0001744489 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2019-03-30


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
x☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 2019April 3, 2021
or
¨☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________.
Commission File Number 001-38842
dis-20210403_g1.jpg

Delaware83-0940635
State or Other Jurisdiction ofI.R.S. Employer Identification
Incorporation or Organization
Delaware83-0940635
State or Other Jurisdiction ofI.R.S. Employer Identification
Incorporation or Organization
500 South Buena Vista Street, Burbank, California91521
Address of Principal Executive OfficesZip Code
(818) 560-1000
Registrant’s Telephone Number, Including Area Code
500 South Buena Vista Street
Burbank, California 91521
Address of Principal Executive Offices and Zip Code
(818) 560-1000
Registrant’s Telephone Number, Including Area Code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueDISNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x☒    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x☒    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerx☒Accelerated filer¨☐
Non-accelerated filer¨☐Smaller reporting company¨☐
Emerging growth company¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ☐    No  ☒¨    No  x
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueDISNew York Stock Exchange
There were 1,799,698,9221,816,932,058 shares of common stock outstanding as of May 1, 2019.5, 2021.




PART I. FINANCIAL INFORMATION
Item 1: Financial Statements
THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited; in millions, except per share data)
 Quarter EndedSix Months Ended
 April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Revenues:
Services$14,522 $16,190 $29,393 $34,284 
Products1,091 1,835 2,469 4,618 
Total revenues15,613 18,025 31,862 38,902 
Costs and expenses:
Cost of services (exclusive of depreciation and amortization)(8,932)(10,683)(19,670)(22,078)
Cost of products (exclusive of depreciation and amortization)(850)(1,254)(1,887)(2,893)
Selling, general, administrative and other(3,113)(3,393)(6,030)(7,102)
Depreciation and amortization(1,272)(1,334)(2,570)(2,633)
Total costs and expenses(14,167)(16,664)(30,157)(34,706)
Restructuring and impairment charges(414)(145)(527)(295)
Other income, net305 0 305 0 
Interest expense, net(320)(300)(644)(583)
Equity in the income of investees213 135 437    359 
Income from continuing operations before income taxes1,230 1,051 1,276 3,677    
Income taxes on continuing operations(108)(523)(124)(981)
Net income from continuing operations1,122 528 1,152 2,696 
Loss from discontinued operations, net of income tax benefit of $3, $3, $7 and $10, respectively)(11)(8)   (23)(29)
Net income1,111 520 1,129 2,667 
Net income from continuing operations attributable to noncontrolling interests(210)(60)(211)(100)
Net income attributable to The Walt Disney Company (Disney)$901    $460 $918 $2,567 
Earnings (loss) per share attributable to Disney(1):
Diluted
Continuing operations$0.50 $0.26 $0.52 $1.43 
Discontinued operations(0.01)0 (0.01)(0.02)
$0.49 $0.25 $0.50 $1.41 
Basic
Continuing operations$0.50 $0.26 $0.52 $1.44 
Discontinued operations(0.01)0 (0.01)(0.02)
$0.50 $0.25 $0.51 $1.42 
Weighted average number of common and common equivalent shares outstanding:
Diluted1,829 1,816 1,826 1,816 
Basic1,817 1,808 1,814 1,806 
 Quarter Ended Six Months Ended
 March 30,
2019		 March 31,
2018		 March 30,
2019		 March 31,
2018
Revenues:       
Services$13,006
 $12,520
 $25,872
 $25,504
Products1,916
 2,028
 4,353
 4,395
Total revenues14,922
 14,548
 30,225
 29,899
Costs and expenses:       
Cost of services (exclusive of depreciation and amortization)(7,167) (6,313) (14,731) (13,637)
Cost of products (exclusive of depreciation and amortization)(1,209) (1,228) (2,646) (2,633)
Selling, general, administrative and other(2,327) (2,239) (4,479) (4,326)
Depreciation and amortization(828) (731) (1,560) (1,473)
Total costs and expenses(11,531) (10,511) (23,416) (22,069)
Restructuring and impairment charges(662) (13) (662) (28)
Other income4,963
 41
 4,963
 94
Interest expense, net(143) (143) (206) (272)
Equity in the income / (loss) of investees, net(312) 6
 (236) 49
Income from continuing operations before income taxes7,237
 3,928
 10,668
 7,673
Income taxes from continuing operations(1,647) (813) (2,292) (85)
Net income from continuing operations5,590
 3,115
 8,376
 7,588
Income (loss) from discontinued operations (net of income taxes of $5, $0, $5 and $0, respectively)21
 —
 21
 —
Consolidated net income5,611
 3,115
 8,397
 7,588
Less: Net income attributable to noncontrolling interests(159) (178) (157) (228)
Net income attributable to The Walt Disney Company (Disney)$5,452
 $2,937
 $8,240
 $7,360
        
Earnings per share attributable to Disney:       
Continuing operations$3.53
 $1.95
 $5.42
 $4.86
Discontinued operations0.01
 —
 0.01
 —
Diluted$3.55
 $1.95
 $5.43
 $4.86
        
Continuing operations$3.55
 $1.95
 $5.44
 $4.88
Discontinued operations0.01
 —
 0.01
 —
Basic$3.56
 $1.95
 $5.46
 $4.88
        
Weighted average number of common and common equivalent shares outstanding:       
Diluted1,537
 1,510
 1,517
 1,515
        
Basic1,530
 1,503
 1,510
 1,507
(1)Total may not equal the sum of the column due to rounding.
See Notes to Condensed Consolidated Financial Statements

2

THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited; in millions)
 
 Quarter Ended Six Months Ended
 March 30,
2019		 March 31,
2018		 March 30,
2019		 March 31,
2018
Consolidated net income$5,611
 $3,115
 $8,397
 $7,588
Other comprehensive income/(loss), net of tax:       
Market value adjustments for investments(4) 7
 (4) 6
Market value adjustments for hedges(80) (112) (89) (94)
Pension and postretirement medical plan adjustments68
 94
 121
 155
Foreign currency translation and other46
 144
 25
 231
Other comprehensive income30
 133
 53
 298
Comprehensive income5,641
 3,248
 8,450
 7,886
Net income attributable to noncontrolling interests, including redeemable noncontrolling interests(159) (178) (157) (228)
Other comprehensive income attributable to noncontrolling interests(34) (74) (36) (115)
Comprehensive income attributable to Disney$5,448
 $2,996
 $8,257
 $7,543

 Quarter EndedSix Months Ended
 April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Net income$1,111 $520 $1,129 $2,667 
Other comprehensive income (loss), net of tax:
Market value adjustments, primarily for hedges110 129 (63)22 
Pension and postretirement medical plan adjustments191 73    341 180 
Foreign currency translation and other(93)(323)184 (196)
Other comprehensive income208 (121)462 6 
Comprehensive income1,319 399 1,591 2,673 
Net income from continuing operations attributable to noncontrolling interests(210)(60)(211)(100)
Other comprehensive income (loss) attributable to noncontrolling interests15 17 (58)(26)
Comprehensive income attributable to Disney$1,124    $356 $1,322    $2,547    
See Notes to Condensed Consolidated Financial Statements




3

THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited; in millions, except per share data)
March 30,
2019		 September 29,
2018		April 3,
2021		October 3,
2020
ASSETS   ASSETS
Current assets   Current assets
Cash and cash equivalents$10,108
 $4,150
Cash and cash equivalents$15,890 $17,914 
Receivables14,593
 9,334
Receivables, netReceivables, net12,533 12,708 
Inventories1,445
 1,392
Inventories1,406 1,583 
Television costs and advances5,408
 1,314
Content advancesContent advances2,204 2,171 
Other current assets1,257
 635
Other current assets844 875 
Assets held for sale1,466
 —
Total current assets34,277
 16,825
Total current assets32,877 35,251 
Film and television costs24,353
 7,888
Produced and licensed content costsProduced and licensed content costs26,858 25,022 
Investments4,080
 2,899
Investments4,309 3,903 
Parks, resorts and other property   Parks, resorts and other property
Attractions, buildings and equipment57,991
 55,238
Attractions, buildings and equipment63,037    62,111    
Accumulated depreciation(33,132) (30,764)Accumulated depreciation(36,866)(35,517)
24,859
 24,474
26,171 26,594 
Projects in progress4,984
 3,942
Projects in progress4,891 4,449 
Land1,174
 1,124
Land1,075 1,035 
31,017
 29,540
32,137 32,078 
Intangible assets, net26,985
 6,812
Intangible assets, net18,123 19,173 
Goodwill75,057
 31,269
Goodwill77,861 77,689 
Noncurrent assets held for sale13,182
 —
Other assets5,391
 3,365
Other assets8,085 8,433 
Total assets$214,342
 $98,598
Total assets$200,250 $201,549 
   
LIABILITIES AND EQUITY   LIABILITIES AND EQUITY
Current liabilities   Current liabilities
Accounts payable and other accrued liabilities$20,503
 $9,479
Accounts payable and other accrued liabilities$17,062 $16,801 
Current portion of borrowings19,158
 3,790
Current portion of borrowings5,243 5,711 
Deferred revenue and other4,281
 4,591
Deferred revenue and other4,337 4,116 
Liabilities held for sale434
 —
Total current liabilities44,376
 17,860
Total current liabilities26,642 26,628 
Borrowings37,803
 17,084
Borrowings50,903 52,917 
Deferred income taxes11,208
 3,109
Deferred income taxes6,894 7,288 
Noncurrent liabilities held for sale2,659
 —
Other long-term liabilities12,854
 6,590
Other long-term liabilities16,615 17,204 
Commitments and contingencies (Note 13)


 


Commitments and contingencies (Note 12)Commitments and contingencies (Note 12)00
Redeemable noncontrolling interests1,103
 1,123
Redeemable noncontrolling interests9,410 9,249 
Equity   Equity
Preferred stock—
 —
Preferred stock0 0 
Common stock, $0.01 par value, Authorized – 4.6 billion shares, Issued – 1.8 billion shares at
March 30, 2019 and 2.9 billion shares at September 29, 2018
53,419
 36,779
Common stock, $0.01 par value, Authorized – 4.6 billion shares, Issued – 1.8 billion sharesCommon stock, $0.01 par value, Authorized – 4.6 billion shares, Issued – 1.8 billion shares55,000 54,497 
Retained earnings41,212
 82,679
Retained earnings39,365 38,315 
Accumulated other comprehensive loss(3,786) (3,097)Accumulated other comprehensive loss(7,918)(8,322)
90,845
 116,361
Treasury stock, at cost, 19 million shares at March 30, 2019 and 1.4 billion shares at September 29, 2018(907) (67,588)
Treasury stock, at cost, 19 million sharesTreasury stock, at cost, 19 million shares(907)(907)
Total Disney Shareholders’ equity89,938
 48,773
Total Disney Shareholders’ equity85,540 83,583 
Noncontrolling interests14,401
 4,059
Noncontrolling interests4,246 4,680 
Total equity104,339
 52,832
Total equity89,786 88,263 
Total liabilities and equity$214,342
 $98,598
Total liabilities and equity$200,250 $201,549 
See Notes to Condensed Consolidated Financial Statements

4

THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in millions)
Six Months Ended Six Months Ended
March 30,
2019		 March 31,
2018		April 3,
2021		March 28,
2020
OPERATING ACTIVITIES   OPERATING ACTIVITIES
Net income from continuing operations$8,376
 $7,588
Net income from continuing operations$1,152 $2,696 
Depreciation and amortization1,560
 1,473
Depreciation and amortization2,570    2,633 
Gain on acquisition(4,917) —
Net (gain)/loss on investmentsNet (gain)/loss on investments(481)5 
Deferred income taxes1,190
 (1,623)Deferred income taxes(556)   297 
Equity in the (income) / loss of investees236

(49)
Equity in the income of investeesEquity in the income of investees(437)(359)
Cash distributions received from equity investees370
 389
Cash distributions received from equity investees372 405    
Net change in film and television costs and advances(281) (490)
Net change in produced and licensed content costs and advancesNet change in produced and licensed content costs and advances(1,685)(925)
Net change in operating lease right of use assets / liabilitiesNet change in operating lease right of use assets / liabilities146 (96)
Equity-based compensation475
 194
Equity-based compensation270 246 
Other121
 155
Other, netOther, net490 161 
Changes in operating assets and liabilities, net of business acquisitions:   Changes in operating assets and liabilities, net of business acquisitions:
Receivables(386) (1,004)Receivables(37)828 
Inventories(19) 64
Inventories175 70 
Other assets46
 (248)Other assets(131)(174)
Accounts payable and other liabilities(283) (92)Accounts payable and other liabilities(780)(888)
Income taxes(474) 406
Income taxes400 (112)
Cash provided by operations - continuing operations6,014
 6,763
Cash provided by operations - continuing operations1,468 4,787 
   
INVESTING ACTIVITIES   INVESTING ACTIVITIES
Investments in parks, resorts and other property(2,390) (2,044)Investments in parks, resorts and other property(1,530)(2,585)
Acquisitions(9,901) (1,581)
Other(392) (180)Other203 (21)
Cash used in investing activities - continuing operations(12,683) (3,805)Cash used in investing activities - continuing operations(1,327)(2,606)
   
FINANCING ACTIVITIES   FINANCING ACTIVITIES
Commercial paper borrowings, net376
 1,372
Commercial paper borrowings (payments), netCommercial paper borrowings (payments), net(87)3,138 
Borrowings31,145
 1,048
Borrowings37 6,071 
Reduction of borrowings(17,398) (1,350)Reduction of borrowings(1,816)(1,048)
Dividends(1,310) (1,266)Dividends0 (1,587)
Repurchases of common stock—
 (2,608)
Proceeds from exercise of stock options83
 91
Proceeds from exercise of stock options394 207 
Other(200) (169)Other(769)(165)
Cash provided by / (used in) financing activities - continuing operations12,696
 (2,882)
Cash provided by (used in) financing activities - continuing operationsCash provided by (used in) financing activities - continuing operations(2,241)6,616 
   
CASH FLOWS FROM DISCONTINUED OPERATIONS   CASH FLOWS FROM DISCONTINUED OPERATIONS
Cash used in operations - discontinued operations(35) —
Cash provided by operations - discontinued operationsCash provided by operations - discontinued operations4 4 
Cash provided by investing activities - discontinued operationsCash provided by investing activities - discontinued operations4 198 
Cash provided by discontinued operationsCash provided by discontinued operations8 202 
   
Impact of exchange rates on cash, cash equivalents and restricted cash75
 55
Impact of exchange rates on cash, cash equivalents and restricted cash70 (76)
   
Change in cash, cash equivalents and restricted cash6,067
 131
Change in cash, cash equivalents and restricted cash(2,022)8,923 
Cash, cash equivalents and restricted cash, beginning of period4,155
 4,064
Cash, cash equivalents and restricted cash, beginning of period17,954 5,455 
Cash, cash equivalents and restricted cash, end of period$10,222
 $4,195
Cash, cash equivalents and restricted cash, end of period$15,932 $14,378 
See Notes to Condensed Consolidated Financial Statements

5

THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(unaudited; in millions)
  Quarter Ended
  Equity Attributable to Disney    
  Shares Common Stock Retained Earnings
Accumulated
Other
Comprehensive
Income
(Loss)
Treasury Stock Total Disney Equity 
Non-controlling
   Interests (1)
 
Total
Equity
Balance at December 29, 2018 1,490
 $36,799
 $84,887
 $(3,782) $(67,588) $50,316
 $4,077
 $54,393
Comprehensive income —
 —
 5,452
 (4) —
 5,448
 191
 5,639
Equity compensation activity 1
 395
 —
 —
 —
 395
 —
 395
Dividends —
 8
 (8) —
 —
 —
 —
 —
Contributions —
 —
 —
 —
 —
 —
 27
 27
Acquisition of 21CF 307
 33,804
 —
 —
 —
 33,804
 10,638
 44,442
Retirement of treasury stock —
 (17,563) (49,118) —
 66,681
 —
 —
 —
Distributions and other —
 (24) (1) —
 —
 (25) (532) (557)
Balance at March 30, 2019 1,798
 $53,419
 $41,212
 $(3,786) $(907) $89,938
 $14,401
 $104,339
                 
Balance at December 30, 2017 1,507
 $36,254
 $75,763
 $(3,404) $(65,324) $43,289
 $3,794
 $47,083
Comprehensive income —
 —
 2,937
 59
 —
 2,996
 251
 3,247
Equity compensation activity 1
 157
 —
 —
 —
 157
 —
 157
Common stock repurchases (12) —
 —
 —
 (1,295) (1,295) —
 (1,295)
Distributions and other —
 —
 4
 —
 —
 4
 (545) (541)
Balance at March 31, 2018 1,496
 $36,411
 $78,704
 $(3,345) $(66,619) $45,151
 $3,500
 $48,651

(1)
 Quarter Ended
Equity Attributable to Disney
 SharesCommon StockRetained EarningsAccumulated
Other
Comprehensive
Income
(Loss)		Treasury StockTotal Disney Equity
Non-controlling
   Interests(1)
Total
Equity
Balance at January 2, 20211,814 $54,663 $38,456 $(8,141)$(907)$84,071 $4,657 $88,728 
Comprehensive income— — 901 223 — 1,124 115 1,239 
Equity compensation activity3 337 — — — 337 — 337 
Cumulative effect of accounting change— — (5)— — (5)— (5)
Distributions and other— — 13 — — 13 (526)(513)
Balance at April 3, 20211,817 $55,000 $39,365 $(7,918)$(907)$85,540 $4,246 $89,786 
Balance at December 28, 20191,805 $53,995 $43,202 $(6,533)$(907)$89,757 $5,016 $94,773 
Comprehensive income (loss)— — 460    (104)— 356 (23)333 
Equity compensation activity1 226 — — — 226 — 226 
Dividends— 9 (9)— — — — — 
Contributions— — — — — — 33 33 
Distributions and other— — 68 — — 68 (556)(488)
Balance at March 28, 20201,806 $54,230 $43,721 $(6,637)$(907)$90,407 $4,470 $94,877 
(1)Excludes redeemable noncontrolling interests.
Excludes redeemable noncontrolling interest.
See Notes to Condensed Consolidated Financial Statements



6

THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(unaudited; in millions)
 
 Six Months Ended
Equity Attributable to Disney
 SharesCommon StockRetained EarningsAccumulated
Other
Comprehensive
Income
(Loss)		Treasury StockTotal Disney Equity
Non-controlling
   Interests (1)
Total
Equity
Balance at October 3, 20201,810 $54,497 $38,315 $(8,322)$(907)$83,583 $4,680 $88,263 
Comprehensive income— — 918 404 — 1,322 109 1,431 
Equity compensation activity7 502 — — — 502 — 502 
Contributions— — — — — — 5 5 
Cumulative effect of accounting change— — 105 — — 105 — 105 
Distributions and other— 1 27 — — 28 (548)(520)
Balance at April 3, 20211,817 $55,000 $39,365 $(7,918)$(907)$85,540 $4,246 $89,786 
Balance at September 28, 20191,802 $53,907 $42,494 $(6,617)$(907)$88,877 $5,012 $93,889 
Comprehensive income (loss)— — 2,567 (20)— 2,547 (6)2,541 
Equity compensation activity4 314 — — — 314 — 314 
Dividends— 9 (1,596)— — (1,587)— (1,587)
Contributions— — — — — — 53 53 
Adoption of new lease accounting guidance— — 197 — — 197 — 197 
Distributions and other— — 59 — — 59 (589)(530)
Balance at March 28, 20201,806 $54,230 $43,721 $(6,637)$(907)$90,407 $4,470 $94,877 
  Six Months Ended
  Equity Attributable to Disney    
  Shares Common Stock Retained Earnings
Accumulated
Other
Comprehensive
Income
(Loss)
Treasury Stock Total Disney Equity 
Non-controlling
   Interests (1)
 
Total
Equity
Balance at September 29, 2018 1,488
 $36,779
 $82,679
 $(3,097) $(67,588) $48,773
 $4,059
 $52,832
Comprehensive income —
 —
 8,240
 17
 —
 8,257
 190
 8,447
Equity compensation activity 3
 415
 —
 —
 —
 415
 —
 415
Dividends —
 8
 (1,318) —
 —
 (1,310) —
 (1,310)
Contributions —
 —
 —
 —
 —
 —
 47
 47
Acquisition of 21CF 307
 33,804
 —
 —
 —
 33,804
 10,638
 44,442
Adoption of new accounting guidance:   

            
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income —
 —
 691
 (691) —
 —
 —
 —
Intra-Entity Transfers of Assets Other Than Inventory —
 —
 129
 —
 —
 129
 —
 129
Revenues from Contracts with Customers —
 —
 (116) —
 —
 (116) —
 (116)
Other —
 —
 22
 (15) —
 7
 —
 7
Retirement of treasury stock —
 (17,563) (49,118) —
 66,681
 —
 —
 —
Distributions and other —
 (24) 3
 —
 —
 (21) (533) (554)
Balance at March 30, 2019 1,798
 $53,419
 $41,212
 $(3,786) $(907) $89,938
 $14,401
 $104,339
                 
Balance at September 30, 2017 1,517
 $36,248
 $72,606
 $(3,528) $(64,011) $41,315
 $3,689
 $45,004
Comprehensive income —
 —
 7,360
 183
 —
 7,543
 348
 7,891
Equity compensation activity 4
 163
 —
 —
 —
 163
 —
 163
Common stock repurchases (25) —
 —
 —
 (2,608) (2,608) —
 (2,608)
Dividends —
 —
 (1,266) —
 —
 (1,266) —
 (1,266)
Distributions and other —
 —
 4
 —
 —
 4
 (537) (533)
Balance at March 31, 2018 1,496
 $36,411
 $78,704
 $(3,345) $(66,619) $45,151
 $3,500
 $48,651
(1)(1)Excludes redeemable noncontrolling interests.
Excludes redeemable noncontrolling interest.
See Notes to Condensed Consolidated Financial Statements



