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 21, 2023	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 21, 2023
(Robert A. Iger)

Principal Financial and Accounting Officers
/s/ KEVIN A. LANSBERRY	Interim Chief Financial Officer (Principal Financial Officer)	November 21, 2023
(Kevin A. Lansberry)

/s/ BRENT A. WOODFORD	Executive Vice President-Controllership, Financial Planning and Tax	November 21, 2023
(Brent A. Woodford)

Directors



/s/ MARY T. BARRA	Director	November 21, 2023
(Mary T. Barra)

/s/ SAFRA A. CATZ	Director	November 21, 2023
(Safra A. Catz)

/s/ AMY L. CHANG	Director	November 21, 2023
(Amy L. Chang)

/s/ FRANCIS A. DESOUZA	Director	November 21, 2023
(Francis A. deSouza)

/s/ CAROLYN N. EVERSON	Director	November 21, 2023
(Carolyn N. Everson)

/s/ MICHAEL B.G. FROMAN	Director	November 21, 2023
(Michael B.G. Froman)




/s/ MARIA ELENA LAGOMASINO	Director	November 21, 2023
(Maria Elena Lagomasino)

/s/ CALVIN R. MCDONALD	Director	November 21, 2023
(Calvin R. McDonald)







/s/ MARK G. PARKER	Chairman of the Board and Director	November 21, 2023
(Mark G. Parker)

/s/ DERICA W. RICE	Director	November 21, 2023
(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			78
Report of Independent Registered Public Accounting Firm (PCAOB ID: 238)			79
Consolidated Financial Statements of The Walt Disney Company and Subsidiaries
Consolidated Statements of Income for the Years Ended September 30, 2023, October 1, 2022 and October 2, 2021			81
Consolidated Statements of Comprehensive Income for the Years Ended September 30, 2023, October 1, 2022 and October 2, 2021			82
Consolidated Balance Sheets as of September 30, 2023 and October 1, 2022			83
Consolidated Statements of Cash Flows for the Years Ended September 30, 2023, October 1, 2022 and October 2, 2021			84
Consolidated Statements of Shareholders’ Equity for the Years Ended September 30, 2023, October 1, 2022 and October 2, 2021			85
Notes to Consolidated Financial Statements			86

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 September 30, 2023.

The effectiveness of our internal control over financial reporting as of September 30, 2023 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 September 30, 2023 and October 1, 2022, and the related consolidated statements of income, of comprehensive income, of shareholders’ equity and of cash flows for each of the three years in the period ended September 30, 2023, 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 September 30, 2023, 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 September 30, 2023 and October 1, 2022, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2023 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 September 30, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

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.

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,

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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.

Annual Goodwill Impairment Assessment – Entertainment Linear Networks and Direct-to-Consumer (DTC) Services Reporting Units

As described in Notes 2 and 18 to the consolidated financial statements, the Company’s consolidated goodwill balance was $77.1 billion as of September 30, 2023, of which a significant portion relates to the entertainment linear networks and DTC services reporting units. Management performs the annual test of goodwill for impairment in the fiscal fourth quarter, and if current events or circumstances require, on an interim basis. Management bypassed the qualitative test and performed a quantitative assessment of goodwill for impairment. 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. To determine the fair value of the Company’s reporting units, management generally uses a present value technique (discounted cash flows) corroborated by market multiples when available and as appropriate. Significant judgments and assumptions in the discounted cash flow model relate to future revenues and certain operating expenses, terminal growth rates, and discount rates. Based on management’s projections, the carrying amounts of the entertainment and international sports linear networks reporting units exceeded their fair values, and management recorded non-cash goodwill impairment charges of approximately $0.7 billion, of which a significant portion relates to the entertainment linear networks reporting unit.

The principal considerations for our determination that performing procedures relating to the annual goodwill impairment assessment of the entertainment linear networks and DTC services reporting units is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the entertainment linear networks and DTC services reporting units; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to future revenues and certain operating expenses, terminal growth rates, and discount rates; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

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 management’s goodwill impairment assessment, including controls over the valuation of the Company’s entertainment linear networks and DTC services reporting units. These procedures also included, among others, for the entertainment linear networks and DTC services reporting units (i) testing management’s process for developing the fair value estimates; (ii) testing the completeness and accuracy of underlying data used in the discounted cash flow models; and (iii) evaluating the reasonableness of the significant assumptions used by management related to future revenues and certain operating expenses, terminal growth rates, and discount rates. Evaluating management’s assumptions related to future revenues and certain operating expenses, and terminal growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the entertainment linear networks and DTC services reporting units; (ii) the consistency with external market and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of the discount rate assumptions.

/s/ PricewaterhouseCoopers LLP

Los Angeles, California

November 21, 2023

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

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CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share data)


	2023		2022		2021
Revenues:
Services	$	79,562	$	74,200	$	61,768
Products	9,336		8,522		5,650
Total revenues	88,898		82,722		67,418
Costs and expenses:
Cost of services (exclusive of depreciation and amortization)	(53,139)		(48,962)		(41,129)
Cost of products (exclusive of depreciation and amortization)	(6,062)		(5,439)		(4,002)
Selling, general, administrative and other	(15,336)		(16,388)		(13,517)
Depreciation and amortization	(5,369)		(5,163)		(5,111)
Total costs and expenses	(79,906)		(75,952)		(63,759)
Restructuring and impairment charges	(3,892)		(237)		(654)
Other income (expense), net	96		(667)		201
Interest expense, net	(1,209)		(1,397)		(1,406)
Equity in the income of investees	782		816		761
Income from continuing operations before income taxes	4,769		5,285		2,561
Income taxes on continuing operations	(1,379)		(1,732)		(25)
Net income from continuing operations	3,390		3,553		2,536
Loss from discontinued operations, net of income tax benefit of $0, $14 and $9, respectively	—		(48)		(29)
Net income	3,390		3,505		2,507
Net income from continuing operations attributable to noncontrolling and redeemable noncontrolling interests	(1,036)		(360)		(512)

Net income attributable to The Walt Disney Company (Disney)	$	2,354	$	3,145	$	1,995

Earnings (loss) per share attributable to Disney(1):
Diluted
Continuing operations	$	1.29	$	1.75	$	1.11
Discontinued operations	—		(0.03)		(0.02)
	$	1.29	$	1.72	$	1.09

Basic
Continuing operations	$	1.29	$	1.75	$	1.11
Discontinued operations	—		(0.03)		(0.02)
	$	1.29	$	1.73	$	1.10

Weighted average number of common and common equivalent shares outstanding:
Diluted	1,830		1,827		1,828
Basic	1,828		1,822		1,816

(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

(in millions)


	2023		2022		2021
Net income	$	3,390	$	3,505	$	2,507
Other comprehensive income (loss), net of tax:

Market value adjustments, primarily for hedges	(430)		735		41
Pension and postretirement medical plan adjustments	1,214		2,503		1,850
Foreign currency translation and other	10		(1,060)		77
Other comprehensive income	794		2,178		1,968
Comprehensive income	4,184		5,683		4,475
Net income from continuing operations attributable to noncontrolling interests	(1,036)		(360)		(512)
Other comprehensive income (loss) attributable to noncontrolling interests	33		143		(86)
Comprehensive income attributable to Disney	$	3,181	$	5,466	$	3,877

See Notes to Consolidated Financial Statements

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CONSOLIDATED BALANCE SHEETS

(in millions, except share data)


	September 30, 2023		October 1, 2022
ASSETS
Current assets
Cash and cash equivalents	$	14,182	$	11,615
Receivables, net	12,330		12,652
Inventories	1,963		1,742
Content advances	3,002		1,890

Other current assets	1,286		1,199

Total current assets	32,763		29,098
Produced and licensed content costs	33,591		35,777
Investments	3,080		3,218
Parks, resorts and other property
Attractions, buildings and equipment	70,090		66,998
Accumulated depreciation	(42,610)		(39,356)
	27,480		27,642
Projects in progress	6,285		4,814
Land	1,176		1,140
	34,941		33,596
Intangible assets, net	13,061		14,837
Goodwill	77,067		77,897

Other assets	11,076		9,208
Total assets	$	205,579	$	203,631

LIABILITIES AND EQUITY
Current liabilities
Accounts payable and other accrued liabilities	$	20,671	$	20,213
Current portion of borrowings	4,330		3,070
Deferred revenue and other	6,138		5,790

Total current liabilities	31,139		29,073
Borrowings	42,101		45,299
Deferred income taxes	7,258		8,363

Other long-term liabilities	12,069		12,518
Commitments and contingencies (Note 14)
Redeemable noncontrolling interests	9,055		9,499
Equity
Preferred stock	—		—
Common stock, $0.01 par value, Authorized – 4.6 billion shares, Issued – 1.8 billion shares	57,383		56,398
Retained earnings	46,093		43,636
Accumulated other comprehensive loss	(3,292)		(4,119)
Treasury stock, at cost, 19 million shares	(907)		(907)
Total Disney Shareholders’ equity	99,277		95,008
Noncontrolling interests	4,680		3,871
Total equity	103,957		98,879
Total liabilities and equity	$	205,579	$	203,631

See Notes to Consolidated Financial Statements

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)


	2023		2022		2021
OPERATING ACTIVITIES
Net income from continuing operations	$	3,390	$	3,553	$	2,536
Depreciation and amortization	5,369		5,163		5,111
Impairments of produced and licensed content costs and goodwill	2,987		—		—
Net (gain)/loss on investments	(166)		714		(332)
Deferred income taxes	(1,346)		200		(1,241)
Equity in the income of investees	(782)		(816)		(761)
Cash distributions received from equity investees	720		779		754
Net change in produced and licensed content costs and advances	(1,908)		(6,271)		(4,301)

