Item 16. Form 10-K Summary

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Item 16. Form 10-K Summary

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			THE WALT DISNEY COMPANY
			(Registrant)
Date:	November 29, 2022	By:	/s/ ROBERT A. IGER
			(Robert A. Iger
			Chief Executive Officer and Director)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Signature	Title	Date

Principal Executive Officer
/s/ ROBERT A. IGER	Chief Executive Officer and Director	November 29, 2022
(Robert A. Iger)

Principal Financial and Accounting Officers
/s/ CHRISTINE M. MCCARTHY	Senior Executive Vice President and Chief Financial Officer	November 29, 2022
(Christine M. McCarthy)

/s/ BRENT A. WOODFORD	Executive Vice President-Controllership, Financial Planning and Tax	November 29, 2022
(Brent A. Woodford)

Directors
/s/ SUSAN E. ARNOLD	Chairman of the Board and Director	November 29, 2022
(Susan E. Arnold)

/s/ MARY T. BARRA	Director	November 29, 2022
(Mary T. Barra)

/s/ SAFRA A. CATZ	Director	November 29, 2022
(Safra A. Catz)

/s/ AMY L. CHANG	Director	November 29, 2022
(Amy L. Chang)

/s/ FRANCIS A. DESOUZA	Director	November 29, 2022
(Francis A. deSouza)

/s/ CAROLYN N. EVERSON	Director	November 29, 2022
(Carolyn N. Everson)

/s/ MICHAEL B.G. FROMAN	Director	November 29, 2022
(Michael B.G. Froman)




/s/ MARIA ELENA LAGOMASINO	Director	November 29, 2022
(Maria Elena Lagomasino)

/s/ CALVIN R. MCDONALD	Director	November 29, 2022
(Calvin R. McDonald)







/s/ MARK G. PARKER	Director	November 29, 2022
(Mark G. Parker)

/s/ DERICA W. RICE	Director	November 29, 2022
(Derica W. Rice)

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THE WALT DISNEY COMPANY AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA


			Page
Management’s Report on Internal Control Over Financial Reporting			64
Report of Independent Registered Public Accounting Firm (PCAOB ID: 238)			65
Consolidated Financial Statements of The Walt Disney Company and Subsidiaries
Consolidated Statements of Operations for the Years Ended October 1, 2022, October 2, 2021 and October 3, 2020			67
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended October 1, 2022, October 2, 2021 and October 3, 2020			68
Consolidated Balance Sheets as of October 1, 2022 and October 2, 2021			69
Consolidated Statements of Cash Flows for the Years Ended October 1, 2022, October 2, 2021 and October 3, 2020			70
Consolidated Statements of Shareholders’ Equity for the Years Ended October 1, 2022, October 2, 2021 and October 3, 2020			71
Notes to Consolidated Financial Statements			72

All schedules are omitted for the reason that they are not applicable or the required information is included in the financial statements or notes.

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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements prepared for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on our evaluation under the framework in Internal Control - Integrated Framework, management concluded that our internal control over financial reporting was effective as of October 1, 2022.

The effectiveness of our internal control over financial reporting as of October 1, 2022 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is included herein.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of The Walt Disney Company

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of The Walt Disney Company and its subsidiaries (the “Company”) as of October 1, 2022 and October 2, 2021, and the related consolidated statements of operations, of comprehensive income (loss), of shareholders’ equity and of cash flows for each of the three years in the period ended October 1, 2022, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of October 1, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of October 1, 2022 and October 2, 2021, and the results of its operations and its cash flows for each of the three years in the period ended October 1, 2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 1, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As disclosed in the consolidated statements of shareholders’ equity, the Company changed the manner in which it accounts for leases in fiscal year 2020.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Amortization of Production Costs

As described in Note 2 and 7 to the consolidated financial statements and disclosed by management, capitalized film and television production costs are amortized based on whether the content is predominantly monetized individually or as a group. Production costs for content that is predominantly monetized individually is amortized based upon the ratio of the current period’s revenues to the estimated remaining total revenues (Ultimate Revenues). For film productions, Ultimate Revenues include revenues from all sources, which may include imputed license fees for content that is used by the Company’s DTC streaming services, that will be earned within ten years from the date of the initial release for theatrical films. For episodic television series, Ultimate Revenues include revenues that will be earned within ten years, including imputed license fees for content that is used on the Company’s DTC streaming services, from delivery of the first episode, or if still in production, five years from delivery of the most recent episode, if later. Production costs that are predominantly monetized as a group are amortized based on projected usage (which may be, for example, derived from historical viewership patterns), typically resulting in an accelerated or straight-line amortization pattern. For the year ended October 1, 2022, the Company recognized $10,224 million of amortization of produced content costs, which is primarily included in “Cost of services” in the consolidated statements of operations.

The principal considerations for our determination that performing procedures relating to amortization of production costs is a critical audit matter are the significant auditor effort in performing procedures and evaluating audit evidence used in the amortization calculation for production costs monetized individually and as a group, and management’s estimates of Ultimate Revenues and projected usage.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to amortization of production costs, including controls over the estimation of Ultimate Revenues and projected usage. These procedures also included, among others, (i) testing management’s process for determining the amortization of production costs, (ii) evaluating whether ultimate revenues for certain content titles were reasonable considering information such as past performance of comparable titles, future firm commitments to license programs, and current market trends, (iii) evaluating the accelerated amortization pattern for content predominately monetized as a group, and (iv) testing the completeness and accuracy of the underlying data used in the amortization calculation for certain titles and for historical viewership data used to calculate the estimate of projected usage for certain groups.

/s/ PricewaterhouseCoopers LLP

Los Angeles, California

November 29, 2022

We have served as the Company’s auditor since 1938.

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CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)


	2022		2021		2020
Revenues:
Services	$	74,200	$	61,768	$	59,265
Products	8,522		5,650		6,123
Total revenues	82,722		67,418		65,388
Costs and expenses:
Cost of services (exclusive of depreciation and amortization)	(48,962)		(41,129)		(39,406)
Cost of products (exclusive of depreciation and amortization)	(5,439)		(4,002)		(4,474)
Selling, general, administrative and other	(16,388)		(13,517)		(12,369)
Depreciation and amortization	(5,163)		(5,111)		(5,345)
Total costs and expenses	(75,952)		(63,759)		(61,594)
Restructuring and impairment charges	(237)		(654)		(5,735)
Other income (expense), net	(667)		201		1,038
Interest expense, net	(1,397)		(1,406)		(1,491)
Equity in the income of investees	816		761		651
Income (loss) from continuing operations before income taxes	5,285		2,561		(1,743)
Income taxes on continuing operations	(1,732)		(25)		(699)
Net income (loss) from continuing operations	3,553		2,536		(2,442)
Loss from discontinued operations, net of income tax benefit of $14, $9 and $10, respectively	(48)		(29)		(32)
Net income (loss)	3,505		2,507		(2,474)
Net income from continuing operations attributable to noncontrolling and redeemable noncontrolling interests	(360)		(512)		(390)

Net income (loss) attributable to The Walt Disney Company (Disney)	$	3,145	$	1,995	$	(2,864)

Earnings (loss) per share attributable to Disney(1):
Diluted
Continuing operations	$	1.75	$	1.11	$	(1.57)
Discontinued operations	(0.03)		(0.02)		(0.02)
	$	1.72	$	1.09	$	(1.58)

Basic
Continuing operations	$	1.75	$	1.11	$	(1.57)
Discontinued operations	(0.03)		(0.02)		(0.02)
	$	1.73	$	1.10	$	(1.58)

Weighted average number of common and common equivalent shares outstanding:
Diluted	1,827		1,828		1,808
Basic	1,822		1,816		1,808

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

See Notes to Consolidated Financial Statements

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)


	2022		2021		2020
Net income (loss)	$	3,505	$	2,507	$	(2,474)
Other comprehensive income (loss), net of tax:

Market value adjustments, primarily for hedges	735		41		(251)
Pension and postretirement medical plan adjustments	2,503		1,850		(1,476)
Foreign currency translation and other	(1,060)		77		115
Other comprehensive income (loss)	2,178		1,968		(1,612)
Comprehensive income (loss)	5,683		4,475		(4,086)
Net income from continuing operations attributable to noncontrolling interests	(360)		(512)		(390)
Other comprehensive income (loss) attributable to noncontrolling interests	143		(86)		(93)
Comprehensive income (loss) attributable to Disney	$	5,466	$	3,877	$	(4,569)

See Notes to Consolidated Financial Statements

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CONSOLIDATED BALANCE SHEETS

(in millions, except share data)


	October 1, 2022		October 2, 2021
ASSETS
Current assets
Cash and cash equivalents	$	11,615	$	15,959
Receivables, net	12,652		13,367
Inventories	1,742		1,331
Content advances	1,890		2,183

Other current assets	1,199		817

Total current assets	29,098		33,657
Produced and licensed content costs	35,777		29,549
Investments	3,218		3,935
Parks, resorts and other property
Attractions, buildings and equipment	66,998		64,892
Accumulated depreciation	(39,356)		(37,920)
	27,642		26,972
Projects in progress	4,814		4,521
Land	1,140		1,131
	33,596		32,624
Intangible assets, net	14,837		17,115
Goodwill	77,897		78,071

Other assets	9,208		8,658
Total assets	$	203,631	$	203,609

LIABILITIES AND EQUITY
Current liabilities
Accounts payable and other accrued liabilities	$	20,213	$	20,894
Current portion of borrowings	3,070		5,866
Deferred revenue and other	5,790		4,317

Total current liabilities	29,073		31,077
Borrowings	45,299		48,540
Deferred income taxes	8,363		7,246

Other long-term liabilities	12,518		14,522
Commitments and contingencies (Note 14)
Redeemable noncontrolling interests	9,499		9,213
Equity
Preferred stock	—		—
Common stock, $0.01 par value, Authorized – 4.6 billion shares, Issued – 1.8 billion shares	56,398		55,471
Retained earnings	43,636		40,429
Accumulated other comprehensive loss	(4,119)		(6,440)
Treasury stock, at cost, 19 million shares	(907)		(907)
Total Disney Shareholders’ equity	95,008		88,553
Noncontrolling interests	3,871		4,458
Total equity	98,879		93,011
Total liabilities and equity	$	203,631	$	203,609

See Notes to Consolidated Financial Statements

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)


	2022		2021		2020
OPERATING ACTIVITIES
Net income (loss) from continuing operations	$	3,553	$	2,536	$	(2,442)
Depreciation and amortization	5,163		5,111		5,345
Goodwill and intangible asset impairments	—		—		4,953
Net (gain) loss on investments	714		(332)		(920)
Deferred income taxes	200		(1,241)		(392)
Equity in the income of investees	(816)		(761)		(651)
Cash distributions received from equity investees	779		754		774
Net change in produced and licensed content costs and advances	(6,271)		(4,301)		397

Equity-based compensation	977		600		525
Pension and postretirement medical cost amortization	620		816		547
Other, net	595		190		125
Changes in operating assets and liabilities
Receivables	605		(357)		1,943
Inventories	(420)		252		14
Other assets	(707)		171		(157)
Accounts payable and other liabilities	964		2,410		(2,293)
Income taxes	46		(282)		(152)
Cash provided by operations - continuing operations	6,002		5,566		7,616

INVESTING ACTIVITIES
Investments in parks, resorts and other property	(4,943)		(3,578)		(4,022)


Other, net	(65)		407		172
Cash used in investing activities - continuing operations	(5,008)		(3,171)		(3,850)

FINANCING ACTIVITIES
Commercial paper payments, net	(334)		(26)		(3,354)
Borrowings	333		64		18,120
Reduction of borrowings	(4,016)		(3,737)		(3,533)
Dividends	—		—		(1,587)

Proceeds from exercise of stock options	127		435		305

Acquisition of redeemable noncontrolling interests	—		(350)		—
Other, net	(839)		(771)		(1,471)
Cash provided by (used in) financing activities - continuing operations	(4,729)		(4,385)		8,480

CASH FLOWS FROM DISCONTINUED OPERATIONS
Cash provided by operations - discontinued operations	8		1		2
Cash provided by investing activities - discontinued operations	—		8		213
Cash used in financing activities - discontinued operations	(12)		—		—
Cash (used in) provided by discontinued operations	(4)		9		215

Impact of exchange rates on cash, cash equivalents and restricted cash	(603)		30		38

Change in cash, cash equivalents and restricted cash	(4,342)		(1,951)		12,499
Cash, cash equivalents and restricted cash, beginning of year	16,003		17,954		5,455
Cash, cash equivalents and restricted cash, end of year	$	11,661	$	16,003	$	17,954

Supplemental disclosure of cash flow information:
Interest paid	$	1,685	$	1,892	$	1,559
Income taxes paid	$	1,097	$	1,638	$	738

See Notes to Consolidated Financial Statements

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in millions)


	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 September 28, 2019	1,802	$	53,907	$	42,494		$	(6,617)	$	(907)	$	88,877	$	5,012	$	93,889
Comprehensive income (loss)	—	—		(2,864)			(1,705)		—		(4,569)		198		(4,371)
Equity compensation activity	8	590		—			—		—		590		—		590

Dividends	—	9		(1,596)			—		—		(1,587)		—		(1,587)
Contributions	—	—		—			—		—		—		94		94





Adoption of new lease accounting guidance	—	—		197			—		—		197		—		197




Distributions and other	—	(9)		84			—		—		75		(624)		(549)
Balance at October 3, 2020	1,810	$	54,497	$	38,315		$	(8,322)	$	(907)	$	83,583	$	4,680	$	88,263
Comprehensive income	—	—		1,995			1,882		—		3,877		284		4,161
Equity compensation activity	8	904		—			—		—		904		—		904

Contributions	—	—		—			—		—		—		89		89
Cumulative effect of accounting change	—	—		109			—		—		109		—		109
Distributions and other	—	70		10			—		—		80		(595)		(515)
Balance at October 2, 2021	1,818	$	55,471	$	40,429		$	(6,440)	$	(907)	$	88,553	$	4,458	$	93,011
Comprehensive income (loss)	—	—		3,145			2,321		—		5,466		(68)		5,398
Equity compensation activity	6	925		—			—		—		925		—		925


Contributions	—	—		—			—		—		—		74		74

Distributions and other	—	2		62			—		—		64		(593)		(529)
Balance at October 1, 2022	1,824	$	56,398	$	43,636		$	(4,119)	$	(907)	$	95,008	$	3,871	$	98,879

(1)Excludes redeemable noncontrolling interest.

See Notes to Consolidated Financial Statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollars in millions, except where noted and per share amounts)

1Description of the Business and Segment Information

The Walt Disney Company, together with the subsidiaries through which businesses are conducted (the Company), is a diversified worldwide entertainment company with operations in the Disney Media and Entertainment Distribution (DMED) and Disney Parks, Experiences and Products (DPEP) segments.

The terms “Company”, “we”, “our” and “us” are used in this report to refer collectively to the parent company and the subsidiaries through which businesses are conducted.

Impact of COVID-19

Since early 2020, the world has been, and continues to be, impacted by the novel coronavirus (COVID-19) and its variants. COVID-19 and measures to prevent its spread have impacted our segments in a number of ways, most significantly at DPEP where our theme parks and resorts were closed and cruise ship sailings and guided tours were suspended. In addition, at DMED we delayed, or in some cases, shortened or cancelled theatrical releases and experienced disruptions in the production and availability of content. Operations have resumed at various points since May 2020, with certain theme park and resort operations and film and television productions resuming by the end of fiscal 2020 and throughout fiscal 2021. Although operations resumed, many of our businesses continue to experience impacts from COVID-19, such as incremental health and safety measures and related increased expenses, capacity restrictions and closures (including at some of our international parks and in theaters in certain markets), and disruption of content production activities.