7

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)
 
1.Principles of Consolidation
1.Principles of Consolidation
These Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. We believe that we have included all normal recurring adjustments necessary for a fair presentation of the results for the interim period. Operating results for the six months endedMarch 30, 2019 April 3, 2021 are not necessarily indicative of the results that may be expected for the year ending September 28, 2019.October 2, 2021.
The terms “Company,” “we,” “us,” and “our” are used in this report to refer collectively to the parent company and the subsidiaries through which our various businesses are actually conducted. The term “TWDC” is used to refer to the parent company.
These financial statements should be read in conjunction with the Company’s 20182020 Annual Report on Form 10-K.
On March 20, 2019 the Company acquired Twenty-First CenturyThe Fox Inc. (“21CF”) (see Note 4). As part of the acquisition, the Company agreed to sell 21CF’s Regional Sports Networks and certain sports media business in Mexico, along with another Fox business divested in fiscal 2020, are presented as discontinued operations in Brazilthe Condensed Consolidated Statements of Income. At April 3, 2021 and Mexico. TheOctober 3, 2020, the assets and liabilities of these operationsthe sports media operation in Mexico are reported as held for salenot material and are included in other assets and other liabilities in the income and cash flows are reported as discontinued operations. In addition, as a result of the 21CF acquisition the Company’s ownership interest in Hulu LLC (Hulu) increased to 60% and the Company started consolidating the results of Hulu. 21CF and Hulu results are consolidated from the acquisition date through March 30, 2019.Condensed Consolidated Balance Sheet.
Variable Interest Entities
The Company enters into relationships with or makes investments within other entities that may be variable interest entities (VIE). A VIE is consolidated in the financial statements if the Company has the power to direct activities that most significantly impact the economic performance of the VIE and has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant (as defined by ASC 810-10-25-38) to the VIE. Hong Kong Disneyland Resort and Shanghai Disney Resort (together the Asia Theme Parks) are VIEs in which the Company has less than 50% equity ownership. Company subsidiaries (the Management Companies) have management agreements with the Asia Theme Parks, which provide the Management Companies, subject to certain protective rights of joint venture partners, with the ability to direct the day-to-day operating activities and the development of business strategies that we believe most significantly impact the economic performance of the Asia Theme Parks. In addition, the Management Companies receive management fees under these arrangements that we believe could be significant to the Asia Theme Parks. Therefore, the Company has consolidated the Asia Theme Parks in its financial statements.
Redeemable Noncontrolling Interests
The Company consolidates the results of certain subsidiaries that are less than 100% owned and for which the noncontrolling interest shareholders have the rights to require the Company to purchase their interests in these subsidiaries. The most significant of these are Hulu LLC (Hulu) and BAMTech LLC (BAMTech).
Hulu provides direct-to-consumer (DTC) streaming services and is owned 67% by the Company and 33% by NBC Universal (NBCU). In May 2019, the Company entered into a put/call agreement with NBCU that provided the Company with full operational control of Hulu. Under the agreement, beginning in January 2024, NBCU has the option to require the Company to purchase NBCU’s interest in Hulu and the Company has the option to require NBCU to sell its interest in Hulu to the Company, based on NBCU’s equity ownership percentage of the greater of Hulu’s then fair value or $27.5 billion.
NBCU’s interest will generally not be allocated its portion of Hulu’s losses as the redeemable noncontrolling interest is required to be carried at a minimum value. The minimum value is equal to the fair value as of the May 2019 agreement date accreted to the January 2024 estimated redemption value. At April 3, 2021, NBCU’s interest in Hulu is recorded in the Company’s financial statements at $8.3 billion.
BAMTech provides streaming technology services to third parties and is owned 75% by the Company, 15% by Major League Baseball (MLB) and 10% by the National Hockey League (NHL), both of which have the right to sell their interests to the Company in the future.
MLB has the right to sell its interest to the Company and the Company has the right to buy MLB’s interest starting five years from and ending ten years after the Company’s September 25, 2017 acquisition date of BAMTech at the greater of fair value or a guaranteed floor value ($563 million accreting at 8% annually for eight years from the date of acquisition). The NHL
8
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)
can sell its interest to the Company in 2021 for $350 million. The Company has the right to acquire the NHL interest in 2021 for $500 million.
The MLB and NHL interests are required to be recorded at a minimum value equal to the greater of (i) their acquisition date fair value adjusted for their share (if any) of earnings, losses, or dividends (“adjusted value”) or (ii) an accreted value from the date of the acquisition to the applicable redemption date (“accreted value”). As the accreted value is typically always higher than the adjusted value, the MLB and NHL interests are not allocated their portion of BAMTech losses. Therefore, the MLB and NHL interests are accreted to the estimated redemption value as of the earliest redemption date. As of April 3, 2021, the guaranteed floor value for the MLB interest, accreted from the date of acquisition, was $738 million. As of April 3, 2021, the accreted value of the NHL interest was $338 million.
Adjustments to the carrying amount of redeemable noncontrolling interests increase or decrease income available to Company shareholders and are recorded in “Net income from continuing operations attributable to noncontrolling interests” on the Condensed Consolidated Statements of Income.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results may differ from those estimates.
Reclassifications
Certain reclassifications have been made in the fiscal 20182020 financial statements and notes to conform to the fiscal 20192021 presentation.
2.Description of Business and Segment Information
2.Description of Business and Segment Information
Our operating segments report separate financial information, which is evaluated regularly by the Chief Executive Officer in order to decide how to allocate resources and to assess performance.
Effective inAs of the first quarter of fiscal 2019,2021, we changed the presentation of segment operating results as discussed below and have recast our fiscal 2020 segment operating results to align with the fiscal 2021 presentation.
Media and Entertainment Reorganization
In October 2020, the Company startedreorganized its media and entertainment operations, which have been previously reported in three segments: Media Networks, Studio Entertainment and Direct-to-Consumer & International. With this reorganization, a single group is responsible for distributing all of the Company’s media and entertainment content across all platforms globally. This distribution organization will have full accountability for the financial results of the media and entertainment businesses, and content will generally be created by three production groups: Studios, General Entertainment and Sports.
As a result of the reorganization, effective at the beginning of the first quarter of fiscal 2021, we are reporting itsthe financial results of the media and entertainment businesses as one segment, Disney Media and Entertainment Distribution (DMED) across three significant lines of business/distribution platforms: Linear Networks, Direct-to-Consumer and Content Sales/Licensing (primarily comprising theatrical, home entertainment and third-party television and subscription video-on-demand “TV/SVOD” distribution globally).
Intersegment Transfer Pricing
Under our previous segment structure, in certain instances production and distribution activities were in different segments. In these situations, for segment financial accounting purposes, the producer segment would recognize revenue based on an intersegment transfer price that included a “mark-up”. These transactions were reported “gross” (i.e. the segment producing the content reported revenue and the mark-up from intersegment transactions, and the required eliminations were reported on a separate “Eliminations” line when presenting a summary of our segment results). Under our new segment structure, the operating results of the production and distribution activities are reported in the following operating segments:same segment, and the fully loaded production cost is allocated across the distribution platforms which are utilizing the content.
Media Networks;Elimination of Consumer Products Revenue Share
Parks, Experiences and Products;
Under our legacy segment financial reporting, the Studio Entertainment; and
Direct-to-Consumer & International
TheEntertainment segment received a revenue share related to the consumer products business, which is included in the Disney Parks, Experiences and Products segment reflects(DPEP) segment. Under the combination ofnew reporting structure, DMED does not receive a revenue share from DPEP related to the former Parks & Resorts and Consumer Products & Interactive Media segments. Certain businesses that were previously reported in Media Networks, Studioconsumer products business.
9
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


Entertainment and Consumer Products & Interactive Media are now reported in Direct-to-Consumer & International (DTCI). Fiscal 2018 segment operating results have been recast to align with the fiscal 2019 presentation.
Results for 21CF in the current quarter are not included in these segments and are reported separately. We currently plan to include 21CF’s results in our historical segments when we report third-quarter results. Hulu’s results for the period of consolidation and for the period the Company recorded equity method earnings are reported as part of DTCI.
DESCRIPTION OF BUSINESS
Disney Media Networksand Entertainment Distribution
Significant operations:
◦Disney, ESPN and Freeform branded domestic cable networks
◦ABC branded broadcast television network and eight owned domestic television stations
◦Television programming, production and distribution
◦A 50% equity investment in A+E Television Networks (A+E), which operates a variety of cable networks including A&E, HISTORY and Lifetime
Significant revenues:
◦Affiliate fees - Fees charged to multi-channel video programming distributors (i.e. cable, satellite, telecommunications and digital over-the-top (e.g. Hulu, YouTube TV) service providers) (“MVPDs”) and to television stations affiliated with the ABC Network for the right to deliver our programming to their customers
◦Advertising - Sales of ad time/space on our domestic networks and related platforms (“ratings-based ad sales”, which excludes advertising on digital platforms that is not ratings based), and the sale of time on our domestic television stations. Ratings-based ad sales are generally determined using viewership measured with Nielsen ratings. Non-ratings-based advertising on digital platforms is reported by DTCI
◦TV/SVOD distribution - Licensing fees and other revenues for the right to use our television programs and productions and content transactions with other Company segments (“program sales”)
Significant expenses:
◦Operating expenses consisting primarily of programming and production costs, participations and residuals expense, technical support costs, operating labor and distribution costs
◦Selling, general and administrative costs
◦Depreciation and amortization
Parks, ExperiencesThe DMED segment encompasses the Company’s global film and Productsepisodic television content production and distribution activities. Content is distributed by a single organization across three significant lines of business: Linear Networks, Direct-to-Consumer and Content Sales/Licensing and is generally created by three production/content licensing groups: Studios, General Entertainment and Sports. The distribution organization has full accountability for the financial results of the entire media and entertainment business.
Significant operations:The operations in our significant lines of business are as follows:
◦Parks & Experiences:
▪Theme parks and resorts, which include: Walt Disney World Resort in Florida; Disneyland Resort in California; Disneyland Paris; and 47% and 43% interests in Hong Kong Disneyland Resort and Shanghai Disney Resort, respectively, all of which are consolidated in our results. Additionally, the Company licenses our intellectual property to a third party to operate Tokyo Disney Resort
▪Disney Cruise Line, Disney Vacation Club and Aulani, a Disney Resort & Spa in Hawaii
◦Consumer Products:
▪Licensing of our trade names, characters, visual, literary and other intellectual properties to various manufacturers, game developers, publishers and retailers throughout the world
▪Sale of branded merchandise through retail, online and wholesale businesses, and development and publishing of books, magazines, comic books and games. As of the end of fiscal 2018, the segment had substantially exited the vertical games development business
Significant revenues:•Linear Networks
◦Theme park admissions - Sales of tickets for admission to our theme parks
◦Parks & Experiences merchandise, food and beverage - Sales of merchandise, food and beverages at our theme parks and resorts and cruise ships
◦Resorts and vacations - Sales of room nights at hotels, sales of cruise vacations and sales and rentals of vacation club properties
◦Merchandise licensing and retail
◦Domestic Channels: ABC Television Network (ABC) and eight owned ABC television stations (Broadcasting), and Disney, ESPN, Freeform, FX and National Geographic branded domestic television networks (Cable)
◦International Channels: Disney, ESPN, Fox, National Geographic and Star branded television networks outside the U.S.
◦A 50% equity investment in A+E Television Networks (A+E), which operates a variety of cable channels including A&E, HISTORY and Lifetime
•Direct-to-Consumer
◦Disney+, Disney+ Hotstar, ESPN+, Hulu and Star+ DTC streaming services
•Content Sales/Licensing
◦Sales/licensing of film and television content to third-party television and subscription video-on-demand (TV/SVOD) services
◦Theatrical distribution
◦Home entertainment distribution (DVD, Blu-ray and electronic home video licenses)
◦Music distribution
◦Staging and licensing of live entertainment events on Broadway and around the world (Stage Plays)
DMED also includes the following activities that are reported with Content Sales/Licensing:
•Post-production services through Industrial Light & Magic and Skywalker Sound
•A 30% ownership interest in Tata Sky Limited, which operates a direct-to-home satellite distribution platform in India
The significant revenues of DMED are as follows:
•Affiliate fees - Fees charged by our linear networks to multi-channel video programming distributors (i.e. cable, satellite, telecommunications and digital over-the-top (e.g. YouTube TV) service providers) (MVPDs) and television stations affiliated with the ABC Network for the right to deliver our programming to their customers
•Advertising - Sales of advertising time/space on our Linear Networks and Direct-to-Consumer
•Subscription fees - Fees charged to customers/subscribers for our DTC services
•TV/SVOD distribution - Licensing fees and other revenue for the right to use our film and television productions and revenue from fees charged to customers to view our sports programming (“pay-per-view”) and Premier Access content. TV/SVOD distribution revenue is primarily reported in Content Sales/Licensing, except for pay-per-view and Premier Access revenue, which is reported in Direct-to-Consumer
•Theatrical distribution - Rentals from licensing our film productions to theaters
•Home entertainment - Sale of our film and television content to retailers and distributors in home video formats
•Other content sales/licensing revenue - Revenues from licensing our music, ticket sales from stage play performances and fees from licensing our intellectual properties for use in stage plays
•Other revenue - Fees from sub-licensing of sports programming rights (reported in Linear Networks) and post-production services (reported with Content Sales/Licensing)
The significant expenses of DMED are as follows:
•Operating expenses consist primarily of programming and production costs, technical support costs, operating labor, distribution costs and costs of sales. Operating expenses also includes fees paid to Linear Networks from other DMED business for the right to air the linear networks feed and other services. Programming and production costs include amortization of acquired licensed programming rights (including sports rights), amortization of capitalized production
10
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


costs (including participations and residuals) and production costs related to live programming such as news and sports. Programming and production costs are largely incurred across three content creation groups, as follows:
▪Merchandise licensing - Royalties from intellectual property licensing
▪Retail - Sales of merchandise at The Disney Stores and through branded internet shopping sites, as well as, to wholesalers (including sales of published materials and games)
◦Parks licensing and other - Revenues from sponsorships and co-branding opportunities, real estate rent and sales, and royalties from Tokyo Disney Resort
Significant expenses:◦Studios - Primarily capitalized production costs related to feature films produced under the Walt Disney Pictures, Twentieth Century Studios, Marvel, Lucasfilm, Pixar and Searchlight Pictures banners
◦Operating expenses consisting primarily of operating labor, costs of goods sold, infrastructure costs, supplies, commissions and entertainment offerings. Infrastructure costs include information systems expense, repairs and maintenance, utilities and fuel, property taxes, retail occupancy costs, insurance and transportation
◦Selling, general and administrative costs
◦Depreciation and amortization
Studio◦General Entertainment - Primarily acquisition of rights to and internal production of episodic television programs and news content. Internal content is generally produced by the following television studios: ABC Signature; 20th Television; Disney Television Animation, FX Productions and various studios for which we commission productions for our branded channels and DTC services
◦Sports - Primarily acquisition of professional and college sports programming rights and related production costs
•Selling, general and administrative costs
•Depreciation and amortization
Disney Parks, Experiences and Products
Significant operations:
◦Motion picture production and distribution under the Walt Disney Pictures, Pixar, Marvel, Lucasfilm and Touchstone banners
◦Development, production and licensing of live entertainment events on Broadway and around the world (“Stage plays”)
•Parks & Experiences:
◦Theme parks and resorts, which include: Walt Disney World Resort in Florida; Disneyland Resort in California; Disneyland Paris; Hong Kong Disneyland Resort; Shanghai Disney Resort. Additionally, the Company licenses our intellectual property to a third party to operate Tokyo Disney Resort
◦Disney Cruise Line, Disney Vacation Club and Aulani, a Disney Resort & Spa in Hawaii
•Consumer Products:
◦Licensing of our trade names, characters, visual, literary and other intellectual properties to various manufacturers, game developers, publishers and retailers throughout the world, for use on merchandise, published materials and games
◦Sale of branded merchandise through retail, online and wholesale businesses, and development and publishing of books, comic books and magazines
Significant revenues:
◦Theatrical distribution - Rentals from licensing our motion pictures to theaters
◦Home entertainment - Sale of our motion pictures to retailers and distributors in physical (DVD and Blu-ray) and electronic formats
◦TV/SVOD distribution and other - Licensing fees and other revenue for the right to use our motion picture productions, content transactions with other Company segments, ticket sales from stage plays and fees from licensing our intellectual properties for use in live entertainment productions
•Theme park admissions - Sales of tickets for admission to our theme parks
•Parks & Experiences merchandise, food and beverage - Sales of merchandise, food and beverages at our theme parks and resorts and cruise ships
•Resorts and vacations - Sales of room nights at hotels, sales of cruise and other vacations and sales and rentals of vacation club properties
•Merchandise licensing and retail:
◦Merchandise licensing - Royalties from licensing our intellectual properties for use on consumer goods
◦Retail - Sales of merchandise at The Disney Stores and through branded internet shopping sites, as well as to wholesalers (including books, comic books and magazines)
•Parks licensing and other - Revenues from sponsorships and co-branding opportunities and real estate rent and sales. In addition, we earn royalties on Tokyo Disney Resort revenues
Significant expenses:
◦Operating expenses consisting primarily of amortization of production, participations and residuals costs, distribution costs and costs of sales
◦Selling, general and administrative costs
◦Depreciation and amortization
Direct-to-Consumer & International•Operating expenses consist primarily of operating labor, costs of goods sold, infrastructure costs, supplies, commissions and entertainment offerings. Infrastructure costs include information systems expense, repairs and maintenance, property taxes, utilities and fuel, retail occupancy costs, insurance and transportation
Significant operations:
◦Disney and ESPN branded international television networks and channels (“International Channels”)
◦Direct-to-consumer (DTC) businesses:
▪Hulu streaming service, which aggregates acquired television and film entertainment content and produces original content. The content is distributed digitally to internet-connected devices. Prior to the acquisition of 21CF, Hulu was reported as an equity investment
▪ESPN+ streaming service, which was launched in April 2018
▪Disney+ streaming service, which we plan to launch in late 2019
◦Other Company branded digital content distribution platforms and services
◦BAMTech LLC (BAMTech) (owned 75% by the Company since September 25, 2017), which provides streaming technology services
◦Equity investments:
▪A 21% effective ownership in Vice Group Holdings, Inc. (Vice), which is a media company that targets millennial audiences. 21CF has an additional 6% interest in Vice. Vice operates Viceland, which is owned 50% by Vice and 50% by A+E
Significant revenues:
◦Affiliate fees - Fees charged to MVPDs for the right to deliver our International Channels to their customers
◦Advertising - Sales of ad time/space on our International Channels. Sales of non-ratings based ad time/space on digital platforms (“addressable ad sales”). In general, addressable ad sales are delivered using technology that allows for dynamic insertion of advertisements into video content, which can be targeted to specific viewer groups
THE WALT DISNEY COMPANY•Selling, general and administrative costs
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS•Depreciation and amortization
(unaudited; tabular dollars in millions, except for per share data)


◦Subscription fees and other - Fees charged to customers/subscribers for our streaming and technology services
Significant expenses:
◦Operating expenses consisting primarily of programming and production costs (including digital content obtained from other Company segments), technical support costs, operating labor and distribution costs
◦Selling, general and administrative costs
◦Depreciation and amortization
SEGMENT INFORMATION
Segment operating results reflect earnings before corporate and unallocated shared expenses, restructuring and impairment charges, net other income, net interest expense, income taxes and noncontrolling interests. Segment operating income includes equity in the income of investees and excludes impairments of certain equity investments and purchaseacquisition accounting amortization of 21CFTFCF Corporation (TFCF) and Hulu assets (i.e. intangible assets and the fair value step-up for film and television costs) recognized in connection with the 21CF acquisition. Corporate and unallocated shared expenses principally consist of corporate functions, executive management and certain unallocated administrative support functions.
Intersegment content transactions (e.g. feature films aired on the ABC Television Network, our networks streaming on our DTC services) are presented “gross” (i.e. the segment producing the content reports revenue and profit from intersegment transactionsTFCF acquisition in a manner similar to the reporting of third-party transactions, and the required eliminations are reported on a separate “Eliminations” line when presenting a summary of our segment results). Previously, these transactions were reported “net”, and the intersegment revenue was eliminated in the results of the segment producing the content. Fiscal 2018 intersegment content transactions have been recast to align with the fiscal 2019 presentation.
Segment revenues(TFCF and segment operating income are as follows:Hulu acquisition amortization).
11
 Quarter Ended Six Months Ended
 March 30,
2019		 March 31,
2018		 March 30,
2019		 March 31,
2018
Revenues (1):
       
Media Networks$5,525

$5,508

$11,446

$11,063
Parks, Experiences and Products6,169

5,903

12,993

12,430
Studio Entertainment2,134

2,499

3,958

5,008
Direct-to-Consumer & International955

831

1,873

1,762
21CF373
 —
 373
 —
Eliminations(2)
(234) (193) (418) (364)
 $14,922
 $14,548
 $30,225
 $29,899
Segment operating income (1):
       
Media Networks$2,185
 $2,258
 $3,515
 $3,501
Parks, Experiences and Products1,506
 1,309
 3,658
 3,263
Studio Entertainment534
 874
 843
 1,699
Direct-to-Consumer & International(393) (188) (529) (230)
21CF25
 —
 25
 —
Eliminations(2)
(41) (16) (41) (10)
 $3,816
 $4,237
 $7,471
 $8,223
(1)
Studio Entertainment revenues and operating income include an allocation of Parks, Experiences and Products revenues, which is meant to reflect royalties on sales of merchandise based on film properties. The increase to Studio Entertainment revenues and operating income and corresponding decrease to Parks, Experiences and Products revenues and operating income was $126 million and $136 million for the quarters ended March 30, 2019 and March 31, 2018, respectively, and $280 million and $307 million for the six months ended March 30, 2019 and March 31, 2018, respectively.
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