Equity-based compensation	1,143		977		600
Pension and postretirement medical cost amortization	4		620		816
Other, net	278		595		190
Changes in operating assets and liabilities
Receivables	358		605		(357)
Inventories	(183)		(420)		252
Other assets	(201)		(707)		171
Accounts payable and other liabilities	(1,142)		964		2,410
Income taxes	1,345		46		(282)
Cash provided by operations - continuing operations	9,866		6,002		5,566

INVESTING ACTIVITIES
Investments in parks, resorts and other property	(4,969)		(4,943)		(3,578)
Proceeds from sales of investments	458		52		337

Other, net	(130)		(117)		70
Cash used in investing activities - continuing operations	(4,641)		(5,008)		(3,171)

FINANCING ACTIVITIES
Commercial paper payments, net	(191)		(334)		(26)
Borrowings	83		333		64
Reduction of borrowings	(1,675)		(4,016)		(3,737)


Proceeds from exercise of stock options	52		127		435
Contributions from / sales of noncontrolling interests	735		74		91
Acquisition of redeemable noncontrolling interests	(900)		—		(350)
Other, net	(828)		(913)		(862)
Cash used in financing activities - continuing operations	(2,724)		(4,729)		(4,385)

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

Impact of exchange rates on cash, cash equivalents and restricted cash	73		(603)		30

Change in cash, cash equivalents and restricted cash	2,574		(4,342)		(1,951)
Cash, cash equivalents and restricted cash, beginning of year	11,661		16,003		17,954
Cash, cash equivalents and restricted cash, end of year	$	14,235	$	11,661	$	16,003

Supplemental disclosure of cash flow information:
Interest paid	$	2,110	$	1,685	$	1,892
Income taxes paid	$	1,193	$	1,097	$	1,638

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 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
Comprehensive income	—	—		2,354			827		—		3,181		549		3,730
Equity compensation activity	6	1,056		—			—		—		1,056		—		1,056


Contributions	—	—		—			—		—		—		806		806

Distributions and other	—	(71)		103			—		—		32		(546)		(514)
Balance at September 30, 2023	1,830	$	57,383	$	46,093		$	(3,292)	$	(907)	$	99,277	$	4,680	$	103,957

(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 three segments: Entertainment, Sports and Experiences.

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.

Segment Restructuring

In fiscal 2023, the Company reorganized into three business segments: Entertainment, Sports and Experiences (renamed from Disney Parks, Experiences and Products). Fiscal 2022 and 2021 segment financial information has been recast for the following:

The prior Disney Media and Entertainment Distribution (DMED) segment has been reorganized into the Entertainment and Sports segments
A portion of Consumer Products (a business within the Experiences segment) revenues is recognized at the Entertainment segment, which is meant to reflect royalties on merchandise licensing revenues generated on IP created by the Entertainment segment

DESCRIPTION OF THE BUSINESS

Entertainment

The Entertainment segment generally encompasses the Company’s non-sports focused global film, television and direct-to-consumer (DTC) video streaming content production and distribution activities.

The significant lines of business within Entertainment are as follows:

Linear Networks

◦Domestic: ABC Television Network; Disney, Freeform, FX and National Geographic (owned 73% by the Company) branded television channels; and eight owned ABC television stations

◦International: Disney, Fox (which will be rebranded in fiscal 2024 primarily to FX or Star), FX, National Geographic (owned 73% by the Company) and Star branded general entertainment television networks outside of the U.S.

◦A 50% equity investment in A+E Television Networks (A+E), which operates cable channels including A&E, HISTORY and Lifetime

Direct-to-Consumer

◦Disney+: a global DTC service that primarily offers general entertainment and family programming. In certain Latin American countries, we offer Disney+ as well as Star+, a general entertainment service that also has sports programming

◦Disney+ Hotstar: a DTC service primarily in India that offers general entertainment, family and sports programming

◦Hulu (owned 67% by the Company): a U.S. DTC service that offers general entertainment and family programming and a digital over-the-top service that includes live linear streams of cable networks and the major broadcast networks

Content Sales/Licensing

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

◦Theatrical distribution

◦Home entertainment distribution: DVD and Blu-ray discs, electronic home video licenses and video-on-demand (VOD) rentals

◦Staging and licensing of live entertainment events on Broadway and around the world (Stage Plays)

◦Intersegment allocation of revenues from the Experiences segment, which is meant to reflect royalties on consumer products merchandise licensing revenues generated on intellectual property (“IP”) created by the Entertainment segment

◦Music distribution

◦Post-production services by Industrial Light & Magic and Skywalker Sound

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Entertainment also includes the following activities that are reported with Content Sales/Licensing:

National Geographic magazine and online business (owned 73% by the Company)
A 30% ownership interest in Tata Play Limited, which operates a direct-to-home satellite distribution platform in India

The significant revenues of Entertainment are as follows:

Affiliate fees - Fees charged to multi-channel video programming distributors (i.e. cable, satellite, telecommunications and digital over-the-top (e.g. YouTube TV) service providers) (MVPDs) for the right to deliver our programming to their customers. Linear Networks also generates revenues from fees charged to television stations affiliated with ABC Network.
Subscription fees - Fees charged to customers/subscribers for our DTC streaming services
Advertising - Sales of advertising time/space
TV/VOD distribution - Licensing fees for the right to use our film and episodic content
Theatrical distribution - Rentals from licensing our films to theaters
Home entertainment distribution - Sales and rentals of our film and episodic content to retailers and through distributors
Other revenue - Revenues from licensing our music, ticket sales from stage play performances, fees from licensing our IP for use in stage plays, sales of post-production services and the allocation of consumer products merchandise licensing revenues

The significant expenses of Entertainment are as follows:

Operating expenses, consisting primarily of programming and production costs, technology support costs, operating labor, distribution costs and costs of sales. Programming and production costs include the following:

◦Amortization of capitalized production costs

◦Amortization of the costs of licensed programming rights

◦Subscriber-based fees for programming our Hulu Live service, including fees paid by Hulu to the Sports segment and other Entertainment segment businesses for the right to air their linear networks on Hulu Live

◦Production costs related to live programming (primarily news)

◦Amortization of participations and residual obligations

◦Fees paid to the Sports segment to program ESPN on ABC and certain sports content on Star+

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

Sports

The Sports segment generally encompasses the Company’s sports-focused global television and DTC video streaming content production and distribution activities.

The significant lines of business within Sports are as follows:

ESPN (generally owned 80% by the Company)

◦Domestic:

▪Eight ESPN branded television channels

▪ESPN on ABC (sports programmed on the ABC Network by ESPN)

▪ESPN+ DTC video streaming service

◦International: ESPN-branded channels outside of the U.S.

Star: Star-branded sports channels in India

The significant revenues of Sports are as follows:

Affiliate fees
Advertising
Subscription fees
Other revenue - Fees from the following activities: pay-per-view events on ESPN+, sub-licensing of sports rights, programming ESPN on ABC and licensing the ESPN brand

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The significant expenses of Sports are as follows:

Operating expenses, consisting primarily of programming and production costs, technology support costs, operating labor and distribution costs. Programming and production costs include amortization of licensed sports rights and production costs related to live sports and other sports-related programming.
Selling, general and administrative costs, including marketing costs
Depreciation and amortization

Experiences

The significant lines of business within Experiences are as follows:

Parks & Experiences:

◦Domestic:

▪Theme parks and resorts:

Walt Disney World Resort in Florida
Disneyland Resort in California

▪Experiences

Disney Cruise Line
Disney Vacation Club
National Geographic Expeditions (owned 73% by the Company) and Adventures by Disney
Aulani, a Disney Resort & Spa in Hawaii

◦International:

▪Theme parks and resorts:

Disneyland Paris
Hong Kong Disneyland Resort (48% ownership interest and consolidated in our financial results)
Shanghai Disney Resort (43% ownership interest and consolidated in our financial results)
In addition, the Company licenses its IP to a third party to operate Tokyo Disney Resort
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 magazine, which is reported in Entertainment)

The significant revenues of Experiences 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)
Resorts and vacations - Sales of room nights at hotels, sales of cruise and other vacations and sales and rentals of vacation club properties
Parks & Experiences merchandise, food and beverage - Sales of merchandise, food and beverages at our theme parks and resorts and cruise ships
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 Experiences are as follows:

Operating expenses, consisting 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

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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 generally 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 episodic 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.

Segment revenues and segment operating income are as follows:


	2023		2022		2021
Revenues
Entertainment
Third parties	$	40,258	$	39,231	$	36,155
Intersegment	377		338		334
	40,635		39,569		36,489
Sports
Third parties	16,091		16,429		15,302
Intersegment	1,020		841		658
	17,111		17,270		15,960
Experiences	32,549		28,085		15,961
Eliminations	(1,397)		(1,179)		(992)
Total segment revenues	$	88,898	$	83,745	$	67,418
Segment operating income (loss)
Entertainment	$	1,444	$	2,126	$	5,196
Sports	2,465		2,710		2,690
Experiences	8,954		7,285		(120)
Total segment operating income(1)	$	12,863	$	12,121	$	7,766

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


	2023		2022		2021
Entertainment	$	685	$	783	$	744
Sports	55		55		51
Experiences	(2)		(10)		(19)
Equity in the income of investees included in segment operating income	738		828		776
A+E Gain(1)	56		—		—
Amortization of TFCF intangible assets related to equity investees	(12)		(12)		(15)
Equity in the income of investees	$	782	$	816	$	761

(1)Restructuring and impairment charges include the impact of a content license agreement termination with A+E, which generated a gain at A+E. The Company’s 50% interest of this gain was $56 million (A+E gain).