The impact of COVID-19 related disruptions on our financial and operating results will be dictated by the currently unknowable duration and severity of COVID-19 and its variants, and among other things, governmental actions imposed in response to COVID-19 and individuals’ and companies’ risk tolerance regarding health matters going forward. We have incurred and will continue to incur additional costs to address government regulations and the safety of our employees, guests and talent.

In fiscal 2020, the Company recorded goodwill and intangible asset impairments totaling $5.0 billion, in part due to the negative impact COVID-19 has had on the International Channels business (see Note 18).

DESCRIPTION OF THE BUSINESS

Disney Media and Entertainment Distribution

DMED encompasses the Company’s global film and episodic television content production and distribution

activities. Content is distributed by a single organization across three significant lines of business: Linear Networks, Direct-to-Consumer and Content Sales/Licensing. Content is generally created/licensed by four groups: Studios, General Entertainment, Sports and International. The distribution organization has full accountability for the financial results of the entire media and entertainment business.

The operations of DMED’s significant lines of business are as follows:

Linear Networks

◦Domestic Channels: ABC Television Network and eight owned ABC television stations (Broadcasting), and Disney, ESPN (80% interest), Freeform, FX and National Geographic (73% interest) 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+ (68% effective interest), Hulu and Star+ direct-to-consumer (DTC) video streaming services

Content Sales/Licensing

◦Sale/licensing of film and television content to third-party television and subscription/advertising video-on-demand (TV/SVOD) services

◦Theatrical distribution

◦Home entertainment distribution (DVD, Blu-ray discs and electronic home video licenses)

◦Music distribution

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◦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 by Industrial Light & Magic and Skywalker Sound
National Geographic magazine and online business
A 30% ownership interest in Tata Play Limited (formerly Tata Sky Limited), which operates a direct-to-home satellite distribution platform in India

The significant revenues of DMED are as follows:

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. YouTube TV) service providers) (MVPDs) and television stations affiliated with the ABC Network for the right to deliver our programming to their customers
Subscription fees - Fees charged to customers/subscribers for our DTC streaming services
Advertising - Sales of advertising time/space on our Linear Networks and Direct-to-Consumer
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 fees for streaming access to films that are also playing in theaters (“Premier Access”). TV/SVOD distribution revenue is primarily reported in Content Sales/Licensing, except for pay-per-view and Premier Access revenues, which are 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 (“IP”) for use in stage plays
Other revenue - Fees from sub-licensing of sports programming rights (reported in Linear Networks) and sales of post-production services (reported with Content Sales/Licensing)

The significant expenses of DMED are as follows:

Operating expenses consist primarily of programming and production costs, technical support costs, operating labor, distribution costs and costs of sales. Programming and production costs include amortization of licensed programming rights (including sports rights), amortization of capitalized production costs, subscriber-based fees for programming our Hulu services, production costs related to live programming such as news and sports and amortization of participations and residual obligations. Programming and production costs also include fees paid to Linear Networks from other DMED businesses for the right to air our linear networks and related services. These costs are largely incurred across four content creation/licensing groups, as follows:

◦Studios - Primarily capitalized production costs related to films produced under the Walt Disney Pictures, Twentieth Century Studios, Marvel, Lucasfilm, Pixar and Searchlight Pictures banners

◦General Entertainment - Primarily internal production of and acquisition of rights to 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 streaming services.

◦Sports - Primarily acquisition of professional and college sports programming rights and related production costs

◦International - Primarily internal production of and acquisition of rights to local content outside the U.S. and Canada.

Selling, general and administrative costs, including marketing costs
Depreciation and amortization

Disney Parks, Experiences and Products

The operations of DPEP’s significant lines of business are as follows:

Parks & Experiences:

◦Theme parks and resorts, which include: Walt Disney World Resort in Florida; Disneyland Resort in California; Disneyland Paris; Hong Kong Disneyland Resort (48% ownership interest); and Shanghai Disney Resort (43% ownership interest), all of which are consolidated in our results. Additionally, the Company licenses our IP to a third party to operate Tokyo Disney Resort

◦Disney Cruise Line, Disney Vacation Club, National Geographic Expeditions (73% ownership interest), Adventures by Disney and Aulani, a Disney Resort & Spa in Hawaii

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Consumer Products:

◦Licensing of our trade names, characters, visual, literary and other IP to various manufacturers, game developers, publishers and retailers throughout the world, for use on merchandise, published materials and games

◦Sale of branded merchandise through online, retail and wholesale businesses, and development and publishing of books, comic books and magazines (except National Geographic, which is reported in DMED)

The significant revenues of DPEP are as follows:

Theme park admissions - Sales of tickets for admission to our theme parks and for premium access to certain attractions (e.g. Genie+ and Lightning Lane)
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 IP for use on consumer goods

◦Retail - Sales of merchandise through internet shopping sites generally branded shopDisney and at The Disney Store, as well as to wholesalers (including books, comic books and magazines)

Parks licensing and other - Revenues from sponsorships and co-branding opportunities, real estate rent and sales and royalties earned on Tokyo Disney Resort revenues

The significant expenses of DPEP are as follows:

Operating expenses consist primarily of operating labor, costs of goods sold, infrastructure costs, supplies, commissions and entertainment offerings. Infrastructure costs include technology support costs, repairs and maintenance, property taxes, utilities and fuel, retail occupancy costs, insurance and transportation
Selling, general and administrative costs, including marketing costs
Depreciation and amortization

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.

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 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.

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Segment revenues and segment operating income are as follows:


	2022		2021		2020
Revenues
Disney Media and Entertainment Distribution	$	55,040	$	50,866	$	48,350
Disney Parks, Experiences and Products	28,705		16,552		17,038
Total segment revenues	$	83,745	$	67,418	$	65,388
Segment operating income
Disney Media and Entertainment Distribution	$	4,216	$	7,295	$	7,653
Disney Parks, Experiences and Products	7,905		471		455
Total segment operating income(1)	$	12,121	$	7,766	$	8,108

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


	2022		2021		2020
Disney Media and Entertainment Distribution	$	838	$	795	$	696
Disney Parks, Experiences and Products	(10)		(19)		(19)
Equity in the income of investees included in segment operating income	828		776		677

Amortization of TFCF intangible assets related to equity investees	(12)		(15)		(26)
Equity in the income of investees	$	816	$	761	$	651

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


	2022		2021		2020
Segment revenues	$	83,745	$	67,418	$	65,388
Content License Early Termination(1)	(1,023)		—		—
Total revenues	$	82,722	$	67,418	$	65,388

(1)In fiscal 2022, the Company recognized a reduction in revenue for amounts to early terminate 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 direct-to-consumer services (Content License Early Termination). Because the content is functional IP, we recognized substantially all of the consideration to be paid by the customer under the licenses as revenue in prior years when the content was made available under the agreements. Consequently, we have recorded the amounts to terminate the license agreements, net of remaining amounts of deferred revenue, as a reduction of revenue in the current year.

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


	2022		2021		2020
Segment operating income	$	12,121	$	7,766	$	8,108
Content License Early Termination	(1,023)		—		—
Corporate and unallocated shared expenses	(1,159)		(928)		(817)
Restructuring and impairment charges	(237)		(654)		(5,735)
Other income, net	(667)		201		1,038
Interest expense, net	(1,397)		(1,406)		(1,491)
TFCF and Hulu acquisition amortization(1)	(2,353)		(2,418)		(2,846)

Income (loss) from continuing operations before income taxes	$	5,285	$	2,561	$	(1,743)

(1)For fiscal 2022, amortization of intangible assets, fair value step-up on film and television costs and intangibles related to TFCF equity investees were $1,707 million, $634 million and $12 million, respectively. For fiscal 2021, amortization of intangible assets, fair value step-up on film and television costs and intangibles related to TFCF equity investees were $1,757 million, $646 million and $15 million, respectively. For fiscal 2020, amortization of intangible assets, fair value step-up on film and television costs and intangibles related to TFCF equity investees were $1,921 million, $899 million and $26 million, respectively.

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Capital expenditures, depreciation expense and amortization expense are as follows:


Capital expenditures	2022		2021		2020
Disney Media and Entertainment Distribution	$	810	$	862	$	783
Disney Parks, Experiences and Products
Domestic	2,680		1,597		2,145
International	767		675		759
Corporate	686		444		335
Total capital expenditures	$	4,943	$	3,578	$	4,022
Depreciation expense
Disney Media and Entertainment Distribution	$	650	$	613	$	638
Disney Parks, Experiences and Products
Domestic	1,680		1,551		1,634
International	662		718		694
Amounts included in segment operating income	2,342		2,269		2,328
Corporate	191		186		174
Total depreciation expense	$	3,183	$	3,068	$	3,140
Amortization of intangible assets
Disney Media and Entertainment Distribution	$	164	$	178	$	175
Disney Parks, Experiences and Products	109		108		109
Amounts included in segment operating income	273		286		284
TFCF and Hulu	1,707		1,757		1,921
Total amortization of intangible assets	$	1,980	$	2,043	$	2,205

Identifiable assets, including equity method investments and intangible assets,(1) are as follows:


	October 1, 2022		October 2, 2021
Disney Media and Entertainment Distribution	$	148,129	$	144,675
Disney Parks, Experiences and Products	43,027		41,763
Corporate (primarily fixed asset and cash and cash equivalents)	12,475		17,171
Total consolidated assets	$	203,631	203,609

(1)Equity method investments included in identifiable assets by segment are as follows:


	October 1, 2022		October 2, 2021
Disney Media and Entertainment Distribution	$	2,633	$	2,578
Disney Parks, Experiences and Products	2		2
Corporate	43		58
	$	2,678	$	2,638

Intangible assets, which include character/franchise intangibles, copyrights, trademarks, MVPD agreements and FCC licenses (see Note 13), included in identifiable assets by segment are as follows:


	October 1, 2022		October 2, 2021
Disney Media and Entertainment Distribution	$	11,981	$	14,143
Disney Parks, Experiences and Products	2,836		2,952
Corporate	20		20
	$	14,837	$	17,115

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


	2022		2021		2020
Revenues
Americas	$	68,218	$	54,157	$	51,992
Europe	8,680		6,690		7,333
Asia Pacific	6,847		6,571		6,063
	83,745		$	67,418	$	65,388
Content License Early Termination	(1,023)
	$	82,722
Segment operating income (loss)
Americas	$	11,099	$	6,314	$	5,819
Europe	586		800		1,273
Asia Pacific	436		652		1,016
	$	12,121	$	7,766	$	8,108

Long-lived assets(1) by geographical markets are as follows:


	October 1, 2022		October 2, 2021
Americas	$	150,786	$	144,788
Europe	8,739		8,215
Asia Pacific	10,976		12,012
	$	170,501	$	165,015

(1)Long-lived assets are total assets less: current assets, long-term receivables, deferred taxes, financial investments and the fair value of derivative instruments.

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


	DMED		DPEP		Total
Balance at Oct. 3, 2020	$	72,139	$	5,550	$	77,689




Currency translation adjustments and other, net	382		—		382
Balance at Oct. 2, 2021	$	72,521	$	5,550	$	78,071



Currency translation adjustments and other, net	(174)		—		(174)
Balance at Oct. 1, 2022	$	72,347	$	5,550	$	77,897

2Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements of the Company include the accounts of The Walt Disney Company and its majority-owned or controlled subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

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.

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Reporting Period

The Company’s fiscal year ends on the Saturday closest to September 30 and consists of fifty-two weeks with the exception that approximately every six years, we have a fifty-three week year. When a fifty-three week year occurs, the Company reports the additional week in the fourth quarter. Fiscal 2022 and 2021 were fifty-two week years. Fiscal 2020 was a fifty-three week year, which began on September 29, 2019 and ended on October 3, 2020.

Reclassifications

Certain reclassifications have been made in the fiscal 2021 and fiscal 2020 financial statements and notes to conform to the fiscal 2022 presentation.

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.

Revenues and Costs from Services and Products

The Company generates revenue from the sale of both services and tangible products and revenues and operating costs are classified under these two categories in the Consolidated Statements of Operations. Certain costs related to both the sale of services and tangible products are not specifically allocated between the service or tangible product revenue streams but are instead attributed to the principal revenue stream. The cost of services and tangible products exclude depreciation and amortization.

Significant service revenues include:

Affiliate fees
Subscription fees to our DTC streaming services
Advertising revenues
Admissions to our theme parks, charges for room nights at hotels and sales of cruise vacation packages
Revenue from the licensing and distribution of film and television properties
Royalties from licensing our IP for use on consumer goods, published materials and in multi-platform games

Significant operating costs related to the sale of services include:

Programming and production costs
Distribution costs
Operating labor
Facilities and infrastructure costs

Significant tangible product revenues include:

The sale of food, beverage and merchandise at our retail locations
The sale of DVDs and Blu-ray discs
The sale of books, comic books and magazines

Significant operating costs related to the sale of tangible products include:

Costs of goods sold
Operating labor
Programming and production costs
Distribution costs
Retail occupancy costs

Revenue Recognition

The Company’s revenue recognition policies are as follows:

Affiliate fees are recognized as the programming is provided based on contractually specified per subscriber rates and the actual number of the affiliate’s customers receiving the programming. For affiliate contracts with fixed license fees, the fees are recognized ratably over the contract term. If an affiliate contract includes a minimum guaranteed license fee, the guaranteed license fee is recognized ratably over the guaranteed period and any fees earned in excess of the guarantee are recognized as earned once the minimum guarantee has been exceeded. Affiliate agreements may also include a license to use the network programming for on demand viewing. As the fees charged under these contracts are generally based on a contractually specified per subscriber rate for the number of underlying subscribers of the affiliate, revenues are recognized as earned.

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Subscription fees are recognized ratably over the term of the subscription.
Advertising sales are recognized as revenue, net of agency commissions, when commercials are aired. For contracts that contain a guaranteed number of impressions, revenues are recognized based on impressions delivered. When the guaranteed number of impressions is not met (“ratings shortfall”), revenues are not recognized for the ratings shortfall until the additional impressions are delivered.
Theme park admissions are recognized when the tickets are used. Sales of annual passes are recognized ratably over the period for which the pass is available for use.
Resorts and vacations sales are recognized as revenue as the services are provided to the guest. Sales of vacation club properties are recognized as revenue upon the later of when title transfers to the customer or when construction activity is deemed complete.
Merchandise, food and beverage sales are recognized at the time of sale. Sales from our branded internet shopping sites and to wholesalers are recognized upon delivery. We estimate returns and customer incentives based upon historical return experience, current economic trends and projections of consumer demand for our products.
Merchandise licensing fees are recognized as revenue as earned based on the contractual royalty rate applied to the licensee’s underlying product sales. For licenses with minimum guaranteed license fees, the excess of the minimum guaranteed amount over actual royalties earned (“shortfall”) is recognized straight-line over the remaining license period once an expected shortfall is probable.
TV/SVOD distribution fixed license fees are recognized as revenue when the content is available for use by the licensee. License fees based on the underlying sales of the licensee are recognized as revenue as earned based on the contractual royalty rate applied to the licensee sales.

For TV/SVOD licenses that include multiple titles with a fixed license fee across all titles, each title is considered a separate performance obligation. The fixed license fee is allocated to each title at contract inception and the allocated license fee is recognized as revenue when the title is available for use by the licensee.