Corporate and unallocated shared expenses principally consist of corporate functions, executive management and certain unallocated administrative support functions.
Segment operating results include allocations of certain costs, including information technology, pension, legal and other shared services costs, which are allocated based on metrics designed to correlate with consumption.
Impact of COVID-19
Since early 2020, the world has been, and continues to be, impacted by the novel coronavirus (COVID-19) pandemic. COVID-19 and measures to prevent its spread are impacting our segments in a number of ways, most significantly at DPEP where our theme parks have been closed or operating at significantly reduced capacity and cruise ship sailings and guided tours have been suspended. We have delayed, or in some cases, shortened or canceled, theatrical releases, and stage play performances have been suspended since March 2020 with a limited number of performances returning in the first quarter of fiscal 2021. We have experienced significant disruptions in the production and availability of content, including the shift of key live sports programming from the third quarter of fiscal 2020 to the fourth quarter of fiscal 2020 and into the first quarter of fiscal 2021 as well as the suspension of most film and television content late in the second quarter of fiscal 2020. Although most film and television production activities resumed beginning in the fourth quarter of fiscal 2020, we continue to see disruption in production activities depending on local circumstances.
The impact of these disruptions and the extent of their adverse impact on our financial and operating results will be dictated by the length of time that such disruptions continue, which will, in turn, depend on the currently unknowable duration and severity of the impacts of COVID-19, and among other things, the impact of governmental actions imposed in response to COVID-19 and individuals’ and companies’ risk tolerance regarding health matters going forward. As some of our businesses have reopened, we have incurred additional costs to address government regulations and the safety of our employees, talent and guests.
Segment revenues and segment operating income are as follows:
 Quarter EndedSix Months Ended
 April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Revenues:
Disney Media and Entertainment Distribution$12,440 $12,365 $25,101   $25,662   
Disney Parks, Experiences and Products3,173 5,660 6,761 13,240 
$15,613 $18,025 $31,862 $38,902 
Segment operating income (loss):
Disney Media and Entertainment Distribution$2,871 $1,651 $4,322 $3,125 
Disney Parks, Experiences and Products(406)756 (525)3,278 
$2,465 $2,407 $3,797 $6,403 
(2)
Intersegment content transactions are as follows:
 Quarter Ended Six Months Ended
(in millions)March 30,
2019		 March 31,
2018		 March 30,
2019		 March 31,
2018
Revenues:       
Studio Entertainment:       
Content transactions with Media Networks$(13) $(64) $(34) $(95)
Content transactions with Direct-to-Consumer & International(82) (8) (100) (16)
Media Networks:       
Content transactions with Direct-to-Consumer & International(139) (121) (284) (253)
 $(234) $(193) $(418) $(364)
        
Operating income:       
Studio Entertainment:       
Content transactions with Media Networks$5
 $(16) $5
 $(9)
Content transactions with Direct-to-Consumer & International(46) —
 (44) —
Media Networks:       
Content transactions with Direct-to-Consumer & International—
 —
 (2) (1)
Total$(41) $(16) $(41) $(10)

Equity in the income/(loss)income of investees is included in segment operating income as follows:
 Quarter EndedSix Months Ended
 April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Disney Media and Entertainment Distribution$226   $149 $461   $384   
Disney Parks, Experiences and Products(9)(6)(17)(9)
Equity in the income of investees included in segment operating income217 143   444 375 
Amortization of TFCF intangible assets related to equity investees(4)(8)(7)(16)
Equity in the income of investees, net$213 $135 $437 $359 
 Quarter Ended Six Months Ended
 March 30,
2019		 March 31,
2018		 March 30,
2019		 March 31,
2018
Media Networks$182
 $182
 $361
 $341
Parks, Experiences and Products—
 (7) (12) (14)
Direct-to-Consumer & International(141) (169) (232) (278)
Equity in the income of investees included in segment operating income41
 6
 117
 49
Vice Impairment(353) —
 (353) —
Equity in the income / (loss) of investees, net$(312) $6
 $(236) $49
12

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


A reconciliation of segment operating income to income from continuing operations before income taxes is as follows:
 Quarter EndedSix Months Ended
 April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Segment operating income$2,465 $2,407   $3,797 $6,403 
Corporate and unallocated shared expenses(201)  (188)(433)(425)
Restructuring and impairment charges
   (see Note 15)
(414)(145)(527)  (295)  
Other income, net(1)
305 0 305 0 
Interest expense, net(320)(300)(644)(583)
TFCF and Hulu acquisition amortization(2)
(605)(723)(1,222)(1,423)
Income from continuing operations before income taxes$1,230 $1,051 $1,276 $3,677 
 Quarter Ended Six Months Ended
 March 30,
2019		 March 31,
2018		 March 30,
2019		 March 31,
2018
Segment operating income$3,816
 $4,237
 $7,471
 $8,223
Corporate and unallocated shared expenses(279) (194) (440) (344)
Restructuring and impairment charges(662) (13) (662) (28)
Other income4,963
 41
 4,963
 94
Interest expense, net(143) (143) (206) (272)
Amortization of 21CF and Hulu intangible assets and fair value step-up on film and television costs(105) —
 (105) —
Impairment of equity investment(353) —
 (353) —
Income from continuing operations before income taxes$7,237
 $3,928
 $10,668
 $7,673

(1)For the quarter ended April 3, 2021, other income reflected a $305 million gain from an adjustment of our investment in DraftKings, Inc. to fair value (DraftKings Gain). For the six months ended April 3, 2021, other income reflected a $186 million gain from an adjustment of our investment in fuboTV Inc. to fair value, which was sold in January 2021 (fuboTV Gain), and a $119 million DraftKings Gain.
3.Revenues
At(2)For the beginningquarter ended April 3, 2021 amortization of fiscal 2019,intangible assets, step-up of film and television costs and intangibles related to TFCF equity investees were $447 million, $154 million and $4 million, respectively. For the six months ended April 3, 2021 amortization of intangible assets, step-up of film and television costs and intangibles related to TFCF equity investees were $894 million, $321 million and $7 million, respectively. For the quarter ended March 28, 2020 amortization of intangible assets, step-up of film and television costs and intangibles related to TFCF equity investees were $498 million, $217 million, and $8 million, respectively. For the six months ended March 28, 2020 amortization of intangible assets, step-up of film and television costs and intangibles related to TFCF equity investees were $984 million, $423 million and $16 million, respectively.
Goodwill
The changes in the carrying amount of goodwill for the six months ended April 3, 2021 are as follows:
Media
Networks		Disney Parks, Experiences and ProductsStudio
Entertainment		Direct-to-Consumer & InternationalDisney
Media and Entertainment Distribution		Total
Balance at October 3, 2020$33,991 $5,550 $17,795 $20,353 $0 $77,689 
Segment recast (1)
(33,991)0 (17,795)(20,353)72,139 0 
Currency translation adjustments and other, net0 0 0 0 172 172 
Balance at April 3, 2021$0 $5,550 $0 $0 $72,311 $77,861 
(1)Represents the reallocation of goodwill as a result of the Company adopted Financial Accounting Standards Board (FASB) guidance, which replaced the existing accounting guidance for revenue recognition with a single comprehensive five-step model (“new revenue guidance”). The core principle is to recognize revenue upon the transfer of control of goods or services to customers at an amount that reflects the consideration expected to be received. We adopted the new revenue guidance using the modified retrospective method; therefore, results for reporting periods beginning after September 30, 2018 are presented under the new revenue guidance, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting. Upon adoption we recorded a net reduction of $116 million to opening retained earnings in the first quarter of fiscal 2019.recasting its segments.
3.Revenues
The most significant changes to the Company’sCompany has revenue recognition policies resulting from the adoption of the new revenue guidancefor its various operating segments that are as follows:
For television and film content licensing agreements with multiple availability windows with the same licensee, the Company now defers more revenue to future windows than under the previous accounting guidance.
For licenses of character images, brands and trademarks with minimum guaranteed license fees, the excess of the minimum guaranteed amount over actual amounts earned based on a percentage of the licensee’s underlying sales (“shortfall”) is now recognized straight-line over the remaining license period once an expected shortfall is probable. Previously, shortfalls were recognized at the end of the contract period.
For licenses that include multiple television and film titles with a minimum guaranteed license fee across all titles that earns out against the aggregate fees based on the licensee’s underlying sales, the Company now allocates the minimum guaranteed license fee to each title at contract inception and recognizes the allocated license fee as revenue when the title is made availableappropriate to the customer. License fees earned by titles in excesscircumstances of their allocated amount are deferred until the minimum guaranteed license fee across all titles is exceeded. Once the minimum guaranteed license fee across all titles is exceeded, license fees are recognized as earned based on the licensee’s underlying sales. Previously, license fees were recognized as earned based on the licensee’s underlying sales with any shortfalls recognized at the end of the contract period.each business.
For renewals or extensions of license agreements for television and film content, revenues are now recognized when the licensed content becomes available under the renewal or extension. Previously, revenues were recognized when the agreement was renewed or extended.
13
The adoption of the new revenue guidance resulted in certain reclassifications on the Condensed Consolidated Balance Sheet. The primary changes are the reclassification of sales returns reserves (previously reported as a reduction of receivables) to other accrued liabilities ($133 million at March 30, 2019) and the reclassification of refundable customer advances (previously reported as deferred revenues) to other accrued liabilities ($1.0 billion at March 30, 2019).
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


The cumulative effect of adoption at September 29, 2018following table presents our revenues by segment and the impact at March 30, 2019 (had we not applied the new revenue guidance) on the Condensed Consolidated Balance Sheet is as follows:major source:
Quarter Ended April 3, 2021Quarter Ended March 28, 2020
Disney
Media and Entertainment
Distribution		Disney Parks, Experiences and ProductsConsolidatedDisney
Media and Entertainment
Distribution		Disney Parks, Experiences and ProductsConsolidated
Affiliate fees$4,594$— $4,594 $4,529 $— $4,529 
Advertising2,5821 2,583 2,788 1 2,789 
Subscription fees3,000— 3,000 1,796 — 1,796 
Theme park admissions—597 597 — 1,554 1,554 
Resort and vacations—514 514 — 1,377 1,377 
Retail and wholesale sales of merchandise, food and beverage—911    911    —    1,584 1,584 
TV/SVOD distribution licensing1,624— 1,624 1,665 —    1,665    
Theatrical distribution licensing109— 109 603 — 603 
Merchandise licensing5791 796 8 708 716 
Home entertainment219— 219 489 — 489 
Other307359 666 487 436 923 
$12,440$3,173 $15,613 $12,365 $5,660 $18,025 
 September 29, 2018 March 30, 2019
 Fiscal 2018 Ending Balances as Reported Effect of Adoption Q1 2019 Opening Balances 
Balances Assuming
Historical Accounting
 Impact of New Revenue guidance Q2 2019 Ending Balances as Reported
Assets           
Receivables - current/non-current$11,262
 $(241) $11,021
 16,735
 $(130) $16,605
Film and television costs and advances - current/non-current9,202
 48
 9,250
 29,737
 24
 29,761
            
Liabilities           
Accounts payable and other accrued liabilities9,479
 1,039
 10,518
 19,369
 1,134
 20,503
Deferred revenue and other4,591
 (1,082) 3,509
 5,446
 (1,165) 4,281
Deferred income taxes3,109
 (34) 3,075
 11,236
 (28) 11,208
            
Equity52,832
 (116) 52,716
 104,387
 (48) 104,339
x
Six Months Ended April 3, 2021Six Months Ended March 28, 2020
Disney
Media and Entertainment
Distribution		Disney Parks, Experiences and ProductsConsolidatedDisney
Media and Entertainment
Distribution		Disney Parks, Experiences and ProductsConsolidated
Affiliate fees$8,996$— $8,996 $8,969 $— $8,969 
Advertising6,3452 6,347 6,184 3 6,187 
Subscription fees5,546— 5,546 3,122 — 3,122 
Theme park admissions—1,146 1,146 — 3,621 3,621 
Resort and vacations—946 946 — 3,008 3,008 
Retail and wholesale sales of merchandise, food and beverage—2,074    2,074    —    3,897 3,897 
TV/SVOD distribution licensing2,793— 2,793 3,234 —    3,234    
Theatrical distribution licensing140— 140 2,011 — 2,011 
Merchandise licensing101,881 1,891 16 1,756 1,772 
Home entertainment519— 519 1,085 — 1,085 
Other752712 1,464 1,041 955 1,996 
$25,101$6,761 $31,862 $25,662 $13,240 $38,902 
The following table presents our revenues by segment and primary geographical markets:
Quarter Ended April 3, 2021Quarter Ended March 28, 2020
Disney
Media and Entertainment
Distribution		Disney Parks, Experiences and ProductsConsolidatedDisney
Media and Entertainment
Distribution		Disney Parks, Experiences and ProductsConsolidated
Americas$10,293 $2,414 $12,707 $9,962 $4,681 $14,643 
Europe1,219    267    1,486    1,338    546    1,884    
Asia Pacific928 492 1,420 1,065 433 1,498 
Total revenues$12,440 $3,173 $15,613 $12,365 $5,660 $18,025 

The impact on the Condensed Consolidated Statement of Income for the quarter and six months ended March 30, 2019, due to the adoption of the new revenue guidance is as follows:
Six Months Ended April 3, 2021Six Months Ended March 28, 2020
Disney
Media and Entertainment
Distribution		Disney Parks, Experiences and ProductsConsolidatedDisney
Media and Entertainment
Distribution		Disney Parks, Experiences and ProductsConsolidated
Americas$20,584 $4,870 $25,454 $20,379 $10,559 $30,938 
Europe2,512    754    3,266    2,901    1,479    4,380    
Asia Pacific2,005 1,137 3,142 2,382 1,202 3,584 
Total revenues$25,101 $6,761 $31,862 $25,662 $13,240 $38,902 
 Quarter Ended March 30, 2019 Six Months Ended March 30, 2019
 
Results Assuming
Historical Accounting
 Impact of New Revenue guidance Reported 
Results Assuming
Historical Accounting
 Impact of New Revenue guidance Reported
Revenues$14,901
 $21
 $14,922
 $30,010
 $215
 $30,225
Cost and Expenses(11,483) (48) (11,531) (23,289) (127) (23,416)
Income Taxes(1,653) 6
 (1,647) (2,272) (20) (2,292)
Consolidated Net Income5,632
 (21) 5,611
 8,329
 68
 8,397
14

The most significant impacts were at the Studio Entertainment, Parks, Experiences and Products and Media Networks segments. Studio Entertainment was impacted by a change in the timing of revenue recognition related to film content licensing agreements with multiple availability windows, and the Parks, Experiences and Products and Media Networks segments were impacted by a change in the timing of revenue recognition on contracts with minimum guarantees.
Summary of Significant Revenue Recognition Accounting Policies
The Company generates revenue from the sale of both services and products. Revenue is recognized when control of the services or products is transferred to the customer. The amount of revenue recognized reflects the consideration the Company expects to receive in exchange for the services or products.
The Company has three broad categories of service revenues: licenses of rights to use our intellectual property, sales to guests at our Parks and Experiences businesses and advertising. The Company’s primary product revenues include the sale of food, beverage and merchandise at our parks, resorts and retail stores and the sale of film and television productions in physical formats (DVD and Blu-ray).
The new revenue guidance defines two types of licenses of intellectual property (“IP”): IP that has “standalone functionality,” which is called functional IP, and all other IP, which is called symbolic IP. Revenue related to the license of functional IP is generally recognized upon delivery (availability) of the IP to the customer. The substantial majority of the Company’s film and television content distribution activities at the Media Networks, Studio Entertainment and DTCI segments is considered licensing of functional IP. Revenue related to the license of symbolic IP is generally recognized over the term of the license. The Company’s primary revenue stream derived from symbolic IP is the licensing of trade names, characters, visual and literary properties at the Parks, Experiences and Products segment.
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


More detailed information about the revenue recognition policies for our key revenues is as follows:
Affiliate fees - Fees charged to affiliates (i.e., MVPDs or television stations) for the right to deliver our television network programming on a continuous basis to their customers 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 - Fees charged to customers/subscribers for our streaming services are recognized ratably over the term of the subscription.
Advertising - Sales of advertising time/space on our television networks, digital platforms and television stations 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 - Sales of theme park tickets 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 of hotel room nights and cruise vacations and rentals of vacation club properties are recognized as the services are provided to the guest. Sales of vacation club properties are recognized when title to the property transfers to the customer.
Merchandise, food and beverage - Sales of merchandise, food and beverages at our theme parks and resorts, cruise ships and Disney Stores 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.
TV/SVOD distribution licensing - Fixed license fees charged for the right to use our television and motion picture productions are recognized as revenue when the content is available for use by the licensee. License fees based on the underlying sales of the licensee are recognized as revenue as earned based on the contractual royalty rate applied to the licensee sales.
For TV/SVOD licenses that include multiple titles with a fixed license fee across all titles, each title is considered a separate performance obligation. The fixed license fee is allocated to each title at contract inception and the allocated license fee is recognized as revenue when the title is available for use by the licensee.
When the license contains a minimum guaranteed license fee across all titles, the license fees earned by titles in excess of their allocated amount are deferred until the minimum guaranteed license fee across all titles is exceeded. Once the minimum guaranteed license fee is exceeded, revenue is recognized as earned based on the licensee’s underlying sales.
TV/SVOD distribution contracts may limit the licensee’s use of a title to certain defined periods of time during the contract term. In these instances, each period of availability is generally considered a separate performance obligation. For these contracts, the fixed license fee is allocated to each period of availability at contract inception based on relative standalone selling price using management’s best estimate. Revenue is recognized at the start of each availability period when the content is made available for use by the licensee.
When the term of an existing agreement is renewed or extended, revenues are recognized when the licensed content becomes available under the renewal or extension.
Theatrical distribution licensing - Fees charged for licensing of our motion pictures to theatrical distributors are recognized as revenue based on the contractual royalty rate applied to the distributor’s underlying sales from exhibition of the film.
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


Merchandise licensing - Fees charged for the use of our trade names and characters in connection with the sale of a licensee’s products 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.
Home entertainment - Sales of our motion pictures to retailers and distributors in physical formats (DVD and Blu-ray) 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 motion pictures in electronic formats are recognized as revenue when the product is available for use by the consumer.
Taxes - Taxes collected from customers and remitted to governmental authorities are excluded from revenue.
Shipping and handling - Fees collected from customers for shipping and handling are recorded as revenue and the related shipping expenses are recorded in cost of products upon delivery of the product to the consumer.
The following table presents our revenues by segment and major source:
 Quarter Ended March 30, 2019
 
Media
Networks
 Parks, Experiences and Products 
Studio
Entertainment
 Direct-to-Consumer & International 21CF Eliminations Consolidated
Affiliate fees$3,177
 $—
 $—
 $335
 $134
 $(12) $3,634
Advertising1,596
 1
 —
 357
 118
 —
 2,072
Theme park admissions—
 1,768
 —
 —
 —
 —
 1,768
Resort and vacations—
 1,502
 —
 —
 —
 —
 1,502
Retail and wholesale sales of merchandise, food and beverage—
 1,768
 —
 —
 —
 —
 1,768
TV/SVOD distribution licensing678
 —
 709
 24
 91
 (222) 1,280
Theatrical distribution licensing—
 —
 745
 —
 7
 —
 752
Merchandise licensing—
 635
 126
 12
 —
 —
 773
Home entertainment—
 —
 263
 21
 10
 —
 294
Other74
 495
 291
 206
 13
 —
 1,079
Total revenues$5,525
 $6,169
 $2,134
 $955
 $373
 $(234) $14,922
 
Quarter Ended March 31, 2018(1)
 
Media
Networks
 Parks, Experiences and Products 
Studio
Entertainment
 Direct-to-Consumer & International 21CF Eliminations Consolidated
Affiliate fees$3,043
 $—
 $—
 $354
 $—
 $—
 $3,397
Advertising1,643
 2
 —
 301
 —
 —
 1,946
Theme park admissions—
 1,690
 —
 —
 —
 —
 1,690
Resort and vacations—
 1,461
 —
 —
 —
 —
 1,461
Retail and wholesale sales of merchandise, food and beverage—
 1,707
 —
 —
 —
 —
 1,707
TV/SVOD distribution licensing761
 —
 619
 28
 —
 (193) 1,215
Theatrical distribution licensing—
 —
 956
 —
 —
 —
 956
Merchandise licensing—
 625
 139
 19
 —
 —
 783
Home entertainment—
 —
 471
 24
 —
 —
 495
Other61
 418
 314
 105
 —
 —
 898
Total revenues$5,508
 $5,903
 $2,499
 $831
 $—
 $(193) $14,548
(1)
Amounts presented are based on our historical accounting prior to the adoption of the new revenue guidance.
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


 Six Months Ended March 30, 2019
 
Media
Networks
 Parks, Experiences and Products 
Studio
Entertainment
 Direct-to-Consumer & International 21CF Eliminations Consolidated
Affiliate fees$6,252
 $—
 $—
 $658
 $134
 $(12) $7,032
Advertising3,619
 3
 —
 774
 118
 —
 4,514
Theme park admissions—
 3,701
 —
 —
 —
 —
 3,701
Resort and vacations—
 3,033
 —
 —
 —
 —
 3,033
Retail and wholesale sales of merchandise, food and beverage—
 3,890
 —
 —
 —
 —
 3,890
TV/SVOD distribution licensing1,400
 —
 1,314
 58
 91
 (406) 2,457
Theatrical distribution licensing—
 —
 1,118
 —
 7
 —
 1,125
Merchandise licensing—
 1,376
 280
 27
 —
 —
 1,683
Home entertainment—
 —
 688
 49
 10
 —
 747
Other175
 990
 558
 307
 13
 —
 2,043
Total revenues$11,446
 $12,993
 $3,958
 $1,873
 $373
 $(418) $30,225
 