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


	2023		2022		2021
Segment revenues	$	88,898	$	83,745	$	67,418
Content License Early Termination(1)	—		(1,023)		—
Total revenues	$	88,898	$	82,722	$	67,418

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

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


	2023		2022		2021
Segment operating income	$	12,863	$	12,121	$	7,766
Content License Early Termination	—		(1,023)		—
Corporate and unallocated shared expenses	(1,147)		(1,159)		(928)
Restructuring and impairment charges(1)	(3,836)		(237)		(654)
Other income (expense), net	96		(667)		201
Interest expense, net	(1,209)		(1,397)		(1,406)
TFCF and Hulu acquisition amortization(2)	(1,998)		(2,353)		(2,418)

Income from continuing operations before income taxes	$	4,769	$	5,285	$	2,561

(1)Net of the A+E Gain.

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


	2023		2022		2021
Amortization of intangible assets	$	1,547	$	1,707	$	1,757
Step-up of film and episodic costs	439		634		646
Intangibles related to TFCF equity investees	12		12		15
	$	1,998	$	2,353	$	2,418

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


Capital expenditures	2023		2022		2021
Entertainment	$	1,032	$	802	$	838
Sports	15		8		24
Experiences
Domestic	2,203		2,680		1,597
International	822		767		675
Corporate	897		686		444
Total capital expenditures	$	4,969	$	4,943	$	3,578
Depreciation expense
Entertainment	$	669	$	560	$	513
Sports	73		90		100
Experiences
Domestic	2,011		1,680		1,551
International	669		662		718
Amounts included in segment operating income	2,680		2,342		2,269
Corporate	204		191		186
Total depreciation expense	$	3,626	$	3,183	$	3,068
Amortization of intangible assets
Entertainment	$	87	$	164	$	174
Sports	—		—		4
Experiences	109		109		108
Amounts included in segment operating income	196		273		286
TFCF and Hulu	1,547		1,707		1,757
Total amortization of intangible assets	$	1,743	$	1,980	$	2,043

Identifiable assets, including equity method investments(1) and intangible assets,(2) are as follows:


	September 30, 2023		October 1, 2022
Entertainment	$	113,307	$	117,184
Sports	25,402		24,988
Experiences	42,808		41,969
Corporate (primarily fixed asset and cash and cash equivalents)	24,062		19,490
Total consolidated assets	$	205,579	203,631

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


	September 30, 2023		October 1, 2022
Entertainment	$	2,433	$	2,449
Sports	213		184
Experiences	—		2
Corporate	42		43
	$	2,688	$	2,678

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(2)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:


	September 30, 2023		October 1, 2022
Entertainment	$	8,556	$	9,829
Sports	1,767		2,152
Experiences	2,718		2,836
Corporate	20		20
	$	13,061	$	14,837

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


	2023		2022		2021
Revenues
Americas	$	71,205	$	68,218	$	54,157
Europe	9,533		8,680		6,690
Asia Pacific	8,160		6,847		6,571
	$	88,898	$	83,745	$	67,418
Content License Early Termination			(1,023)
			$	82,722
Segment operating income
Americas	$	10,779	$	11,099	$	6,314
Europe	856		586		800
Asia Pacific	1,228		436		652
	$	12,863	$	12,121	$	7,766

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


	September 30, 2023		October 1, 2022
Americas	$	148,567	$	150,786
Europe	9,895		8,739
Asia Pacific	10,244		10,976
	$	168,706	$	170,501

(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		Experiences		Entertainment		Sports		Total
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


Segment recast(1)	(72,347)		—		55,488		16,859		—
Goodwill impairment(2)	—		—		(425)		(296)		(721)
Currency translation adjustments and other, net	—		—		(32)		(77)		(109)
Balance at Sep. 30, 2023	$	—	$	5,550	$	55,031	$	16,486	$	77,067

(1)Reflects the reallocation of goodwill as a result of the Company recasting its segments from the strategic reorganization during fiscal 2023.

(2)Reflects goodwill impairments at entertainment and international sports linear networks (See Note 18).

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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.

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 2023, 2022 and 2021 were fifty-two week years.

Reclassifications

Certain reclassifications have been made in the fiscal 2022 and fiscal 2021 financial statements and notes to conform to the fiscal 2023 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 Income. 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

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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.
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/VOD 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 based on the contractual royalty rate applied to the licensee sales.

For TV/VOD 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/VOD 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.

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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 2023, 2022 and 2021 was $6.4 billion, $7.2 billion and $5.5 billion, respectively. The decrease in advertising expense for fiscal 2023 compared to fiscal 2022 was due to lower spend for our DTC streaming services. 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.

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 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.


	September 30, 2023		October 1, 2022		October 2, 2021
Cash and cash equivalents	$	14,182	$	11,615	$	15,959
Restricted cash included in:
Other current assets	—		3		3
Other assets	53		43		41

Total cash, cash equivalents and restricted cash in the statement of cash flows	$	14,235	$	11,661	$	16,003

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 episodic content 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.

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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 title (e.g. theatrical revenues or sales to third-party television programmers)
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 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 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, domestic ESPN television network, International Sports Channels 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 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 Income.

The costs of produced and licensed film and television content are subject to regular recoverability assessments. Production costs for content that is predominantly monetized individually are tested for impairment at the individual title level by comparing that title’s unamortized costs to the estimated present value of discounted cash flows directly attributable to the title. To the extent the title’s unamortized costs exceed the present value of discounted cash flows, an impairment charge is recorded for the excess. Cost of content that is predominantly monetized as a group is tested for impairment by comparing the present value of the discounted cash flows of the group to the aggregate unamortized costs of the group. The group is established by identifying the lowest level for which cash flows are independent of the cash flows of other produced and licensed content. If the unamortized costs exceed the present value of discounted cash flows, an impairment charge is recorded

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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 down to its estimated fair value. Licensed content is included as part of the group within which it is monetized for purposes of impairment testing.

Content Production Incentives

The Company receives tax incentives from U.S. (state and local) and foreign government agencies to encourage the production of film, episodic and streaming content. The incentives are largely received as tax credits, which are recognized as a reduction to produced and licensed content costs when there is reasonable assurance of collection (presented as “Produced and licensed content costs” in the Consolidated Balance Sheets), resulting in a reduction to programming and production costs (presented as “Costs of services” in the Consolidated Statements of Income) over the asset’s amortization period.

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 September 30, 2023 and October 1, 2022, capitalized software costs, net of accumulated amortization, totaled $1.2 billion and $1.1 billion, respectively. The capitalized costs are amortized on a straight-line basis over the estimated useful life of the software, generally up to 5 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 2023, the Company bypassed the qualitative test and performed a quantitative assessment of goodwill for impairment (see Note 18).

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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 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 estimated projected future cash flows as well as the discount rates used to calculate their present value. Our future cash flows are based on internal forecasts for each reporting unit, which consider projected inflation and other economic indicators, as well as industry growth projections. Discount rates for each reporting unit are determined based on the inherent risks of each reporting unit’s underlying operations. 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.

To test 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 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 of 5 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 $3.0 billion, $0.2 billion and $0.3 billion in fiscal 2023, 2022 and 2021, respectively. The charges are recorded in “Restructuring and impairment charges” in the Consolidated Statements of Income.

The fiscal 2023 charges primarily related to content impairments resulting from a strategic change in our approach to content curation ($2.2 billion) and goodwill ($0.7 billion) at our entertainment and international sports linear networks reporting units (see Note 18).

The fiscal 2022 charges primarily related to exiting 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 Company expects its aggregate annual amortization expense for finite-lived intangible assets for fiscal 2024 through 2028 to be as follows:


2024	$	1,627
2025	1,535
2026	1,042
2027	965
2028	898

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Financial 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 impact earnings or are no longer expected to occur, the Company recognizes the gain or loss on the designated derivatives.

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 zero percent likely of being realized upon ultimate settlement.

Redeemable Noncontrolling Interests and Contributions from Noncontrolling Interest Holders

Hulu LLC

The Company consolidates the results of Hulu LLC (Hulu), a DTC streaming service provider, which is owned 67% by the Company and 33% by NBC Universal (NBCU). In May 2019, the Company entered into a put/call agreement with NBCU that provided the Company with full operational control of Hulu. Under the agreement, NBCU has the option to require the Company to purchase NBCU’s interest in Hulu (put right) and the Company has the option to require NBCU to sell its interest in Hulu to the Company (call right) at a redemption value based on NBCU’s equity ownership percentage of the greater of Hulu’s equity fair value or a guaranteed floor value of $27.5 billion. In August 2023, certain provisions under the put/call agreement were amended, including the addition of a November 2023 exercise window for the put/call, which would require assessment of Hulu’s equity fair value as of September 30, 2023. In November 2023, NBCU exercised its put right and the Company is obligated to pay NBCU the minimum value (approximately $9.2 billion based on the guaranteed floor value, less the unpaid capital call contributions payable by NBCU to the Company of $0.6 billion) within 30 days of exercise of the put. In accordance with the valuation procedures, Hulu’s equity fair value is not expected to be determined until sometime in calendar 2024. If Hulu’s equity fair value is determined to be higher than the guaranteed floor value, the Company would be required to pay NBCU’s share of the difference between the equity fair value and the guaranteed floor value at that time.

