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 July 1, 2023

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

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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	DIS	New 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 1,829,778,789 shares of common stock outstanding as of August 2, 2023.

Cautionary Note on Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events or our future financial or operating performance and may include statements concerning, among other things, financial results, business plans (including statements regarding new services and products and future expenditures, costs and investments), future liabilities, impairments and amortization, competition, and the impact of COVID-19 on our businesses and results of operations. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “would,” “should,” “expects,” “plans,” “could,” “intends,” “target,” “projects,” “believes,” “estimates,” “anticipates,” “potential,” “continue” or “assumption” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. These statements reflect our current views with respect to future events and are based on assumptions as of the date of this report. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from expectations or results projected or implied by forward-looking statements.

Such differences may result from actions taken by the Company, including restructuring or strategic initiatives (including capital investments, asset acquisitions or dispositions, new or expanded business lines or cessation of certain operations), our execution of our business plans (including the content we create and IP we invest in, our pricing decisions, our cost structure and our management and other personnel decisions), our ability to quickly execute on cost rationalization while preserving revenue, the discovery of additional information or other business decisions, as well as from developments beyond the Company’s control, including:

•the occurrence of subsequent events;

•further deterioration in domestic and global economic conditions or failure of conditions to improve as anticipated;

•deterioration in or pressures from competitive conditions, including competition to create or acquire content, competition for talent and competition for advertising revenue;

•consumer preferences and acceptance of our content, offerings, pricing model and price increases, and corresponding subscriber additions and churn, and the market for advertising sales on our direct-to-consumer services and linear networks;

•health concerns and their impact on our businesses and productions;

•international, political or military developments;

•regulatory and legal developments;

•technological developments;

•labor markets and activities, including work stoppages;

•adverse weather conditions or natural disasters; and

•availability of content.

Such developments may further affect entertainment, travel and leisure businesses generally and may, among other things, affect (or further affect, as applicable):

•our operations, business plans or profitability, including direct-to-consumer profitability;

•demand for our products and services;

•the performance of the Company’s content;

•our ability to create or obtain desirable content at or under the value we assign the content;

•the advertising market for programming;

•income tax expense; and

•performance of some or all Company businesses either directly or through their impact on those who distribute our products.

Additional factors include those described in our 2022 Annual Report on Form 10-K, including under the captions “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business,” in our subsequent quarterly reports on Form 10-Q, including under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in our subsequent filings with the Securities and Exchange Commission.

A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances. You should not place undue reliance on the forward-looking statements. Unless required by federal securities laws, we assume no obligation to update any of these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated, to reflect circumstances or events that occur after the statements are made.

2

PART I. FINANCIAL INFORMATION

Item 1: Financial Statements

THE WALT DISNEY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited; in millions, except per share data)

	Quarter Ended				Nine Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Revenues:
Services	$	20,008	$	19,461	$	60,591	$	56,215
Products	2,322		2,043		7,066		6,357
Total revenues	22,330		21,504		67,657		62,572
Costs and expenses:
Cost of services (exclusive of depreciation and amortization)	(12,974)		(12,404)		(40,915)		(36,895)
Cost of products (exclusive of depreciation and amortization)	(1,497)		(1,278)		(4,558)		(3,948)
Selling, general, administrative and other	(3,874)		(4,100)		(11,315)		(11,655)
Depreciation and amortization	(1,344)		(1,290)		(3,960)		(3,846)
Total costs and expenses	(19,689)		(19,072)		(60,748)		(56,344)
Restructuring and impairment charges	(2,650)		(42)		(2,871)		(237)
Other income (expense), net	(11)		(136)		96		(730)
Interest expense, net	(305)		(360)		(927)		(1,026)
Equity in the income of investees	191		225		555		674
Income (loss) from continuing operations before income taxes	(134)		2,119		3,762		4,909
Income taxes on continuing operations	(19)		(617)		(1,066)		(1,610)
Net income (loss) from continuing operations	(153)		1,502		2,696		3,299
Loss from discontinued operations, net of income tax benefit of $0, $0, $0 and $14, respectively	—		—		—		(48)
Net income (loss)	(153)		1,502		2,696		3,251
Net income from continuing operations attributable to noncontrolling interests	(307)		(93)		(606)		(268)
Net income (loss) attributable to Disney	$	(460)	$	1,409	$	2,090	$	2,983
Earnings (loss) per share attributable to Disney(1):
Diluted
Continuing operations	$	(0.25)	$	0.77	$	1.14	$	1.66
Discontinued operations	—		—		—		(0.03)
	$	(0.25)	$	0.77	$	1.14	$	1.63
Basic
Continuing operations	$	(0.25)	$	0.77	$	1.14	$	1.66
Discontinued operations	—		—		—		(0.03)
	$	(0.25)	$	0.77	$	1.14	$	1.64
Weighted average number of common and common equivalent shares outstanding:
Diluted	1,829		1,825		1,829		1,827
Basic	1,829		1,823		1,827		1,821

(1)Total may not equal the sum of the column due to rounding.