Six Months Ended March 31, 2018(1)
 
Media
Networks
 Parks, Experiences and Products 
Studio
Entertainment
 Direct-to-Consumer & International 21CF Eliminations Consolidated
Affiliate fees$5,910
 $—
 $—
 $692
 $—
 $—
 $6,602
Advertising3,606
 4
 —
 712
 —
 —
 4,322
Theme park admissions—
 3,522
 —
 —
 —
 —
 3,522
Resort and vacations—
 2,924
 —
 —
 —
 —
 2,924
Retail and wholesale sales of merchandise, food and beverage—
 3,766
 —
 —
 —
 —
 3,766
TV/SVOD distribution licensing1,385
 —
 1,138
 53
 —
 (364) 2,212
Theatrical distribution licensing—
 —
 2,125
 —
 —
 —
 2,125
Merchandise licensing—
 1,401
 310
 37
 —
 —
 1,748
Home entertainment—
 —
 832
 54
 —
 —
 886
Other162
 813
 603
 214
 —
 —
 1,792
Total revenues$11,063
 $12,430
 $5,008
 $1,762
 $—
 $(364) $29,899
(1)
Amounts presented are based on our historical accounting prior to the adoption of the new revenue guidance.
The following table presents our revenues by segment and primary geographical markets:
 Quarter Ended March 30, 2019
 
Media
Networks
 Parks, Experiences and Products 
Studio
Entertainment
 Direct-to-Consumer & International 21CF Eliminations Consolidated
United States and Canada$5,307
 $4,700
 $1,066
 $294
 $149
 $(208) $11,308
Europe167
 631
 550
 147
 68
 (22) 1,541
Asia Pacific47
 789
 393
 135
 121
 (4) 1,481
Latin America4
 49
 125
 379
 35
 —
 592
Total revenues$5,525
 $6,169
 $2,134
 $955
 $373
 $(234) $14,922
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


 Six months ended March 30, 2019
 
Media
Networks
 Parks, Experiences and Products 
Studio
Entertainment
 Direct-to-Consumer & International 21CF Eliminations Consolidated
United States and Canada$10,995
 $9,841
 $2,104
 $519
 $149
 $(372) $23,236
Europe309
 1,486
 963
 336
 68
 (37) 3,125
Asia Pacific110
 1,550
 679
 269
 121
 (9) 2,720
Latin America32
 116
 212
 749
 35
 —
 1,144
Total revenues$11,446
 $12,993
 $3,958
 $1,873
 $373
 $(418) $30,225

Revenues recognized in the current periodand prior-year periods from performance obligations satisfied (or partially satisfied) in previous reporting periods primarily relate to revenues earned on theatricalTV/SVOD and TV/SVODtheatrical distribution licensee sales on titles made available to the licensee in previous reporting periods. For the quarter ended March 30, 2019, $431 millionApril 3, 2021, $0.4 billion was recognized related to performance obligations satisfied prior to December 30, 2018.as of January 2, 2021. For the six months ended March 30, 2019, $476 millionApril 3, 2021, $0.7 billion was recognized related to performance obligations satisfied prioras of October 3, 2020. For the quarter ended March 28, 2020, $0.7 billion was recognized related to performance obligations satisfied as of December 28, 2019. For the six months ended March 28, 2020, $0.8 billion was recognized related to performance obligations satisfied as of September 30, 2018.28, 2019.
As of March 30, 2019,April 3, 2021, revenue for unsatisfied performance obligations expected to be recognized in the future is $17.6$15 billion, which primarily relates to content to be delivered in the future under existing agreements with television station affiliates and TV/SVOD licensees. Of this amount, we expect to recognize approximately $3.7$4 billion in the remainder of fiscal 2019, $5.42021, $5 billion in fiscal 2020, $3.52022, $3 billion in fiscal 20212023 and $5$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.
Payment terms vary by the type and location of our customers and the products or services offered. For certain products or services and customer types, we require payment before the products or services are provided to the customer; in other cases, after appropriate credit evaluations, payment is due in arrears. Advertising contracts, which are generally short term, are billed monthly with payments generally due within 30 days. Payments due under affiliate arrangements are calculated monthly and are generally due within 30 days of month end. Home entertainment terms generally include payment within 60 to 90 days of availability date to the customer. Licensing payment terms vary by contract but are generally collected in advance or over the license term. The Company has accounts receivable with original maturities greater than one year related to the sale of film and television program rights and vacation club properties (see Note 13). These receivables are discounted to present value at an appropriate discount rate at contract inception, and the related revenues are recognized at the discounted amount.
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 areis recognized as accounts receivable. Deferred revenues are recognized as (or when) the Company performs under the contract. Contract assets, accounts receivable and deferred revenues from contracts with customers are as follows:
 March 30,
2019		 September 30,
2018
Contract assets$110
 $89
Accounts Receivable   
Current13,565
 8,553
Non-current2,318
 1,640
Allowance for doubtful accounts(263) (226)
Deferred revenues   
Current3,950
 2,926
Non-current572
 609

April 3,
2021		October 3,
2020
Contract assets$134 $70 
Accounts receivable
Current11,087   11,340   
Non-current1,643 1,789 
Allowance for credit losses(271)(460)
Deferred revenues
Current3,995 3,688 
Non-current582 513 
Contract assets primarily relate to certain multi-season TV/SVOD licensing contracts. Activity for the current and prior-year quarters related to contract assets was not material. The allowance for credit losses decreased from $460 million at October 3, 2020 to $271 million at April 3, 2021 primarily due to the adoption of new accounting guidance on the measurement of credit losses (see Note 16).
For the quarter and six months ended April 3, 2021, the Company recognized revenues of $0.6 billion and $2.1 billion, respectively, primarily related to licensing and publishing advances and content sales included in the deferred revenue balance at October 3, 2020. For the quarter and six months ended March 30, 201928, 2020, the Company recognized revenues of $0.8 billion and $2.9 billion, respectively, primarily related to contract assets and the allowance for doubtful accounts was not material.
Deferred revenue primarily relates to non-refundable consideration received in advance for (i) licensing contracts, theme park annual passes, theme park tickets andadmissions, vacation packages and (ii) the deferral of advertising revenues due to ratings shortfalls. The increaselicensing advances included in the deferred revenue balance at September 28, 2019.
We evaluate our allowance for credit losses and estimate collectability of current and non-current accounts receivable based on historical bad debt experience, our assessment of the financial condition of individual companies with which we do business, current market conditions, and reasonable and supportable forecasts of future economic conditions. In times of economic turmoil, including COVID-19, our estimates and judgments with respect to the collectability of our receivables are subject to greater uncertainty than in more stable periods.
The Company has accounts receivable with original maturities greater than one year related to the sale of film and television program rights and vacation club properties. These receivables are discounted to present value at contract inception and the related revenues are recognized at the discounted amount.
The balance of film and television program sales receivables recorded in other non-current assets, net of an immaterial allowance for credit losses, was $1.1 billion as of April 3, 2021. The activity in the allowance for credit losses for the six monthsquarter and six-month period ended March 30, 2019April 3, 2021 was primarily due to thenot material.
15
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


receiptThe balance of additional prepaid park admissions, non-refundable travel deposits and advances on certain licensing arrangements, andmortgage receivables recorded in other non-current assets, net of an immaterial allowance for credit losses, was $0.7 billion as of April 3, 2021. The activity in the acquisition of 21CF (see Note 4) on March 20, 2019 which increased deferred revenues by $0.6 billion. Forallowance for credit losses for the quarter and six monthssix-month period ended March 30, 2019, the Company recognized revenues of $0.7 billionApril 3, 2021 was not material.
4.Cash, Cash Equivalents, Restricted Cash and $2.3 billion, respectively, primarily related to theme park admissions and vacation packages included in the deferred revenue balance at September 30, 2018.
4.Acquisitions
Twenty-First Century Fox
On March 20, 2019, the Company acquired the outstanding capital stock of Twenty-First Century Fox, Inc. (“21CF”), a diversified global media and entertainment company. Prior to the acquisition, 21CF and a newly-formed subsidiary of 21CF (“New Fox”) entered into a separation agreement, pursuant to which 21CF transferred to New Fox a portfolio of 21CF’s news, sports and broadcast businesses and certain other assets. 21CF retained all of the assets and liabilities not transferred to New Fox, including the Twentieth Century Fox film and television studios, certain cable networks and 21CF’s international TV businesses; these remaining assets and businesses are held directly or indirectly by the acquired 21CF entity.Borrowings
The acquisition purchase price totaled $69.5 billion, of which the Company paid $35.7 billion in cash and $33.8 billion in Disney shares (307 million shares at a price of $110.00 per share).
We acquired 21CF to enhance the Company’s position as a premier, global entertainment company by increasing our portfolio of creative assets and branded content to be monetized through our film and television studio, theme parks and direct-to-consumer offerings.
In connection with the acquisition, outstanding 21CF performance stock units and restricted stock units were either vested upon closing of the acquisition or replaced with Disney restricted stock units (which require additional service for vesting). The purchase price for 21CF includes approximately $340 million related to 21CF awards that were settled or replaced in connection with the acquisition. Additionally, the Company recognized compensation expense of $184 million related to awards that were accelerated to vest upon closing of the acquisition. Approximately $218 million of compensation expense related to awards that were replaced with Disney restricted stock units and will be recognized over the remaining service period of up to approximately two years.
As part of the 21CF acquisition, the Company acquired 21CF’s 30% interest in Hulu increasing our ownership to 60%. As a result, the Company began consolidating Hulu and recorded a one-time gain of $4.9 billion from remeasuring our initial 30% interest to its estimated fair value, which was determined based on a discounted cash flow analysis.
On April 15, 2019, Hulu redeemed Warner Media LLC’s (WM) approximate 10% interest in Hulu for approximately $1.4 billion. The redemption was funded via a loan from the Company to Hulu. Pursuant to the redemption agreement, Hulu’s remaining noncontrolling interest holder, NBC Universal (NBCU), may elect to participate in the redemption by contributing its proportionate share of the purchase price to Hulu. NBCU must make this election within 90 days from the transaction date. If NBCU elects to participate, the Company’s interest in Hulu will increase to 67%. If NBCU does not elect to participate, the Company’s interest in Hulu will increase to 70%.
Upon closing of the acquisition, the Company exchanged new Disney notes for outstanding notes issued by 21st Century Fox America, Inc. (“21CFA Notes”) with a principal balance of $16.8 billion (see Note 6).
The Company also assumed 21CF commitments totaling $31 billion, of which $22 billion relate to the Regional Sports Networks (see Discontinued Operations below). The remaining commitments are primarily for sports and entertainment programming rights. In addition, we entered into commitments with New Fox totaling $0.3 billion, primarily for the lease of production facilities and office space. Hulu commitments total $3.4 billion and relate primarily to programming rights.
The Company is required to allocate the 21CF purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values. The excess of the purchase price over those fair values is recorded as goodwill. The Company is in the process of obtaining additional information necessary to finalize the valuation of the assets acquired and liabilities assumed including income tax related amounts. Therefore, the preliminary fair values set forth below are subject to adjustment as additional information is obtained and the valuations are completed.
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


The following table summarizes our initial allocation of the purchase price:
 Estimated Fair Value
Cash and cash equivalents$25,666
Receivables4,746
Film and television costs20,120
Investments1,471
Intangible assets20,385
Net assets held for sale11,704
Accounts payables and other liabilities(10,753)
Borrowings(21,723)
Deferred income taxes(6,497)
Other net liabilities acquired(3,865)
Noncontrolling interests(10,638)
Goodwill43,751
Fair value of net assets acquired74,367
Less: Disney’s previously held 30% interest in Hulu(4,860)
Total purchase price$69,507

Intangible assets primarily consist of MVPD agreements, advertising networks and trade names with estimated useful lives ranging from 2 to 40 years and a weighted average life of 12 years.
The goodwill reflects the value to Disney of increasing our global portfolio of creative assets and branded content to be monetized through our film and television studio, theme parks and direct-to-consumer offerings.
The goodwill is not deductible for tax purposes.
The fair value of investments acquired in the acquisition include $1.2 billion of equity method investments and $0.3 billion of equity investments. Equity method investments primarily consist of a 50% interest in Endemol Shine Group, a global multi-platform content provider and a 30% interest in Tata Sky Limited, a satellite operator in India).
The fair value of the assets acquired includes current trade receivables of $4.7 billion. The gross amount due under the contracts is $4.9 billion, of which $0.2 billion is expected to be uncollectible.
For the six months ended March 30, 2019, the Company incurred $211 million of acquisition-related expenses of which $111 million is included in Selling, general, administrative and other and $100 million related to financing fees is included in Interest expense, net in the Company’s Condensed Consolidated Statement of Income.
The revenues and net loss from continuing operations (including purchase accounting amortization) of 21CF and Hulu included in the Company’s Condensed Consolidated Statement of Income since the date of acquisition through March 30, 2019 is $518 million and $115 million, respectively.
The following pro forma summary presents consolidated information of the Company as if the acquisition had occurred on October 1, 2017:
 Six Months Ended
 March 30,
2019		 March 31,
2018
Revenues$38,764
 $38,651
Net income4,000
 9,472
Net income attributable to Disney4,119
 9,609
Earnings per share attributable to Disney:   
Diluted$2.28
 $5.27
Basic2.29
 5.30

These pro forma results include adjustments for purposes of consolidating the historical financial results of 21CF and Hulu (net of adjustments to eliminate transactions between Disney and 21CF, Disney and Hulu and Hulu and 21CF). These pro
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


formas also include an adjustment of $2.1 billion for both the six months ended March 30, 2019 and 2018, to reflect the preliminary estimate of incremental amortization as a result of recording film and television programming and production costs and finite lived intangible assets at fair value. Interest expense was adjusted by $259 million to reflect the cost of borrowings to finance the 21CF acquisition for both the six months ended March 30, 2019 and 2018, which assumed an estimated weighted average interest rate of 3.5%. The six months ended March 30, 2019 and 2018, include a benefit of $109 million, to reflect lower interest expense using an effective interest method to adjust 21CF’s long-term debt to preliminary fair value.
Additionally, the pro forma earnings for the six months ended March 31, 2018 include the impact of remeasuring our initial 30% interest in Hulu to fair value, compensation expense of $184 million related to 21CF equity awards that were accelerated to vest upon closing of the acquisition, and $400 million of acquisition-related expenses.
The pro forma results exclude a $10.8 billion gain on sale and $237 million of equity earnings recorded by 21CF for the six months ended March 30, 2019 and 2018, respectively, related to its 39% interest in Sky plc which was sold by 21CF in October 2018. The pro forma results include $314 million and $321 million of net income recorded by 21CF for the six months ended March 30, 2019 and 2018, respectively, related to the 21CF businesses that we are required to divest as a condition of the acquisition (see the Assets to be Disposed and Discontinued Operations section below).
These pro forma results do not represent financial results that would have been realized had the acquisition actually occurred on October 1, 2017, nor are they intended to be a projection of future results.
Assets to be Disposed and Discontinued Operations
Pursuant to a consent decree with the U.S. Department of Justice (DOJ), we are required to sell 21CF’s twenty-two Regional Sports Networks (the “RSNs”) (the “RSN Divestiture”) within 90 days of the closing of the 21CF acquisition, with the possibility that the DOJ can grant extensions of time up to another 90 days. The DOJ must approve the purchaser(s) and terms and conditions of the RSN Divestiture. On May 3, 2019, the Company entered into a definitive agreement with Sinclair Broadcast Group, Inc. to sell twenty-one of the RSNs (not including the YES Network), for a sales price of approximately $10 billion. Completion of the transaction is subject to customary closing conditions, including the approval of the DOJ.
Additionally, the Company has agreed with Conselho Administrativo de Defesa Economica (CADE) to sell 21CF’s sports operations in Brazil (the “Brazil Divestiture”) and agreed with the Instituto Federal de Telecomunicaciones (IFT) to sell 21CF’s sports operations in Mexico (the “Mexico Divestiture”). The Company will have 180 days from the date of the 21CF acquisition to complete the Brazil Divestiture. The Company will have six months, with the possibility that the IFT can grant extensions of time up to another six months, for the Mexico Divestiture. CADE and the IFT must approve the purchaser(s) and terms and conditions of the Brazil and Mexico Divestitures, respectively.
The European Commission approved the acquisition on the condition that the Company divest its interests in certain cable channels in the European Economic Area that are controlled by A+E, including History, H2, Crime & Investigation, Blaze and Lifetime (“the EEA Channels”). The Company divested its interests in the entities that operate the EEA Channels on April 12, 2019. The EEA Channels are not presented as assets held for sale or discontinued operations.
The RSNs and the Brazil and Mexico sports operations are presented as assets held for sale and discontinued operations in the Condensed Consolidated Balance Sheets and Statements of Income, respectively.
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


The preliminary fair values of the major classes of assets and liabilities of the RSNs and the Brazil and Mexico sports operations classified as held for sale on our Condensed Consolidated Balance Sheets are presented below and are subject to change based on developments during the sales process.
 March 30, 2019
Cash$100
Receivables and other current assets855
Television costs and advances511
Total current assets classified as held for sale1,466
Film and television costs1,730
Property and equipment and other assets67
Intangible assets, net7,569
Goodwill3,816
Total assets classified as held for sale$14,648
  
Accounts payable and other accrued liabilities$371
Current portion of borrowings33
Deferred revenue and other30
Total current liabilities classified as held for sale

434
Borrowings1,036
Other long-term liabilities138
Redeemable noncontrolling interests1,485
Total liabilities classified as held for sale$3,093

Goodwill
The changes in the carrying amount of goodwill for the six months ended March 30, 2019 are as follows:
 
Media
Networks
 
Parks and
Resorts
Studio
Entertainment
Consumer
Products & Interactive Media
 Parks, Experiences and ProductsDirect-to-Consumer & InternationalUnallocated Total
Balance at Sept. 29, 2018$19,388
 $291
 $7,164
 $4,426
 $—
 $—
 $—
 $31,269
Segment recast (1)
(3,399) (291) (70) (4,426) 4,487
 3,699
 —
 —
Acquisitions (2)
—
 —
 —
 —
 —
 —
 43,751
 43,751
Other, net—
 —
 14
 —
 —
 23
 —
 37
Balance at Mar. 30, 2019$15,989
 $—
 $7,108
 $—
 $4,487
 $3,722
 $43,751
 $75,057

(1) Represents the reallocation of goodwill as a result of the Company recasting its segments (see Note 2).
(2) Represents the acquisition of 21CF and consolidation of Hulu.
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


5.
Other Income
Other income is as follows:
 Quarter Ended Six Months Ended
 March 30,
2019		 March 31,
2018		 March 30,
2019		 March 31,
2018
Hulu gain (see Note 4)$4,917
 $—
 $4,917
 $—
Insurance recoveries related to legal matters46
 38
 46
 38
Gain on the sale of property rights and other—
 3
 —
 56
Other income$4,963
 $41
 $4,963
 $94

6.Cash, Cash Equivalents, Restricted Cash and Borrowings
Cash, Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Condensed Consolidated Balance Sheet to the total of the amounts reported in the Condensed Consolidated Statements of Cash Flows.
  March 30,
2019		 September 29,
2018
Cash and cash equivalents $10,108
 $4,150
Restricted cash included in:    
Other current assets 9
 1
Other assets 5
 4
Cash included in current assets held for sale 100
 —
Total cash, cash equivalents and restricted cash in the statement of cash flows $10,222
 $4,155

April 3,
2021		October 3,
2020
Cash and cash equivalents$15,890 $17,914 
Restricted cash included in:
Other current assets1    3    
Other assets41 37 
Total cash, cash equivalents and restricted cash in the statement of cash flows$15,932 $17,954 
Borrowings
During the six months ended March 30, 2019,April 3, 2021, the Company’s borrowing activity was as follows:
October 3,
2020		BorrowingsPaymentsOther
Activity		April 3,
2021
Commercial paper with original maturities greater than three months$2,023 $670 $(757)$1 $1,937 
U.S. dollar denominated notes(1)
52,736 0 (1,663)(68)51,005 
Asia Theme Parks borrowings(2)
1,303    34    (84)   66    1,319    
Foreign currency denominated debt and other(3)
2,566 3 (69)(615)1,885 
$58,628 $707 $(2,573)$(616)$56,146 
(1)The other activity is primarily due to the amortization of purchase price adjustments on debt assumed in the TFCF acquisition and debt issuance fees.
 September 29,
2018		 Borrowings Payments Borrowings Assumed in Acquisition of 21CF 
Other
Activity
 March 30,
2019
Commercial paper with original maturities less than three months(1)
$50
 $440
 $—
 $—
 $8
 $498
Commercial paper with original maturities greater than three months955
 992
 (1,056) —
 7
 898
U.S. and European notes17,942
 —
 (1,250) 21,174
 (33) 37,833
Credit facilities to acquire 21CF—
 31,100
 (16,100) —
 —
 15,000
Asia Theme Parks borrowings1,145
 —
 (48) —
 54
 1,151
Foreign currency denominated debt and other(2)
782
 45
 —
 549
 205
 1,581
 20,874
 32,577
 (18,454) 21,723
 241
 56,961
Liabilities held for sale—
 —
 —
 1,069
 —
 1,069
 $20,874
 $32,577
 $(18,454) $22,792
 $241
 $58,030