Determining the estimated redemption value requires management to make significant judgments. To the extent the fair value is deemed to exceed the guaranteed floor value, we would recognize NBCU’s share of the additional amount as a charge to “Net income from continuing operations attributable to noncontrolling interests” and thus reduce “Net income attributable to Disney” in the Consolidated Statements of Income.

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In addition, the Company will share 50% of its tax benefit from the purchase of NBCU’s interest in Hulu with NBCU, which payments are expected to be made primarily over a 15-year period.

At September 30, 2023, NBCU’s interest in Hulu is recorded in the Company’s financial statements at $9.1 billion, which is reported as “Redeemable noncontrolling interest” in the Consolidated Balance Sheet.

BAMTech LLC

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

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

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:


	2023	2022	2021
Weighted average number of common and common equivalent shares outstanding (basic)	1,828	1,822	1,816
Weighted average dilutive impact of Awards	2	5	12
Weighted average number of common and common equivalent shares outstanding (diluted)	1,830	1,827	1,828
Awards excluded from diluted earnings per share	24	15	4

3Revenues

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


	2023
	Entertainment		Sports		Experiences		Eliminations		Total
Affiliate fees	$	7,369	$	10,590	$	—	$	(1,084)	$	16,875
Subscription fees	16,420		1,517		—		—		17,937
Advertising	7,594		3,920		4		—		11,518
Theme park admissions	—		—		10,423		—		10,423
Resort and vacations	—		—		7,949		—		7,949
Retail and wholesale sales of merchandise, food and beverage	—		—		8,921		—		8,921
Merchandise licensing	619		—		2,509		—		3,128
TV/VOD distribution licensing	2,645		347		—		—		2,992
Theatrical distribution licensing	3,174		—		—		—		3,174
Home entertainment	931		—		—		—		931
Other	1,883		737		2,743		(313)		5,050
	$	40,635	$	17,111	$	32,549	$	(1,397)	$	88,898

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	2022
	Entertainment		Sports		Experiences		Eliminations and Other		Total
Affiliate fees	$	7,739	$	10,796	$	—	$	(1,010)	$	17,525
Subscription fees	14,178		1,113		—		—		15,291
Advertising	8,674		4,370		4		—		13,048
Theme park admissions	—		—		8,602		—		8,602
Resort and vacations	—		—		6,410		—		6,410
Retail and wholesale sales of merchandise, food and beverage	—		—		7,838		—		7,838
Merchandise licensing	620		—		3,349		—		3,969
TV/VOD distribution licensing	3,551		351		—		(1,023)		2,879
Theatrical distribution licensing	1,875		—		—		—		1,875
Home entertainment	1,083		—		—		—		1,083
Other	1,849		640		1,882		(169)		4,202
	$	39,569	$	17,270	$	28,085	$	(2,202)	$	82,722


	2021
	Entertainment		Sports		Experiences		Eliminations		Total
Affiliate fees	$	8,043	$	10,609	$	—	$	(892)	$	17,760
Subscription fees	11,295		725		—		—		12,020
Advertising	8,705		3,720		4		—		12,429
Theme park admissions	—		—		3,848		—		3,848
Resort and vacations	—		—		2,701		—		2,701
Retail and wholesale sales of merchandise, food and beverage	—		—		4,957		—		4,957
Merchandise licensing	603		—		2,995		—		3,598
TV/VOD distribution licensing	4,366		429		—		—		4,795
Theatrical distribution licensing	920		—		—		—		920
Home entertainment	1,297		—		—		—		1,297
Other	1,260		477		1,456		(100)		3,093
	$	36,489	$	15,960	$	15,961	$	(992)	$	67,418

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


	2023
	Entertainment		Sports		Experiences		Eliminations		Total
Americas	$	31,414	$	16,000	$	25,188	$	(1,397)	$	71,205
Europe	5,475		370		3,688		—		9,533
Asia Pacific	3,746		741		3,673		—		8,160

	$	40,635	$	17,111	$	32,549	$	(1,397)	$	88,898


	2022
	Entertainment		Sports		Experiences		Eliminations		Total
Americas	$	30,841	$	15,666	$	22,890	$	(1,179)	$	68,218
Europe	5,098		396		3,186		—		8,680
Asia Pacific	3,630		1,208		2,009		—		6,847

	$	39,569	$	17,270	$	28,085	$	(1,179)	83,745
Content License Early Termination									(1,023)
									$	82,722


	2021
	Entertainment		Sports		Experiences		Eliminations		Total
Americas	28,469		$	14,533	$	12,147	$	(992)	$	54,157
Europe	4,836		346		1,508		—		6,690
Asia Pacific	3,184		1,081		2,306		—		6,571

	$	36,489	$	15,960	$	15,961	$	(992)	$	67,418

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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/VOD licenses for titles made available to the licensee in previous reporting periods. For fiscal 2023, $0.9 billion was recognized related to performance obligations satisfied prior to October 1, 2022. For fiscal 2022, $1.1 billion was recognized related to performance obligations satisfied prior to October 2, 2021. For fiscal 2021, $1.3 billion was recognized related to performance obligations satisfied prior to October 3, 2020.

As of September 30, 2023, 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, DTC wholesalers, sports sublicensees and advertisers. Of this amount, we expect to recognize approximately $6 billion in fiscal 2024, $4 billion in fiscal 2025, $2 billion in fiscal 2026 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. The Company’s contract assets and activity for the current and prior-year periods were not material. Accounts receivable and deferred revenues from contracts with customers are as follows:


	September 30, 2023		October 1, 2022



Accounts Receivable
Current	$	10,279	$	10,886
Non-current	1,212		1,226
Allowance for credit losses	(154)		(179)
Deferred revenues
Current	5,568		5,531
Non-current	977		927

For fiscal 2023, 2022 and 2021, the Company recognized revenues of $5.1 billion, $3.6 billion and $2.9 billion, respectively, that was included in the deferred revenue balance at October 1, 2022, October 2, 2021 and October 3, 2020, respectively. Amounts deferred generally relate to theme park admissions and vacation packages, DTC subscriptions and advances related to merchandise and TV/VOD licenses.

The Company has accounts receivable with original maturities greater than one year related to TV/VOD sales 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/VOD licensing receivables recorded in other non-current assets was $0.6 billion at both September 30, 2023 and October 1, 2022. The balance of vacation club receivables recorded in other non-current assets was $0.7 billion and $0.6 billion at September 30, 2023 and October 1, 2022, respectively. The allowance for credit losses and activity for fiscal 2023 and 2022 was not material.

4Other Income (Expense), Net

Other income (expense), net is as follows:


	2023		2022		2021
DraftKings gain (loss)	$	169	$	(663)	$	(111)
fuboTV gain	—		—		186
German FTA gain	—		—		126






Other, net	(73)		(4)		—

Other income (expense), net	$	96	$	(667)	$	201

In fiscal 2023, the Company recognized a gain of $169 million on its investment in DraftKings, Inc. (DraftKings), which was sold in the current fiscal year. In fiscal 2022 and 2021, respectively, the Company recognized non-cash losses of $663 million and $111 million to adjust its investment in DraftKings to fair value.

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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).

5Investments

Investments consist of the following:


	September 30, 2023		October 1, 2022
Investments, equity basis	$	2,688	$	2,678
Investments, other	392		540
	$	3,080	$	3,218

Investments, Equity Basis

The Company’s significant equity investments include A+E (50% ownership), Tata Play Limited (30% ownership) and CTV Specialty Television, Inc. (30% ownership). As of September 30, 2023, 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 $0.7 billion, which represents amortizable intangible assets and goodwill arising from acquisitions.

Investments, Other

As of September 30, 2023 and October 1, 2022, the Company had securities in publicly and non-publicly traded investments, which were not material.

Gains, losses and impairments on securities are generally recorded in “Interest expense, net” in the Consolidated Statements of Income; these amounts were not material for fiscal 2023, 2022 and 2021. See Note 4 for realized and unrealized gains and losses on securities recorded in “Other income (expense), net” in the Consolidated Statements of Income.

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.

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


	September 30, 2023		October 1, 2022
Cash and cash equivalents	$	504	$	280
Other current assets	159		137
Total current assets	663		417
Parks, resorts and other property	6,150		6,356
Other assets	234		161
Total assets	$	7,047	$	6,934

Current liabilities	$	720	$	468
Long-term borrowings	1,308		1,426
Other long-term liabilities	392		395
Total liabilities	$	2,420	$	2,289

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The following table summarizes the International Theme Parks’ revenues and costs and expenses included in the Company’s Consolidated Statements of Income for fiscal 2023:


Revenues	$	5,095
Costs and expenses	(4,265)
Equity in the loss of investees	(2)

Asia Theme Parks’ royalty and management fees of $235 million for fiscal 2023 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 2023 Consolidated Statements of Cash Flows were $1,753 million provided by operating activities, $898 million used in investing activities and $114 million used in financing activities.

Hong Kong Disneyland Resort

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

The Company and HKSAR have provided loans to Hong Kong Disneyland Resort with outstanding balances of $163 million and $109 million, respectively. The interest rate on both loans is three month HIBOR plus 2%, and the scheduled 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 $2.7 billion ($345 million), which bears interest at a rate of three month HIBOR plus 1.25% and matures in December 2028. The outstanding balance under the line of credit at September 30, 2023 was $80 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 $57 million and $148 million in fiscal 2023 and 2022, respectively. To date, the Company and HKSAR have funded a total of $773 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 6 percentage points over a period no shorter than 10 years.

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.