See Notes to Condensed Consolidated Financial Statements

3

THE WALT DISNEY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited; in millions)

	Quarter Ended				Nine Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Net income (loss)	$	(153)	$	1,502	$	2,696	$	3,251
Other comprehensive income (loss), net of tax:
Market value adjustments for hedges	10		428		(614)		506
Pension and postretirement medical plan adjustments	1		119		58		393
Foreign currency translation and other	(101)		(446)		241		(659)
Other comprehensive income (loss)	(90)		101		(315)		240
Comprehensive income (loss)	(243)		1,603		2,381		3,491
Net income from continuing operations attributable to noncontrolling interests	(307)		(93)		(606)		(268)
Other comprehensive income attributable to noncontrolling interests	66		69		21		58
Comprehensive income (loss) attributable to Disney	$	(484)	$	1,579	$	1,796	$	3,281

See Notes to Condensed Consolidated Financial Statements

4

THE WALT DISNEY COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited; in millions, except per share data)

	July 1, 2023		October 1, 2022
ASSETS
Current assets
Cash and cash equivalents	$	11,458	$	11,615
Receivables, net	13,112		12,652
Inventories	1,900		1,742
Content advances	2,369		1,890
Other current assets	1,335		1,199
Total current assets	30,174		29,098
Produced and licensed content costs	34,607		35,777
Investments	3,062		3,218
Parks, resorts and other property
Attractions, buildings and equipment	69,819		66,998
Accumulated depreciation	(42,112)		(39,356)
	27,707		27,642
Projects in progress	5,689		4,814
Land	1,181		1,140
	34,577		33,596
Intangible assets, net	13,478		14,837
Goodwill	77,881		77,897
Other assets	10,004		9,208
Total assets	$	203,783	$	203,631
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and other accrued liabilities	$	19,115	$	20,213
Current portion of borrowings	2,645		3,070
Deferred revenue and other	6,474		5,790
Total current liabilities	28,234		29,073
Borrowings	44,544		45,299
Deferred income taxes	7,304		8,363
Other long-term liabilities	12,759		12,518
Commitments and contingencies (Note 13)
Redeemable noncontrolling interests	8,886		9,499
Equity
Preferred stock	—		—
Common stock, $0.01 par value, Authorized – 4.6 billion shares, Issued – 1.8 billion shares	57,136		56,398
Retained earnings	45,794		43,636
Accumulated other comprehensive loss	(4,413)		(4,119)
Treasury stock, at cost, 19 million shares	(907)		(907)
Total Disney Shareholders’ equity	97,610		95,008
Noncontrolling interests	4,446		3,871
Total equity	102,056		98,879
Total liabilities and equity	$	203,783	$	203,631

See Notes to Condensed Consolidated Financial Statements

5

THE WALT DISNEY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited; in millions)