(2)The other activity is driven by the impact of changes in foreign currency exchange rates.
(1)
Borrowings and reductions of borrowings are reported net.
(2)
The other activity is due to market value adjustments for debt with qualifying hedges, partially offset by the impact of changes in foreign currency exchange rates.
(3)The other activity is due to market value adjustments for debt with qualifying hedges, partially offset by the impact of changes in foreign currency exchange rates.
At April 3, 2021, 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 2022$5,250 $0 $5,250 
Facility expiring March 20234,000    0    4,000    
Facility expiring March 20253,000 0 3,000 
Total$12,250 $0 $12,250 
The Company had a $5.25 billion bank facility that was scheduled to expire in March 2021 and a $5.0 billion facility that was scheduled to expire in April 2021. The facility expiring in March 2021 was refinanced with a new $5.25 billion bank facility maturing in March 2022. The facility expiring in April 2021 was terminated in the second quarter of fiscal 2021. The facilities expiring in March 2023 and March 2025 allow for borrowings at LIBOR-based rates plus a spread depending on the credit default swap spread applicable to the Company’s debt, or a fixed spread in the case of the facility expiring in March 2022, subject to a cap and floor that vary with the Company’s debt rating assigned by Moody’s Investors Service and Standard and Poor’s. The spread above LIBOR can range from 0.18% to 1.63%. The bank facilities specifically exclude certain entities, including the Asia Theme Parks, from any representations, covenants or events of default. The bank facilities contain only one financial covenant, which is interest coverage of three times earnings before interest, taxes, depreciation and amortization,
16
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


The Company has bank facilities with a syndicate of lenders to support commercial paper borrowings as follows:
 
Committed
Capacity
 
Capacity
Used
 
Unused
Capacity
Facility expiring March 2020$6,000
 $—
 $6,000
Facility expiring March 20212,250
 —
 2,250
Facility expiring March 20234,000
 —
 4,000
Total$12,250
 $—
 $12,250

Allincluding both intangible amortization and amortization of the above bank facilities allow for borrowings at LIBOR-based rates plus a spread depending on the credit default swap spread applicable to the Company’s debt, subject to a capour film and floor that vary withtelevision production and programming costs. On April 3, 2021 the Company’s debt rating assigned by Moody’s Investors Service and Standard & Poor’s. The spread above LIBOR can range from 0.18% to 1.63%. The facilities specifically exclude certain entities, including the Asia Theme Parks, from any representations, covenants, or events of default and contain only one financial covenant relating to interest coverage, which the Companywas met on March 30, 2019 by a significant margin. The Company also has the ability to issue up to $500 million of letters of credit under the facility expiring in March 2023, which if utilized, reduces available borrowings under this facility. As of March 30, 2019,April 3, 2021, the Company has $1.4$1.3 billion of outstanding letters of credit, of which none were issued under this facility. Outstanding letters of credit include letters of credit assumed in the acquisition of 21CF primarily in support of international sports programming rights.
U.S. and European Notes
On March 20, 2019, the Company assumed public debt with a fair value of $21.2 billion (principal balance of $17.4 billion) upon the completion of the 21CF acquisition. The debt has maturities ranging from 1 to 78 years and stated rates ranging from 3.00% to 9.50%. On March 20, 2019, 96% ($16.8 billion) of the assumed debt was exchanged for senior notes of The Walt Disney Company, with essentially the same terms. The exchange was with qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States with investors who are not U.S. persons pursuant to Regulation S under the Securities Act. At March 30, 2019, the weighted-average stated interest rates and effective interest rates were 5.94% and 3.86%, respectively.
Credit Facilities to Acquire 21CF
On March 20, 2019, the Company borrowed $31.1 billion under two 364-day unsecured bridge loan facilities with a bank syndicate to fund the cash component of the 21CF acquisition. On March 21, 2019, the Company repaid one bridge loan facility in the amount of $16.1 billion, utilizing cash acquired in the 21CF transaction, and terminated the facility. The remaining 364-day unsecured bridge loan facility has $15.0 billion outstanding and is anticipated to be paid down with the after-tax net proceeds from the divestiture of the RSNs. The $15.0 billion loan facility bears interest at LIBOR plus 0.875% (3.51% as of March 30, 2019).
Foreign Currency Denominated Debt and Other
On March 20, 2019, the Company assumed a term loan and various unsecured credit facilities with an outstanding balance of $211 million upon the completion of the 21CF acquisition. The term loan and credit facilities have stated rates ranging from 7.80% to 10.05%. At March 30, 2019, the weighted-average stated interest rates was 8.56% and the term loan and unsecured credit facilities have been recorded in current borrowings.
On March 20, 2019, the Company consolidated Hulu and now reports its term loan with an outstanding balance of $338 million. The term loan matures in August 2022 and bears interest at LIBOR plus 0.917% (3.71% as of March 30, 2019). Two-thirds of the loan is guaranteed by the Company and one-third is guaranteed by Comcast Corporation and certain of its subsidiaries.
Liabilities Held for Sale
On March 20, 2019 as part of the 21CF acquisition, the Company assumed debt related to the The Yankees Entertainment and Sports Network (the “Yes Network”). The Yes Network has a $1.6 billion secured revolving credit facility and term loan facility that expires in December 2023. As of March 30, 2019, outstanding borrowings under the term loan facility and secured revolving credit facility were $1.1 billion and $10 million, respectively. The credit facilities bear interest at rates that are reset quarterly and are based on the leverage ratio of the Yes Network. The credit facilities contain restrictive covenants and are collateralized by a substantial portion of assets of the Yes Network. The Yes Network is one of the RSNs that is held for sale (see Note 4).
Cruise Ship Credit Facilities
In October 2016 and December 2017, theThe Company entered intohas credit facilities to finance three new cruise ships, which are expected to be delivered in 2021, 2022 and 2023. The financings may be used for up to 80% of the contract price of the
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollarsthree new cruise ships, which are scheduled to be delivered in millions, except for per share data)


cruise ships.2022, 2024 and 2025. Under the agreements,facilities, $1.0 billion in financing is available beginning in AprilOctober 2021, another $1.1 billion is available beginning in May 2022August 2023 and another $1.1 billion is available beginning in April 2023.August 2024. Each tranche of financing may be utilized for a period of 18 months from the initial availability date. If utilized, the interest rates will be fixed at 3.48%, 3.72%3.80% and 3.74%, respectively, and the loansloan and interest will be payable semi-annually over a 12-year period from the borrowing date. Early repayment is permitted subject to cancellation fees.
Interest expense, net
Interest expense (net of amounts capitalized), interest and investment income, and net periodic pension and postretirement benefit costs (other than service costs) (see Note 9)8) are reported net in the Condensed Consolidated Statements of Income and consist of the following (net of capitalized interest):following:
 Quarter Ended Six Months Ended
 March 30,
2019		 March 31,
2018		 March 30,
2019		 March 31,
2018
Interest expense$(198) $(172) $(361) $(318)
Interest and investment income30
 29
 105
 46
Net periodic pension and postretirement benefit costs (other than service costs)25
 —
 50
 —
Interest expense, net$(143) $(143) $(206) $(272)

Quarter EndedSix Months Ended
April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Interest expense$(415)$(365)$(819)$(727)
Interest and investment income131    63    243    139    
Net periodic pension and postretirement benefit costs (other than service costs)(36)2 (68)5 
Interest expense, net$(320)$(300)$(644)$(583)
Interest and investment income includes gains and losses on publicly traded and non-publicly tradednon-public investments, investment impairments and interest earned on cash and cash equivalents and certain receivables.
7.International Theme Parks
5.International Theme Parks
The Company has a 47%48% ownership interest in the operations of Hong Kong Disneyland Resort and a 43% ownership interest in the operations of Shanghai Disney Resort. 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 InternationalAsia Theme Parks’ assets and liabilities included in the Company’s Condensed Consolidated Balance Sheets as of March 30, 2019 and September 29, 2018:Sheet:
 April 3,
2021		October 3, 2020
Cash and cash equivalents$249 $372 
Other current assets111 91 
Total current assets360 463 
Parks, resorts and other property6,754    6,720    
Other assets183 191 
Total assets$7,297 $7,374 
Current liabilities$428 $486 
Long-term borrowings1,276 1,213 
Other long-term liabilities411 403 
Total liabilities$2,115 $2,102 
 March 30, 2019 September 29, 2018
Cash and cash equivalents$736
 $834
Other current assets356
 400
Total current assets1,092
 1,234
Parks, resorts and other property8,950
 8,973
Other assets106
 103
Total assets (1)
$10,148
 $10,310
    
Current liabilities$667
 $921
Long-term borrowings1,151
 1,106
Other long-term liabilities364
 382
Total liabilities (1)
$2,182
 $2,409
17

(1)
Total assets of the Asia Theme Parks were $8 billion at both March 30, 2019 and September 29, 2018 including parks, resorts and other property of $7 billion. Total liabilities of the Asia Theme Parks were $2 billion at both March 30, 2019 and September 29, 2018.     
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


The following table summarizes the International Theme Parks’ revenues and costs and expenses included in the Company’s Condensed Consolidated StatementStatements of Income for the six months ended March 30, 2019:April 3, 2021:
 March 30, 2019
Revenues$1,749
Costs and expenses(1,762)
Equity in the loss of investees(12)

Revenues$555
Costs and expenses(1,237)
Equity in the loss of investees(17)
Asia Theme Parks’ royalty and management fees of $71$42 million for the six months ended March 30, 2019April 3, 2021 are eliminated in consolidation, but are considered in calculating earnings attributable to noncontrolling interests.
International Theme Parks’ cash flows included in the Company’s Condensed Consolidated StatementStatements of Cash Flows for the six months ended March 30, 2019April 3, 2021 were $315$459 million generated fromused in operating activities, $439$355 million used in investing activities and no change in cash from financing activities. Approximately two thirds of cash flows generated from operating activities and$45 million used in investing activities, were for the Asia Theme Parks.financing activities.
Hong Kong Disneyland Resort
The Government of the Hong Kong Special Administrative Region (HKSAR) and the Company have a 53%52% and a 47%48% equity interest in Hong Kong Disneyland Resort, respectively.
The Company and HKSAR have both provided loans to Hong Kong Disneyland Resort with outstanding balances of $144$148 million and $96$97 million, respectively. The interest rate is three month HIBOR plus 2%, and the maturity date is September 2025. The Company’s loan is eliminated in consolidation.
The Company has provided Hong Kong Disneyland Resort with a revolving credit facility of HK $2.1 billion ($269270 million), which bears interest at a rate of three month HIBOR plus 1.25% and matures in December 2023. There is noThe outstanding balance under the line of credit at March 30, 2019.April 3, 2021 was $89 million.
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 $813$876 million, bearing interest at rates up to 8% and maturing in 2036, with early repayment permitted. In addition, the Company has an outstanding balance of $130 million due from Shanghai Disney Resort primarily related to royalties. The Company has also provided Shanghai Disney Resort with a $157 million line of credit bearing interest at 8%. There is noAs of April 3, 2021, the total amount outstanding balance under the line of credit at March 30, 2019.was $33 million. These balances are eliminated in consolidation.
Shendi has provided Shanghai Disney Resort with loans totaling 7.17.7 billion yuan (approximately $1.1$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 1.4 billion yuan (approximately $0.2 billion) line of credit bearing interest at 8%. There is noAs of April 3, 2021 the total amount outstanding balance under the line of credit at March 30, 2019.was 0.3 billion yuan (approximately $44 million).
8.Income Taxes
U.S. Tax Cuts6.Produced and Jobs Act
In December 2017, new federal income tax legislation, the “Tax CutsAcquired/Licensed Content Costs and Jobs Act” (Tax Act), was signed into law. The most significant impacts on the Company are as follows:
Effective January 1, 2018, the U.S. corporate federal statutory income tax rate was reduced from 35.0% to 21.0%. Because of our fiscal year end, the Company’s fiscal 2018 statutory federal tax rate was 24.5%. The Company’s statutory federal tax rate is 21.0% for fiscal 2019 (and thereafter).Advances
The Company remeasuredclassifies its U.S. federal deferred taxcapitalized produced and acquired/licensed content costs as long-term assets and liabilities atgenerally classifies advances for live programming rights made prior to the ratelive event as short-term assets. 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 Company expectsspecific film or television title (e.g. theatrical revenues or sales to bethird-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)
18
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in effect when those deferred taxes are realized (either 24.5% ifmillions, except for per share data)
Total capitalized produced and licensed content by predominant monetization strategy is as follows:
As of April 3, 2021As of October 3, 2020
Predominantly Monetized IndividuallyPredominantly Monetized as a GroupTotalPredominantly Monetized IndividuallyPredominantly Monetized as a GroupTotal
Produced content
Theatrical film costs
Released, less amortization$2,811 $2,657 $5,468 $3,000 $2,601 $5,601 
Completed, not released1,224 10 1,234 522 210 732 
In-process3,144   679   3,823   3,322   259   3,581   
In development or pre-production229 11 240 262 16 278 
$7,408 $3,357 10,765 $7,106 $3,086 10,192 
Television costs
Released, less amortization$1,874 $6,060 $7,934 $2,090 $5,584 $7,674 
Completed, not released214 733 947 33 510 543 
In-process207 2,843 3,050 263 1,831 2,094 
In development or pre-production2 207 209 6 87 93 
$2,297 $9,843 12,140 $2,392 $8,012 10,404 
Licensed content - Television programming rights and advances6,157 6,597 
Total produced and licensed content$29,062 $27,193 
Current portion$2,204 $2,171 
Non-current portion$26,858 $25,022 
Amortization of produced and licensed content is as follows:
Quarter Ended April 3, 2021Quarter Ended March 28, 2020
Predominantly
Monetized
Individually		Predominantly
Monetized
as a Group		TotalPredominantly
Monetized
Individually		Predominantly
Monetized
as a Group		Total
Theatrical film costs$352$270$622$499 $232 $731 
Television costs4069711,377726   940   1,666   
Total produced content costs$758$1,2411,999$1,225 $1,172 2,397 
Television programming rights and advances2,2232,709 
Total produced and licensed content costs(1)
$4,222$5,106 
Six Months Ended April 3, 2021Six Months Ended March 28, 2020
Predominantly
Monetized
Individually		Predominantly
Monetized
as a Group		TotalPredominantly
Monetized
Individually		Predominantly
Monetized
as a Group		Total
Theatrical film costs$649$510$1,159$1,025 $543 $1,568 
Television costs7211,9292,6501,480   1,867   3,347   
Total produced content costs$1,370$2,4393,809$2,505 $2,410 4,915 
Television programming rights and advances6,7626,440 
Total produced and licensed content costs(1)
$10,571$11,355 
(1)Primarily included in 2018 or 21.0% thereafter) (Deferred Remeasurement). The Company recognized a benefit“Costs of approximately $2.2 billion from the Deferred Remeasurement, the majority of which was recognizedservices” in the first quarterCondensed Consolidated Statements of fiscal 2018.Income.
A one-time tax is due on certain accumulated foreign earnings (Deemed Repatriation Tax), which is payable over eight years. The effective tax rate is generally 15.5% on the portion
7.Income Taxes
Interim Period Tax Expense
Because of the uncertainties associated with the impact of COVID-19 on our projections of full-year pre-tax earnings held in cash and cash equivalentsincome tax expense, as well as the projected impact of permanent tax differences and other items that are generally not proportional to full-year earnings (“Permanent Differences”), our normal approach of using an estimated full-year effective
19
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


and 8% on the remainder. The Company recognized a chargeincome tax rate to determine interim period tax expense produces an income tax provision for the Deemed Repatriation Taxcurrent year-to-date period that is not meaningful. Accordingly, we calculated year-to-date fiscal 2021 tax expense based on year-to-date earnings before tax and using a blended U.S. Federal and state statutory tax rate of approximately $0.4 billion,23%, and adjusted for the majorityestimated impact of which was recognized in the first quarter of fiscal 2018. Generally there will no longer be a U.S. federal income tax cost arising from the repatriation of foreign earnings.
The Company is eligible to claim an immediate deduction for investments in qualified fixed assets acquired and film and television productions that commenced after September 27, 2017 and placed in service by the end of fiscal 2022. The immediate deduction phases out for assets placed in service in fiscal 2023 through fiscal 2027.
Beginning in fiscal 2019:
◦The domestic production activity deduction is eliminated.
◦Certain foreign derived income will be taxed in the U.S. at an effective rate of approximately 13% (which increases to approximately 16% in 2025) rather than the general statutory rate of 21%.
◦
Certain foreign earnings will be taxed at a minimum effective rate of approximately 13%, which increases to approximately 16% in 2025. The Company’s policy is to expense the tax on these earnings in the period the earnings are taxable in the U.S.
Intra-Entity Transfers of Assets Other Than Inventory
At the beginning of fiscal 2019, the Company adopted new FASB accounting guidance that requires recognition of the income tax consequences of an intra-entity transfer of an asset (other than inventory) when the transfer occurs instead of when the asset is ultimately sold to an outside party. In the first quarter of fiscal 2019, the Company recorded a $0.1 billion deferred tax asset with an offsetting increase to retained earnings.Permanent Differences.
Unrecognized Tax Benefits
DuringThe change in the Company’s gross unrecognized tax benefits for the six months ended March 30, 2019, the Company increased its gross unrecognized tax benefits by $2.2 billion from $0.6 billion to $2.8 billion (before interest and penalties). The increase includes $2.1 billion related to 21CF. Interest and penalty reserves related to 21CF unrecognized tax benefits are $0.9 billion.April 3, 2021 was not material. In the next twelve months, it is reasonably possible that our unrecognized tax benefits could change due to resolutions of open tax matters. These resolutionsmatters, which would reduce our unrecognized tax benefits by $0.2 billion, of which $0.1 billion would reduce our income tax expense$0.5 billion.
8.Pension and effective tax rate if recognized.Other Benefit Programs
9.Pension and Other Benefit Programs
The components of net periodic benefit cost are as follows:
 Pension Plans Postretirement Medical Plans
 Quarter Ended Six Months Ended Quarter Ended Six Months Ended
 Mar. 30,
2019		 Mar. 31,
2018		 Mar. 30,
2019		 Mar. 31,
2018		 Mar. 30,
2019		 Mar. 31,
2018		 Mar. 30,
2019		 Mar. 31,
2018
Service costs$83
 $87
 $166
 $175
 $2
 $2
 $4
 $5
Other costs (benefits):               
Interest costs144
 122
 289
 245
 17
 15
 33
 30
Expected return on plan assets(240) (227) (479) (452) (14) (13) (28) (26)
Amortization of prior-year service costs4
 5
 7
 8
 —
 —
 —
 —
Recognized net actuarial loss67
 88
 131
 175
 —
 4
 —
 7
Total other costs (benefits)(25) (12) (52) (24) 3
 6
 5
 11
Net periodic benefit cost$58
 $75
 $114
 $151
 $5
 $8
 $9
 $16

At the beginning of fiscal 2019, the Company adopted new FASB accounting guidance on the presentation of the components of net periodic pension and postretirement benefit cost (“net periodic benefit cost”). This guidance requires the Company to present the service cost component of net periodic benefit cost in the same line items on the statement of operations as other compensation costs of the related employees (i.e. “Costs and expenses” in the Condensed Consolidated Statement of Income). All of the other components of net periodic benefit cost (“other costs / benefits”) are presented as a component of “Interest expense, net” in the Condensed Consolidated Statement of Income (see Note 6). The other costs / benefits in fiscal 2018 were not material and are reported in Costs and expenses.
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


 Pension PlansPostretirement Medical Plans
 Quarter EndedSix Months EndedQuarter EndedSix Months Ended
 April 3,
2021		March 28,
2020		April 3, 2021March 28, 2020April 3, 2021March 28, 2020April 3, 2021March 28, 2020
Service costs$109 $102 $217 $205 $2 $2 $5 $5 
Other costs (benefits):
Interest costs115   133   229   266   11   14   23   28   
Expected return on plan assets(274)(273)(549)(546)(13)(15)(27)(29)
Amortization of previously deferred service costs4 4 6 7 0 0 0 0 
Recognized net actuarial loss185 131 371 262 8 4 15 7 
Total other costs (benefits)30 (5)57 (11)6 3 11 6 
Net periodic benefit cost$139 $97 $274 $194 $8 $5 $16 $11 
During the six months ended March 30, 2019,April 3, 2021, the Company did not make any material contributions to its pension and postretirement medical plans. The Company currently expects totalto make approximately $0.5 billion to $0.6 billion in pension and postretirement medical plan contributions in fiscal 2019 of approximately $750 million. However, final2021. Final minimum funding amountsrequirements for fiscal 20192021 will be assesseddetermined based on oura January 1, 20192021 funding actuarial valuation, which willis expected to be available inreceived during the fourth quarter of fiscal 2019.2021.
In connection with our acquisition of 21CF, we assumed net pension obligations of $237 million ($824 million in obligations and $587 million in plan assets), which is anticipated to have an immaterial impact on our fiscal 2019 Condensed Consolidated Statement of Income. The Company expects to contribute approximately $50 million to the 21CF plans in fiscal 2019.
9.Earnings Per Share
10.Earnings Per Share
Diluted earnings per share amounts are based upon the weighted average number of common and common equivalent shares outstanding during the period and are calculated using the treasury stock method for equity-based compensation awards (Awards). 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:
 Quarter EndedSix Months Ended
 April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Shares (in millions):
Weighted average number of common and common equivalent shares outstanding (basic)1,817   1,808   1,814   1,806   
Weighted average dilutive impact of Awards12 8 12 10 
Weighted average number of common and common equivalent shares outstanding (diluted)1,829 1,816 1,826 1,816 
Awards excluded from diluted earnings per share3 9 5 9 
 Quarter Ended Six Months Ended
 March 30,
2019		 March 31,
2018		 March 30,
2019		 March 31,
2018
Shares (in millions):       
Weighted average number of common and common equivalent shares outstanding (basic)1,530
 1,503
 1,510
 1,507
Weighted average dilutive impact of Awards7
 7
 7
 8
Weighted average number of common and common equivalent shares outstanding (diluted)1,537
 1,510
 1,517
 1,515
Awards excluded from diluted earnings per share14
 12
 13
 13