The Company has provided Shanghai Disney Resort with loans totaling $967 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 September 30, 2023, the total amount outstanding under the line of credit was 0.1 billion yuan (approximately $9 million). These balances are eliminated in consolidation.

Shendi has provided Shanghai Disney Resort with loans totaling 8.7 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 September 30, 2023, the total amount outstanding under the line of credit was 0.1 billion yuan (approximately $13 million).

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7Produced and Acquired/Licensed Content Costs and Advances

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


	As of September 30, 2023						As of October 1, 2022
	Predominantly Monetized Individually		Predominantly Monetized as a Group		Total		Predominantly Monetized Individually		Predominantly Monetized as a Group		Total
Produced content
Released, less amortization	$	4,968	$	13,555	$	18,523	$	4,639	$	12,688	$	17,327
Completed, not released	70		1,786		1,856		214		2,019		2,233
In-process	3,331		6,120		9,451		5,041		6,793		11,834
In development or pre-production	279		133		412		372		254		626
	$	8,648	$	21,594	30,242		$	10,266	$	21,754	32,020
Licensed content - Television Programming rights and advances					6,351						5,647
Total produced and licensed content					$	36,593					$	37,667

Current portion					$	3,002					$	1,890
Non-current portion					$	33,591					$	35,777

Amortization of produced and licensed content is as follows:


	2023		2022		2021
Produced content
Predominantly monetized individually	$	3,999	$	3,448	$	2,947
Predominantly monetized as a group	7,862		6,776		5,228
	11,861		10,224		8,175
Licensed programming rights and advances	13,405		13,432		12,784
Total produced and licensed content costs(1)	$	25,266	$	23,656	$	20,959

(1)Primarily included in “Costs of services” in the Consolidated Statements of Income. Fiscal 2023 amounts exclude impairment charges of $2.0 billion for produced content and $257 million for licensed programming rights recorded in “Restructuring and impairment charges” in the Consolidated Statements of Income (see Note 18).

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 September 30, 2023 is as follows:


	Predominantly Monetized Individually		Predominantly Monetized as a Group		Total
Produced content
Released
2024	$	1,069	$	3,257	$	4,326
2025	600		2,055		2,655
2026	506		1,632		2,138
Completed, not released
2024	36		794		830

Licensed content - Programming rights and advances
2024					$	4,202
2025					785
2026					495

Approximately $2.4 billion of accrued participations and residual liabilities will be paid in fiscal 2024.

At September 30, 2023, acquired film and television library content has remaining unamortized costs of $3.1 billion, which are generally being amortized straight-line over a weighted-average remaining period of approximately 15 years.

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Content Production Incentives

Programming and production costs were reduced by $0.8 billion for fiscal 2023 related to the amortization of production tax incentives. We have production tax credit receivables of $1.6 billion as of September 30, 2023, which, based on the expected timing of collection, are reflected in “Receivables, net” or “Other Assets” in our Consolidated Balance Sheet.

8Borrowings

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


					September 30, 2023
	Sep. 30, 2023		Oct. 1, 2022		Stated Interest Rate(1)	Pay Floating Interest rate and Cross- Currency Swaps(2)			Effective Interest Rate(3)	Swap Maturities
Commercial paper	$	1,476	$	1,662	—		$	—		5.62%
U.S. dollar denominated notes(4)	43,504		45,091		4.03%		11,625			4.90%	2024-2031
Foreign currency denominated debt	1,872		1,844		2.92%		1,878			4.99%	2025-2027



Other(5)	(1,729)		(1,653)				—
	45,123		46,944		3.85%		13,503			4.92%
Asia Theme Parks borrowings	1,308		1,425		1.86%		—			5.90%
Total borrowings	46,431		48,369		3.94%		13,503			4.95%
Less current portion	4,330		3,070		2.35%		—			5.12%
Total long-term borrowings	$	42,101	$	45,299			$	13,503

(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 September 30, 2023; 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 September 30, 2023.

(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 $1.8 billion and $1.9 billion at September 30, 2023 and October 1, 2022, respectively.

(5)Includes market value adjustments for debt with qualifying hedges, which reduces borrowings by $1.8 billion and $1.7 billion at September 30, 2023 and October 1, 2022, respectively.

Commercial Paper

At September 30, 2023, 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 2024	$	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 rates based on the Secured Overnight Financing Rate (SOFR), and at other variable rates for non-U.S. dollar denominated borrowings plus a fixed spread that varies with the Company’s debt ratings assigned by Moody’s Investors Service and Standard & Poor’s ranging from 0.655% 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 September 30, 2023, 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 September 30, 2023, the Company has $1.7 billion of outstanding letters of credit, of which none were issued under this facility.

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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. 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
Additions	238		3,603		3,841
Payments	—		(4,032)		(4,032)
Other Activity	1		4		5
Balance at Sep. 30, 2023	$	289	$	1,187	$	1,476

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

U.S. Dollar Denominated Notes

At September 30, 2023, the Company had $43.5 billion of fixed rate U.S. dollar denominated notes with maturities ranging from 1 to 73 years and stated interest rates that range from 1.75% to 9.50%.

Foreign Currency Denominated Debt

At September 30, 2023, the Company had fixed rate senior notes of Canadian $1.3 billion ($0.9 billion) and Canadian $1.3 billion ($1.0 billion) with maturities of October 2024 and March 2027, respectively, and stated interest rates of 2.76% and 3.057%, respectively. The Company has entered into pay-floating interest rate and cross currency swaps that effectively convert the borrowings to a variable-rate U.S. dollar denominated borrowings indexed to SOFR.

Cruise Ship Credit Facilities

The Company has credit facilities to finance a significant portion of the contract price of two new cruise ships, which are scheduled to be delivered in fiscal 2025 and fiscal 2026. Under the facilities, $1.1 billion became available beginning in August 2023 and $1.1 billion is available beginning in August 2024. 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 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 $0.9 billion ($109 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 8.7 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 September 30, 2023 the total amount outstanding under the line of credit was 0.1 billion yuan (approximately $13 million).

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Maturities

The following table provides total borrowings, excluding market value adjustments and debt issuance premiums, discounts and costs, by scheduled maturity date as of September 30, 2023. The table also provides the estimated interest payments on these borrowings as of September 30, 2023 although actual future payments will differ for floating-rate borrowings:


	Borrowings
Fiscal Year:	Before Asia Theme Parks Consolidation		Asia Theme Parks		Total Borrowings		Interest		Total Borrowings and Interest
2024	$	4,369	$	13	$	4,382	$	1,733	$	6,115
2025	3,619		109		3,728		1,626		5,354
2026	4,578		—		4,578		1,616		6,194
2027	2,921		—		2,921		1,506		4,427
2028	1,599		—		1,599		1,502		3,101
Thereafter	28,018		1,186		29,204		16,935		46,139
	$	45,104	$	1,308	$	46,412	$	24,918	$	71,330

Interest

The Company capitalizes interest on assets constructed for its parks and resorts and on certain film and television productions. In fiscal 2023, 2022 and 2021, total interest capitalized was $365 million, $261 million and $187 million, respectively.

Interest expense (net of amounts capitalized), interest and investment income, and net periodic pension and postretirement benefit costs (other than service costs) (see Note 10) are reported net in the Consolidated Statements of Income and consist of the following:


	2023		2022		2021
Interest expense	$	(1,973)	$	(1,549)	$	(1,546)
Interest and investment income	424		90		307
Net periodic pension and postretirement benefit costs (other than service costs)	340		62		(167)
Interest expense, net	$	(1,209)	$	(1,397)	$	(1,406)

9Income Taxes

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


Income Before Income Taxes	2023		2022		2021

Domestic subsidiaries (including U.S. exports)	$	3,086	$	5,955	$	5,241
Foreign subsidiaries	1,683		(670)		(2,680)
Total income from continuing operations	4,769		5,285		2,561
Loss from discontinued operations	—		(62)		(38)
	$	4,769	$	5,223	$	2,523

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Provision for Income Taxes: Current and Deferred


Income Tax Expense (Benefit)
Current	2023		2022		2021
Federal	$	1,475	$	436	$	594
State	402		282		129
Foreign(1)	867		846		554
	2,744		1,564		1,277
Deferred
Federal	(1,180)		407		(526)
State	4		26		(220)
Foreign	(189)		(265)		(506)
	(1,365)		168		(1,252)
Income tax expense on income from continuing operations	1,379		1,732		25
Income tax expense on loss from discontinued operations	—		(14)		(9)
	$	1,379	$	1,718	$	16

(1)Includes foreign withholding taxes.

Deferred Tax Assets and Liabilities


Components of Deferred Tax (Assets) and Liabilities	September 30, 2023		October 1, 2022

Deferred tax assets
Net operating losses and tax credit carryforwards(1)	$	(3,841)	$	(3,527)
Accrued liabilities	(1,335)		(1,570)
Lease liabilities	(852)		(748)
Licensing revenues	(115)		(124)
Other	(623)		(819)
Total deferred tax assets	(6,766)		(6,788)
Deferred tax liabilities
Depreciable, amortizable and other property	7,581		8,575
Investment in U.S. entities	1,271		1,798
Right-of-use lease assets	751		676

Investment in foreign entities	482		543

Other	81		64
Total deferred tax liabilities	10,166		11,656
Net deferred tax liability before valuation allowance	3,400		4,868
Valuation allowance	3,187		2,859
Net deferred tax liability	$	6,587	$	7,727

(1)Balances at September 30, 2023 and October 1, 2022 include approximately $1.6 billion and $1.5 billion, respectively, of International Theme Park net operating losses and approximately $1.0 billion at both September 30, 2023 and October 1, 2022 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, if not used, expire between fiscal 2024 and fiscal 2028. Foreign tax credits in the U.S. have a ten-year carryforward period. Foreign tax credits of $1.0 billion, if not used, expire beginning in fiscal 2028.