When the license contains a minimum guaranteed license fee across all titles, the license fees earned by titles in excess of their allocated amount are deferred until the minimum guaranteed license fee across all titles is exceeded. Once the minimum guaranteed license fee is exceeded, revenue is recognized as earned based on the licensee’s underlying sales.

TV/SVOD distribution contracts may limit the licensee’s use of a title to certain defined periods of time during the contract term. In these instances, each period of availability is generally considered a separate performance obligation. For these contracts, the fixed license fee is allocated to each period of availability at contract inception based on relative standalone selling price using management’s best estimate. Revenue is recognized at the start of each availability period when the content is made available for use by the licensee.

When the term of an existing agreement is renewed or extended, revenues are recognized when the licensed content becomes available under the renewal or extension.

Theatrical distribution licensing fees are recognized as revenue based on the contractual royalty rate applied to the distributor’s underlying sales from exhibition of the film.
Home entertainment sales in physical formats are recognized as revenue on the later of the delivery date or the date that the product can be sold by retailers. We reduce home entertainment revenues for estimated future returns of merchandise and sales incentives based upon historical return experience, current economic trends and projections of consumer demand for our products. Sales of our films in electronic formats are recognized as revenue when the product is available for use by the consumer.
Taxes collected from customers and remitted to governmental authorities are excluded from revenue.
Shipping and handling fees collected from customers are recorded as revenue and the related shipping expenses are recorded in cost of products upon delivery of the product to the consumer.

Allowance for Credit Losses

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 supportable forecasts of future economic conditions.

Advertising Expense

Advertising costs are expensed as incurred. Advertising expense for fiscal 2022, 2021 and 2020 was $7.2 billion, $5.5 billion and $4.7 billion, respectively. The increase in advertising expense for fiscal 2022 compared to fiscal 2021 was due to higher spend for our DTC streaming services and an increase in theatrical marketing costs. The increase in advertising expense for fiscal 2021 compared to fiscal 2020 was due to higher spend for our DTC streaming services.

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Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and marketable securities with original maturities of three months or less.

Cash and cash equivalents subject to contractual restrictions and not readily available are classified as restricted cash. The Company’s restricted cash balances are primarily made up of cash posted as collateral for certain derivative instruments.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Consolidated Balance Sheet to the total of the amounts in the Consolidated Statements of Cash Flows.


	October 1, 2022		October 2, 2021		October 3, 2020
Cash and cash equivalents	$	11,615	$	15,959	$	17,914
Restricted cash included in:
Other current assets	3		3		3
Other assets	43		41		37

Total cash, cash equivalents and restricted cash in the statement of cash flows	$	11,661	$	16,003	$	17,954

Investments

Investments in equity securities with a readily determinable fair value, not accounted for under the equity method, are recorded at that value with unrealized gains and losses included in earnings. For equity securities without a readily determinable fair value, the investment is recorded at cost, less any impairment, plus or minus adjustments related to observable transactions for the same or similar securities, with unrealized gains and losses included in earnings.

For equity method investments, the Company regularly reviews its investments to determine whether there is a decline in fair value below book value. If there is a decline that is other-than-temporary, the investment is written down to fair value.

Translation Policy

Generally, the U.S. dollar is the functional currency for our international film and television distribution and licensing businesses and the branded International Channels and DTC streaming services. Generally, the local currency is the functional currency for the Asia Theme Parks, Disneyland Paris, the Star branded channels in India, international sports channels and international locations of The Disney Store.

For U.S. dollar functional currency locations, foreign currency assets and liabilities are remeasured into U.S. dollars at end-of-period exchange rates, except for non-monetary balance sheet accounts, which are remeasured at historical exchange rates. Revenue and expenses are remeasured at average exchange rates in effect during each period, except for those expenses related to the non-monetary balance sheet amounts, which are remeasured at historical exchange rates. Gains or losses from foreign currency remeasurement are included in income.

For local currency functional locations, assets and liabilities are translated at end-of-period rates while revenues and expenses are translated at average rates in effect during the period. Equity is translated at historical rates and the resulting cumulative translation adjustments are included as a component of accumulated other comprehensive income (loss) (AOCI).

Inventories

Inventory primarily includes vacation timeshare units, merchandise, food, materials and supplies. Carrying amounts of vacation ownership units are recorded at the lower of cost or net realizable value. Carrying amounts of merchandise, food, materials and supplies inventories are generally determined on a moving average cost basis and are recorded at the lower of cost or net realizable value.

Film and Television Content Costs

The Company classifies its capitalized produced and acquired/licensed content costs as long-term assets (“Produced and licensed content costs” in the Consolidated Balance Sheet) and classifies advances for live programming rights made prior to the live event as short-term assets (“Content advances” in the Consolidated Balance Sheet). For produced content, we capitalize all direct costs incurred in the physical production of a film, as well as allocations of production overhead and capitalized interest. For licensed and acquired content, we capitalize the license fee or acquisition cost, respectively. For purposes of amortization and impairment, the capitalized content costs are classified based on their predominant monetization strategy as follows:

Individual - lifetime value is predominantly derived from third-party revenues that are directly attributable to the specific film or television title (e.g. theatrical revenues or sales to third-party television programmers)

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Group - lifetime value is predominantly derived from third-party revenues that are attributable only to a bundle of titles (e.g. subscription revenue for a DTC service or affiliate fees for a cable television network)

The determination of the predominant monetization strategy is made at commencement of production on a consolidated basis and is based on the means by which we derive third-party revenues from use of the content. Imputed title by title license fees that may be necessary for other purposes are established as required for those purposes.

We generally classify content that is initially intended for use on our DTC streaming services or Linear Networks as group assets. We generally classify content initially intended for theatrical release or for sale to third-party licensees as individual assets. The predominant monetization strategy for content released prior to the beginning of fiscal 2020 (the date the Company adopted accounting guidance that was applied prospectively) was determined based on the expected means of monetization over the remaining life of the content. Thus for example, film titles that were released theatrically and in home entertainment prior to fiscal year 2020 and are now distributed on Disney+ are generally considered group content.

The classification of content as individual or group only changes if there is a significant change to the title’s monetization strategy relative to its initial assessment (e.g. content that was initially intended for license to a third party is instead used on an owned DTC service). When there is a significant change in monetization strategy, the title’s capitalized content costs are tested for impairment.

Production costs for content that is predominantly monetized individually are amortized based upon the ratio of the current period’s revenues to the estimated remaining total revenues (Ultimate Revenues). For film productions, Ultimate Revenues include revenues from all sources, which may include imputed license fees for content that is used on our DTC streaming services, that will be earned within ten years from the date of the initial release for theatrical films. For episodic television series that are classified as individual, Ultimate Revenues include revenues that will be earned within ten years, including imputed license fees for content that is used on our DTC streaming services, from delivery of the first episode, or if still in production, five years from delivery of the most recent episode, if later. Participations and residuals are expensed over the applicable product life cycle based upon the ratio of the current period’s revenues to the estimated remaining total revenues for each production.

Production costs that are predominantly monetized as a group are amortized based on projected usage, generally resulting in an accelerated or straight-line amortization pattern. Adjustments to projected usage are applied prospectively in the period of the change. Participations and residuals are generally expensed in line with the pattern of usage.

Licensed rights to film and television content and other programs for broadcast on our Linear Networks or DTC streaming services are expensed on an accelerated or straight-line basis over their useful life or over the number of times the program is expected to be aired, as appropriate. We amortize rights costs for multi-year sports programming arrangements during the applicable seasons based on the estimated relative value of each year in the arrangement. If annual contractual payments related to each season approximate each season’s estimated relative value, we expense the related contractual payments during the applicable season.

Acquired film and television libraries are generally amortized on a straight-line basis over 20 years from the date of acquisition. Acquired film and television libraries include content that was initially released three years prior to its acquisition, except it excludes the prior seasons of episodic television programming still in production at the date of its acquisition.

Amortization of capitalized costs for produced and acquired content begins in the month the content is first released, while amortization of capitalized costs for licensed content commences when the license period begins and the content is first aired or available for use on our DTC services. Amortization of content assets is primarily included in “Cost of services” in the Consolidated Statements of Operations.

The costs of produced and licensed film and television content are subject to regular recoverability assessments. For content that is predominantly monetized individually, the unamortized costs are compared to the estimated fair value. The fair value is determined based on a discounted cash flow analysis of the cash flows directly attributable to the title. To the extent the unamortized costs exceed the fair value, an impairment charge is recorded for the excess. For content that is predominantly monetized as a group, the aggregate unamortized costs of the group are compared to the present value of the discounted cash flows using the lowest level for which identifiable cash flows are independent of other produced and licensed content. If the unamortized costs exceed the present value of discounted cash flows, an impairment charge is recorded for the excess and allocated to individual titles based on the relative carrying value of each title in the group. If there are no plans to continue to use an individual film or television program that is part of a group, the unamortized cost of the individual title is written-off immediately. Licensed content is included as part of the group within which it is monetized for purposes of assessing recoverability.

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Internal-Use Software Costs

The Company expenses costs incurred in the preliminary project stage of developing or acquiring internal use software, such as research and feasibility studies as well as costs incurred in the post-implementation/operational stage, such as maintenance and training. Capitalization of software development costs occurs only after the preliminary-project stage is complete, management authorizes the project and it is probable that the project will be completed and the software will be used for the function intended. As of October 1, 2022 and October 2, 2021, capitalized software costs, net of accumulated amortization, totaled $1.1 billion and $1.2 billion, respectively. The capitalized costs are amortized on a straight-line basis over the estimated useful life of the software up to 7 years.

Parks, Resorts and Other Property

Parks, resorts and other property are carried at historical cost. Depreciation is computed on the straight-line method, generally over estimated useful lives as follows:


Attractions, buildings and improvements						20 – 40 years
Furniture, fixtures and equipment						3 – 25 years
Land improvements						20 – 40 years
Leasehold improvements						Life of lease or asset life if less

Leases

The Company determines whether a contract is a lease at contract inception or for a modified contract at the modification date. At inception or modification, the Company calculates the present value of operating lease payments using the Company’s incremental borrowing rate applicable to the lease, which is determined by estimating what it would cost the Company to borrow a collateralized amount equal to the total lease payments over the lease term based on the contractual terms of the lease and the location of the leased asset. Our leases may require us to make fixed rental payments, variable lease payments based on usage or sales and fixed non-lease costs relating to the leased asset. Variable lease payments are generally not included in the measurement of the right-of-use asset and lease liability. Fixed non-lease costs, for example common-area maintenance costs, are included in the measurement of the right-of-use asset and lease liability as the Company does not separate lease and non-lease components.

Goodwill, Other Intangible Assets and Long-Lived Assets

The Company is required to test goodwill and other indefinite-lived intangible assets for impairment on an annual basis and if current events or circumstances require, on an interim basis. The Company performs its annual test of goodwill and indefinite-lived intangible assets for impairment in its fiscal fourth quarter.

Goodwill is allocated to various reporting units, which are an operating segment or one level below the operating segment. To test goodwill for impairment, the Company first performs a qualitative assessment to determine if it is more likely than not that the carrying amount of a reporting unit exceeds its fair value. If it is, a quantitative assessment is required. Alternatively, the Company may bypass the qualitative assessment and perform a quantitative impairment test.

The qualitative assessment requires the consideration of factors such as recent market transactions, macroeconomic conditions, and changes in projected future cash flows of the reporting unit.

The quantitative assessment compares the fair value of each goodwill reporting unit to its carrying amount, and to the extent the carrying amount exceeds the fair value, an impairment of goodwill is recognized for the excess up to the amount of goodwill allocated to the reporting unit.

In fiscal 2022, the Company bypassed the qualitative test and performed a quantitative assessment of goodwill for impairment.

The impairment test for goodwill requires judgment related to the identification of reporting units, the assignment of assets and liabilities to reporting units including goodwill, and the determination of fair value of the reporting units. To determine the fair value of our reporting units, we apply what we believe to be the most appropriate valuation methodology for each of our reporting units. We generally use a present value technique (discounted cash flows) corroborated by market multiples when available and as appropriate. The discounted cash flow analyses are sensitive to our estimates of future revenue growth and margins for these businesses as well as the discount rates used to calculate the present value of future cash flows. In times of adverse economic conditions in the global economy, the Company’s long-term cash flow projections are subject to a greater degree of uncertainty than usual. We believe our estimates are consistent with how a marketplace participant would value our reporting units. If we had established different reporting units or utilized different valuation methodologies or assumptions, the impairment test results could differ, and we could be required to record impairment charges.

To test its other indefinite-lived intangible assets for impairment, the Company first performs a qualitative assessment to determine if it is more likely than not that the carrying amount of each of its indefinite-lived intangible assets exceeds its fair

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value. If it is, a quantitative assessment is required. Alternatively, the Company may bypass the qualitative assessment and perform a quantitative impairment test.

The qualitative assessment requires the consideration of factors such as recent market transactions, macroeconomic conditions, and changes in projected future cash flows.

The quantitative assessment compares the fair value of an indefinite-lived intangible asset to its carrying amount. If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized for the excess. Fair values of indefinite-lived intangible assets are determined based on discounted cash flows or appraised values, as appropriate. The Company has determined that there are currently no legal, competitive, economic or other factors that materially limit the useful life of our FCC licenses and trademarks, which are our most significant indefinite-lived intangible assets.

Finite-lived intangible assets are generally amortized on a straight-line basis over periods up to 40 years. The costs to periodically renew our intangible assets are expensed as incurred.

The Company tests long-lived assets, including amortizable intangible assets, for impairment whenever events or changes in circumstances (triggering events) indicate that the carrying amount may not be recoverable. Once a triggering event has occurred, the impairment test employed is based on whether the Company’s intent is to hold the asset for continued use or to hold the asset for sale. The impairment test for assets held for use requires a comparison of the estimated undiscounted future cash flows expected to be generated over the useful life of the significant assets of an asset group to the carrying amount of the asset group. An asset group is generally established by identifying the lowest level of cash flows generated by a group of assets that are largely independent of the cash flows of other assets and could include assets used across multiple businesses. If the carrying amount of an asset group exceeds the estimated undiscounted future cash flows, an impairment would be measured as the difference between the fair value of the asset group and the carrying amount of the asset group. For assets held for sale, to the extent the carrying amount is greater than the asset’s fair value less costs to sell, an impairment loss is recognized for the difference.

The Company recorded non-cash impairment charges of $0.2 billion, $0.3 billion, and $5.2 billion in fiscal 2022, 2021 and 2020, respectively.

The fiscal 2022 charges primarily related to our businesses in Russia.

The fiscal 2021 charges primarily related to the closure of an animation studio and a substantial number of our Disney-branded retail stores in North America and Europe.

The fiscal 2020 impairment charges primarily related to impairments of MVPD agreement intangibles assets ($1.9 billion) and goodwill ($3.1 billion) at the International Channels business. See Note 18 to the Consolidated Financial Statements for additional discussion of these impairment charges.

The Company expects its aggregate annual amortization expense for finite-lived intangible assets for fiscal 2023 through 2027 to be as follows:


2023	$	1,808
2024	1,570
2025	1,459
2026	966
2027	888

Risk Management Contracts

In the normal course of business, the Company employs a variety of financial instruments (derivatives) including interest rate and cross-currency swap agreements and forward and option contracts to manage its exposure to fluctuations in interest rates, foreign currency exchange rates and commodity prices.