20
11.Equity
The Company paid the following dividends in fiscal 2019 and 2018:
Per ShareTotal PaidPayment TimingRelated to Fiscal Period
$0.88$1.3 billionSecond quarter of Fiscal 2019Second Half of 2018
$0.84$1.2 billionFourth Quarter of Fiscal 2018First Half of 2018
$0.84$1.3 billionSecond Quarter of Fiscal 2018Second Half of 2017

As a result of our acquisition of 21CF, the TWDC became the parent entity of both 21CF and TWDC Enterprises 18 Corp. (formerly known as The Walt Disney Company and referred to herein as “Legacy Disney”). TWDC issued 307 million shares of common stock to acquire 21CF (see Note 4), and all the outstanding shares of Legacy Disney (other than treasury shares, shares held by subsidiaries of Legacy Disney and shares held on behalf of third parties) were converted on a one-for-one basis into new publicly traded shares of TWDC.
On March 20, 2019, Legacy Disney terminated its share repurchase program and 1.4 billion treasury shares were canceled, which resulted in a decrease to common stock and retained earnings of $17.6 billion and $49.1 billion, respectively. The cost of treasury shares canceled was allocated to common stock based on the ratio of treasury shares to total shares outstanding, with the excess allocated to retained earnings. At March 30, 2019, TWDC held 19 million treasury shares.
TWDC’s authorized share capital consists of 4.6 billion common shares at $0.01 par value and 100 million preferred shares at $0.01 par value, both of which represent the same authorized capital structure in effect prior to the completion of the 21CF acquisition and as of September 29, 2018. As of September 29, 2018, Legacy Disney had 40 thousand preferred series B shares authorized with $0.01 par value, which were eliminated during the first quarter of fiscal 2019.
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


10.Equity
The Company paid the following dividend in fiscal 2020:
Per ShareTotal PaidPayment TimingRelated to Fiscal Period
$0.88$1.6 billionSecond Quarter of Fiscal 2020Second Half 2019
The Company did not pay a dividend with respect to fiscal year 2020 operations. There have been no dividends declared or paid with respect to fiscal 2021 operations.
The following tables summarize the changes in each component of accumulated other comprehensive income (loss) (AOCI) including our proportional share of equity method investee amounts:
 
Market Value Adjustments(1)
Unrecognized
Pension and 
Postretirement
Medical 
Expense		Foreign
Currency
Translation
and Other		AOCI
AOCI, before tax
Second quarter of fiscal 2021
Balance at January 2, 2021$(419)$(9,227)$(877)$(10,523)
Quarter Ended April 3, 2021:
Unrealized gains (losses) arising during the period131 55 (84)102 
Reclassifications of realized net (gains) losses to net income5 194 0 199 
Balance at April 3, 2021$(283)$(8,978)$(961)$(10,222)
Second quarter of fiscal 2020
Balance at December 28, 2019$(12)$(7,363)$(1,004)$(8,379)
Quarter Ended March 28, 2020:
Unrealized gains (losses) arising during the period212    (43)   (364)   (195)   
Reclassifications of realized net (gains) losses to net income(42)138 0 96 
Balance at March 28, 2020$158 $(7,268)$(1,368)$(8,478)
Six months ended fiscal 2021
Balance at October 3, 2020$(191)$(9,423)$(1,088)$(10,702)
Six Months Ended April 3, 2021:
Unrealized gains (losses) arising during the period(54)57 127 130 
Reclassifications of realized net (gains) losses to net income(38)388 0 350 
Balance at April 3, 2021$(283)$(8,978)$(961)$(10,222)
Six months ended fiscal 2020
Balance at September 28, 2019$129 $(7,502)$(1,086)$(8,459)
Six Months Ended March 28, 2020:
Unrealized gains (losses) arising during the period131 (43)(282)(194)
Reclassifications of realized net (gains) losses to net income(102)277 0 175 
Balance at March 28, 2020$158 $(7,268)$(1,368)$(8,478)

21
     Unrecognized
Pension and 
Postretirement
Medical 
Expense		 Foreign
Currency
Translation
and Other		 AOCI
 Market Value Adjustments 
AOCI, before taxInvestments Cash Flow Hedges 
Second quarter of fiscal 2019         
Balance at December 29, 2018$—
 $166
 $(4,254) $(743) $(4,831)
Quarter Ended March 30, 2019:        

Unrealized gains (losses) arising during the period(5) (82) 19
 15
 (53)
Reclassifications of realized net (gains) losses to net income—
 (22) 72
 —
 50
Balance at March 30, 2019$(5) $62
 $(4,163) $(728) $(4,834)
          
Second quarter of fiscal 2018         
Balance at December 30, 2017$14
 $(69) $(4,810) $(461) $(5,326)
Quarter Ended March 31, 2018:         
Unrealized gains (losses) arising during the period10
 (165) 24
 103
 (28)
Reclassifications of realized net (gains) losses to net income—
 37
 96
 —
 133
Balance at March 31, 2018$24
 $(197) $(4,690) $(358) $(5,221)
          
First and second quarter of fiscal 2019        
Balance at September 29, 2018$24
 $177
 $(4,323) $(727) $(4,849)
Six Months Ended March 30, 2019:         
Unrealized gains (losses) arising during the period(5) (55) 19
 (1) (42)
Reclassifications of net (gains) losses to net income—
 (61) 141
 —
 80
Reclassifications to retained earnings(24) 1
 —
 —
 (23)
Balance at March 30, 2019$(5) $62
 $(4,163) $(728) $(4,834)
          
First and second quarter of fiscal 2018        
Balance at September 30, 2017$15
 $(108) $(4,906) $(523) $(5,522)
Six Months Ended March 31, 2018:         
Unrealized gains (losses) arising during the period9
 (146) 24
 165
 52
Reclassifications of net (gains) losses to net income—
 57
 192
 —
 249
Balance at March 31, 2018$24
 $(197) $(4,690) $(358) $(5,221)
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)

 
Market Value Adjustments(1)
Unrecognized
Pension and 
Postretirement
Medical 
Expense		Foreign
Currency
Translation
and Other		AOCI
Tax on AOCI
Second quarter of fiscal 2021
Balance at January 2, 2021$95 $2,155 $132 $2,382 
Quarter Ended April 3, 2021:
Unrealized gains (losses) arising during the period(24)(13)6 (31)
Reclassifications of realized net (gains) losses to net income(2)(45)0 (47)
Balance at April 3, 2021$69 $2,097 $138 $2,304 
Second quarter of fiscal 2020
Balance at December 28, 2019$5 $1,724 $117 $1,846 
Quarter Ended March 28, 2020:
Unrealized gains (losses) arising during the period(51)   10    58    17    
Reclassifications of realized net (gains) losses to net income10 (32)0 (22)
Balance at March 28, 2020$(36)$1,702 $175 $1,841 
Six months ended fiscal 2021
Balance at October 3, 2020$40 $2,201 $139 $2,380 
Six Months Ended April 3, 2021:
Unrealized gains (losses) arising during the period22 (14)(1)7 
Reclassifications of realized net (gains) losses to net income7 (90)0 (83)
Balance at April 3, 2021$69 $2,097 $138 $2,304 
Six months ended fiscal 2020
Balance at September 28, 2019$(29)$1,756 $115 $1,842 
Six Months Ended March 28, 2020:
Unrealized gains (losses) arising during the period(31)10 60 39 
Reclassifications of realized net (gains) losses to net income24 (64)0 (40)
Balance at March 28, 2020$(36)$1,702 $175 $1,841 

22
     Unrecognized
Pension and 
Postretirement
Medical 
Expense		 Foreign
Currency
Translation
and Other		 AOCI
 Market Value Adjustments 
Tax on AOCIInvestments Cash Flow Hedges 
Second quarter of fiscal 2019         
Balance at December 29, 2018$—
 $(38) $1,007
 $80
 $1,049
Quarter Ended March 30, 2019:        

Unrealized gains (losses) arising during the period1
 19
 (6) (3) 11
Reclassifications of realized net (gains) losses to net income—
 5
 (17) —
 (12)
Balance at March 30, 2019$1
 $(14) $984
 $77
 $1,048
          
Second quarter of fiscal 2018         
Balance at December 30, 2017$(7) $25
 $1,804
 $100
 $1,922
Quarter Ended March 31, 2018:        

Unrealized gains (losses) arising during the period(3) 25
 (3) (33) (14)
Reclassifications of realized net (gains) losses to net income—
 (9) (23) —
 (32)
Balance at March 31, 2018$(10) $41
 $1,778
 $67
 $1,876
          
First and second quarter of fiscal 2019        
Balance at September 29, 2018$(9) $(32) $1,690
 $103
 $1,752
Six Months Ended March 30, 2019:         
Unrealized gains (losses) arising during the period1
 13
 (6) (10) (2)
Reclassifications of net (gains) losses to net income—
 14
 (33) —
 (19)
Reclassifications to retained earnings (1)
9
 (9) (667) (16) (683)
Balance at March 30, 2019$1
 $(14) $984
 $77
 $1,048
          
First and second quarter of fiscal 2018        
Balance at September 30, 2017$(7) $46
 $1,839
 $116
 $1,994
Six Months Ended March 31, 2018:         
Unrealized gains (losses) arising during the period(3) 12
 (3) (49) (43)
Reclassifications of net (gains) losses to net income—
 (17) (58) —
 (75)
Balance at March 31, 2018$(10) $41
 $1,778
 $67
 $1,876
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


 
Market Value Adjustments(1)
Unrecognized
Pension and 
Postretirement
Medical 
Expense		Foreign
Currency
Translation
and Other		AOCI
AOCI, after tax
Second quarter of fiscal 2021
Balance at January 2, 2021$(324)$(7,072)$(745)$(8,141)
Quarter Ended April 3, 2021:
Unrealized gains (losses) arising during the period107 42 (78)71 
Reclassifications of realized net (gains) losses to net income3 149 0 152 
Balance at April 3, 2021$(214)$(6,881)$(823)$(7,918)
Second quarter of fiscal 2020
Balance at December 28, 2019$(7)$(5,639)$(887)$(6,533)
Quarter Ended March 28, 2020:
Unrealized gains (losses) arising during the period161 (33)(306)(178)
Reclassifications of realized net (gains) losses to net income(32)106 0 74 
Balance at March 28, 2020$122 $(5,566)$(1,193)$(6,637)
Six months ended fiscal 2021
Balance at October 3, 2020$(151)$(7,222)$(949)$(8,322)
Six Months Ended April 3, 2021:
Unrealized gains (losses) arising during the period(32)43 126 137 
Reclassifications of realized net (gains) losses to net income(31)   298    0    267    
Balance at April 3, 2021$(214)$(6,881)$(823)$(7,918)
Six months ended fiscal 2020
Balance at September 28, 2019$100 $(5,746)$(971)$(6,617)
Six Months Ended March 28, 2020:
Unrealized gains (losses) arising during the period100 (33)(222)(155)
Reclassifications of realized net (gains) losses to net income(78)213 0 135 
Balance at March 28, 2020$122 $(5,566)$(1,193)$(6,637)
     Unrecognized
Pension and 
Postretirement
Medical 
Expense		 Foreign
Currency
Translation
and Other		 AOCI
 Market Value Adjustments 
AOCI, after taxInvestments Cash Flow Hedges 
Second quarter of fiscal 2019         
Balance at December 29, 2018$—
 $128
 $(3,247) $(663) $(3,782)
Quarter Ended March 30, 2019:         
Unrealized gains (losses) arising during the period(4) (63) 13
 12
 (42)
Reclassifications of realized net (gains) losses to net income—
 (17) 55
 —
 38
Balance at March 30, 2019$(4) $48
 $(3,179) $(651) $(3,786)
          
Second quarter of fiscal 2018         
Balance at December 30, 2017$7
 $(44) $(3,006) $(361) $(3,404)
Quarter Ended March 31, 2018:         
Unrealized gains (losses) arising during the period7
 (140) 21
 70
 (42)
Reclassifications of realized net (gains) losses to net income—
 28
 73
 —
 101
Balance at March 31, 2018$14
 $(156) $(2,912) $(291) $(3,345)
          
First and second quarter of fiscal 2019        
Balance at September 29, 2018$15
 $145
 $(2,633) $(624) $(3,097)
Six Months Ended March 30, 2019:         
Unrealized gains (losses) arising during the period(4) (42) 13
 (11) (44)
Reclassifications of net (gains) losses to net income—
 (47) 108
 —
 61
Reclassifications to retained earnings (1)
(15) (8) (667) (16) (706)
Balance at March 30, 2019$(4) $48
 $(3,179) $(651) $(3,786)
          
First and second quarter of fiscal 2018        
Balance at September 30, 2017$8
 $(62) $(3,067) $(407) $(3,528)
Six Months Ended March 31, 2018:         
Unrealized gains (losses) arising during the period6
 (134) 21
 116
 9
Reclassifications of net (gains) losses to net income—
 40
 134
 —
 174
Balance at March 31, 2018$14
 $(156) $(2,912) $(291) $(3,345)
(1)
At the beginning of fiscal 2019, the Company adopted new FASB accounting guidance, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, and reclassified $691 million from AOCI to retained earnings.
In addition, at the beginning of fiscal 2019, the Company adopted new FASB accounting guidance, Recognition and Measurement of Financial Assets and Liabilities, and reclassified $24 million ($15 million after tax) of(1)Primarily reflects market value adjustments on investments previously recorded in AOCI to retained earnings.for cash flow hedges.
23
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


Details about AOCI components reclassified to net income are as follows:
Gain (loss) in net income:Affected line item in the
Condensed Consolidated
Statements of Operations:		Quarter EndedSix Months Ended
April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Market value adjustments, primarily cash flow hedgesPrimarily revenue$(5)$42 $38 $102 
Estimated taxIncome taxes2 (10)(7)(24)
(3)32 31 78 
Pension and postretirement medical expenseInterest expense, net(194)(138)(388)(277)
Estimated taxIncome taxes45   32   90   64   
(149)(106)(298)(213)
Total reclassifications for the period$(152)$(74)$(267)$(135)
Gains/(losses) in net income: 
Affected line item in the
  Condensed Consolidated
  Statements of Income:
 Quarter Ended Six Months Ended
  March 30,
2019		 March 31,
2018		 March 30,
2019		 March 31,
2018
Cash flow hedges Primarily revenue $22
 $(37) $61
 $(57)
Estimated tax Income taxes (5) 9
 (14) 17
    17
 (28) 47
 (40)
           
Pension and postretirement
  medical expense
 Costs and expenses —
 (96) —
 (192)
  Interest expense, net (72) —
 (141) —
Estimated tax Income taxes 17
 23
 33
 58
    (55) (73) (108) (134)
           
Total reclassifications for the period   $(38) $(101) $(61) $(174)

12.Equity-Based Compensation
11.Equity-Based Compensation
Compensation expense related to stock options and restricted stock units (RSUs) is as follows:
 Quarter EndedSix Months Ended
 April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Stock options$23 $28 $48 $49 
RSUs113   103   222   197   
Total equity-based compensation expense(1)
$136 $131 $270 $246 
Equity-based compensation expense capitalized during the period$22 $21 $56 $45 
 Quarter Ended Six Months Ended
 March 30,
2019		 March 31,
2018		 March 30,
2019		 March 31,
2018
Stock options$24
 $23
 $43
 $46
RSUs (1)
100
 77
 173
 148
Total equity-based compensation expense (2)
$124
 $100
 $216
 $194
Equity-based compensation expense capitalized during the period$22
 $18
 $38
 $37

(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.
(1)
Excludes 21CF RSUs converted to Company RSUs in connection with the acquisition of 21CF (see Note 4). The Company recognized $259 million of equity based compensation in connection with the 21CF acquisition.
(2)
Equity-based compensation expense is net of capitalized equity-based compensation and excludes amortization of previously capitalized equity-based compensation costs.
Unrecognized compensation cost related to unvested stock options and RSUs was $170$155 millionand $827$1,261 million,, respectively, as of March 30, 2019, including $141 million of unrecognized compensation cost related to equity awards assumed and converted to Company RSUs in the 21CF acquisition.April 3, 2021.
The weighted average grant date fair values of options granted during the six months ended April 3, 2021 and March 30, 201928, 2020 were $58.41 and March 31, 2018 were $28.67 and $28.01,$36.22, respectively.
During the six months ended March 30, 2019,April 3, 2021, the Company made equity compensation grants consisting of 3.91.4 million stock options and 3.34.4 million RSUs.
13.Commitments and Contingencies
12.Commitments and Contingencies
Legal Matters
The Company, together with, in some instances, certain of its directors and officers, is a defendant in various legal actions involving copyright, breach of contract and various other claims incident to the conduct of its businesses. Management does not believe that the Company has incurred a probable material loss by reason of any of those actions.
Contractual Guarantees
The Company has guaranteed bond issuances by the Anaheim Public Authority that were used by the City of Anaheim to finance construction of infrastructure and a public parking facility adjacent to the Disneyland Resort. Revenues from sales, occupancy and property taxes from the Disneyland Resort and non-Disney hotels are used by the City of Anaheim to repay the bonds, which have various maturities throughmature in 2037. In the event of a debt service shortfall, the Company will be responsible to
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


fund the shortfall. As of March 30, 2019,April 3, 2021, the remaining debt service obligation guaranteed by the Company was $290$226 million. To the extent that tax revenues exceed the debt service payments subsequent to the Company funding a shortfall, the Company would be reimbursed for any previously funded shortfalls. To date, tax revenues have exceeded the debt service payments for these bonds.
Long-Term Receivables
24
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)

Multi-year Sports Rights Commitments
In fiscal year 2021, we entered into new multi-year sports rights commitments for approximately $36 billion, which primarily reflects a new agreement with the National Football League and to a lesser extent, the AllowanceNational Hockey League, Major League Baseball and various other rights. Payments for Credit Lossesthese commitments are not material in fiscal 2021. Payments in fiscal 2022, fiscal 2023, fiscal 2024 and fiscal 2025 are approximately $2.5 billion, $4.1 billion, $3.7 billion and $3.7 billion, respectively.
The Company has accounts receivable with original maturities greater than one year related to the sale of film and television program rights and vacation club properties. Allowances for credit losses are established against these receivables as necessary.
The Company estimates the allowance for credit losses related to receivables from the sale of film and television programs based upon a number of factors, including historical experience and the financial condition of individual companies with which we do business. The balance of film and television program sales receivables recorded in other non-current assets, net of an immaterial allowance for credit losses, was $0.9 billion as of March 30, 2019. The activity for the quarter and six-month periods ended March 30, 2019 and March 31, 2018 related to the allowance for credit losses was not material.13.Fair Value Measurements
The Company estimates the allowance for credit losses related to receivables from sales of its vacation club properties based primarily on historical collection experience. Estimates of uncollectible amounts also consider the economic environment and the age of receivables. The balance of mortgage receivables recorded in other non-current assets, net of a related allowance for credit losses of approximately 4%, was $0.8 billion as of March 30, 2019. The activity for the quarter and six-month periods ended March 30, 2019 and March 31, 2018 related to the allowance for credit losses was not material.
14.Fair Value Measurements
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:
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
The Company’s assets and liabilities measured at fair value are summarized in the following tables by fair value measurement Level:
 Fair Value Measurement at April 3, 2021
 Level 1Level 2Level 3Total
Assets
Investments$1,184 $0 $0 $1,184 
Derivatives
Interest rate0 202 0 202 
Foreign exchange0 651 0 651 
Other0    10    0    10    
Liabilities
Derivatives
Interest rate0 (421)0 (421)
Foreign exchange0 (620)0 (620)
Other0 (1)0 (1)
Other0 (351)0 (351)
Total recorded at fair value$1,184 $(530)$0 $654 
Fair value of borrowings$0 $59,729 $1,398 $61,127 

25
 Fair Value Measurement at March 30, 2019
 Level 1 Level 2 Level 3 Total
Assets       
 Investments$20
 $—
 $—
 $20
Derivatives       
Interest rate—
 18
 —
 18
Foreign exchange—
 525
 —
 525
Other—
 6
 —
 6
Liabilities       
Derivatives       
Interest rate—
 (158) —
 (158)
Foreign exchange—
 (425) —
 (425)
Other—
 (2) —
 (2)
Total recorded at fair value$20
 $(36) $—
 $(16)
Fair value of borrowings$—
 $41,482
 $17,833
 $59,315
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


 Fair Value Measurement at October 3, 2020
 Level 1Level 2Level 3Total
Assets
Investments$0 $1,057 $0 $1,057 
Derivatives
Interest rate0 515 0 515 
Foreign exchange0    505    0    505    
Other0 1 0 1 
Liabilities
Derivatives
Interest rate0 (4)0 (4)
Foreign exchange0 (549)0 (549)
Other0 (22)0 (22)
Other0 (294)0 (294)
Total recorded at fair value$0 $1,209 $0 $1,209 
Fair value of borrowings$0 $63,370 $1,448 $64,818 
 Fair Value Measurement at September 29, 2018
 Level 1 Level 2 Level 3 Total
Assets       
 Investments$38
 $—
 $—
 $38
Derivatives       
Foreign exchange—
 469
 —
 469
Other—
 15
 —
 15
Liabilities       
Derivatives       
Interest rate—
 (410) —
 (410)
Foreign exchange—
 (274) —
 (274)
Total recorded at fair value$38
 $(200) $—
 $(162)
Fair value of borrowings$—
 $19,826
 $1,171
 $20,997