	Nine Months Ended
	July 1, 2023		July 2, 2022
OPERATING ACTIVITIES
Net income from continuing operations	$	2,696	$	3,299
Depreciation and amortization	3,960		3,846
Impairment of produced and licensed content costs	2,266		—
Net (gain)/loss on investments and disposition of businesses	(184)		779
Deferred income taxes	(899)		605
Equity in the income of investees	(555)		(674)
Cash distributions received from equity investees	531		575
Net change in produced and licensed content costs and advances	(1,861)		(4,306)
Equity-based compensation	861		723
Pension and postretirement medical benefit cost amortization	3		465
Other, net	(166)		492
Changes in operating assets and liabilities:
Receivables	(744)		(506)
Inventories	(120)		(259)
Other assets	(64)		(684)
Accounts payable and other liabilities	(1,609)		(892)
Income taxes	949		15
Cash provided by operations - continuing operations	5,064		3,478
INVESTING ACTIVITIES
Investments in parks, resorts and other property	(3,595)		(3,795)
Proceeds from sale of investments	458		39
Other, net	(122)		(116)
Cash used in investing activities - continuing operations	(3,259)		(3,872)
FINANCING ACTIVITIES
Commercial paper borrowings (payments), net	40		(275)
Borrowings	70		152
Reduction of borrowings	(1,319)		(1,400)
Contributions from / sale of noncontrolling interest	719		48
Acquisition of redeemable noncontrolling interest	(900)		—
Other, net	(737)		(772)
Cash used in financing activities - continuing operations	(2,127)		(2,247)
CASH FLOWS FROM DISCONTINUED OPERATIONS
Cash provided by operations - discontinued operations	—		8
Cash used in financing activities - discontinued operations	—		(12)
Cash used in discontinued operations	—		(4)
Impact of exchange rates on cash, cash equivalents and restricted cash	174		(354)
Change in cash, cash equivalents and restricted cash	(148)		(2,999)
Cash, cash equivalents and restricted cash, beginning of period	11,661			16,003
Cash, cash equivalents and restricted cash, end of period	$	11,513	$	13,004

See Notes to Condensed Consolidated Financial Statements

6

THE WALT DISNEY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(unaudited; in millions)

	Quarter Ended
	Equity Attributable to Disney
	Shares	Common Stock		Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Treasury Stock		Total Disney Equity		Non-controlling  Interests(1)		Total Equity
Balance at April 1, 2023	1,827	$	56,919	$	46,236		$	(4,389)	$	(907)	$	97,859	$	3,697	$	101,556
Comprehensive income (loss)	—	—		(460)			(24)		—		(484)		168		(316)
Equity compensation activity	3	210		—			—		—		210		—		210
Contributions	—	—		—			—		—		—		602		602
Distributions and other	—	7		18			—		—		25		(21)		4
Balance at July 1, 2023	1,830	$	57,136	$	45,794		$	(4,413)	$	(907)	$	97,610	$	4,446	$	102,056
Balance at April 2, 2022	1,822	$	55,823	$	42,032		$	(6,312)	$	(907)	$	90,636	$	4,023	$	94,659
Comprehensive income (loss)	—	—		1,409			170		—		1,579		(67)		1,512
Equity compensation activity	1	259		—			—		—		259		—		259
Dividends	—	—		—			—		—		—		—		—
Contributions	—	—		—			—		—		—		19		19
Distributions and other	—	5		21			—		—		26		(42)		(16)
Balance at July 2, 2022	1,823	$	56,087	$	43,462		$	(6,142)	$	(907)	$	92,500	$	3,933	$	96,433

(1)Excludes redeemable noncontrolling interests.

See Notes to Condensed Consolidated Financial Statements

7

THE WALT DISNEY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(unaudited; in millions)

 

	Nine Months Ended
	Equity Attributable to Disney
	Shares	Common Stock		Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Treasury Stock		Total Disney Equity		Non-controlling Interests(1)		Total Equity
Balance at October 1, 2022	1,824	$	56,398	$	43,636		$	(4,119)	$	(907)	$	95,008	$	3,871	$	98,879
Comprehensive income (loss)	—	—		2,090			(294)		—		1,796		299		2,095
Equity compensation activity	6	735		—			—		—		735		—		735
Contributions	—	—		—			—		—		—		789		789
Distributions and other	—	3		68			—		—		71		(513)		(442)
Balance at July 1, 2023	1,830	$	57,136	$	45,794		$	(4,413)	$	(907)	$	97,610	$	4,446	$	102,056
Balance at October 2, 2021	1,818	$	55,471	$	40,429		$	(6,440)	$	(907)	$	88,553	$	4,458	$	93,011
Comprehensive income	—	—		2,983			298		—		3,281		(22)		3,259
Equity compensation activity	5	615		—			—		—		615		—		615
Contributions	—	—		—			—		—		—		48		48
Distributions and other	—	1		50			—		—		51		(551)		(500)
Balance at July 2, 2022	1,823	$	56,087	$	43,462		$	(6,142)	$	(907)	$	92,500	$	3,933	$	96,433

(1)Excludes redeemable noncontrolling interests.

See Notes to Condensed Consolidated Financial Statements

8

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 statement of the results for the interim period. Operating results for the nine months ended July 1, 2023 are not necessarily indicative of the results that may be expected for the year ending September 30, 2023.