The Company formally documents all relationships between hedges and hedged items as well as its risk management objectives and strategies for undertaking various hedge transactions. The Company primarily enters into two types of derivatives: hedges of fair value exposure and hedges of cash flow exposure. Hedges of fair value exposure are entered into in order to hedge the fair value of a recognized asset, liability, or a firm commitment. Hedges of cash flow exposure are entered into in order to hedge a forecasted transaction (e.g. forecasted revenue) or the variability of cash flows to be paid or received, related to a recognized liability or asset (e.g. floating-rate debt).

The Company designates and assigns the derivatives as hedges of forecasted transactions, specific assets or specific liabilities. When hedged assets or liabilities are sold or extinguished or the forecasted transactions being hedged occur or are no longer expected to occur, the Company recognizes the gain or loss on the designated derivatives.

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The Company’s hedge positions are measured at fair value on the balance sheet. Realized gains and losses from hedges are classified in the income statement consistent with the accounting treatment of the items being hedged. The Company accrues the differential for interest rate swaps to be paid or received under the agreements as interest rates change as adjustments to interest expense over the lives of the swaps. Gains and losses on the termination of effective swap agreements, prior to their original maturity, are deferred and amortized to interest expense over the remaining term of the underlying hedged transactions.

The Company enters into derivatives that are not designated as hedges and do not qualify for hedge accounting. These derivatives are intended to offset certain economic exposures of the Company and are carried at fair value with changes in value recorded in earnings. Cash flows from hedging activities are classified in the Consolidated Statements of Cash Flows under the same category as the cash flows from the related assets, liabilities or forecasted transactions (see Notes 8 and 17).

Income Taxes

Deferred income tax assets and liabilities are recorded with respect to temporary differences in the accounting treatment of items for financial reporting purposes and for income tax purposes. Where, based on the weight of available evidence, it is more likely than not that some amount of recorded deferred tax assets will not be realized, a valuation allowance is established for the amount that, in management’s judgment, is sufficient to reduce the deferred tax asset to an amount that is more likely than not to be realized.

A tax position must meet a minimum probability threshold before a financial statement benefit is recognized. The minimum threshold is defined as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.

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 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, 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 October 1, 2022, NBCU’s interest in Hulu is recorded in the Company’s financial statements at $8.7 billion.

BAMTech provides streaming technology services and is owned 85% by the Company and 15% by Major League Baseball (MLB).

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, in either case at a redemption value based on MLB’s equity ownership percentage of the greater of BAMTech’s then equity fair value or a guaranteed floor value ($563 million accreting at 8% annually for eight years from the date of acquisition).

The MLB interest is required to be carried at a minimum value equal to its acquisition date fair value accreted to its estimated redemption value through the applicable redemption date. Therefore, the MLB interest is generally not allocated its portion of BAMTech losses, if any. As of October 1, 2022, the MLB interest was recorded in the Company’s financial statements at $828 million. In November 2022, the Company purchased MLB’s 15% interest for $900 million.

Our estimate of the redemption value of noncontrolling interests requires management to make significant judgments with respect to the future value of the noncontrolling interests. We are accreting the noncontrolling interests of Hulu to its guaranteed floor value. If our estimate of the future redemption value 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 redeemable noncontrolling interests” and thus reduce “Net income (loss) attributable to The Walt Disney Company (Disney)” on the Consolidated Statements of Operations.

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Earnings Per Share

The Company presents both basic and diluted earnings per share (EPS) amounts. Basic EPS is calculated by dividing net income attributable to Disney by the weighted average number of common shares outstanding during the year. Diluted EPS is based upon the weighted average number of common and common equivalent shares outstanding during the year, which is calculated using the treasury-stock method for equity-based awards (Awards). Common equivalent shares are excluded from the computation in periods for which they have an anti-dilutive effect. Stock options for which the exercise price exceeds the average market price over the period are anti-dilutive and, accordingly, are excluded from the calculation.

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


	2022	2021	2020
Weighted average number of common and common equivalent shares outstanding (basic)	1,822	1,816	1,808
Weighted average dilutive impact of Awards(1)	5	12	—
Weighted average number of common and common equivalent shares outstanding (diluted)	1,827	1,828	1,808
Awards excluded from diluted earnings per share	15	4	35

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

3Revenues

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


	2022									2021						2020
	DMED		DPEP		Content License Early Termination			Total		DMED		DPEP		Total		DMED		DPEP		Total
Affiliate fees	$	17,525	$	—		$	—	$	17,525	$	17,760	$	—	$	17,760	$	17,929	$	—	$	17,929
Subscription fees	15,291		—			—		15,291		12,020		—		12,020		7,645		—		7,645
Advertising	13,044		4			—		13,048		12,425		4		12,429		10,851		4		10,855
Theme park admissions	—		8,602			—		8,602		—		3,848		3,848		—		4,038		4,038
Resort and vacations	—		6,410			—		6,410		—		2,701		2,701		—		3,402		3,402
Retail and wholesale sales of merchandise, food and beverage	—		7,838			—		7,838		—		4,957		4,957		—		4,952		4,952
Merchandise licensing	—		3,969			—		3,969		12		3,586		3,598		32		3,210		3,242
TV/SVOD distribution licensing	4,452		—			(1,023)		3,429		5,266		—		5,266		6,253		—		6,253
Theatrical distribution licensing	1,875		—			—		1,875		920		—		920		2,134		—		2,134
Home entertainment	820		—			—		820		1,014		—		1,014		1,802		—		1,802
Other	2,033		1,882			—		3,915		1,449		1,456		2,905		1,704		1,432		3,136
	$	55,040	$	28,705		$	(1,023)	$	82,722	$	50,866	$	16,552	$	67,418	$	48,350	$	17,038	$	65,388

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


	2022						2021						2020
	DMED		DPEP		Total		DMED		DPEP		Total		DMED		DPEP		Total
Americas	$	45,018	$	23,200	$	68,218	$	41,754	$	12,403	$	54,157	39,163		$	12,829	$	51,992
Europe	5,328		3,352		8,680		5,022		1,668		6,690		5,240		2,093		7,333
Asia Pacific	4,694		2,153		6,847		4,090		2,481		6,571		3,947		2,116		6,063

	$	55,040	$	28,705	$	83,745	$	50,866	$	16,552	$	67,418	$	48,350	$	17,038	$	65,388
Content License Early Termination					(1,023)
					$	82,722

Revenues recognized in the current and prior year 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 fiscal 2022, $1.1 billion was recognized related to performance obligations satisfied prior to

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October 2, 2021. For fiscal 2021, $1.3 billion was recognized related to performance obligations satisfied prior to October 3, 2020. For fiscal 2020, $1.4 billion was recognized related to performance obligations satisfied prior to September 30, 2019.

As of October 1, 2022, revenue for unsatisfied performance obligations expected to be recognized in the future is $15 billion, which primarily relates to content and other IP to be delivered in the future under existing agreements with merchandise and co-branding licensees and sponsors, television station affiliates, sports sublicensees, advertisers, and DTC wholesalers. Of this amount, we expect to recognize approximately $6 billion in fiscal 2023, $4 billion in fiscal 2024, $2 billion in fiscal 2025 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:


	October 1, 2022		October 2, 2021
Contract assets	$	32	$	155


Accounts Receivable
Current	10,886		11,190
Non-current	1,226		1,359
Allowance for credit losses	(179)		(194)
Deferred revenues
Current	5,531		4,067
Non-current	927		581

Contract assets primarily relate to certain multi-season TV/SVOD licensing contracts. Activity for fiscal 2022 and 2021 related to contract assets was not material.

For fiscal 2022, 2021 and 2020, the Company recognized revenues of $3.6 billion, $2.9 billion and $3.4 billion, respectively, that was included in the deferred revenue balance at October 2, 2021, October 3, 2020 and September 28, 2019, respectively. Amounts deferred generally relate to DTC subscriptions, advances from merchandise licensees and TV/SVOD licenses. In fiscal 2020, as a result of COVID-19, the Company had paid refunds for certain non-refundable deposits that were reported as deferred revenue prior to fiscal 2020, the most significant of which related to park admission tickets and deposits for vacation packages. The balance at October 2, 2021 related to these deposits was classified in “Accounts payable and other accrued liabilities” in the Consolidated Balance Sheet. In fiscal 2022, the Company is no longer refunding these deposits and approximately $1.5 billion is now classified as “Deferred revenue and other” in the Consolidated Balance Sheet.

The Company has accounts receivable with original maturities greater than one year related to the sale of film and television program rights (TV/SVOD) 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 $0.6 billion and $0.8 billion at October 1, 2022 and October 2, 2021, respectively. The balance of vacation club receivables recorded in other non-current assets was $0.6 billion at both October 1, 2022 and October 2, 2021, respectively. The allowance for credit losses and activity for fiscal 2022 and 2021 was not material.

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4Other Income (Expense), Net

Other income (expense), net is as follows:


	2022		2021		2020
DraftKings gain (loss)	$	(663)	$	(111)	$	973
fuboTV gain	—		186		—
German FTA gain	—		126		—
Endemol Shine gain	—		—		65





Other, net	(4)		—		—

Other income (expense), net	$	(667)	$	201	$	1,038

In fiscal 2022 and 2021, the Company recognized a non-cash loss of $663 million and $111 million, respectively, from the adjustment of its investment in DraftKings, Inc. (DraftKings) to fair value (DraftKings gain (loss)). In fiscal 2020, the Company recognized a $973 million DraftKings gain.

In fiscal 2021, the Company recognized a $186 million gain from the sale of our investment in fuboTV Inc. (fuboTV gain) and a $126 million gain on the sale of its 50% interest in a German free-to-air (FTA) television network (German FTA gain).

In fiscal 2020, the Company recognized a $65 million gain on the sale of its 50% interest in Endemol Shine Group (Endemol Shine gain).

5Investments

Investments consist of the following:


	October 1, 2022		October 2, 2021
Investments, equity basis	$	2,678	$	2,638
Investments, other	540		1,297
	$	3,218	$	3,935

Investments, Equity Basis

The Company’s significant equity investments primarily consist of media investments and include A+E (50% ownership), CTV Specialty Television, Inc. (30% ownership) and Tata Play Limited (30% ownership). As of October 1, 2022, the book value of the Company’s equity method investments exceeded our share of the book value of the investees’ underlying net assets by approximately $0.8 billion, which represents amortizable intangible assets and goodwill arising from acquisitions.

Investments, Other

As of October 1, 2022 and October 2, 2021, the Company had securities recorded at fair value of $0.3 billion and $1.0 billion, respectively. As of October 1, 2022 and October 2, 2021, the Company had securities recorded at book value related to non-publicly traded securities without a readily determinable fair value of $0.2 billion and $0.3 billion, respectively.

Gains, losses and impairments on securities are generally recorded in “Interest expense, net” in the Consolidated Statements of Operations; these amounts were not material for fiscal 2022, 2021 and 2020. See Note 4 for realized and unrealized gains and losses on securities recorded in “Other income (expense), net” in the Consolidated Statements of Operations.

6International Theme Parks

The Company has a 48% ownership interest in the operations of Hong Kong Disneyland Resort and a 43% ownership interest in the operations of Shanghai Disney Resort (together, the Asia Theme Parks), which are both VIEs consolidated in the Company’s financial statements. See Note 2 for the Company’s policy on consolidating VIEs. In addition, the Company has 100% ownership of Disneyland Paris. The Asia Theme Parks together with Disneyland Paris are collectively referred to as the International Theme Parks.

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The following table summarizes the carrying amounts of the Asia Theme Parks’ assets and liabilities included in the Company’s Consolidated Balance Sheet:


	October 1, 2022		October 2, 2021
Cash and cash equivalents	$	280	$	287
Other current assets	137		95
Total current assets	417		382
Parks, resorts and other property	6,356		6,928
Other assets	161		176
Total assets	$	6,934	$	7,486

Current liabilities	$	468	$	473
Long-term borrowings	1,426		1,331
Other long-term liabilities	395		422
Total liabilities	$	2,289	$	2,226

The following table summarizes the International Theme Parks’ revenues and costs and expenses included in the Company’s Consolidated Statements of Operations for fiscal 2022:


Revenues	$	3,026
Costs and expenses	(3,459)
Equity in the loss of investees	(10)

Asia Theme Parks’ royalty and management fees of $71 million for fiscal 2022 are eliminated in consolidation, but are considered in calculating earnings attributable to noncontrolling interests.

International Theme Parks’ cash flows included in the Company’s fiscal 2022 Consolidated Statements of Cash Flows were $407 million provided by operating activities, $752 million used in investing activities and $240 million provided by financing activities.

Hong Kong Disneyland Resort

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

The Company and HKSAR have provided loans to Hong Kong Disneyland Resort with outstanding balances of $152 million and $102 million, respectively. The interest rate on both loans is three month HIBOR plus 2%, and the maturity date is September 2025. The Company’s loan is eliminated in consolidation.

The Company has provided Hong Kong Disneyland Resort with a revolving credit facility of HK $2.1 billion ($268 million), which bears interest at a rate of three month HIBOR plus 1.25% and matures in December 2023. The outstanding balance under the line of credit at October 1, 2022 was $231 million. The Company’s line of credit is eliminated in consolidation.

Hong Kong Disneyland Resort is undergoing a multi-year expansion estimated to cost HK $10.9 billion ($1.4 billion). The Company and HKSAR have agreed to fund the expansion on an equal basis through equity contributions, which totaled $148 million and $42 million in fiscal 2022 and 2021, respectively. To date, the Company and HKSAR have funded a total of $716 million.

HKSAR has the right to receive additional shares over time to the extent Hong Kong Disneyland Resort exceeds certain return on asset performance targets. The amount of additional shares HKSAR can receive is capped on an annual basis and could decrease the Company’s equity interest by up to an additional 6 percentage points over a period no shorter than 10 years. Assuming HK $10.9 billion is contributed in the expansion, the impact to the Company’s equity interest would be limited to 5 percentage points.

Shanghai Disney Resort

Shanghai Shendi (Group) Co., Ltd (Shendi) and the Company have 57% and 43% equity interests in Shanghai Disney Resort, respectively. A management company, in which the Company has a 70% interest and Shendi a 30% interest, operates Shanghai Disney Resort.

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The Company has provided Shanghai Disney Resort with loans totaling $930 million, bearing interest at rates up to 8% and maturing in 2036, with early repayment permitted. The Company has also provided Shanghai Disney Resort with a 1.9 billion yuan (approximately $0.3 billion) line of credit bearing interest at 8%. As of October 1, 2022, the total amount outstanding under the line of credit was 0.9 billion yuan (approximately $123 million). These balances are eliminated in consolidation.

Shendi has provided Shanghai Disney Resort with loans totaling 8.3 billion yuan (approximately $1.2 billion), bearing interest at rates up to 8% and maturing in 2036, with early repayment permitted. Shendi has also provided Shanghai Disney Resort with a 2.6 billion yuan (approximately $0.4 billion) line of credit bearing interest at 8%. As of October 1, 2022, the total amount outstanding under the line of credit was 1.2 billion yuan (approximately $162 million).