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The following table details the change in valuation allowance for fiscal 2023, 2022 and 2021 (in billions):


	Balance at Beginning of Period		Charges to Tax Expense		Other Changes		Balance at End of Period
Year ended September 30, 2023	$	2.9	$	0.2	$	0.1	$	3.2
Year ended October 1, 2022	2.8		0.4		(0.3)		2.9
Year ended October 2, 2021	2.4		0.4		—		2.8

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


	2023		2022		2021
Federal income tax rate	21.0	%	21.0	%	21.0	%
State taxes, net of federal benefit(1)	5.8		3.1		1.9
Tax rate differential on foreign income	0.1		4.3		12.0
Foreign derived intangible income	(4.3)		(3.4)		(6.4)

Tax impact of equity awards	2.1		—		(5.3)
Legislative changes	—		1.7		(12.2)
Income tax audits and reserves	1.3		2.7		(4.8)
Goodwill impairment	3.5		—		—
Valuation allowance	(1.8)		4.5		2.6
Other	1.2		(1.1)		(7.8)
	28.9	%	32.8	%	1.0	%

(1)Fiscal 2023 includes an adjustment related to certain deferred state taxes

Unrecognized tax benefits

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


	2023		2022		2021
Balance at the beginning of the year	$	2,449	$	2,641	$	2,740

Increases for current year tax positions	98		48		51
Increases for prior year tax positions	273		103		556
Decreases in prior year tax positions	(150)		(108)		(174)
Settlements with taxing authorities	(153)		(235)		(532)
Balance at the end of the year	$	2,517	$	2,449	$	2,641

Balances at September 30, 2023, October 1, 2022 and October 2, 2021 include $1.8 billion, $1.9 billion and $2.0 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 September 30, 2023, October 1, 2022 and October 2, 2021 accrued interest and penalties related to unrecognized tax benefits were $1.0 billion in each period. During fiscal 2023, 2022 and 2021, the Company recorded additional interest and penalties of $210 million, $157 million and $191 million, respectively, and recorded reductions in accrued interest and penalties of $241 million, $119 million and $256 million, respectively. The Company’s policy is to report interest and penalties as a component of income tax expense.

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 $0.3 billion.

Other

In fiscal 2023, the Company recognized income tax expense of $93 million for the shortfall between equity-based compensation deductions and amounts recorded based on the grant date fair value. In fiscal 2022 and 2021, the Company recognized income tax benefits of $2 million and $135 million, respectively, for the excess of equity-based compensation deductions over amounts recorded based on the grant date fair value.

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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
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Projected benefit obligations
Beginning obligations	$	(15,028)	$	(20,955)	$	(1,539)	$	(2,121)

Service cost	(282)		(400)		(5)		(9)
Interest cost	(784)		(500)		(81)		(51)
Actuarial gain(1)	757		6,159		59		595
Plan amendments and other(2)	14		39		539		(16)
Benefits paid	633		629		66		63

Ending obligations	$	(14,690)	$	(15,028)	$	(961)	$	(1,539)
Fair value of plans’ assets
Beginning fair value	$	14,721	$	18,076	$	749	$	889

Actual return on plan assets	1,324		(2,715)		71		(134)
Contributions	73		96		29		61
Benefits paid	(633)		(629)		(66)		(63)
Expenses and other	(43)		(107)		(2)		(4)
Ending fair value	$	15,442	$	14,721	$	781	$	749

Overfunded (Underfunded) status of the plans	$	752	$	(307)	$	(180)	$	(790)
Amounts recognized in the balance sheet
Non-current assets	$	1,971	$	913	$	209	$	—
Current liabilities	(72)		(66)		(2)		(4)
Non-current liabilities	(1,147)		(1,154)		(387)		(786)
	$	752	$	(307)	$	(180)	$	(790)

(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.

(2)The decrease in fiscal 2023 was due to a change in postretirement medical benefit options.

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The components of net periodic benefit cost (benefit) are as follows:


	Pension Plans						Postretirement Medical Plans
	2023		2022		2021		2023		2022		2021
Service cost	$	282	$	400	$	434	$	5	$	9	$	10
Other costs (benefits):
Interest cost	784		500		457		81		51		47
Expected return on plan assets	(1,149)		(1,174)		(1,100)		(61)		(59)		(55)
Amortization of prior-year service costs	8		7		11		—		—		—
Recognized net actuarial loss/(gain)	19		585		777		(22)		28		30
Total other costs (benefit)	(338)		(82)		145		(2)		20		22
Net periodic benefit cost (benefit)	$	(56)	$	318	$	579	$	3	$	29	$	32

In fiscal 2024, we expect pension and postretirement medical costs to be a net benefit of $155 million compared to a net benefit of $53 million in fiscal 2023.


Key assumptions are as follows:
	Pension Plans						Postretirement Medical Plans
	2023		2022		2021		2023		2022		2021
Discount rate used to determine the fiscal year‑end benefit obligation	5.94	%	5.44	%	2.88	%	5.94	%	5.47	%	2.89	%
Discount rate used to determine the interest cost component of net periodic benefit cost	5.37	%	2.45	%	2.28	%	5.38	%	2.47	%	2.28	%
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	%	3.10	%	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	%	4.00	%
Year that the rate reaches the ultimate trend rate	n/a		n/a		n/a		2042		2041		2040

AOCI, before tax, as of September 30, 2023 consists of the following amounts that have not yet been recognized in net periodic benefit cost:


	Pension Plans		Postretirement Medical Plans		Total
Prior service costs (benefits)	$	15	$	(556)	$	(541)
Net actuarial loss (gain)	2,929		(137)		2,792
Total amounts included in AOCI	2,944		(693)		2,251
Prepaid (accrued) pension cost	(3,696)		873		(2,823)
Net balance sheet liability (asset)	$	(752)	$	180	$	(572)

Plan Funded Status

As of September 30, 2023, 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 was not material. 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 was not material.

As of September 30, 2023, 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 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.

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The Company’s total accumulated pension benefit obligations at September 30, 2023 and October 1, 2022 were $13.8 billion and $14.1 billion, respectively. Approximately 98% was vested as of both September 30, 2023 and October 1, 2022.

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 $1.0 billion and $0.8 billion, respectively, at September 30, 2023 and $1.5 billion and $0.7 billion, respectively, at October 1, 2022.

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. NAV per share is determined based on the fair value using the underlying assets divided by the number of units outstanding.

The following is a description of the valuation methodologies used for assets reported at fair value. The methodologies used at September 30, 2023 and October 1, 2022 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 September 30, 2023
Description	Level 1		Level 2		Total		Plan Asset Mix

Cash	$	68	$	—	$	68	—%
Common and preferred stocks(1)	3,517		—		3,517		22%
Mutual funds	1,139		—		1,139		7%
Government and federal agency bonds, notes and MBS	2,025		442		2,467		15%
Corporate bonds	—		750		750		4%
Other mortgage- and asset-backed securities	—		120		120		1%
Derivatives and other, net	—		12		12		—%
Total investments in the fair value hierarchy	$	6,749	$	1,324	8,073

Assets valued at NAV as a practical expedient:
Common collective funds					3,517		22%
Alternative investments					4,352		27%
Money market funds and other					281		2%
Total investments at fair value					$	16,223	100%


	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%

(1)Includes 2.9 million shares of Company common stock valued at $235 million (1% of total plan assets) and 2.9 million shares valued at $273 million (2% of total plan assets) at September 30, 2023 and October 1, 2022, 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 September 30, 2023, the total committed capital still uncalled and unpaid was $1.3 billion.

Plan Contributions

During fiscal 2023, the Company made $102 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 2024. Final minimum funding requirements for fiscal 2024 will be determined based on a January 1, 2024 funding actuarial valuation, which is expected to be received during the fourth quarter of fiscal 2024.

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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)
2024	$	768	$	56
2025	776		55
2026	822		59
2027	866		62
2028	911		64
2029 – 2033	5,132		356

(1)Estimated future benefit payments are net of expected Medicare subsidy receipts of $39 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	3	%	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 2023 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 September 30, 2023 and on cost for fiscal 2024:


	Discount Rate				Expected Long-Term Rate of Return On Assets
Increase (decrease)	Benefit Expense		Projected Benefit Obligations		Benefit Expense
1 percentage point decrease	$	201	$	2,038	$	170
1 percentage point increase	(45)		(1,798)		(170)

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.
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.

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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:


	2023		2022		2021
Pension plans	$	316	$	402	$	289
Health & welfare plans	299		401		272
Total contributions	$	615	$	803	$	561

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 2023, 2022 and 2021, the costs of our domestic and international defined contribution plans were $378 million, $325 million and $254 million, respectively.