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

These financial statements should be read in conjunction with the Company’s 2022 Annual Report on Form 10-K.

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 and Contributions from Noncontrolling Interest Holders

Hulu LLC

The Company consolidates the results of Hulu LLC (Hulu), a direct-to-consumer (DTC) streaming service provider, which is owned 67% by the Company and 33% by NBC Universal (NBCU). In May 2019, the Company entered into a put/call agreement with NBCU that provided the Company with full operational control of Hulu. Under the agreement, beginning in January 2024, NBCU has the option to require the Company to purchase NBCU’s interest in Hulu and the Company has the option to require NBCU to sell its interest in Hulu to the Company, in either case at a redemption value based on NBCU’s equity ownership percentage of the greater of Hulu’s then equity fair value or a guaranteed floor value of $27.5 billion.

NBCU’s interest will generally not be allocated its portion of Hulu’s losses, if any, as the redeemable noncontrolling interest is required to be carried at a minimum value. The minimum value is equal to the fair value as of the May 2019 agreement date accreted to the January 2024 estimated redemption value. At July 1, 2023, NBCU’s interest in Hulu is recorded in the Company’s financial statements at $8.9 billion, which is reported as “Redeemable noncontrolling interest” in the Condensed Consolidated Balance Sheets.

The Company and NBCU have been conducting a confidential arbitration concerning the parties’ rights and responsibilities under the Hulu limited liability company agreement. The Company expects a decision in that arbitration within the next quarter. The outcome of the arbitration is uncertain and we cannot reasonably estimate the amount of any potential loss or the impact on the determination of the value of Hulu’s equity pursuant to the Hulu limited liability company agreement and thus the amount we may be required to pay to acquire NBCU’s interest in Hulu.

We are accreting NBCU’s interest in Hulu to its guaranteed floor value. In determining the redemption value, our estimate of Hulu’s equity fair value in January 2024 requires management to make significant judgments. If our estimate of the future fair value of Hulu’s equity increased above the guaranteed floor value, we would change our rate of accretion, which would generally increase the amount recorded in “Net income from continuing operations attributable to noncontrolling interests” and thus reduce “Net income attributable to Disney” in the Condensed Consolidated Statements of Operations.

9

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited; tabular dollars in millions, except for per share data)

BAMTech LLC

In November 2022, the Company purchased Major League Baseball’s (MLB) 15% redeemable noncontrolling interest in BAMTech LLC (BAMTech), which holds the Company’s domestic DTC sports business, for $900 million (MLB buy-out). MLB’s interest was recorded in the Company’s financial statements at $828 million prior to the MLB buy-out. The $72 million difference was recorded as an increase in “Net income from continuing operations attributable to noncontrolling interests” in the Condensed Consolidated Statements of Operations.

During the nine months ended July 1, 2023, Hearst Corporation (Hearst) contributed $710 million to the domestic DTC sports business, in part to fund its 20% share of the MLB buy-out and in part to fund its share of the domestic DTC sports business’s operating cash requirements, which had been funded by the Company through intercompany loans.

Use of Estimates

The preparation of financial statements in conformity with GAAP 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 2022 financial statements and notes to conform to the fiscal 2023 presentation.

2.Segment Information

In February 2023, the Company announced that it will be reorganized into three business segments: Disney Entertainment, ESPN and Disney Parks, Experiences and Products. We will report under the new structure commencing with our annual fiscal 2023 reporting, at which time we will have implemented changes to our financial processes to reflect the reorganization. The Company’s operations are currently reported in the following two segments: Disney Media and Entertainment Distribution (DMED) and Disney Parks, Experiences and Products (DPEP), for which separate financial information is evaluated regularly by the Chief Executive Officer to allocate resources and assess performance.

Segment operating results reflect earnings before corporate and unallocated shared expenses, restructuring and impairment charges, net other income/expense, net interest expense, income taxes and noncontrolling interests. Segment operating income includes equity in the income of investees and excludes impairments of certain equity investments and acquisition accounting amortization of TFCF Corporation (TFCF) and Hulu assets (i.e. intangible assets and the fair value step-up for film and television costs) recognized in connection with the TFCF acquisition in fiscal 2019 (TFCF and Hulu acquisition amortization). 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.