7Produced and Acquired/Licensed Content Costs and Advances

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


	As of October 1, 2022						As of October 2, 2021
	Predominantly Monetized Individually		Predominantly Monetized as a Group		Total		Predominantly Monetized Individually		Predominantly Monetized as a Group		Total
Produced content
Released, less amortization	$	4,639	$	12,688	$	17,327	$	4,944	$	9,779	$	14,723
Completed, not released	214		2,019		2,233		630		762		1,392
In-process	5,041		6,793		11,834		4,371		4,623		8,994
In development or pre-production	372		254		626		351		162		513
	$	10,266	$	21,754	32,020		$	10,296	$	15,326	25,622
Licensed content - Television Programming rights and advances					5,647						6,110
Total produced and licensed content					$	37,667					$	31,732

Current portion					$	1,890					$	2,183
Non-current portion					$	35,777					$	29,549

Amortization of produced and licensed content is as follows:


	2022		2021		2020
Produced content
Predominantly monetized individually	$	3,448	$	2,947	$	4,305
Predominantly monetized as a group	6,776		5,228		5,032
	10,224		8,175		9,337
Licensed programming rights and advances	13,432		12,784		11,241
Total produced and licensed content costs(1)	$	23,656	$	20,959	$	20,578

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

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Total expected amortization by fiscal year of completed (released and not released) produced, licensed and acquired film and television library content on the balance sheet as of October 1, 2022 is as follows:


	Predominantly Monetized Individually		Predominantly Monetized as a Group		Total
Produced content
Released
2023	$	1,158	$	2,906	$	4,064
2024	674		2,002		2,676
2025	524		1,636		2,160
Completed, not released
2023	91		778		869

Licensed content - Programming rights and advances
2023					$	3,228
2024					1,069
2025					534

Approximately $2.2 billion of accrued participations and residual liabilities will be paid in fiscal 2023.

At October 1, 2022, acquired film and television library content has remaining unamortized costs of $3.3 billion, which are generally being amortized straight-line over a weighted-average remaining period of approximately 16 years.

8Borrowings

The Company’s borrowings, including the impact of interest rate and cross-currency swaps, are summarized as follows:


					October 1, 2022
	Oct. 1, 2022		Oct. 2, 2021		Stated Interest Rate(1)	Pay Floating Interest rate and Cross- Currency Swaps(2)			Effective Interest Rate(3)	Swap Maturities
Commercial paper	$	1,662	$	1,992	—		$	—		3.31%
U.S. dollar denominated notes(4)	45,091		49,090		4.03%		12,625			4.07%	2023-2031
Foreign currency denominated debt	1,844		2,011		2.92%		1,847			3.42%	2025-2027



Other(5)	(1,653)		(18)				—
	46,944		53,075		3.85%		14,472			4.02%
Asia Theme Parks borrowings	1,425		1,331		2.35%		—			6.11%
Total borrowings	48,369		54,406		3.94%		14,472			4.08%
Less current portion	3,070		5,866		3.65%		1,000			3.85%
Total long-term borrowings	$	45,299	$	48,540			$	13,472

(1)The stated interest rate represents the weighted-average coupon rate for each category of borrowings. For floating-rate borrowings, interest rates are the rates in effect at October 1, 2022; these rates are not necessarily an indication of future interest rates.

(2)Amounts represent notional values of interest rate and cross-currency swaps outstanding as of October 1, 2022.

(3)The effective interest rate includes the impact of existing and terminated interest rate and cross-currency swaps, purchase accounting adjustments and debt issuance premiums, discounts and costs.

(4)Includes net debt issuance discounts, costs and purchase accounting adjustments totaling a net premium of $1.9 billion and $2.1 billion at October 1, 2022 and October 2, 2021, respectively.

(5)Includes market value adjustments for debt with qualifying hedges, which reduces borrowings by $1.7 billion and $0.1 billion at October 1, 2022 and October 2, 2021, respectively.

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Commercial Paper

At October 1, 2022, the Company’s bank facilities, which are with a syndicate of lenders and support our commercial paper borrowings, were as follows:


	Committed Capacity		Capacity Used		Unused Capacity
Facility expiring March 2023	$	5,250	$	—	$	5,250
Facility expiring March 2025	3,000		—		3,000
Facility expiring March 2027	4,000		—		4,000
Total	$	12,250	$	—	$	12,250

These facilities allow for borrowings at SOFR-based rates plus a fixed spread that varies with the Company’s debt ratings assigned by Moody’s Investors Service and Standard & Poor’s ranging from 0.755% to 1.225%. The bank facilities contain only one financial covenant, relating to interest coverage of three times earnings before interest, taxes, depreciation and amortization, including both intangible amortization and amortization of our film and television production and programming costs. On October 1, 2022, the Company met this covenant by a significant margin. The bank facilities specifically exclude certain entities, including the Asia Theme Parks, from any representations, covenants or events of default. The Company also has the ability to issue up to $500 million of letters of credit under the facility expiring in March 2027, which if utilized, reduces available borrowings under this facility. As of October 1, 2022, the Company has $1.9 billion of outstanding letters of credit, of which none were issued under this facility.

Commercial paper activity is as follows:


	Commercial paper with original maturities less than three months, net(1)		Commercial paper with original maturities greater than three months		Total
Balance at Oct. 3, 2020	$	—	$	2,023	$	2,023
Additions	—		2,221		2,221
Payments	—		(2,247)		(2,247)
Other Activity	—		(5)		(5)
Balance at Oct. 2, 2021	$	—	$	1,992	$	1,992
Additions	50		2,417		2,467
Payments	—		(2,801)		(2,801)
Other Activity	—		4		4
Balance at Oct. 1, 2022	$	50	$	1,612	$	1,662

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

U.S. Dollar Denominated Notes

At October 1, 2022, the Company had $45.1 billion of fixed rate U.S. dollar denominated notes with maturities ranging from 1 to 74 years and stated interest rates that range from 1.75% to 9.50%.

Foreign Currency Denominated Debt

Prior to fiscal 2020, the Company issued Canadian $1.3 billion ($0.9 billion) of fixed rate senior notes, which bear interest at 2.76% and mature in October 2024. The Company also entered into pay-floating interest rate and cross currency swaps that effectively convert the borrowing to a variable-rate U.S. dollar denominated borrowing indexed to LIBOR.

In fiscal 2020, the Company issued Canadian $1.3 billion ($0.9 billion) of fixed rate senior notes, which bear interest at 3.057% and mature in March 2027. The Company also entered into pay-floating interest rate and cross currency swaps that effectively convert the borrowing to a variable-rate U.S. dollar denominated borrowing indexed to LIBOR.

Cruise Ship Credit Facilities

The Company has credit facilities to finance up to 80% of the contract price of two new cruise ships, which are scheduled to be delivered in fiscal 2025 and fiscal 2026. Under the facilities, $1.1 billion 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 3.80% and 3.74%, respectively, and the loan and interest

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will be payable semi-annually over a 12-year period from the borrowing date. Early repayment is permitted subject to cancellation fees.

Asia Theme Parks Borrowings

HKSAR provided Hong Kong Disneyland Resort with loans totaling HK $0.8 billion ($102 million). The interest rate is three month HIBOR plus 2%, and the maturity date is September 2025.

Shendi has provided Shanghai Disney Resort with loans totaling 8.3 billion yuan (approximately $1.2 billion) bearing interest at rates up to 8% and maturing in 2036, with early repayment permitted. Shendi has also provided Shanghai Disney Resort with a 2.6 billion yuan (approximately $0.4 billion) line of credit bearing interest at 8%. As of October 1, 2022 the total amount outstanding under the line of credit was 1.2 billion yuan (approximately $162 million).

Maturities

The following table provides total borrowings, excluding market value adjustments and debt issuance premiums, discounts and costs, by scheduled maturity date as of October 1, 2022. The table also provides the estimated interest payments on these borrowings as of October 1, 2022 although actual future payments will differ for floating-rate borrowings:


	Borrowings
Fiscal Year:	Before Asia Theme Parks Consolidation		Asia Theme Parks		Total Borrowings		Interest(1)		Total Borrowings and Interest
2023	$	2,918	$	162	$	3,080	$	1,811	$	4,891
2024	2,872		—		2,872		1,748		4,620
2025	3,604		102		3,706		1,631		5,337
2026	4,578		—		4,578		1,533		6,111
2027	2,905		—		2,905		1,428		4,333
Thereafter	29,881		1,161		31,042		19,738		50,780
	$	46,758	$	1,425	$	48,183	$	27,889	$	76,072

(1) In 2023, the Company has the ability to call a debt instrument prior to its scheduled maturity, which if exercised by the Company would reduce future interest payments by $1.1 billion.

Interest

The Company capitalizes interest on assets constructed for its parks and resorts and on certain film and television productions. In fiscal 2022, 2021 and 2020, total interest capitalized was $261 million, $187 million and $157 million, respectively. Interest expense, net of capitalized interest, for fiscal 2022, 2021 and 2020 was $1,549 million, $1,546 million and $1,647 million, respectively.

9Income Taxes

Income (Loss) Before Income Taxes by Domestic and Foreign Subsidiaries


Income (Loss) Before Income Taxes	2022		2021		2020

Domestic subsidiaries (including U.S. exports)	$	5,955	$	5,241	$	4,706
Foreign subsidiaries(1)	(670)		(2,680)		(6,449)
Total income (loss) from continuing operations	5,285		2,561		(1,743)
Loss from discontinued operations	(62)		(38)		(42)
	$	5,223	$	2,523	$	(1,785)

(1) Includes goodwill and intangible asset impairment in fiscal 2020.

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Provision for Income Taxes: Current and Deferred


Income Tax Expense (Benefit)
Current	2022		2021		2020
Federal	$	436	$	594	$	95
State	282		129		148
Foreign(1)	846		554		731
	1,564		1,277		974
Deferred
Federal	407		(526)		279
State	26		(220)		(29)
Foreign	(265)		(506)		(525)
	168		(1,252)		(275)
Income tax expense from continuing operations	1,732		25		699
Income tax expense from discontinued operations	(14)		(9)		(10)
	$	1,718	$	16	$	689

(1)Includes foreign withholding taxes.

Deferred Tax Assets and Liabilities


Components of Deferred Tax (Assets) and Liabilities	October 1, 2022		October 2, 2021

Deferred tax assets
Net operating losses and tax credit carryforwards(1)	$	(3,527)	$	(3,944)
Accrued liabilities	(1,570)		(2,544)
Lease liabilities	(748)		(764)
Licensing revenues	(124)		(80)
Other	(819)		(725)
Total deferred tax assets	(6,788)		(8,057)
Deferred tax liabilities
Depreciable, amortizable and other property	8,575		7,916
Investment in U.S. entities	1,798		2,653
Right-of-use assets	676		697

Investment in foreign entities	543		392

Other	64		164
Total deferred tax liabilities	11,656		11,822
Net deferred tax liability before valuation allowance	4,868		3,765
Valuation allowance	2,859		2,795
Net deferred tax liability	$	7,727	$	6,560

(1)Balances as of October 1, 2022 and October 2, 2021 include approximately $1.5 billion and $1.6 billion, respectively, of International Theme Park net operating losses and approximately $1.0 billion at both October 1, 2022 and October 2, 2021 of foreign tax credits in the U.S. The International Theme Park net operating losses are primarily in France and, to a lesser extent, Hong Kong and China. Losses in France and Hong Kong have an indefinite carryforward period and losses in China have a five-year carryforward period. China theme park net operating losses of $0.2 billion may expire between fiscal 2023 and fiscal 2028. Foreign tax credits in the U.S. have a ten-year carryforward period. Foreign tax credits of $1.0 billion may expire beginning fiscal 2026.

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The following table details the change in valuation allowance for fiscal 2022, 2021 and 2020 (in billions):


	Balance at Beginning of Period		Charges to Tax Expense		Other Changes		Balance at End of Period
Year ended October 1, 2022	$	2.8	$	0.4	$	(0.3)	$	2.9
Year ended October 2, 2021	2.4		0.4		—		2.8
Year ended October 3, 2020	1.9		0.6		(0.1)		2.4

Reconciliation of the effective income tax rate for continuing operations to the federal rate


	2022		2021		2020(1)
Federal income tax rate	21.0	%	21.0	%	21.0	%
State taxes, net of federal benefit	3.1		1.9		4.3
Tax rate differential on foreign income	4.3		12.0		(16.5)
Foreign derived intangible income	(3.4)		(6.4)		—

Excess tax benefits from equity awards	—		(5.3)		3.7
Legislative changes	1.7		(12.2)		4.4
Income tax audits and reserves	2.7		(4.8)		(6.1)
Goodwill impairment	—		—		(41.1)
Valuation allowance	4.5		2.6		(14.6)
Other	(1.1)		(7.8)		4.8
	32.8	%	1.0	%	(40.1	%)

(1)In fiscal 2020, the Company had a pre-tax loss. Positive amounts reflect tax benefits, whereas negative amounts reflect tax expense.

The effective income tax rate in fiscal 2022 was higher than the U.S. statutory rate primarily due to higher effective tax rates on foreign earnings. The effective income tax rate in fiscal 2021 was lower than the U.S. statutory rate due to favorable adjustments related to prior years and excess tax benefits on employee share-based awards, partially offset by higher effective tax rates on foreign earnings. The effective income tax rate in fiscal 2020 included an unfavorable impact of the goodwill impairment, which was not tax deductible, and the impact of higher effective tax rates on foreign earnings than the U.S. statutory rate. Higher effective tax rates on foreign earnings in fiscal 2022, 2021 and 2020 reflected the impact of foreign losses and, to a lesser extent, foreign tax credits for which we are unable to recognize a tax benefit.

Unrecognized tax benefits

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, excluding the related accrual for interest, is as follows:


	2022		2021		2020
Balance at the beginning of the year	$	2,641	$	2,740	$	2,952

Increases for current year tax positions	48		51		26
Increases for prior year tax positions	103		556		168
Decreases in prior year tax positions	(108)		(174)		(99)
Settlements with taxing authorities	(235)		(532)		(307)
Balance at the end of the year	$	2,449	$	2,641	$	2,740

The fiscal year-end 2022, 2021 and 2020 balances include $1.9 billion, $2.0 billion and $2.1 billion, respectively, that if recognized, would reduce our income tax expense and effective tax rate. These amounts are net of the offsetting benefits from other tax jurisdictions.

At October 1, 2022, October 2, 2021 and October 3, 2020, the Company had $1.0 billion, $1.0 billion and $1.1 billion, respectively, in accrued interest and penalties related to unrecognized tax benefits. During fiscal 2022, 2021 and 2020, the Company recorded additional interest and penalties of $157 million, $191 million and $211 million, respectively, and recorded reductions in accrued interest and penalties of $119 million, $256 million and $101 million, respectively, as a result of audit settlements and other prior-year adjustments. The Company’s policy is to report interest and penalties as a component of income tax expense.

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The Company is generally no longer subject to U.S. federal examination for years prior to 2018. The Company is no longer subject to examination in any of its major state or foreign tax jurisdictions for years prior to 2008.

In the next twelve months, it is reasonably possible that our unrecognized tax benefits could change due to the resolution of open tax matters, which would reduce our unrecognized tax benefits by $0.1 billion.

Other

In fiscal 2022, 2021 and 2020, the Company recognized income tax benefits of $2 million, $135 million and $64 million, respectively for the excess of equity-based compensation deductions over amounts recorded based on the grant date fair value.

10Pension and Other Benefit Programs

The Company maintains pension and postretirement medical benefit plans covering certain of its employees not covered by union or industry-wide plans. The Company has defined benefit pension plans that cover employees hired prior to January 1, 2012. For employees hired after this date, the Company has a defined contribution plan. Benefits under these pension plans are generally based on years of service and/or compensation and generally require 3 years of vesting service. Employees generally hired after January 1, 1987 for certain of our media businesses and other employees generally hired after January 1, 1994 are not eligible for postretirement medical benefits. In addition, the Company has a defined benefit plan for TFCF employees for which benefits stopped accruing in June 2017.