11Equity

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 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)
Unrealized gains (losses) arising during the period	(101)		1,594		(2)		1,491
Reclassifications of net (gains) losses to net income	(444)		4		42		(398)
Balance at September 30, 2023	$	259	$	(2,172)	$	(1,974)	$	(3,887)

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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 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
Unrealized gains (losses) arising during the period	12		(384)		17		(355)
Reclassifications of net (gains) losses to net income	103		—		(14)		89
Balance at September 30, 2023	$	(64)	$	517	$	142	$	595


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


AOCI, after tax
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)
Unrealized gains (losses) arising during the period	(89)		1,210		15		1,136
Reclassifications of net (gains) losses to net income	(341)		4		28		(309)
Balance at September 30, 2023	$	195	$	(1,655)	$	(1,832)	$	(3,292)

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:	2023		2022		2021
Market value adjustments, primarily cash flow hedges	Primarily revenue	$	444	$	142	$	31
Estimated tax	Income taxes	(103)		(33)		(10)
		341		109		21


Pension and postretirement medical expense	Interest expense, net	(4)		(620)		(816)
Estimated tax	Income taxes	—		144		190
		(4)		(476)		(626)

Foreign currency translation and other	Other income (expense), net	(42)		—		—
Estimated tax	Income taxes	14		—		—
		(28)		—		—

Total reclassifications for the period		$	309	$	(367)	$	(605)

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12Equity-Based Compensation

Under various plans, the Company may grant stock options and other equity-based awards to executive, management, technology and creative personnel. The Company’s approach to long-term incentive compensation contemplates awards of stock options and 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 a 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 September 30, 2023, 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 93 million shares and the number available for issuance assuming all awards are in the form of RSUs was approximately 44 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:


	2023	2022	2021
Risk-free interest rate	3.6%	1.6%	1.2%
Expected volatility	31%	28%	30%
Dividend yield	—%	—%	0.03%
Termination rate	5.9%	5.8%	5.8%
Exercise multiple	1.98	1.98	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.

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


	2023		2022		2021
Stock option	$	76	$	88	$	95
RSUs	1,067		889		505
Total equity-based compensation expense(1)	1,143		977		600
Tax impact	(260)		(221)		(136)
Reduction in net income	$	883	$	756	$	464
Equity-based compensation expense capitalized during the period	$	145	$	148	$	112

(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.

The following table summarizes information about stock option transactions in fiscal 2023 (shares in millions):



	Shares	Weighted Average Exercise Price
Outstanding at beginning of year	18	$	121.28

Awards granted	2	89.85
Awards exercised	(1)	60.46
Awards expired/canceled	(1)	111.62
Outstanding at end of year	18	$	120.20
Exercisable at end of year	14	$	119.78

The following tables summarize information about stock options vested and expected to vest at September 30, 2023 (shares in millions):


					Vested
Range of Exercise Prices					Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Years of Contractual Life
$	40	—	$	80	1	$	72.59	0.2
$	81	—	$	120	9	107.13		3.7
$	121	—	$	160	3	148.09		6.7

$	161	—	$	200	1	177.72		7.4
					14


					Expected to Vest
Range of Exercise Prices					Number of Options(1)	Weighted Average Exercise Price		Weighted Average Remaining Years of Contractual Life
$	50	—	$	100	2	$	89.89	9.4
$	101	—	$	150	1	146.64		6.3
$	151	—	$	200	1	161.36		7.8

					4

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

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The following table summarizes information about RSU transactions in fiscal 2023 (shares in millions):



	Units(3)	Weighted Average Grant-Date Fair Value
Unvested at beginning of year	18	$	144.00
Granted(1)	18	89.66
Vested	(9)	136.15
Forfeited	(3)	118.86

Unvested at end of year(2)	24	$	109.04

(1)Includes 0.4 million Performance RSUs

(2)Includes 0.8 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 September 30, 2023, the maximum number of these Performance RSUs that could be issued upon vesting is not material.

The weighted average grant-date fair values of options granted during fiscal 2023, 2022 and 2021 were $33.18, $46.76 and $57.05, respectively, and for RSUs were $89.66, $136.36 and $178.70, respectively. The total intrinsic value (market value on date of exercise less exercise price) of options exercised and RSUs vested during fiscal 2023, 2022 and 2021 totaled $829 million, $982 million and $1,175 million, respectively. The aggregate intrinsic values of stock options vested and expected to vest at September 30, 2023 were $4.8 million and $0 million, respectively.

As of September 30, 2023, unrecognized compensation cost related to unvested stock options and RSUs was $77 million and $1,774 million, respectively. That cost is expected to be recognized over a weighted-average period of 1.1 years for stock options and 1.2 years for RSUs.

Cash received from option exercises for fiscal 2023, 2022 and 2021 was $52 million, $127 million and $435 million, respectively. Tax benefits realized from tax deductions associated with option exercises and RSU vestings for fiscal 2023, 2022 and 2021 were approximately $190 million, $219 million and $256 million, respectively.

13Detail of Certain Balance Sheet Accounts


Current receivables	September 30, 2023		October 1, 2022

Accounts receivable	$	10,179	$	10,811
Other	2,266		1,999
Allowance for credit losses	(115)		(158)
	$	12,330	$	12,652


Parks, resorts and other property
Attractions, buildings and improvements	$	35,255	$	33,795
Furniture, fixtures and equipment	26,358		24,409
Land improvements	7,419		7,757
Leasehold improvements	1,058		1,037
	70,090		66,998
Accumulated depreciation	(42,610)		(39,356)
Projects in progress	6,285		4,814
Land	1,176		1,140
	$	34,941	$	33,596

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Intangible assets	September 30, 2023		October 1, 2022

Character/franchise intangibles, copyrights and trademarks	$	10,572	$	10,572
MVPD agreements	8,056		8,058
Other amortizable intangible assets	4,016		4,045
Accumulated amortization	(11,375)		(9,630)
Net amortizable intangible assets	11,269		13,045


Indefinite lived intangible assets(1)	1,792		1,792
	$	13,061	$	14,837

(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	$	15,125	$	16,205
Payroll and employee benefits	3,061		3,447
Income taxes payable	2,276		378
Other	209		183
	$	20,671	$	20,213

14Commitments and Contingencies

Commitments

The Company has various contractual commitments for rights to sports, films and other programming, totaling approximately $66.8 billion, including approximately $3.0 billion for available programming as of September 30, 2023. The Company also has contractual commitments for the construction of 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
2024	$	10,331	$	3,286	$	4,055	$	17,672
2025	10,631		1,591		2,803		15,025
2026	7,876		941		760		9,577
2027	6,687		671		388		7,746
2028	4,713		565		146		5,424
Thereafter	19,121		376		2,181		21,678
	$	59,359	$	7,430	$	10,333	$	77,122

(1)Primarily relates to rights for NFL, college football (including bowl games and the College Football Playoff) and basketball, cricket, NBA, NHL, soccer, MLB, UFC, 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.

Legal Matters

On May 12, 2023, a private securities class action lawsuit was filed in the U.S. District Court for the Central District of California against the Company, its former Chief Executive Officer, Robert Chapek, its former Chief Financial Officer, Christine M. McCarthy, and the former Chairman of the Disney Media and Entertainment Distribution segment, Kareem Daniel on behalf of certain purchasers of securities of the Company (the “Securities Class Action”). On November 6, 2023, a consolidated complaint was filed in the same action, adding Robert Iger, the Company’s Chief Executive Officer, as a defendant. Claims in the Securities Class Action include (i) violations of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder against all defendants, (ii) violations of Section 20A of the Exchange Act against Iger and McCarthy, and (iii) violations of Section 20(a) of the Exchange Act against all defendants. Plaintiffs in the Securities Class Action allege purported misstatements and omissions concerning, and a scheme to conceal, accurate costs and subscriber growth of the

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Disney+ platform. The Company intends to defend against the lawsuit vigorously. The lawsuit is in the early stages and at this time we cannot reasonably estimate the amount of any potential loss.

Two shareholder derivative complaints have been filed. The first, in which Hugues Gervat is the plaintiff, was filed on August 4, 2023, in the U.S. District Court for the Central District of California. The second, in which Stourbridge Investments LLC is the plaintiff, was filed on August 23, 2023 in the U.S. District Court for the District of Delaware. Each named The Walt Disney Company as a nominal defendant and alleged claims on its behalf against the Company’s Chief Executive Officer, Robert Iger; its former Chief Executive Officer, Robert Chapek; its former Chief Financial Officer, Christine M. McCarthy; the former Chairman of the Disney Media and Entertainment Distribution segment, Kareem Daniel, and ten current and former members of the Disney Board (Susan E. Arnold; Mary T. Barra; Safra A. Catz; Amy L. Chang; Francis A. deSouza; Michael B.G. Froman; Maria Elena Lagomasino; Calvin R. McDonald; Mark G. Parker; and Derica W. Rice). Along with alleged violations of Sections 10(b), 14(a), 20(a), and Rule 10b-5 of the Securities Exchange Act, premised on the same allegations as the Securities Class Action, plaintiffs in both actions sought to recover for alleged breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement and waste. On October 24, 2023, the Stourbridge action was voluntarily dismissed and, on November 16, 2023, was refiled in Delaware state court alleging equivalent theories of liability based on state law. On October 30, 2023, the Gervat action was stayed pending a ruling on an expected motion to dismiss to be filed in the Securities Class Action. The Company intends to defend against these lawsuits vigorously. The lawsuits are in the early stages, and at this time we cannot reasonably estimate the amount of any potential loss.