10

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited; tabular dollars in millions, except for per share data)

Segment revenues and segment operating income are as follows:

	Quarter Ended				Nine Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Revenues:
Disney Media and Entertainment Distribution	$	14,004	$	14,110	$	42,819	$	42,315
Disney Parks, Experiences and Products	8,326		7,394		24,838		21,280
Total segment revenues	$	22,330	$	21,504	$	67,657	$	63,595
Segment operating income:
Disney Media and Entertainment Distribution	$	1,134	$	1,381	$	2,243	$	4,133
Disney Parks, Experiences and Products	2,425		2,186		7,644		6,391
Total segment operating income(1)	$	3,559	$	3,567	$	9,887	$	10,524

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

	Quarter Ended				Nine Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Disney Media and Entertainment Distribution	$	194	$	230	$	566	$	693
Disney Parks, Experiences and Products	—		(2)		(2)		(10)
Equity in the income of investees included in segment operating income	194		228		564		683
Amortization of TFCF intangible assets related to equity investees	(3)		(3)		(9)		(9)
Equity in the income of investees, net	$	191	$	225	$	555	$	674

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

	Quarter Ended				Nine Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Segment revenues	$	22,330	$	21,504	$	67,657	$	63,595
Content License Early Termination(1)	—		—		—		(1,023)
Total revenues	$	22,330	$	21,504	$	67,657	$	62,572

(1)In February 2022, the Company early terminated certain license agreements with a customer for film and television content, which was delivered in previous years, in order for the Company to use the content primarily on our DTC services (Content License Early Termination). Because the content is functional intellectual property (IP), we had recognized substantially all of the consideration to be paid by the customer under the licenses as revenue in prior years when the content was delivered. Consequently, we recorded the amounts to terminate the licenses agreements, net of remaining amounts of deferred revenue, as a reduction of revenue.

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				Nine Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Segment operating income	$	3,559	$	3,567	$	9,887	$	10,524
Content License Early Termination	—		—		—		(1,023)
Corporate and unallocated shared expenses	(295)		(325)		(854)		(825)
Restructuring and impairment charges(1)	(2,650)		(42)		(2,871)		(237)
Other income (expense), net(2)	(11)		(136)		96		(730)
Interest expense, net	(305)		(360)		(927)		(1,026)
TFCF and Hulu acquisition amortization(3)	(432)		(585)		(1,569)		(1,774)
Income from continuing operations before income taxes	$	(134)	$	2,119	$	3,762	$	4,909

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

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

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

	Quarter Ended				Nine Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Amortization of intangible assets	$	361	$	422	$	1,186	$	1,292
Step-up of film and television costs	68		160		374		473
Intangibles related to TFCF equity investees	3		3		9		9
	$	432	$	585	$	1,569	$	1,774

Goodwill

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

	DMED		DPEP		Total
Balance at October 1, 2022	$	72,347	$	5,550	$	77,897
Currency translation adjustments and other, net	(16)		—		(16)
Balance at July 1, 2023	$	72,331	$	5,550	$	77,881

12

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited; tabular dollars in millions, except for per share data)

3.Revenues

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

	Quarter Ended July 1, 2023						Quarter Ended July 2, 2022
	DMED		DPEP		Total		DMED		DPEP		Content License Early Termination			Total
Affiliate fees	$	4,234	$	—	$	4,234	$	4,337	$	—		$	—	$	4,337
Subscription fees	4,537		—		4,537		3,889		—			—		3,889
Advertising	3,042		1		3,043		3,534		1			—		3,535
Theme park admissions	—		2,731		2,731		—		2,312			—		2,312
Resort and vacations	—		1,990		1,990		—		1,805			—		1,805
Retail and wholesale sales of merchandise, food and beverage	—		2,226		2,226		—		1,896			—		1,896
Merchandise licensing	—		876		876		—		916			—		916
TV/SVOD distribution licensing	646		—		646		1,119		—			—		1,119
Theatrical distribution licensing	838		—		838		620		—			—		620
Home entertainment	209		—		209		149		—			—		149
Other	498		502		1,000		462		464			—		926
	$	14,004	$	8,326	$	22,330	$	14,110	$	7,394		$	—	$	21,504
	Nine Months Ended July 1, 2023						Nine Months Ended July 2, 2022
	DMED		DPEP		Total		DMED		DPEP		Content License Early Termination			Total
Affiliate fees	$	12,870	$	—	$	12,870	$	13,310	$	—		$	—	$	13,310
Subscription fees	13,382		—		13,382		11,374		—			—		11,374
Advertising	9,047		3		9,050		10,425		3			—		10,428
Theme park admissions	—		7,800		7,800		—		6,437			—		6,437
Resort and vacations	—		5,919		5,919		—		4,701			—		4,701
Retail and wholesale sales of merchandise, food and beverage	—		6,750		6,750		—		5,801			—		5,801
Merchandise licensing	—		2,791		2,791		—		2,928			—		2,928
TV/SVOD distribution licensing	2,658		—		2,658		3,639		—			(1,023)		2,616
Theatrical distribution licensing	2,745		—		2,745		1,373		—			—		1,373
Home entertainment	492		—		492		673		—			—		673
Other	1,625		1,575		3,200		1,521		1,410			—		2,931
	$	42,819	$	24,838	$	67,657	$	42,315	$	21,280		$	(1,023)	$	62,572