Defined Benefit Plans

The Company measures the actuarial value of its benefit obligations and plan assets for its defined benefit pension and postretirement medical benefit plans at September 30 and adjusts for any plan contributions or significant events between September 30 and our fiscal year end.

The following chart summarizes the benefit obligations, assets, funded status and balance sheet impacts associated with the defined benefit pension and postretirement medical benefit plans:


	Pension Plans				Postretirement Medical Plans
	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Projected benefit obligations
Beginning obligations	$	(20,955)	$	(20,760)	$	(2,121)	$	(2,104)

Service cost	(400)		(434)		(9)		(10)
Interest cost	(500)		(457)		(51)		(47)
Actuarial gain (loss)(1)	6,159		15		595		(13)
Plan amendments and other	39		20		(16)		(14)
Benefits paid	629		661		63		67

Ending obligations	$	(15,028)	$	(20,955)	$	(1,539)	$	(2,121)
Fair value of plans’ assets
Beginning fair value	$	18,076	$	15,598	$	889	$	771

Actual return on plan assets	(2,715)		2,653		(134)		137
Contributions	96		565		61		47
Benefits paid	(629)		(661)		(63)		(67)
Expenses and other	(107)		(79)		(4)		1
Ending fair value	$	14,721	$	18,076	$	749	$	889

Underfunded status of the plans	$	(307)	$	(2,879)	$	(790)	$	(1,232)
Amounts recognized in the balance sheet
Non-current assets	$	913	$	88	$	—	$	—
Current liabilities	(66)		(63)		(4)		(4)
Non-current liabilities	(1,154)		(2,904)		(786)		(1,228)
	$	(307)	$	(2,879)	$	(790)	$	(1,232)

(1)The actuarial gain for fiscal 2022 was due to an increase in the discount rate used to determine the fiscal year-end benefit obligation from the rate that was used in the preceding fiscal year.

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The components of net periodic benefit cost are as follows:


	Pension Plans						Postretirement Medical Plans
	2022		2021		2020		2022		2021		2020
Service cost	$	400	$	434	$	410	$	9	$	10	$	10
Other costs (benefits):
Interest cost	500		457		527		51		47		56
Expected return on plan assets	(1,174)		(1,100)		(1,084)		(59)		(55)		(57)
Amortization of prior-year service costs	7		11		13		—		—		—
Recognized net actuarial loss	585		777		544		28		30		14
Total other costs (benefits)	(82)		145		—		20		22		13
Net periodic benefit cost	$	318	$	579	$	410	$	29	$	32	$	23

In fiscal 2023, we expect pension and postretirement medical costs to decrease by $428 million to a net benefit of $81 million primarily due to lower amortization of previously deferred losses, partially offset by higher interest costs.


Key assumptions are as follows:
	Pension Plans						Postretirement Medical Plans
	2022		2021		2020		2022		2021		2020
Discount rate used to determine the fiscal year‑end benefit obligation	5.44	%	2.88	%	2.82	%	5.47	%	2.89	%	2.80	%
Discount rate used to determine the interest cost component of net periodic benefit cost	2.45	%	2.28	%	2.94	%	2.47	%	2.28	%	2.95	%
Rate of return on plan assets	7.00	%	7.00	%	7.00	%	7.00	%	7.00	%	7.00	%
Weighted average rate of compensation increase to determine the fiscal year‑end benefit obligation	3.10	%	3.10	%	3.20	%	n/a		n/a		n/a
Year 1 increase in cost of benefits	n/a		n/a		n/a		7.00	%	7.00	%	7.00	%
Rate of increase to which the cost of benefits is assumed to decline (the ultimate trend rate)	n/a		n/a		n/a		4.00	%	4.00	%	4.25	%
Year that the rate reaches the ultimate trend rate	n/a		n/a		n/a		2041		2040		2034

AOCI, before tax, as of October 1, 2022 consists of the following amounts that have not yet been recognized in net periodic benefit cost:


	Pension Plans		Postretirement Medical Plans		Total
Prior service cost	$	26	$	—	$	26
Net actuarial loss	3,838		(93)		3,745
Total amounts included in AOCI	3,864		(93)		3,771
Prepaid (accrued) pension cost	(3,557)		883		(2,674)
Net balance sheet liability	$	307	$	790	$	1,097

Plan Funded Status

As of October 1, 2022, the projected benefit obligation and accumulated benefit obligation for pension plans with accumulated benefit obligations in excess of plan assets were $1.2 billion and $1.1 billion, respectively, and the aggregate fair value of plan assets were not material. As of October 2, 2021, the projected benefit obligation, accumulated benefit obligation and aggregate fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were $9.0 billion, $8.5 billion and $6.9 billion, respectively.

As of October 1, 2022, the projected benefit obligation for pension plans with projected benefit obligations in excess of plan assets was $1.2 billion and the aggregate fair value of plan assets was not material. As of October 2, 2021, the projected

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benefit obligation and aggregate fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets were $19.9 billion and $16.9 billion respectively.

The Company’s total accumulated pension benefit obligations at October 1, 2022 and October 2, 2021 were $14.1 billion and $19.4 billion, respectively. Approximately 98% was vested as of both October 1, 2022 and October 2, 2021.

The accumulated postretirement medical benefit obligations and fair value of plan assets for postretirement medical plans with accumulated postretirement medical benefit obligations in excess of plan assets were $1.5 billion and $0.7 billion, respectively, at October 1, 2022 and $2.1 billion and $0.9 billion, respectively, at October 2, 2021.

Plan Assets

A significant portion of the assets of the Company’s defined benefit plans are managed in a third-party master trust. The investment policy and allocation of the assets in the master trust were approved by the Company’s Investment and Administrative Committee, which has oversight responsibility for the Company’s retirement plans. The investment policy ranges for the major asset classes are as follows:


Asset Class	Minimum	Maximum

Equity investments	30%	60%
Fixed income investments	20%	40%
Alternative investments	10%	30%
Cash & money market funds	—%	10%

The primary investment objective for the assets within the master trust is the prudent and cost effective management of assets to satisfy benefit obligations to plan participants. Financial risks are managed through diversification of plan assets, selection of investment managers and through the investment guidelines incorporated in investment management agreements. Investments are monitored to assess whether returns are commensurate with risks taken.

The long-term asset allocation policy for the master trust was established taking into consideration a variety of factors that include, but are not limited to, the average age of participants, the number of retirees, the duration of liabilities and the expected payout ratio. Liquidity needs of the master trust are generally managed using cash generated by investments or by liquidating securities.

Assets are generally managed by external investment managers pursuant to investment management agreements that establish permitted securities and risk controls commensurate with the account’s investment strategy. Some agreements permit the use of derivative securities (futures, options, interest rate swaps, credit default swaps) that enable investment managers to enhance returns and manage exposures within their accounts.

Fair Value Measurements of Plan Assets

Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and is generally classified in one of the following categories of the fair value hierarchy:

Level 1 – Quoted prices for identical instruments in active markets

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets

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

Investments that are valued using the net asset value (NAV) (or its equivalent) practical expedient are excluded from the fair value hierarchy disclosure.

The following is a description of the valuation methodologies used for assets reported at fair value. The methodologies used at October 1, 2022 and October 2, 2021 are the same.

Level 1 investments are valued based on reported market prices on the last trading day of the fiscal year. Investments in common and preferred stocks and mutual funds are valued based on the securities’ exchange-listed price or a broker’s quote in an active market. Investments in U.S. Treasury securities are valued based on a broker’s quote in an active market.

Level 2 investments in government and federal agency bonds and notes (excluding U.S. Treasury securities), corporate bonds, mortgage-backed securities (MBS) and asset-backed securities are valued using a broker’s quote in a non-active market or an evaluated price based on a compilation of reported market information, such as benchmark yield curves, credit spreads and estimated default rates. Derivative financial instruments are valued based on models that incorporate observable inputs for the underlying securities, such as interest rates or foreign currency exchange rates.

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The Company’s defined benefit plan assets are summarized by level in the following tables:


	As of October 1, 2022
Description	Level 1		Level 2		Total		Plan Asset Mix

Cash	$	177	$	—	$	177	1%
Common and preferred stocks(1)	3,118		—		3,118		20%
Mutual funds	1,044		—		1,044		7%
Government and federal agency bonds, notes and MBS	2,061		293		2,354		15%
Corporate bonds	—		751		751		5%
Other mortgage- and asset-backed securities	—		84		84		1%
Derivatives and other, net	2		13		15		—%
Total investments in the fair value hierarchy	$	6,402	$	1,141	$	7,543

Assets valued at NAV as a practical expedient:
Common collective funds					3,479		22%
Alternative investments					4,208		27%
Money market funds and other					240		2%
Total investments at fair value					$	15,470	100%


	As of October 2, 2021
Description	Level 1		Level 2		Total		Plan Asset Mix

Cash	$	77	$	—	$	77	—%
Common and preferred stocks(1)	4,407		—		4,407		23%
Mutual funds	1,326		—		1,326		7%
Government and federal agency bonds, notes and MBS	2,437		349		2,786		15%
Corporate bonds	—		1,098		1,098		6%
Other mortgage- and asset-backed securities	—		96		96		1%
Derivatives and other, net	8		21		29		—%
Total investments in the fair value hierarchy	$	8,255	$	1,564	$	9,819

Assets valued at NAV as a practical expedient:
Common collective funds					4,550		24%
Alternative investments					4,342		23%
Money market funds and other					254		1%
Total investments at fair value					$	18,965	100%

(1)Includes 2.9 million shares of Company common stock valued at $273 million (2% of total plan assets) and 2.9 million shares valued at $489 million (3% of total plan assets) at October 1, 2022 and October 2, 2021, respectively.

Uncalled Capital Commitments

Alternative investments held by the master trust include interests in funds that have rights to make capital calls to the investors. In such cases, the master trust would be contractually obligated to make a cash contribution at the time of the capital call. At October 1, 2022, the total committed capital still uncalled and unpaid was $1.5 billion.

Plan Contributions

During fiscal 2022, the Company made $157 million of contributions to its pension and postretirement medical plans. The Company currently does not expect to make material pension and postretirement medical plan contributions in fiscal 2023. Final minimum funding requirements for fiscal 2023 will be determined based on a January 1, 2023 funding actuarial valuation, which is expected to be received during the fourth quarter of fiscal 2023.

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Estimated Future Benefit Payments

The following table presents estimated future benefit payments for the next ten fiscal years:


	Pension Plans		Postretirement Medical Plans(1)
2023	$	720	$	65
2024	727		69
2025	771		73
2026	815		78
2027	858		83
2028 – 2032	4,874		479

(1)Estimated future benefit payments are net of expected Medicare subsidy receipts of $81 million.

Assumptions

Assumptions, such as discount rates, long-term rate of return on plan assets and the healthcare cost trend rate, have a significant effect on the amounts reported for net periodic benefit cost as well as the related benefit obligations.

Discount Rate — The assumed discount rate for pension and postretirement medical plans reflects the market rates for high-quality corporate bonds currently available. The Company’s discount rate was determined by considering yield curves constructed of a large population of high-quality corporate bonds and reflects the matching of the plans’ liability cash flows to the yield curves. The Company measures service and interest costs by applying the specific spot rates along that yield curve to the plans’ liability cash flows.

Long-term rate of return on plan assets — The long-term rate of return on plan assets represents an estimate of long-term returns on an investment portfolio consisting of a mixture of equities, fixed income and alternative investments. When determining the long-term rate of return on plan assets, the Company considers long-term rates of return on the asset classes (both historical and forecasted) in which the Company expects the pension funds to be invested. The following long-term rates of return by asset class were considered in setting the long-term rate of return on plan assets assumption:


Equity Securities	6	%	to	10	%
Debt Securities	2	%	to	5	%
Alternative Investments	6	%	to	11	%

Healthcare cost trend rate — The Company reviews external data and its own historical trends for healthcare costs to determine the healthcare cost trend rates for the postretirement medical benefit plans. The 2022 actuarial valuation assumed a 7.00% annual rate of increase in the per capita cost of covered healthcare claims with the rate decreasing in even increments over nineteen years until reaching 4.00%.

Sensitivity — A one percentage point change in the discount rate and expected long-term rate of return on plan assets would have the following effects on the projected benefit obligations for pension and postretirement medical plans as of October 1, 2022 and on cost for fiscal 2023:


	Discount Rate				Expected Long-Term Rate of Return On Assets
Increase (decrease)	Benefit Expense		Projected Benefit Obligations		Benefit Expense
1 percentage point decrease	$	242	$	2,342	$	172
1 percentage point increase	(59)		(2,045)		(172)

Multiemployer Benefit Plans

The Company participates in a number of multiemployer pension plans under union and industry-wide collective bargaining agreements that cover our union-represented employees and expenses its contributions to these plans as incurred. These plans generally provide for retirement, death and/or termination benefits for eligible employees within the applicable collective bargaining units, based on specific eligibility/participation requirements, vesting periods and benefit formulas. The risks of participating in these multiemployer plans are different from single-employer plans. For example:

Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

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If a participating employer stops contributing to the multiemployer plan, the unfunded obligations of the plan may become the obligation of the remaining participating employers.
If a participating employer chooses to stop participating in these multiemployer plans, the employer may be required to pay those plans an amount based on the underfunded status of the plan.

The Company also participates in several multiemployer health and welfare plans that cover both active and retired employees. Health care benefits are provided to participants who meet certain eligibility requirements under the applicable collective bargaining unit.

The following table sets forth our contributions to multiemployer pension and health and welfare benefit plans:


	2022		2021		2020
Pension plans	$	402	$	289	$	221
Health & welfare plans	401		272		217
Total contributions	$	803	$	561	$	438

Defined Contribution Plans

The Company has defined contribution retirement plans for domestic employees who began service after December 31, 2011 and are not eligible to participate in the defined benefit pension plans. In general, the Company contributes from 4% to 10% of an employee’s compensation depending on the employee’s age and years of service with the Company up to plan limits. The Company has savings and investment plans that allow eligible employees to contribute up to 50% of their salary through payroll deductions depending on the plan in which the employee participates. The Company matches 50% of the employee’s contribution up to plan limits. The Company also has defined contribution retirement plans for employees in our international operations. In fiscal 2022, 2021 and 2020, the costs of our domestic and international defined contribution plans were $325 million, $254 million and $242 million, respectively.

11Equity

The Company paid the following dividend in fiscal 2020:


Per Share						Total Paid						Payment Timing						Related to Fiscal Period
$0.88						$1.6 billion						Second Quarter of Fiscal 2020						Second Half 2019

The Company did not pay a dividend with respect to fiscal year 2021 and 2020 operations and has not declared or paid a dividend with respect to fiscal 2022 operations.