The fair values of Level 2 investments are based on quoted market prices, adjusted for trading restrictions.
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, did not have a material impact on derivative fair value estimates.
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. and Europeandollar 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. Level 3 borrowings at March 30, 2019 also include a bridge loan facility used to finance the acquisition of 21CF. The carrying value approximates fair value of this floating rate financial instrument.
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. For the quarter and six-month period ending March 30, 2019, the Company recorded an impairment charge of $353 million for the write-off of an equity method investment as a result of a level 3 fair value measurement. The impairment was recorded in “14.Equity in the income / (loss) of investees, net” in the Condensed Consolidated Statements of Income.Derivative Instruments
15.Derivative Instruments
The Company manages its exposure to various risks relating to its ongoing business operations according to a risk management policy. The primary risks managed with derivative instruments are interest rate risk and foreign exchange risk.
26
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


The Company’s derivative positions measured at fair value are summarized in the following tables:
 As of April 3, 2021
 Current
Assets		Other AssetsOther Current LiabilitiesOther Long-
Term
Liabilities
Derivatives designated as hedges
Foreign exchange$186 $219 $(168)$(118)
Interest rate0 202 (421)0 
Other6    2    (1)   0    
Derivatives not designated as hedges
Foreign exchange155 91 (151)(183)
Interest rate0 0 0 0 
Other2 0 0 0 
Gross fair value of derivatives349 514 (741)(301)
Counterparty netting(295)(381)467 209 
Cash collateral (received) paid(1)(61)237 78 
Net derivative positions$53 $72 $(37)$(14)

 As of March 30, 2019
 
Current
Assets
 Other Assets Other Current Liabilities 
Other Long-
Term
Liabilities
Derivatives designated as hedges       
Foreign exchange$192
 $176
 $(72) $(148)
Interest rate—
 18
 (121) —
Other5
 1
 (1) (1)
Derivatives not designated as hedges       
Foreign exchange44
 113
 (129) (76)
Interest rate—
 —
 —
 (37)
Gross fair value of derivatives241
 308
 (323) (262)
Counterparty netting(156) (253) 229
 180
Cash collateral (received)/paid(8) —
 65
 —
Net derivative positions$77
 $55
 $(29) $(82)
 As of September 29, 2018
 
Current
Assets
 Other Assets Other Current Liabilities 
Other Long-
Term
Liabilities
Derivatives designated as hedges       
Foreign exchange$166
 $169
 $(80) $(39)
Interest rate—
 —
 (329) —
Other13
 2
 —
 —
Derivatives not designated as hedges       
Foreign exchange38
 96
 (95) (60)
Interest rate—
 —
 —
 (81)
Gross fair value of derivatives217
 267
 (504) (180)
Counterparty netting(158) (227) 254
 131
Cash collateral (received)/paid—
 —
 135
 5
Net derivative positions$59
 $40
 $(115) $(44)

 As of October 3, 2020
 Current
Assets		Other AssetsOther Current LiabilitiesOther Long-
Term
Liabilities
Derivatives designated as hedges
Foreign exchange$184 $132 $(77)$(273)
Interest rate0 515 (4)0 
Other1    0    (15)   (4)   
Derivatives not designated as hedges
Foreign exchange53 136 (98)(101)
Interest rate0 0 0 0 
Other0 0 (3)0 
Gross fair value of derivatives238 783 (197)(378)
Counterparty netting(143)(378)184 338 
Cash collateral (received) paid(26)(142)0 9 
Net derivative positions$69 $263 $(13)$(31)
Interest Rate Risk Management
The Company is exposed to the impact of interest rate changes primarily through its borrowing activities. The Company’s objective is to mitigate the impact of interest rate changes on earnings and cash flows and on the market value of its borrowings. In accordance with its policy, the Company targets its fixed-rate debt as a percentage of its net debt between a minimum and maximum percentage. The Company primarily uses pay-floating and pay-fixed interest rate swaps to facilitate its interest rate risk management activities.
The Company designates pay-floating interest rate swaps as fair value hedges of fixed-rate borrowings effectively converting fixed-rate borrowings to variable rate borrowings indexed to LIBOR. As of March 30, 2019April 3, 2021 and September 29, 2018,October 3, 2020, the total notional amount of the Company’s pay-floating interest rate swaps was $7.2$15.2 billion and $7.6$15.8 billion, respectively.
27
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


The following table summarizes fair value hedge adjustments to hedged borrowings at March 30, 2019 and September 29, 2018:borrowings:
Carrying Amount of Hedged BorrowingsFair Value Adjustments Included
in Hedged Borrowings
April 3,
2021		October 3, 2020April 3,
2021		October 3, 2020
Borrowings:
Current$0    $753    $0    $4    
Long-term15,628 16,229 (217)505 
$15,628 $16,982 $(217)$509 
 
Carrying Amount of Hedged Borrowings (1)
 
Fair Value Adjustments Included
in Hedged Borrowings (1)
 March 30, 2019 September 29, 2018 March 30, 2019 September 29, 2018
Borrowings:       
Current$1,245
 $1,585
 $(4) $(14)
Long-term6,623
 6,425
 (66) (290)
 $7,868
 $8,010
 $(70) $(304)
(1)
Includes $39 million and $41 million of gains on terminated interest rate swaps as of March 30, 2019 and September 29, 2018, respectively.
The following amounts are included in “Interest expense, net” in the Condensed Consolidated Statements of Income:
 Quarter Ended Six Months Ended
 March 30,
2019		 March 31,
2018		 March 30,
2019		 March 31,
2018
Gain (loss) on:       
Pay-floating swaps$117
 $(102) $234
 $(166)
Borrowings hedged with pay-floating swaps(117) 102
 (234) 166
Benefit (expense) associated with interest accruals on pay-floating swaps(18) —
 (32) 7

 Quarter EndedSix Months Ended
 April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Gain (loss) on:
Pay-floating swaps$(577)$542 $(724)$429 
Borrowings hedged with pay-floating swaps577   (542)  724   (429)  
Benefit (expense) associated with interest accruals on pay-floating swaps36 (7)71 (19)
The Company may designate pay-fixed interest rate swaps as cash flow hedges of interest payments on floating-rate borrowings. Pay-fixed 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 March 30, 2019April 3, 2021 or at September 29, 2018,October 3, 2020, and gains and losses related to pay-fixed swaps recognized in earnings for the quarter and six months ended March 30, 2019 and March 31, 2018 were not material.
To facilitate its interest rate risk management activities, the Company sold options in November 2016, October 2017 and April 2018 to enter into a future pay-floating interest rate swaps indexed to LIBOR for $2.0 billion in future borrowings. The fair values of these contracts as of March 30, 2019 or at September 29, 2018 were not material. The options are not designated as hedges and do not qualify for hedge accounting; accordingly, changes in their fair value are recorded in earnings. Gains and losses on the options for the quarter and six months ended March 30, 20193, 2021 and March 31, 201828, 2020 were not material.
Foreign Exchange Risk Management
The Company transacts business globally and is subject to risks associated with changing foreign currency exchange rates. The Company’s objective is to reduce earnings and cash flow fluctuations associated with foreign currency exchange rate changes, enabling management to focus on core business issues and challenges.
The Company enters into option and forward contracts that change in value as foreign currency exchange rates change to protect the value of its existing foreign currency assets, liabilities, firm commitments and forecasted but not firmly committed foreign currency transactions. In accordance with policy, the Company hedges its forecasted foreign currency transactions for periods generally not to exceed four years within an established minimum and maximum range of annual exposure. The gains and losses on these contracts offset changes in the U.S. dollar equivalent value of the related forecasted transaction, asset, liability or firm commitment. The principal currencies hedged are the euro, Japanese yen, British pound, Chinese yuan and Canadian dollar. Cross-currency swaps are used to effectively convert foreign currency denominated borrowings into U.S. dollar denominated borrowings.
The Company designates foreign exchange forward and option contracts as cash flow hedges of firmly committed and forecasted foreign currency transactions. As of March 30, 2019April 3, 2021 and September 29, 2018,October 3, 2020, the notional amounts of the Company’s net foreign exchange cash flow hedges were $6.4$4.7 billion and $6.2$4.6 billion, respectively. Mark-to-market gains and losses on these contracts are deferred in AOCI and are recognized in earnings when the hedged transactions occur, offsetting changes in the value of the foreign currency transactions. Net deferred gains recorded in AOCI for contracts that will mature in the next twelve months total $9 million. The following table summarizes the effect of foreign exchange cash flow hedges on AOCI:
Quarter EndedSix Months Ended
April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Gain (loss) recognized in Other Comprehensive Income$92 $234 $(59)$149 
Gain (loss) reclassified from AOCI into the Statements of Income(1)
(4)   43    40    103    
(1)Primarily recorded in revenue.
28
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


The Company designates cross currency swaps as fair value hedges of foreign currency denominated borrowings. The impact of the designated exposure is recorded to “Interest expense, net” to offset the foreign currency impact of the foreign currency denominated borrowing. The non-hedged exposure is recorded to AOCI and is amortized over the life of the cross currency swap. As of April 3, 2021 and October 3, 2020, the total notional amounts of the Company’s designated cross currency swaps were Canadian $1.3 billion ($1.0 billion) and Canadian $1.3 billion ($1.0 billion), respectively.
the next twelve months total $131 million. The following table summarizesamounts are included in “Interest expense, net” in the effectCondensed Consolidated Statements of foreign exchange cash flow hedges on AOCI for the quarter and six months ended March 30, 2019:Income:
Quarter EndedSix Months Ended
April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Gain (loss) on:
Cross currency swaps$14 $0$56 $0
Borrowings hedged with cross currency swaps(14)0(56)0
Quarter Ended: 
Gain/(loss) recognized in Other Comprehensive Income$(91)
Gain/(loss) reclassified from AOCI into the Statement of Income (1)
20
  
Six Months Ended: 
Gain/(loss) recognized in Other Comprehensive Income(41)
Gain/(loss) reclassified from AOCI into the Statement of Income (1)
57
(1)
Primarily recorded in revenue.
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 March 30, 2019April 3, 2021 and September 29, 2018October 3, 2020 were $2.5$4.2 billion and $3.3$3.5 billion, respectively. The following table summarizes the net foreign exchange gains or losses recognized on foreign currency denominated assets and liabilities and the net foreign exchange gains or losses on the foreign exchange contracts we entered into to mitigate our exposure with respect to foreign currency denominated assets and liabilities for the quarter and six months ended March 30, 2019 and March 31, 2018by the corresponding line item in which they are recorded in the Condensed Consolidated Statements of Income:
Costs and Expenses Interest expense, net Income Tax expense Costs and ExpensesInterest expense, netIncome Tax Expense
Quarter Ended:March 30,
2019		 March 31,
2018		 March 30,
2019		 March 31,
2018		 March 30,
2019		 March 31,
2018		Quarter Ended:April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Net gain (loss) on foreign currency denominated assets and liabilities$1
 $64
 $(12) $24
 $—
 $(15)
Net gain (loss) on foreign exchange risk management contracts not designated as hedges(4) (77) 11
 (27) (4) 17
Net gain (loss)$(3) $(13) $(1) $(3) $(4) $2
Net gains (losses) on foreign currency denominated assets and liabilitiesNet gains (losses) on foreign currency denominated assets and liabilities$(97)$(241)$(14)$64 $25 $8 
Net gains (losses) on foreign exchange risk management contracts not designated as hedgesNet gains (losses) on foreign exchange risk management contracts not designated as hedges91   239   12   (62)  (20)  (20)  
Net gains (losses)Net gains (losses)$(6)$(2)$(2)$2 $5 $(12)
           
Six Months Ended:           Six Months Ended:
Net gains (losses) on foreign currency denominated assets and liabilities$(26) $81
 $28
 $27
 $15
 $(12)Net gains (losses) on foreign currency denominated assets and liabilities$61 $(172)$(55)$52 $(34)$(7)
Net gains (losses) on foreign exchange risk management contracts not designated as hedges20
 (91) (28) (28) (22) 16
Net gains (losses) on foreign exchange risk management contracts not designated as hedges(96)159 55 (52)30 (3)
Net gains (losses)$(6) $(10) $—
 $(1) $(7) $4
Net gains (losses)$(35)$(13)$0 $0 $(4)$(10)
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 March 30, 2019April 3, 2021 and September 29, 2018October 3, 2020 and related gains or losses recognized in earnings for the quarter and six months ended April 3, 2021 and March 30, 2019 and March 31, 201828, 2020 were not material.
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 and fair valueamounts of these contracts at March 30, 2019April 3, 2021 and September 29, 2018October 3, 2020 were not material.$0.3 billion. The related gains or losses recognized in earnings for the quarter and six months ended April 3, 2021 and March 30, 2019 and March 31, 201828, 2020 were not material.
29
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)

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


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 $176$366 million and $299$53 million on April 3, 2021 and October 3, 2020, respectively.
15.March 30, 2019Restructuring and September 29, 2018, respectively.Impairment Charges
TFCF Integration
16.Restructuring Charges
TheIn fiscal 2019, the Company has begun implementingimplemented a restructuring and integration plan as a part of its initiative to realize previously announced cost synergies from the acquisition of 21CF. Although our plans are not yet finalized, we currently anticipate thatTFCF. The restructuring plan was substantially complete as of the total severance and related costs could be on the orderend of $1.5 billion. To date, wefiscal 2020. We have recorded restructuring charges of $1.7 billion, including $1.3 billion related to severance and related costs totaling $403 million(including employee contract terminations) in connection with the plan. In addition, we recorded charges totaling $259 million forplan and $0.3 billion of equity based compensation costs, primarily for 21CFTFCF awards that were accelerated to vest upon the closing of the 21CFTFCF acquisition. These charges are recorded in “Restructuring and impairment charges” in the Condensed Consolidated Statements of Income.
Other
The Company may incur other costs in connection with the plan such as lease termination costs, but is unable to estimate those amounts at this time. For the prior-year quarter and six-month period,recorded approximately $0.4 billion of restructuring and impairment charges were not material.
The following table summarizesduring the changes in restructuring reserves:
 
Beginning
Balance
 Additions Payments Other 
Ending
Balance
Quarter ended March 30, 2019:         
Restructuring reserves$39
 $403
 $(19) $—
 $423


17.Condensed Consolidating Financial Information
Legacy Disney has outstanding public debt that has been fully and unconditionally guaranteed by TWDC. In addition, Legacy Disney has provided a full and unconditional guarantee of debt held by TWDC. Legacy Disney is a 100% owned subsidiary of TWDC.
Set forth below are condensed consolidating financial statements presenting the results of operations, financial position and cash flows of TWDC, Legacy Disney and non-guarantor subsidiaries on a combined basis along with eliminations necessary to arrive at the reported information on a consolidated basis. This condensed consolidating financial information has been prepared and presented pursuantquarter ended April 3, 2021, primarily related to the Securitiesplanned closure of an animation studio and Exchange Commission Regulation S-X Rule 3-10, “Financiala substantial number of our Disney-branded retail stores as well as severance at our parks and resorts businesses. These charges are recorded in “Restructuring and impairment charges” in the Condensed Consolidated Statements of Guarantors and Issuers of Guaranteed Securities Registered or being Registered.” This information is not intended to present the financial position, results of operations and cash flows of the individual companies or groups of companies in accordance with U.S. GAAP. Eliminations represent adjustments to eliminate investments in subsidiaries and intercompany balances and transactions.Income.
Prior to March 20, 2019, Legacy Disney was the parent entity of TWDC. TWDC was formed in June 2018 and did not have any activity prior to fiscal 2019.
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the Quarter Ended March 30, 2019
(unaudited; in millions)
 TWDC Legacy Disney Non-Guarantor Subsidiaries Reclassifications & Eliminations Total
Revenues$—
 $—
 $14,896
 $26
 $14,922
Costs and expenses         
Operating expenses—
 —
 (8,376) —
 (8,376)
Selling, general, administrative and other—
 (218) (2,109) —
 (2,327)
Depreciation and amortization—
 (1) (827) —
 (828)
Total costs and expenses—
 (219) (11,312) —
 (11,531)
Restructuring and impairment charges—
 —
 (662) —
 (662)
Allocations to non-guarantor subsidiaries—
 203
 (203) —
 —
Other income, net—
 19
 4,970
 (26) 4,963
Interest expense, net(109) (112) 78
 —
 (143)
Equity in the income (loss) of investees, net—
 —
 (312) —
 (312)
Income from continuing operations before income taxes(109) (109) 7,455
 —
 7,237
Income taxes from continuing operations25
 25
 (1,697) —
 (1,647)
Earnings from subsidiary entities317
 5,982
 —
 (6,299) —
Net income from continuing operations233
 5,898
 5,758
 (6,299) 5,590
Income (loss) from discontinued operations21
 —
 21
 (21) 21
Consolidated net income254
 5,898
 5,779
 (6,320) 5,611
Less: Net income attributable to noncontrolling interests—
 —
 (159) —
 (159)
Net income excluding noncontrolling interests$254
 $5,898
 $5,620
 $(6,320) $5,452
Comprehensive income excluding noncontrolling interests$254
 $5,895
 $5,634
 $(6,335) $5,448
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the Quarter Ended March 31, 2018
(unaudited; in millions)
 TWDC Legacy Disney Non-Guarantor Subsidiaries Reclassifications & Eliminations Total
Revenues$—
 $—
 $14,586
 $(38) $14,548
Costs and expenses         
Operating expenses—
 —
 (7,541) —
 (7,541)
Selling, general, administrative and other—
 (158) (2,081) —
 (2,239)
Depreciation and amortization—
 —
 (731) —
 (731)
Total costs and expenses—
 (158) (10,353) —
 (10,511)
Restructuring and impairment charges—
 1
 (14) —
 (13)
Allocations to non-guarantor subsidiaries—
 147
 (147) —
 —
Other income, net—
 (108) 111
 38
 41
Interest expense, net—
 (173) 30
 —
 (143)
Equity in the income (loss) of investees, net—
 —
 6
 —
 6
Income before taxes—
 (291) 4,219
 —
 3,928
Income taxes—
 70
 (883) —
 (813)
Earnings from subsidiary entities—
 3,158
 —
 (3,158) —
Consolidated net income—
 2,937
 3,336
 (3,158) 3,115
Less: Net income attributable to noncontrolling interests—
 —
 (178) —
 (178)
Net income excluding noncontrolling interests$—
 $2,937
 $3,158
 $(3,158) $2,937
Comprehensive income excluding noncontrolling interests$—
 $2,996
 $3,250
 $(3,250) $2,996
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the Six Months Ended March 30, 2019
(unaudited; in millions)
 TWDC Legacy Disney Non-Guarantor Subsidiaries Reclassifications & Eliminations Total
Revenues$—
 $—
 $30,144
 $81
 $30,225
Costs and expenses         
Operating expenses—
 —
 (17,377) —
 (17,377)
Selling, general, administrative and other—
 (359) (4,120) —
 (4,479)
Depreciation and amortization—
 (1) (1,559) —
 (1,560)
Total costs and expenses—
 (360) (23,056) —
 (23,416)
Restructuring and impairment charges—
 —
 (662) —
 (662)
Allocations to non-guarantor subsidiaries—
 330
 (330) —
 —
Other income, net—
 95
 4,949
 (81) 4,963
Interest expense, net(175) (236) 205
 —
 (206)
Equity in the income (loss) of investees, net—
 —
 (236) —
 (236)
Income from continuing operations before income taxes(175) (171) 11,014
 —
 10,668
Income taxes from continuing operations38
 37
 (2,367) —
 (2,292)
Earnings from subsidiary entities317
 8,886
 —
 (9,203) —
Net income from continuing operations180
 8,752
 8,647
 (9,203) 8,376
Income (loss) from discontinued operations21
 —
 21
 (21) 21
Consolidated net income201
 8,752
 8,668
 (9,224) 8,397
Less: Net income attributable to noncontrolling interests—
 —
 (157) —
 (157)
Net income excluding noncontrolling interests$201
 $8,752
 $8,511
 $(9,224) $8,240
Comprehensive income excluding noncontrolling interests$200
 $8,770
 $8,486
 $(9,199) $8,257
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the Six Months Ended March 31, 2018
(unaudited; in millions)
 TWDC Legacy Disney Non-Guarantor Subsidiaries Reclassifications & Eliminations Total
Revenues$—
 $—
 $29,953
 $(54) $29,899
Costs and expenses         
Operating expenses—
 —
 (16,270) —
 (16,270)
Selling, general, administrative and other—
 (285) (4,041) —
 (4,326)
Depreciation and amortization—
 —
 (1,473) —
 (1,473)
Total costs and expenses—
 (285) (21,784) —
 (22,069)
Restructuring and impairment charges—
 —
 (28) —
 (28)
Allocations to non-guarantor subsidiaries—
 266
 (266) —
 —
Other income, net—
 (127) 167
 54
 94
Interest expense, net—
 (314) 42
 —
 (272)
Equity in the income (loss) of investees, net—
 —
 49
 —
 49
Income before taxes—
 (460) 8,133
 —
 7,673
Income taxes—
 35
 (120) —
 (85)
Earnings from subsidiary entities—
 7,785
 —
 (7,785) —
Consolidated net income—
 7,360
 8,013
 (7,785) 7,588
Less: Net income attributable to noncontrolling interests—
 —
 (228) —
 (228)
Net income excluding noncontrolling interests$—
 $7,360
 $7,785
 $(7,785) $7,360
Comprehensive income excluding noncontrolling interests$—
 $7,543
 $7,929
 $(7,929) $7,543

