrowing date. Early repayment is permitted subject to cancellation fees.
Interest expense, net
Interest expense (net of amounts capitalized), interest and investment income, and net periodic pension and postretirement benefit costs (other than service costs) (see Note 8) are reported net in the Condensed Consolidated Statements of Income and consist of the following:
Quarter Ended
January 2,
2021		December 28,
2019
Interest expense$(404)