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


	Market Value Adjustments for Hedges		Unrecognized Pension and Postretirement Medical Expense		Foreign Currency Translation and Other		AOCI


AOCI, before tax
Balance at September 28, 2019	$	129	$	(7,502)	$	(1,086)	$	(8,459)
Unrealized gains (losses) arising during the period	(57)		(2,468)		(2)		(2,527)
Reclassifications of net (gains) losses to net income	(263)		547		—		284

Balance at October 3, 2020	$	(191)	$	(9,423)	$	(1,088)	$	(10,702)
Unrealized gains (losses) arising during the period	70		1,582		41		1,693
Reclassifications of net (gains) losses to net income	(31)		816		—		785
Balance at October 2, 2021	$	(152)	$	(7,025)	$	(1,047)	$	(8,224)
Unrealized gains (losses) arising during the period	1,098		2,635		(967)		2,766
Reclassifications of net (gains) losses to net income	(142)		620		—		478
Balance at October 1, 2022	$	804	$	(3,770)	$	(2,014)	$	(4,980)

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	Market Value Adjustments for Hedges		Unrecognized Pension and Postretirement Medical Expense		Foreign Currency Translation and Other		AOCI


Tax on AOCI
Balance at September 28, 2019	$	(29)	$	1,756	$	115	$	1,842
Unrealized gains (losses) arising during the period	8		572		24		604
Reclassifications of net (gains) losses to net income	61		(127)		—		(66)

Balance at October 3, 2020	$	40	$	2,201	$	139	$	2,380
Unrealized gains (losses) arising during the period	(8)		(358)		(50)		(416)
Reclassifications of net (gains) losses to net income	10		(190)		—		(180)
Balance at October 2, 2021	$	42	$	1,653	$	89	$	1,784
Unrealized gains (losses) arising during the period	(254)		(608)		50		(812)
Reclassifications of net (gains) losses to net income	33		(144)		—		(111)
Balance at October 1, 2022	$	(179)	$	901	$	139	$	861


	Market Value Adjustments for Hedges		Unrecognized Pension and Postretirement Medical Expense		Foreign Currency Translation and Other		AOCI


AOCI, after tax
Balance at September 28, 2019	$	100	$	(5,746)	$	(971)	$	(6,617)
Unrealized gains (losses) arising during the period	(49)		(1,896)		22		(1,923)
Reclassifications of net (gains) losses to net income	(202)		420		—		218

Balance at October 3, 2020	$	(151)	$	(7,222)	$	(949)	$	(8,322)
Unrealized gains (losses) arising during the period	62		1,224		(9)		1,277
Reclassifications of net (gains) losses to net income	(21)		626		—		605
Balance at October 2, 2021	$	(110)	$	(5,372)	$	(958)	$	(6,440)
Unrealized gains (losses) arising during the period	844		2,027		(917)		1,954
Reclassifications of net (gains) losses to net income	(109)		476		—		367
Balance at October 1, 2022	$	625	$	(2,869)	$	(1,875)	$	(4,119)

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


Gains (losses) in net income:	Affected line item in the Consolidated Statements of Operations:	2022		2021		2020
Market value adjustments, primarily cash flow hedges	Primarily revenue	$	142	$	31	$	263
Estimated tax	Income taxes	(33)		(10)		(61)
		109		21		202


Pension and postretirement medical expense	Interest expense, net	(620)		(816)		(547)
Estimated tax	Income taxes	144		190		127
		(476)		(626)		(420)





Total reclassifications for the period		$	(367)	$	(605)	$	(218)

12Equity-Based Compensation

Under various plans, the Company may grant stock options and other equity-based awards to executive, management and creative personnel. The Company’s approach to long-term incentive compensation contemplates awards of stock options and

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restricted stock units (RSUs). Certain RSUs awarded to senior executives vest based upon the achievement of market or performance conditions (Performance RSUs).

Stock options are generally granted with a 10 year term at exercise prices equal to or exceeding the market price at the date of grant and become exercisable ratably over a three-year period from the grant date (exercisable ratably over four-year period from the grant date for awards granted prior to fiscal 2021). At the discretion of the Compensation Committee of the Company’s Board of Directors, options can occasionally extend up to 15 years after date of grant. RSUs generally vest ratably over three years (four years for grants awarded prior to fiscal 2021) and Performance RSUs generally fully vest after three years, subject to achieving market or performance conditions. Equity-based award grants generally provide continued vesting, in the event of termination, for employees that reach age 60 or greater, have at least ten years of service and have held the award for at least one year.

Each share granted subject to a stock option award reduces the number of shares available under the Company’s stock incentive plans by one share while each share granted subject to a RSU award reduces the number of shares available by two shares. As of October 1, 2022, the maximum number of shares available for issuance under the Company’s stock incentive plans (assuming all the awards are in the form of stock options) was approximately 124 million shares and the number available for issuance assuming all awards are in the form of RSUs was approximately 60 million shares. The Company satisfies stock option exercises and vesting of RSUs with newly issued shares. Stock options and RSUs are generally forfeited by employees who terminate prior to vesting.

Each year, generally during the first half of the year, the Company awards stock options and restricted stock units to a broad-based group of management, technology and creative personnel. The fair value of options is estimated based on the binomial valuation model. The binomial valuation model takes into account variables such as volatility, dividend yield and the risk-free interest rate. The binomial valuation model also considers the expected exercise multiple (the multiple of exercise price to grant price at which exercises are expected to occur on average) and the termination rate (the probability of a vested option being canceled due to the termination of the option holder) in computing the value of the option.

The weighted average assumptions used in the option-valuation model were as follows:


	2022	2021	2020
Risk-free interest rate	1.6%	1.2%	1.8%
Expected volatility	28%	30%	23%
Dividend yield	—%	0.03%	1.36%
Termination rate	5.8%	5.8%	5.8%
Exercise multiple	1.98	1.83	1.83

Although the initial fair value of stock options is not adjusted after the grant date, changes in the Company’s assumptions may change the value of, and therefore the expense related to, future stock option grants. The assumptions that cause the greatest variation in fair value in the binomial valuation model are the expected volatility and expected exercise multiple. Increases or decreases in either the expected volatility or expected exercise multiple will cause the binomial option value to increase or decrease, respectively. The volatility assumption considers both historical and implied volatility and may be impacted by the Company’s performance as well as changes in economic and market conditions.

Compensation expense for RSUs and stock options is recognized ratably over the service period of the award. Compensation expense for RSUs is based on the market price of the shares underlying the awards on the grant date. Compensation expense for Performance RSUs reflects the estimated probability that the market or performance conditions will be met.

Compensation expense related to stock options and RSUs is as follows:


	2022		2021		2020
Stock option	$	88	$	95	$	101
RSUs	889		505		424
Total equity-based compensation expense(1)	977		600		525
Tax impact	(221)		(136)		(118)
Reduction in net income	$	756	$	464	$	407
Equity-based compensation expense capitalized during the period	$	148	$	112	$	87

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

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The following table summarizes information about stock option transactions in fiscal 2022 (shares in millions):



	Shares	Weighted Average Exercise Price
Outstanding at beginning of year	18	$	113.99
Awards forfeited	—	143.27
Awards granted	2	146.15
Awards exercised	(2)	69.05

Outstanding at end of year	18	$	121.28
Exercisable at end of year	13	$	111.01

The following tables summarize information about stock options vested and expected to vest at October 1, 2022 (shares in millions):


					Vested
Range of Exercise Prices					Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Years of Contractual Life
$	0	—	$	55	1	$	51.28	0.3
$	56	—	$	110	4	95.59		3.1
$	111	—	$	165	7	120.61		5.7

$	166	—	$	225	1	177.74		8.4
					13


					Expected to Vest
Range of Exercise Prices					Number of Options(1)	Weighted Average Exercise Price		Weighted Average Remaining Years of Contractual Life
$	95	—	$	125	1	$	109.61	6.7
$	126	—	$	155	3	148.36		8.1
$	156	—	$	185	1	173.44		8.4

					5

(1)Number of options expected to vest is total unvested options less estimated forfeitures.

The following table summarizes information about RSU transactions in fiscal 2022 (shares in millions):



	Units(3)	Weighted Average Grant-Date Fair Value
Unvested at beginning of year	13	$	151.61
Granted(1)	13	136.36
Vested	(7)	144.39
Forfeited	(1)	155.88

Unvested at end of year(2)	18	$	144.00

(1)Includes 0.3 million Performance RSUs

(2)Includes 0.6 million Performance RSUs

(3)Excludes Performance RSUs for which vesting is subject to service conditions and the number of units vesting is subject to the discretion of the CEO. At October 1, 2022, the maximum number of these Performance RSUs that could be issued upon vesting is 0.1 million.

The weighted average grant-date fair values of options granted during fiscal 2022, 2021 and 2020 were $46.76, $57.05 and $36.19, respectively, and for RSUs were $136.36, $178.70 and $145.27, respectively. The total intrinsic value (market value on date of exercise less exercise price) of options exercised and RSUs vested during fiscal 2022, 2021 and 2020 totaled $982 million, $1,175 million and $989 million, respectively. The aggregate intrinsic values of stock options vested and expected to vest at October 1, 2022 were $50 million and $0 million, respectively.

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As of October 1, 2022, unrecognized compensation cost related to unvested stock options and RSUs was $89 million and $1,707 million, respectively. That cost is expected to be recognized over a weighted-average period of 1.2 years for stock options and 1.3 years for RSUs.

Cash received from option exercises for fiscal 2022, 2021 and 2020 was $127 million, $435 million and $305 million, respectively. Tax benefits realized from tax deductions associated with option exercises and RSU vestings for fiscal 2022, 2021 and 2020 were approximately $219 million, $256 million and $220 million, respectively.

13Detail of Certain Balance Sheet Accounts


Current receivables	October 1, 2022		October 2, 2021

Accounts receivable	$	10,811	$	11,177
Other	1,999		2,360
Allowance for credit losses	(158)		(170)
	$	12,652	$	13,367


Parks, resorts and other property
Attractions, buildings and improvements	$	33,795	$	32,765
Furniture, fixtures and equipment	24,409		24,008
Land improvements	7,757		7,061
Leasehold improvements	1,037		1,058
	66,998		64,892
Accumulated depreciation	(39,356)		(37,920)
Projects in progress	4,814		4,521
Land	1,140		1,131
	$	33,596	$	32,624


Intangible assets
Character/franchise intangibles, copyrights and trademarks	$	10,572	$	10,572
MVPD agreements	8,058		8,089
Other amortizable intangible assets	4,045		4,303
Accumulated amortization	(9,630)		(7,641)
Net amortizable intangible assets	13,045		15,323


Indefinite lived intangible assets(1)	1,792		1,792
	$	14,837	$	17,115

(1)Indefinite lived intangible assets consist of ESPN, Pixar and Marvel trademarks and television FCC licenses.


Accounts payable and other accrued liabilities
Accounts and accrued payables	$	16,205	$	16,357
Payroll and employee benefits	3,447		3,482
Other	561		1,055
	$	20,213	$	20,894


Other long-term liabilities
Pension and postretirement medical plan liabilities	$	1,940	$	4,132
Operating and financing lease liabilities	3,239		3,229
Other	7,339		7,161
	$	12,518	$	14,522

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14Commitments and Contingencies

Commitments

The Company has various contractual commitments for rights to sports, films and other programming, totaling approximately $75.7 billion, including approximately $2.6 billion for available programming as of October 1, 2022. The Company also has contractual commitments for the construction of two new cruise ships, creative talent and employment agreements and unrecognized tax benefits. Creative talent and employment agreements include obligations to actors, producers, sports, television and radio personalities and executives. Contractual commitments for sports programming rights, other programming rights and other commitments including cruise ships and creative talent are as follows:


Fiscal Year:	Sports Programming(1)		Other Programming		Other		Total
2023	$	10,783	$	3,815	$	2,891	$	17,489
2024	9,906		1,469		2,735		14,110
2025	10,222		977		1,747		12,946
2026	7,420		738		379		8,537
2027	6,528		554		153		7,235
Thereafter	22,745		585		2,628		25,958
	$	67,604	$	8,138	$	10,533	$	86,275

(1)Primarily relates to rights for NFL, college football (including bowl games and the College Football Playoff) and basketball, cricket, NBA, NHL, soccer, UFC, MLB, tennis, golf and Top Rank Boxing. Certain sports programming rights have payments that are variable based primarily on revenues and are not included in the table above. The Company has multi-year agreements to sublicense less than 5% of our sports right.

Legal Matters

The Company, together with, in some instances, certain of its directors and officers, is a defendant in various legal actions involving copyright, breach of contract and various other claims incident to the conduct of its businesses. Management does not believe that the Company has incurred a probable material loss by reason of any of those actions.

15Leases

The Company’s operating leases primarily consist of real estate and equipment, including office space for general and administrative purposes, production facilities, land, cruise terminals, retail outlets and distribution centers for consumer products. The Company also has finance leases, primarily for broadcast equipment and land.

Some of our leases include renewal and/or termination options. If it is reasonably certain that a renewal or termination option will be exercised, the exercise of the option is considered in calculating the term of the lease. As of October 1, 2022, our operating leases have a weighted-average remaining lease term of approximately 11 years, and our finance leases have a weighted-average remaining lease term of approximately 29 years. The weighted-average incremental borrowing rate is 2.7% and 6.5%, for our operating leases and finance leases, respectively. At October 1, 2022 total estimated future lease payments for non-cancelable leases agreements that have not commenced of approximately $832 million are excluded from the measurement of the right-of-use asset and lease liability.

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The Company’s operating and finance right-of-use assets and lease liabilities are as follows:


	October 1, 2022		October 2, 2021
Right-of-use assets(1)
Operating leases	$	3,966	$	3,895
Finance leases	303		336
Total right-of-use assets	4,269		4,231

Short-term lease liabilities(2)
Operating leases	614		637
Finance leases	37		41
	651		678
Long-term lease liabilities(3)
Operating leases	3,020		2,983
Finance leases	219		246
	3,239		3,229
Total lease liabilities	$	3,890	$	3,907

(1)Included in “Other assets” in the Consolidated Balance Sheet

(2)Included in “Accounts payable and other accrued liabilities” in the Consolidated Balance Sheet

(3)Included in “Other long-term liabilities” in the Consolidated Balance Sheet

The components of lease costs are as follows:


	2022		2021		2020
Finance lease cost
Amortization of right-of-use assets	$	39	$	42	$	37
Interest on lease liabilities	15		20		16
Operating lease cost	796		853		899
Variable fees and other(1)	363		414		491
Total lease cost	$	1,213	$	1,329	$	1,443

(1)Includes variable lease payments related to our operating and finance leases and costs of leases with initial terms of less than one year, net of sublease income

Cash paid during the year for amounts included in the measurement of lease liabilities is as follows:


	2022		2021		2020
Operating cash flows for operating leases	$	736	$	925	$	879
Operating cash flows for finance leases	15		20		16
Financing cash flows for finance leases	48		25		37
Total	$	799	$	970	$	932

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Future minimum lease payments, as of October 1, 2022, are as follows:


	Operating		Financing
Fiscal Year:
2023	$	704	$	52
2024	590		43
2025	523		38
2026	384		33
2027	272		27
Thereafter	2,072		423
Total undiscounted future lease payments	4,545		616
Less: Imputed interest	(910)		(360)
Total reported lease liability	$	3,635	$	256

16Fair Value Measurement

The Company’s assets and liabilities measured at fair value are summarized in the following tables by fair value measurement Level. See Note 10 for definitions of fair value measures and the Levels within the fair value hierarchy.