The Company, together with, in some instances, certain of its directors and officers, is a defendant in various other legal actions involving copyright, breach of contract and various other claims incident to the conduct of its businesses. 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 September 30, 2023, our operating leases have a weighted-average remaining lease term of approximately 10 years, and our finance leases have a weighted-average remaining lease term of approximately 29 years. The weighted-average incremental borrowing rate is 3.6% and 6.5%, for our operating leases and finance leases, respectively. At September 30, 2023 total estimated future lease payments for non-cancelable lease agreements that have not commenced of approximately $0.5 billion 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:


	September 30, 2023		October 1, 2022
Right-of-use assets(1)
Operating leases	$	4,211	$	3,966
Finance leases	291		303
Total right-of-use assets	4,502		4,269

Short-term lease liabilities(2)
Operating leases	740		614
Finance leases	37		37
	777		651
Long-term lease liabilities(3)
Operating leases	3,258		3,020
Finance leases	206		219
	3,464		3,239
Total lease liabilities	$	4,241	$	3,890

(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:


	2023		2022		2021
Finance lease cost
Amortization of right-of-use assets	$	39	$	39	$	42
Interest on lease liabilities	15		15		20
Operating lease cost	820		796		853
Variable fees and other(1)	444		363		414
Total lease cost	$	1,318	$	1,213	$	1,329

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

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


	2023		2022		2021
Operating cash flows for operating leases	$	714	$	736	$	925
Operating cash flows for finance leases	15		15		20
Financing cash flows for finance leases	41		48		25
Total	$	770	$	799	$	970

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Future minimum lease payments, as of September 30, 2023, are as follows:


	Operating		Financing
Fiscal Year:
2024	$	824	$	47
2025	792		44
2026	504		38
2027	384		33
2028	318		29
Thereafter	2,265		350
Total undiscounted future lease payments	5,087		541
Less: Imputed interest	(1,089)		(298)
Total reported lease liability	$	3,998	$	243

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 September 30, 2023
Description	Level 1		Level 2		Level 3		Total
Assets
Investments	$	46	$	128	$	—	$	174
Derivatives

Foreign exchange	—		1,336		—		1,336
Other	—		18		—		18
Liabilities
Derivatives
Interest rate	—		(1,791)		—		(1,791)
Foreign exchange	—		(815)		—		(815)
Other	—		(13)		—		(13)
Other	—		(465)		—		(465)
Total recorded at fair value	$	46	$	(1,602)	$	—	$	(1,556)
Fair value of borrowings	$	—	$	40,123	$	1,333	$	41,456

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	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

The fair value of Level 2 investments are primarily determined based on an internal valuation model that uses observable inputs such as stock trading price, volatility and risk free rate.

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 the fourth quarter of fiscal 2023, the Company recorded impairment charges for goodwill 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 (see Note 18 for a discussion of the more significant inputs used in our discounted cash flow analysis).

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 September 30, 2023, 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 balances in high quality money market funds. At September 30, 2023, 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.

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The Company’s trade receivables and financial investments do not represent a significant concentration of credit risk at September 30, 2023 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.

17Derivative Instruments

The Company manages its exposure to various financial 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 September 30, 2023
	Current Assets		Other Assets		Other Current Liabilities		Other Long- Term Liabilities
Derivatives designated as hedges
Foreign exchange	$	595	$	338	$	(123)	$	(93)
Interest rate	—		—		(1,791)		—
Other	12		6		—		—
Derivatives not designated as hedges(1)
Foreign exchange	384		19		(520)		(79)

Other	—		—		(13)		—
Gross fair value of derivatives	991		363		(2,447)		(172)
Counterparty netting	(770)		(262)		900		132
Cash collateral (received) paid	(123)		(7)		1,257		—
Net derivative positions	$	98	$	94	$	(290)	$	(40)

(1)In fiscal 2023, the Company entered into a licensing and promotional arrangement and received warrants to purchase equity that are accounted for as a derivative asset. The warrants are recorded in investments at their fair market value of $128 million at September 30, 2023.


	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)

Reference Rate Reform

In fiscal 2023, the Company amended its interest rate and cross-currency swap agreements to implement modifications related to changing the reference rates from LIBOR to SOFR and from the Canadian Dollar Offered Rate to the Canadian Overnight Repo Rate Average. In connection with these amendments, the Company applied the hedge accounting relief provided by the Financial Accounting Standards Board (FASB) in ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting to preserve the fair value hedge designation of the interest rate and cross-currency swaps.

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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. The total notional amount of the Company’s pay-floating interest rate swaps as of September 30, 2023 and October 1, 2022, was $13.5 billion and $14.5 billion, respectively.

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


	Carrying Amount of Hedged Borrowings				Fair Value Adjustments Included in Hedged Borrowings
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Borrowings:
Current	$	1,439	$	997	$	(59)	$	(3)
Long-term	10,748		12,358		(1,694)		(1,733)
	$	12,187	$	13,355	$	(1,753)	$	(1,736)

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


	2023		2022		2021
Gain (loss) on:
Pay-floating swaps	$	(14)	$	(1,635)	$	(603)
Borrowings hedged with pay-floating swaps	14		1,635		603
Benefit (expense) associated with interest accruals on pay-floating swaps	(510)		31		143

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 September 30, 2023 or at October 1, 2022, and gains and losses related to pay-fixed swaps recognized in earnings for fiscal 2023, 2022 and 2021 were not material.

Foreign Exchange Risk Management

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

The Company enters into option and forward contracts 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 September 30, 2023 and October 1, 2022, the notional amounts of the Company’s net foreign exchange cash flow hedges were $8.3 billion and $7.4 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

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the next twelve months total $488 million. The following table summarizes the effect of foreign exchange cash flow hedges on AOCI:


	2023		2022		2021
Gain (loss) recognized in Other Comprehensive Income	$	(136)	$	1,093	$	61
Gain (loss) reclassified from AOCI into the Statement of Operations(1)	446		116		24

(1)Primarily recorded in revenue.

The Company designates cross currency swaps as fair value hedges of foreign currency denominated borrowings. The impact from the change in foreign currency on both the cross currency swap and borrowing is recorded to “Interest expense, net”. The impact from interest rate changes is recorded in AOCI and is amortized over the life of the cross currency swap. As of both September 30, 2023 and October 1, 2022, the total notional amounts of the Company’s designated cross currency swaps were Canadian $1.3 billion ($1.0 billion), respectively. The related gains or losses recognized in earnings were not material for the fiscal years ended 2023, 2022 and 2021.

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 September 30, 2023 and October 1, 2022 were $3.1 billion and $3.8 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 Income:


	Costs and Expenses						Interest expense, net						Income Tax Expense
	2023		2022		2021		2023		2022		2021		2023		2022		2021
Net gains (losses) on foreign currency denominated assets and liabilities	$	(37)	$	(685)	$	(30)	$	(15)	$	82	$	(47)	$	(91)	$	212	$	(7)
Net gains (losses) on foreign exchange risk management contracts not designated as hedges	(159)		547		(83)		10		(82)		47		64		(208)		2
Net gains (losses)	$	(196)	$	(138)	$	(113)	$	(5)	$	—	$	—	$	(27)	$	4	$	(5)

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 September 30, 2023 and October 1, 2022 and related gains or losses recognized in earnings were not material for fiscal 2023, 2022 and 2021.

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 September 30, 2023 and October 1, 2022 was $0.4 billion, respectively. The related gains or losses recognized in earnings were not material for fiscal 2023, 2022 and 2021.

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 $1,587 million and $1,507 million at September 30, 2023 and October 1, 2022, respectively.

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18Restructuring and Impairment Charges

Content Impairment

As a result of our strategic change in approach to content curation, we removed content from our Entertainment Direct-to-Consumer services and terminated certain third-party license agreements for the right to use content primarily on our Entertainment Direct-to-Consumer platforms. We recorded charges of $2.6 billion in fiscal 2023, including a $2.0 billion write-off of produced content costs and $0.6 billion to terminate license agreements. We paid approximately $0.4 billion of cash to terminate these license agreements. The charges are recorded in “Restructuring and impairment charges” in the Consolidated Statements of Income.

Goodwill Impairment

In the fourth quarter of fiscal 2023, the Company performed a quantitative goodwill impairment test under both the previous segment reporting structure and the new segment reporting structure. There were no goodwill impairments under the previous reporting structure. The change in reporting structure requires judgment to identify new reporting units, allocate goodwill to these reporting units (based on relative fair values) and assign other recorded assets and liabilities to these reporting units. See Note 2 for additional information regarding the quantitative goodwill impairment assessment.

Our future cash flows are based on internal forecasts for each reporting unit, which consider projected inflation and other economic indicators, as well as industry growth projections. Significant judgments and assumptions in the discounted cash flow model relate to future revenues and certain operating expenses, terminal growth rates and discount rates. Discount rates for each reporting unit are determined based on the inherent risks of each reporting unit’s underlying operations. 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 would differ.

Based on our projections, the carrying amounts of our entertainment and international sports linear networks reporting units exceeded their fair values, and we recorded non-cash goodwill impairment charges of approximately $0.7 billion in “Restructuring and impairment charges” in the Consolidated Statement of Income. Goodwill, net of impairments recorded was $77.1 billion as of September 30, 2023

Other

In fiscal 2023, the Company recorded charges of $0.4 billion of severance, $0.1 billion for an impairment of an investment and $0.1 billion for exiting our businesses in Russia. In fiscal 2022, the Company recorded charges of $0.2 billion, primarily due to asset impairments related to exiting our businesses in Russia. In fiscal 2021, the Company recorded restructuring and impairment charges of $0.7 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. These charges are reported in “Restructuring and impairment charges” in the Consolidated Statements of Income.

19New Accounting Pronouncements

Accounting Pronouncements Adopted in Fiscal 2023

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, including: the nature of the transactions, the accounting for the transactions and the effect of the transactions on the financial statements. The Company adopted the new guidance prospectively in the fourth quarter of fiscal 2023. The adoption did not have a material impact on our financial statements other than additional disclosures related to content production incentives. See Notes 2 and 7 for additional information.

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