    

13

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 July 1, 2023						Quarter Ended July 2, 2022
	DMED		DPEP		Total		DMED		DPEP		Total
Americas	$	11,466	$	6,299	$	17,765	$	11,444	$	6,130	$	17,574
Europe	1,352		984		2,336		1,230		897		2,127
Asia Pacific	1,186		1,043		2,229		1,436		367		1,803
Total revenues	$	14,004	$	8,326	$	22,330	$	14,110	$	7,394	$	21,504
Content License Early Termination											—
											$	21,504
	Nine Months Ended July 1, 2023						Nine Months Ended July 2, 2022
	DMED		DPEP		Total		DMED		DPEP		Total
Americas	$	35,009	$	19,357	$	54,366	$	34,465	$	17,400	$	51,865
Europe	4,373		2,794		7,167		4,111		2,389		6,500
Asia Pacific	3,437		2,687		6,124		3,739		1,491		5,230
Total revenues	$	42,819	$	24,838	$	67,657	$	42,315	$	21,280	$	63,595
Content License Early Termination											(1,023)
											$	62,572

Revenues recognized in the current and prior-year periods from performance obligations satisfied (or partially satisfied) in previous reporting periods primarily relate to revenues earned on TV/SVOD licenses for titles made available to the licensee in previous reporting periods. For the quarter ended July 1, 2023, $0.3 billion was recognized related to performance obligations satisfied as of April 1, 2023. For the nine months ended July 1, 2023, $0.7 billion was recognized related to performance obligations satisfied as of October 1, 2022. For the quarter ended July 2, 2022, $0.3 billion was recognized related to performance obligations satisfied as of April 2, 2022. For the nine months ended July 2, 2022, $0.9 billion was recognized related to performance obligations satisfied as of October 2, 2021.

As of July 1, 2023, revenue for unsatisfied performance obligations expected to be recognized in the future is $16 billion, primarily for content and other IP to be made available in the future under existing agreements with merchandise and co-branding licensees and sponsors, television station affiliates, DTC wholesalers, sports sublicensees, and advertisers. Of this amount, we expect to recognize approximately $2 billion in the remainder of fiscal 2023, $6 billion in fiscal 2024, $4 billion in fiscal 2025 and $4 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. The Company’s contract assets and activity for the current and prior-year periods were not material.

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

	July 1, 2023		October 1, 2022
Accounts receivable
Current	$	11,445	$	10,886
Non-current	1,126		1,226
Allowance for credit losses	(165)		(179)
Deferred revenues
Current	5,871		5,531
Non-current	834		927

For the quarter and nine months ended July 1, 2023, the Company recognized revenue of $0.5 billion and $4.7 billion, respectively, that was included in the October 1, 2022 deferred revenue balance. For the quarter and nine months ended July 2, 2022, the Company recognized revenue of $0.4 billion and $3.2 billion, respectively, that was included in the October 2, 2021

14

THE WALT DISNEY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited; tabular dollars in millions, except for per share data)

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

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, our estimates and judgments with respect to the collectability of our receivables are subject to greater uncertainty than in more stable periods.

The Company has accounts receivable with original maturities greater than one year related to the sale of film and television program rights (TV/SVOD licensing) and vacation club properties. These receivables are discounted to present value at contract inception and the related revenues are recognized at the discounted amount. The balance of TV/SVOD licensing receivables recorded in other non-current assets was $0.5 billion at July 1, 2023 and $0.6 billion at October 1, 2022. The balance of vacation club receivables recorded in other non-current assets was $0.6 billion at both July 1, 2023 and October 1, 2022. The allowance for credit losses and activity for the period ended July 1, 2023 was not material.

4.