	Fair Value Measurement at October 1, 2022
Description	Level 1		Level 2		Level 3		Total
Assets
Investments	$	308	$	—	$	—	$	308
Derivatives
Interest rate	—		1		—		1
Foreign exchange	—		2,223		—		2,223
Other	—		10		—		10
Liabilities
Derivatives
Interest rate	—		(1,783)		—		(1,783)
Foreign exchange	—		(1,239)		—		(1,239)
Other	—		(31)		—		(31)
Other	—		(354)		—		(354)
Total recorded at fair value	$	308	$	(1,173)	$	—	$	(865)
Fair value of borrowings	$	—	$	42,509	$	1,510	$	44,019

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	Fair Value Measurement at October 2, 2021
Description	Level 1		Level 2		Level 3		Total
Assets
Investments	$	950	$	—	$	—	$	950
Derivatives
Interest rate	—		186		—		186
Foreign exchange	—		707		—		707
Other	—		10		—		10
Liabilities
Derivatives
Interest rate	—		(287)		—		(287)
Foreign exchange	—		(618)		—		(618)
Other	—		(8)		—		(8)
Other	—		(375)		—		(375)
Total recorded at fair value	950		(385)		—		565
Fair value of borrowings	$	—	$	58,913	$	1,411	$	60,324

The fair values of Level 2 derivatives are primarily determined by internal discounted cash flow models that use observable inputs such as interest rates, yield curves and foreign currency exchange rates. Counterparty credit risk, which is mitigated by master netting agreements and collateral posting arrangements with certain counterparties, had an impact on derivative fair value estimates that was not material.

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

Level 2 borrowings, which include commercial paper, U.S. dollar denominated notes and certain foreign currency denominated borrowings, are valued based on quoted prices for similar instruments in active markets or identical instruments in markets that are not active.

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

The Company’s financial instruments also include cash, cash equivalents, receivables and accounts payable. The carrying values of these financial instruments approximate the fair values.

The Company also has assets that are required to be recorded at fair value on a non-recurring basis. These assets are evaluated when certain triggering events occur (including a decrease in estimated future cash flows) that indicate the asset should be evaluated for impairment. In fiscal 2020, the Company recorded impairment charges for goodwill and intangible assets as disclosed in Note 18. The fair value of these assets was determined using estimated discounted future cash flows, which is a Level 3 valuation technique.

Credit Concentrations

The Company monitors its positions with, and the credit quality of, the financial institutions that are counterparties to its financial instruments on an ongoing basis and does not currently anticipate nonperformance by the counterparties.

The Company does not expect that it would realize a material loss, based on the fair value of its derivative financial instruments as of October 1, 2022, in the event of nonperformance by any single derivative counterparty. The Company generally enters into derivative transactions only with counterparties that have a credit rating of A- or better and requires collateral in the event credit ratings fall below A- or aggregate exposures exceed limits as defined by contract. In addition, the Company limits the amount of investment credit exposure with any one institution.

The Company does not have material cash and cash equivalent balances with financial institutions that have below investment grade credit ratings and maintains short-term liquidity needs in high quality money market funds. At October 1, 2022, the Company did not have balances (excluding money market funds) with individual financial institutions that exceeded 10% of the Company’s total cash and cash equivalents.

The Company’s trade receivables and financial investments do not represent a significant concentration of credit risk at October 1, 2022 due to the wide variety of customers and markets in which the Company’s products are sold, the dispersion of our customers across geographic areas and the diversification of the Company’s portfolio among financial institutions.

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17Derivative Instruments

The Company manages its exposure to various risks relating to its ongoing business operations according to a risk management policy. The primary risks managed with derivative instruments are interest rate risk and foreign exchange risk.

The Company’s derivative positions measured at fair value are summarized in the following tables:


	As of October 1, 2022
	Current Assets		Other Assets		Other Current Liabilities		Other Long- Term Liabilities
Derivatives designated as hedges
Foreign exchange	$	864	$	786	$	(228)	$	(350)
Interest rate	—		1		(1,783)		—
Other	10		—		(4)		—
Derivatives not designated as hedges
Foreign exchange	336		247		(374)		(287)

Other	—		—		(27)		—
Gross fair value of derivatives	1,210		1,034		(2,416)		(637)
Counterparty netting	(831)		(715)		1,070		476
Cash collateral (received) paid	(341)		(151)		1,282		96
Net derivative positions	$	38	$	168	$	(64)	$	(65)


	As of October 2, 2021
	Current Assets		Other Assets		Other Current Liabilities		Other Long- Term Liabilities
Derivatives designated as hedges
Foreign exchange	$	165	$	240	$	(122)	$	(83)
Interest rate	—		186		(287)		—
Other	10		—		—		—
Derivatives not designated as hedges
Foreign exchange	183		119		(208)		(205)

Other	(8)		—		—		—
Gross fair value of derivatives	350		545		(617)		(288)
Counterparty netting	(301)		(360)		460		201
Cash collateral (received) paid	(3)		(51)		157		73
Net derivative positions	$	46	$	134	$	—	$	(14)

Interest Rate Risk Management

The Company is exposed to the impact of interest rate changes primarily through its borrowing activities. The Company’s objective is to mitigate the impact of interest rate changes on earnings and cash flows and on the market value of its borrowings. In accordance with its policy, the Company targets its fixed-rate debt as a percentage of its net debt between a minimum and maximum percentage. The Company primarily uses pay-floating and pay-fixed interest rate swaps to facilitate its interest rate risk management activities.

The Company designates pay-floating interest rate swaps as fair value hedges of fixed-rate borrowings effectively converting fixed-rate borrowings to variable-rate borrowings indexed to LIBOR. As of October 1, 2022 and October 2, 2021, the total notional amount of the Company’s pay-floating interest rate swaps was $14.5 billion and $15.1 billion, respectively.

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


	Carrying Amount of Hedged Borrowings				Fair Value Adjustments Included in Hedged Borrowings
	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Borrowings:
Current	$	997	$	505	$	(3)	$	5
Long-term	12,358		15,136		(1,733)		(103)
	$	13,355	$	15,641	$	(1,736)	$	(98)

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


	2022		2021		2020
Gain (loss) on:
Pay-floating swaps	$	(1,635)	$	(603)	$	479
Borrowings hedged with pay-floating swaps	1,635		603		(479)
Benefit associated with interest accruals on pay-floating swaps	31		143		28

The Company may designate pay-fixed interest rate swaps as cash flow hedges of interest payments on floating-rate borrowings. Pay-fixed interest rate swaps effectively convert floating-rate borrowings to fixed-rate borrowings. The unrealized gains or losses from these cash flow hedges are deferred in AOCI and recognized in interest expense as the interest payments occur. The Company did not have pay-fixed interest rate swaps that were designated as cash flow hedges of interest payments at October 1, 2022 or at October 2, 2021, and gains and losses related to pay-fixed swaps recognized in earnings for fiscal 2022, 2021 and 2020 were not material.

Foreign Exchange Risk Management

The Company transacts business globally and is subject to risks associated with changing foreign currency exchange rates. The Company’s objective is to reduce earnings and cash flow fluctuations associated with foreign currency exchange rate changes, enabling management to focus on core business issues and challenges.

The Company enters into option and forward contracts that change in value as foreign currency exchange rates change to protect the value of its existing foreign currency assets, liabilities, firm commitments and forecasted but not firmly committed foreign currency transactions. In accordance with policy, the Company hedges its forecasted foreign currency transactions for periods generally not to exceed four years within an established minimum and maximum range of annual exposure. The gains and losses on these contracts offset changes in the U.S. dollar equivalent value of the related forecasted transaction, asset, liability or firm commitment. The principal currencies hedged are the euro, Japanese yen, British pound, Chinese yuan and Canadian dollar. Cross-currency swaps are used to effectively convert foreign currency denominated borrowings into U.S. dollar denominated borrowings.

The Company designates foreign exchange forward and option contracts as cash flow hedges of firmly committed and forecasted foreign currency transactions. As of October 1, 2022 and October 2, 2021, the notional amounts of the Company’s net foreign exchange cash flow hedges were $7.4 billion and $6.9 billion, respectively. Mark-to-market gains and losses on these contracts are deferred in AOCI and are recognized in earnings when the hedged transactions occur, offsetting changes in the value of the foreign currency transactions. Net deferred gains recorded in AOCI for contracts that will mature in the next twelve months total $704 million. The following table summarizes the effect of foreign exchange cash flow hedges on AOCI:


	2022		2021		2020
Gain (loss) recognized in Other Comprehensive Income	$	1,093	$	61	$	(63)
Gain (loss) reclassified from AOCI into the Statement of Operations(1)	116		24		269

(1)Primarily recorded in revenue.

The Company designates cross currency swaps as fair value hedges of foreign currency denominated borrowings. The impact of the cross currency swaps is recorded to “Interest expense, net” to offset the foreign currency impact of the foreign currency denominated borrowing. As of October 1, 2022 and October 2, 2021, the total notional amounts of the Company’s designated cross currency swaps were Canadian $1.3 billion ($0.9 billion) and Canadian $1.3 billion ($1.0 billion), respectively.

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


	2022		2021		2020
Gain (loss) on:
Cross currency swaps	$	(84)	$	47	$	53
Borrowings hedged with cross currency swaps	84		(47)		(53)

Foreign exchange risk management contracts with respect to foreign currency denominated assets and liabilities are not designated as hedges and do not qualify for hedge accounting. The notional amounts of these foreign exchange contracts at October 1, 2022 and October 2, 2021 were $3.8 billion and $3.5 billion, respectively. The following table summarizes the net foreign exchange gains or losses recognized on foreign currency denominated assets and liabilities and the net foreign exchange gains or losses on the foreign exchange contracts we entered into to mitigate our exposure with respect to foreign currency denominated assets and liabilities by the corresponding line item in which they are recorded in the Consolidated Statements of Operations:


	Costs and Expenses						Interest expense, net						Income Tax Expense
	2022		2021		2020		2022		2021		2020		2022		2021		2020
Net gains (losses) on foreign currency denominated assets and liabilities	$	(685)	$	(30)	$	10	$	82	$	(47)	$	1	$	212	$	(7)	$	(35)
Net gains (losses) on foreign exchange risk management contracts not designated as hedges	547		(83)		(56)		(82)		47		—		(208)		2		33
Net gains (losses)	$	(138)	$	(113)	$	(46)	$	—	$	—	$	1	$	4	$	(5)	$	(2)

Commodity Price Risk Management

The Company is subject to the volatility of commodities prices, and the Company designates certain commodity forward contracts as cash flow hedges of forecasted commodity purchases. Mark-to-market gains and losses on these contracts are deferred in AOCI and are recognized in earnings when the hedged transactions occur, offsetting changes in the value of commodity purchases. The notional amount of these commodities contracts at October 1, 2022 and October 2, 2021 and related gains or losses recognized in earnings were not material for fiscal 2022, 2021 and 2020.

Risk Management – Other Derivatives Not Designated as Hedges

The Company enters into certain other risk management contracts that are not designated as hedges and do not qualify for hedge accounting. These contracts, which include certain total return swap contracts, are intended to offset economic exposures of the Company and are carried at market value with any changes in value recorded in earnings. The notional amount of these contracts at both October 1, 2022 and October 2, 2021 was $0.4 billion, respectively. The related gains or losses recognized in earnings were not material for fiscal 2022, 2021 and 2020.

Contingent Features and Cash Collateral

The Company has master netting arrangements by counterparty with respect to certain derivative financial instrument contracts. The Company may be required to post collateral in the event that a net liability position with a counterparty exceeds limits defined by contract and that vary with the Company’s credit rating. In addition, these contracts may require a counterparty to post collateral to the Company in the event that a net receivable position with a counterparty exceeds limits defined by contract and that vary with the counterparty’s credit rating. If the Company’s or the counterparty’s credit ratings were to fall below investment grade, such counterparties or the Company would also have the right to terminate our derivative contracts, which could lead to a net payment to or from the Company for the aggregate net value by counterparty of our derivative contracts. The aggregate fair values of derivative instruments with credit-risk-related contingent features in a net liability position by counterparty were $1,507 million and $244 million at October 1, 2022 and October 2, 2021, respectively.

18Restructuring and Impairment Charges

Goodwill and Intangible Asset Impairment

Prior to a reorganization of the Company’s operations in October 2020, a former segment, Direct-to-Consumer & International, included the International Channels reporting unit, which comprised the Company’s international television networks. In fiscal 2020, the Company tested this former reporting unit’s goodwill and long-lived assets (including intangible assets) for impairment. This resulted in non-cash impairment charges of $1.9 billion relating primarily to our MVPD agreement

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intangible assets and $3.1 billion to fully impair the reporting unit’s goodwill. These charges were recorded in “Restructuring and impairment charges” in the Consolidated Statements of Operations in fiscal 2020.

As of October 1, 2022, the remaining balance of our international MVPD agreement intangible assets was $1.6 billion, primarily related to our channel businesses in Latin America and India.

TFCF Integration

The Company’s restructuring plan implemented in connection with the 2019 acquisition of TFCF to realize cost synergies was completed in fiscal 2021. To date, we have recorded restructuring charges primarily related to DMED of $1.8 billion including $1.4 billion related to severance (including employee contract terminations) and $0.3 billion of equity based compensation costs, primarily for TFCF awards that were accelerated to vest upon the closing of the acquisition.

The changes in restructuring reserves related to the TFCF integration, including amounts recorded in “Restructuring and impairment charges” in the Consolidated Statements of Operations in fiscal 2021 and 2020, are as follows (activity in fiscal 2022 and the balance at October 1, 2022 were not material):





Balance at September 28, 2019	$	676
Additions in fiscal 2020	453
Payments in fiscal 2020	(772)
Balance at October 3, 2020	357
Additions in fiscal 2021	44
Payments in fiscal 2021	(351)

Balance at October 2, 2021	$	50

Other

In fiscal 2022, the Company recorded charges of $0.2 billion, primarily due to asset impairments related to our businesses in Russia. In fiscal 2021, the Company recorded restructuring and impairment charges of $0.6 billion, primarily related to the planned closure of an animation studio and a substantial number of our Disney-branded retail stores in North America and Europe as well as severance at our parks and experiences businesses. In fiscal 2020, the Company recorded restructuring and impairment charges of $0.3 billion, primarily for severance at our parks and experiences businesses. These charges are reported in “Restructuring and impairment charges” in the Consolidated Statements of Operations.

19New Accounting Pronouncements

Accounting Pronouncements Adopted in Fiscal 2022

Simplifying the Accounting for Income Taxes

In December 2019, the Financial Accounting Standards Board (FASB) issued guidance which simplifies the accounting for income taxes. The guidance amends the rules for recognizing deferred taxes for investments, performing intraperiod tax allocations and calculating income taxes in interim periods. It also reduces complexity in certain areas, including the accounting for transactions that result in a step-up in the tax basis of goodwill and allocating taxes to members of a consolidated group. The Company adopted the new guidance in the first quarter of fiscal 2022. The adoption did not have a material impact on our financial statements.

Facilitation of the Effects of Reference Rate Reform

In March 2020, the FASB issued guidance which provides optional expedients and exceptions for applying current GAAP to contracts, hedging relationships, and other transactions affected by the transition from the use of LIBOR to an alternative reference rate. The guidance is applicable to contracts entered into before January 1, 2023. The Company adopted the new guidance in the first quarter of fiscal 2022. The adoption did not have a material impact on our financial statements.

Accounting Pronouncements Not Yet Adopted

Disclosures by Business Entities about Government Assistance

In November 2021, the FASB issued guidance requiring annual disclosures about transactions with a government that are accounted for by analogizing to a grant or contribution accounting model. The new guidance requires the disclosure of the nature of the transactions, the accounting for the transactions, and the effect of the transactions on the financial statements. The guidance is effective for annual periods beginning with the Company’s 2023 fiscal year. While the guidance will not have an effect on the Company’s Consolidated Statements of Operations or Consolidated Balance Sheets upon adoption, the Company may need to disclose the effects on the financial statements of incentives related to the production of content, which is the most significant type of government assistance we receive.

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