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


CONDENSED CONSOLIDATING BALANCE SHEETS
As of March 30, 2019
(unaudited; in millions)
 TWDC Legacy Disney Non-Guarantor Subsidiaries Reclassifications & Eliminations Total
ASSETS         
Current assets         
Cash and cash equivalents$4,133
 $3
 $5,972
 $—
 $10,108
Receivables, net231
 —
 14,362
 —
 14,593
Inventories—
 4
 1,441
 —
 1,445
Television costs and advances—
 —
 5,408
 —
 5,408
Other current assets—
 96
 1,161
 —
 1,257
Assets held for sale—
 —
 1,466
 —
 1,466
Total current assets4,364
 103
 29,810
 —
 34,277
Film and television costs—
 —
 24,353
 —
 24,353
Investments in subsidiaries125,651
 158,701
 —
 (284,352) —
Other investments—
 —
 4,080
 —
 4,080
Parks, resorts and other property, net—
 11
 31,006
 —
 31,017
Intangible assets, net—
 —
 26,985
 —
 26,985
Goodwill—
 —
 75,057
 —
 75,057
Noncurrent assets held for sale—
 —
 13,182
 —
 13,182
Intercompany receivables4,226
 —
 139,527
 (143,753) —
Other assets110
 736
 5,176
 (631) 5,391
Total assets$134,351
 $159,551
 $349,176
 $(428,736) $214,342
LIABILITIES AND EQUITY         
Current liabilities         
Accounts payable and other accrued liabilities$169
 $292
 $20,042
 $—
 $20,503
Current portion of borrowings16,396
 2,506
 256
 —
 19,158
Deferred revenues and other—
 26
 4,255
 —
 4,281
Liabilities held for sale—
 —
 434
 —
 434
Total current liabilities16,565
 2,824
 24,987
 —
 44,376
Non-current liabilities         
Borrowings$20,353
 $14,880
 $2,570
 $—
 $37,803
Deferred income taxes—
 —
 11,839
 (631) 11,208
Noncurrent liabilities held for sale—
 —
 2,659
 —
 2,659
Other long-term liabilities751
 2,863
 9,240
 —
 12,854
Intercompany payables6,744
 132,342
 4,667
 (143,753) —
Total non-current liabilities27,848
 150,085
 30,975
 (144,384) 64,524
Redeemable noncontrolling interests—
 —
 1,103
 —
 1,103
Total Disney Shareholders’ equity89,938
 6,642
 277,710
 (284,352) 89,938
Noncontrolling interests—
 —
 14,401
 —
 14,401
Total equity89,938
 6,642
 292,111
 (284,352) 104,339
Total liabilities and equity$134,351
 $159,551
 $349,176
 $(428,736) $214,342
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


CONDENSED CONSOLIDATING BALANCE SHEETS
As of September 29, 2018
(unaudited; in millions)
 TWDC Legacy Disney Non-Guarantor Subsidiaries Reclassifications & Eliminations Total
ASSETS         
Current assets         
Cash and cash equivalents$—
 $1,367
 $2,783
 $—
 $4,150
Receivables, net—
 155
 9,179
 —
 9,334
Inventories—
 4
 1,388
 —
 1,392
Television costs and advances—
 —
 1,314
 —
 1,314
Other current assets—
 152
 483
 —
 635
Total current assets—
 1,678
 15,147
 —
 16,825
Film and television costs—
 —
 7,888
 —
 7,888
Investments in subsidiaries—
 149,586
 —
 (149,586) —
Other investments—
 —
 2,899
 —
 2,899
Parks, resorts and other property, net—
 12
 29,528
 —
 29,540
Intangible assets, net—
 —
 6,812
 —
 6,812
Goodwill—
 —
 31,269
 —
 31,269
Intercompany receivables—
 —
 79,499
 (79,499) —
Other assets—
 911
 3,178
 (724) 3,365
Total assets$—
 $152,187
 $176,220
 $(229,809) $98,598
LIABILITIES AND EQUITY         
Current liabilities         
Accounts payable and other accrued liabilities$—
 $688
 $8,791
 $—
 $9,479
Current portion of borrowings—
 3,751
 39
 —
 3,790
Deferred revenues and other—
 115
 4,476
 —
 4,591
Total current liabilities—
 4,554
 13,306
 —
 17,860
Non-current liabilities         
Borrowings$—
 $15,676
 $1,408
 $—
 $17,084
Deferred income taxes—
 —
 3,833
 (724) 3,109
Other long-term liabilities—
 3,685
 2,905
 —
 6,590
Intercompany payables—
 79,499
 —
 (79,499) —
Total non-current liabilities—
 98,860
 8,146
 (80,223) 26,783
Redeemable noncontrolling interests—
 —
 1,123
 —
 1,123
Total Disney Shareholders’ equity—
 48,773
 149,586
 (149,586) 48,773
Noncontrolling interests—
 —
 4,059
 —
 4,059
Total equity—
 48,773
 153,645
 (149,586) 52,832
Total liabilities and equity$—
 $152,187
 $176,220
 $(229,809) $98,598

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


CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Six Months Ended March 30, 2019
(unaudited; in millions)
 TWDC Legacy Disney Non-Guarantor Subsidiaries Reclassifications & Eliminations Total
OPERATING ACTIVITIES         
Cash provided by operations$534
 $(763) $6,403
 $(160) $6,014
          
INVESTING ACTIVITIES         
Investments in parks, resorts and other property—
 —
 (2,390) —
 (2,390)
Acquisitions(35,702) —
 25,801
 —
 (9,901)
Intercompany investing activities, net22,900
 —
 —
 (22,900) —
Other—
 —
 (392) —
 (392)
Cash used in investing activities(12,802) —
 23,019
 (22,900) (12,683)
         
FINANCING ACTIVITIES        
Commercial paper, net1,387
 (1,009) (2) —
 376
Borrowings31,100
 —
 45
 —
 31,145
Reduction of borrowings(16,100) (1,250) (48) —
 (17,398)
Dividends—
 (1,310) —
 —
 (1,310)
Repurchases of common stock—
 —
 —
 —
 —
Proceeds from exercise of stock options—
 83
 —
 —
 83
Intercompany financing and other, net14
 3,134
 (26,208) 23,060
 —
Other—
 (241) 41
 —
 (200)
Cash used in financing activities16,401
 (593) (26,172) 23,060
 12,696
          
Discontinued operations—
 —
 (35) —
 (35)
          
Impact of exchange rates on cash, cash equivalents and restricted cash—
 —
 75
 —
 75
          
Change in cash, cash equivalents and restricted cash4,133
 (1,356) 3,290
 —
 6,067
Cash, cash equivalents and restricted cash, beginning of year—
 1,367
 2,788
 —
 4,155
Cash, cash equivalents and restricted cash, end of period$4,133
 $11
 $6,078
 $—
 $10,222
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Six Months Ended March 31, 201816.New Accounting Pronouncements
(unaudited; in millions)
 TWDC Legacy Disney Non-Guarantor Subsidiaries Reclassifications & Eliminations Total
OPERATING ACTIVITIES         
Cash provided by operations$—
 $507
 $6,282
 $(26) $6,763
          
INVESTING ACTIVITIES         
Investments in parks, resorts and other property—
 (17) (2,027) —
 (2,044)
Acquisitions—
 —
 (1,581) —
 (1,581)
Intercompany investing activities, net—
 (1,581) —
 1,581
 —
Other—
 —
 (180) —
 (180)
Cash used in investing activities—
 (1,598) (3,788) 1,581
 (3,805)
         
FINANCING ACTIVITIES        
Commercial paper, net—
 1,372
 —
 —
 1,372
Borrowings—
 997
 51
 —
 1,048
Reduction of borrowings—
 (1,300) (50) —
 (1,350)
Dividends—
 (1,266) (26) 26
 (1,266)
Repurchases of common stock—
 (2,608) —
 —
 (2,608)
Intercompany financing and other, net—
 4,297
 (2,716) (1,581) —
Proceeds from exercise of stock options—
 91
 —
 —
 91
Other—
 (159) (10) —
 (169)
Cash used in financing activities—
 1,424
 (2,751) (1,555) (2,882)
          
Impact of exchange rates on cash, cash equivalents and restricted cash—
 —
 55
 —
 55
          
Change in cash, cash equivalents and restricted cash—
 333
 (202) —
 131
Cash, cash equivalents and restricted cash, beginning of year—
 693
 3,371
 —
 4,064
Cash, cash equivalents and restricted cash, end of period$—
 $1,026
 $3,169
 $—
 $4,195

18.New Accounting Pronouncements
Accounting Pronouncements Adopted in Fiscal 20192021
Revenues from Contracts with Customers - See Note 3
Intra-Entity Transfers of Assets Other Than Inventory - See Note 8
Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost - See Note 9
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income - See Note 11
Recognition and Measurement of Credit Losses on Financial AssetsInstruments
In June 2016, the FASB issued new accounting guidance which modifies existing guidance related to the measurement of credit losses on financial instruments, including trade and Liabilities - See Note 11
Targeted Improvementsloan receivables. The new guidance requires the allowance for credit losses to Accounting for Hedging Activities -be measured based on expected losses over the life of the asset rather than incurred losses. The adoption ofCompany adopted the new guidance in the first quarter of fiscal 2021 without restating prior periods by recording the impact of adoption as an adjustment to retained earnings at the beginning of fiscal 2021. The adoption did not have a material impact on our consolidated financial statementsstatements.
LeasesAccounting Pronouncements Not Yet Adopted
Facilitation of the Effects of Reference Rate Reform
In February 2016,March 2020, the FASB issued new lease accounting guidance which requiresprovides optional expedients and exceptions for applying current GAAP to contracts, hedging relationships, and other transactions affected by the present valuetransition from the use of committed operating lease paymentsLIBOR to an alternative reference rate. We are currently evaluating our contracts and hedging relationships that reference LIBOR and the potential effects of adopting this new guidance. The guidance can be recorded as right-of-use lease assetsadopted immediately and lease liabilities onis applicable to contracts entered into before January 1, 2023.
Simplifying the balance sheet.Accounting for Income Taxes
In December 2019, the FASB issued guidance which simplifies the accounting for income taxes. The guidance amends the rules for recognizing deferred taxes for investments, performing intraperiod tax allocations and calculating income taxes in interim periods. It also reduces complexity in certain areas, including the accounting for transactions that result in a step-up in the tax basis of goodwill and allocating taxes to members of a consolidated group. The guidance is effective at the beginning of the Company’s 2020Company’s 2022 fiscal year.year (with early adoption permitted). We expect to adopt the guidance without restating prior periods.
The new guidance provides a number of practical expedients for transition upon adoption. The Company expects to elect the practical expedients that permit the Company not to reassess its prior conclusions concerning whether:
Arrangements contain a lease
•
The Company’s lease arrangements are operating or capital leases (financing)
Initial direct costs should be capitalized
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


Existing land easements are leases
The Company is currently assessing the impact of the new guidance on its financial statements. We believe the most significant effects of adoption will be:
Recognizing new right-of-use assets and lease liabilities on our balance sheet for our operating leases
Reclassifying a deferred gain of approximately $350 million related to a prior sale-leaseback transaction to retained earnings
As of September 29, 2018, the Company had an estimated $3.6 billion in undiscounted future minimum lease commitments. The Company also assumed an estimated $1 billion in undiscounted future minimum lease commitments in connection with the acquisition of 21CF and consolidation of Hulu.
Improvements to Accounting for Costs of Films and License Agreements for Program Materials
In March 2019, the FASB updated guidance for the accounting for film and television content costs. The new guidance impacts the capitalization, amortization and impairment of these costs as follows:
Eliminates the limitation on capitalization of production costs for episodic content, aligning the capitalization model with film content;
Requires production costs amortized using estimated usage to be reviewed and updated each reporting period, with any changes in estimated usage applied prospectively; and
Requires produced and acquired programming costs to be tested for impairment based on the lowest level of identifiable cash flows using the predominant monetization strategy for the produced content (i.e., monetized individually or in a group)
While we currently do not expect the new guidance will have a material impact on our financial statements, it is relevant to the accounting for content to be used on our streaming services. The guidance is effective at the beginning of the Companystatements.
’s 2021 fiscal year (with early adoption permitted) and requires prospective adoption. The Company plans to adopt the new guidance by the beginning of fiscal 2020.

30



MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
ORGANIZATION OF INFORMATION
Management’s Discussion and Analysis provides a narrative of the Company’s financial performance and condition that should be read in conjunction with the accompanying financial statements. It includes the following sections:
•Consolidated Results and Non-segment Items
Seasonality•Significant Developments
•Current Quarter Results Compared to Prior-Year Quarter
•Current Period Results Compared to Prior-Year Period
•Seasonality
•Business Segment Results
Restructuring in Connection with the Acquisition of 21CF•Corporate and Unallocated Shared Expenses
•Financial Condition
•Supplemental Guarantor Financial Information
•Commitments and Contingencies
•Other Matters
•Market Risk
CONSOLIDATED RESULTS AND NON-SEGMENT ITEMS
Quarter Ended% Change
Better
(Worse)		Six Months Ended% Change
Better
(Worse)
(in millions, except per share data)April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Revenues:
Services$14,522 $16,190 (10) %$29,393 $34,284 (14) %
Products1,091 1,835 (41) %2,469 4,618 (47) %
Total revenues15,613 18,025 (13) %31,862 38,902 (18) %
Costs and expenses:
Cost of services (exclusive of depreciation and amortization)(8,932)(10,683)16  %(19,670)(22,078)11  %
Cost of products (exclusive of depreciation and amortization)(850)(1,254)32  %(1,887)(2,893)35  %
Selling, general, administrative and other(3,113)(3,393)8  %(6,030)(7,102)15  %
Depreciation and amortization(1,272)(1,334)5  %(2,570)(2,633)2  %
Total costs and expenses(14,167)(16,664)15  %(30,157)(34,706)13  %
Restructuring and impairment charges(414)(145)>(100) %(527)(295)(79) %
Other income, net305 0 nm305 0 nm
Interest expense, net(320)(300)(7) %(644)(583)(10) %
Equity in the income of investees213 135 58  %437    359    22  %
Income from continuing operations before income taxes1,230 1,051 17  %1,276 3,677 (65) %
Income taxes on continuing operations(108)(523)79  %(124)(981)87  %
Net income from continuing operations1,122    528    >100  %1,152 2,696 (57) %
Loss from discontinued operations, net of income tax benefit of $3, $3, $7 and $10, respectively)(11)(8)(38) %(23)(29)21  %
Net income1,111 520 >100  %1,129 2,667 (58) %
Net income from continuing operations attributable to noncontrolling interests(210)(60)>(100) %(211)(100)>(100) %
Net income attributable to Disney$901 $460 96 %$918 $2,567 (64) %
Diluted earnings per share from continuing operations attributable to Disney$0.50 $0.26 92 %$0.52 $1.43 (64) %
Our summary consolidated results are presented below:
31
 Quarter Ended % Change Six Months Ended % Change
(in millions, except per share data)March 30,
2019		 March 31,
2018		 
Better/
(Worse)
 March 30,
2019		 March 31,
2018		 Better/
(Worse)
Revenues:          

Services$13,006
 $12,520
 4 % $25,872
 $25,504
 1 %
Products1,916
 2,028
 (6) % 4,353
 4,395
 (1) %
Total revenues14,922
 14,548
 3 % 30,225
 29,899
 1 %
Costs and expenses:    

     

Cost of services (exclusive of depreciation and amortization)(7,167) (6,313) (14) % (14,731) (13,637) (8) %
Cost of products (exclusive of depreciation and amortization)(1,209) (1,228) 2 % (2,646) (2,633) — %
Selling, general, administrative and other(2,327) (2,239) (4) % (4,479) (4,326) (4) %
Depreciation and amortization(828) (731) (13) % (1,560) (1,473) (6) %
Total costs and expenses(11,531) (10,511) (10) % (23,416) (22,069) (6) %
Restructuring and impairment charges(662) (13) >(100) % (662) (28) >(100) %
Other income4,963
 41
 >100 % 4,963
 94
 >100 %
Interest expense, net(143) (143) — % (206) (272) 24 %
Equity in the income / (loss) of investees, net(312) 6
 nm
 (236) 49
 nm
Income from continuing operations before income taxes7,237
 3,928
 84 % 10,668
 7,673
 39 %
Income taxes from continuing operations(1,647) (813) >(100) % (2,292) (85) >(100) %
Net income from continuing operations5,590
 3,115
 79 % 8,376
 7,588
 10 %
Income (loss) from discontinued operations (net of income taxes of $5, $0, $5 and $0, respectively)21
 —
 nm
 21
 —
 nm
Consolidated net income5,611
 3,115
 80 % 8,397
 7,588
 11 %
Less: Net income attributable to noncontrolling interests(159) (178) 11 % (157) (228) 31 %
Net income attributable to Disney$5,452
 $2,937
 86 % $8,240
 $7,360
 12 %
Diluted earnings per share from continuing operations attributable to Disney$3.53
1.9450331126
$1.95
 81 % $5.42
4.8580858086
$4.86
 12 %
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


SIGNIFICANT DEVELOPMENTS
The Company’s financial results for fiscal 2019COVID-19 Pandemic
Since early 2020, the world has been, and continues to be, impacted by COVID-19. COVID-19 and measures to prevent its spread are presentedimpacting our segments in accordance with new accounting guidance for revenue recognition (ASC 606) that we adopteda number of ways, most significantly at the beginning of fiscal 2019. Prior period results have not been restated to reflect this change in accounting guidance. Current quarter segment operating income includes a $27 million unfavorable impact from the ASC 606 adoption while the current six-month segment operating income includes an $88 million benefit. For the current quarter the most significant ASC 606 impacts were a $63 million decrease atDisney Parks, Experiences and Products where our theme parks and resorts have been closed or operating at significantly reduced capacity and cruise ship sailings and guided tours have been suspended. We have delayed or, in some cases, shortened or canceled, theatrical releases, and stage play performances have been suspended since March 2020 with a $30 million decrease at Media Networks, bothlimited number of performances returning in the first quarter of fiscal 2021. We have experienced significant disruptions in the production and availability of content, including the shift of key live sports programming from the third quarter of fiscal 2020 to the fourth quarter of fiscal 2020 and into the first quarter of fiscal 2021, as well as the suspension of production of most film and television content late in the second quarter of fiscal 2020. Although most film and television production activities resumed beginning in the fourth quarter of fiscal 2020, we continue to see disruption of production activities, as well as live sporting events, depending on local circumstances.
We have taken a number of mitigation efforts in response to the impacts of COVID-19 on our businesses. We have significantly increased cash balances through the issuance of senior notes in March and May 2020. The Company did not pay a dividend with respect to fiscal 2020 operations; suspended certain capital projects; reduced certain discretionary expenditures (such as spending on marketing); reduced management compensation for several months in fiscal 2020 and temporarily eliminated Board of Director retainers and committee fees in fiscal 2020. In addition, we furloughed over 120,000 of our employees (who continued to receive Company provided medical benefits), many of which reflectedhave returned from furlough as certain business operations have reopened. At the end of fiscal 2020, the Company announced a change in timing of revenue recognition on contracts with minimum guarantees. These impacts were partially offset by a $71 million increase at Studio Entertainment,workforce reduction plan, which reflected a changewas essentially completed in the timingfirst half of revenue recognition atfiscal 2021. As of May 7, 2021, approximately 18,000 employees remain on furlough. We may take additional mitigation actions in the future such as raising additional financing; not declaring future dividends; reducing, or not making, certain payments, such as some contributions to our TV/SVOD distribution business. For the six months, thepension and postretirement medical plans; further suspending capital spending, reducing film and television content investments; or implementing additional furloughs or reductions in force. Some of these measures may have an adverse impact on our businesses.
The most significant benefit from ASC 606 was a $90 million increase at Studio Entertainment for the timing of revenue recognition at our TV/SVOD distribution business. We do not anticipate the impact of adoption of ASC 606 on our full-year fiscal 2019 results will be material. Further information about our adoption of ASC 606 is provided in Note 3 to the Condensed Consolidated Financial Statements.
Results for 21CFoperating income in the current quarter and six months are not included insix-month period from COVID-19 was at the Disney Parks, Experiences and Products segment due to revenue lost as a result of the closures and reduced operating capacities. We estimate a $1.2 billion and $3.8 billion impact on current quarter and six-month period, respectively, on Disney Parks, Experiences and Products segment operating income compared to the prior-year quarter and six-month period. The impacts at our segments resultsDisney Media and are reported separately. We currently planEntertainment Distribution segment, compared to include 21CF’s results in our historical segments when we report third-quarter results. Hulu’s results for the prior-year period, were less significant as lower revenues across film and television distribution windows due to the deferral or cancellation of consolidation and for the period the Company recorded equity method earnings are reportedsignificant film releases as parta result of Direct to Consumer & International.
Quarter Results
Revenues for the quarter increased 3%, or $0.4 billion, to $14.9 billion; net income attributable to Disney increasedtheater closures were largely offset by $2.5 billion, to $5.5 billion; and diluted earnings per share from continuing operations attributable to Disney (EPS) increased 81% from $1.95 to $3.53. The EPS increase for the quarter waslower costs due to a non-cash gain recognizedreduction in connection withfilm cost amortization, marketing and distribution costs. The impact of COVID-19 in the acquisitioncurrent quarter and six-month period is not necessarily indicative of a controlling interest in Hulu (Hulu gain), partially offset by lower segment operating income, severance and related charges and equity based compensation costs in connection with the acquisition and integrationimpact on future period results.
The impact of 21CFthese disruptions and the absenceextent of a benefittheir adverse impact on our financial and operational results will be dictated by the length of time that such disruptions continue, which will, in turn, depend on the prior-year quarter relatedcurrently unknowable duration and severity of the impacts of COVID-19, and among other things, the impact and duration of governmental actions imposed in response to new federal income tax legislation, the “Tax CutsCOVID-19 and Jobs Act” (Tax Act) (See Note 8individuals’ and companies’ risk tolerance regarding health matters going forward. While we cannot be certain as to the Condensed Consolidated Financial Statements). Lower segment operating income was dueduration of the impacts of COVID-19, we currently expect COVID-19 to a decreaseadversely impact our financial results at Studio Entertainment, increased losses at Direct-to-Consumer & Internationalleast through fiscal 2021.
Some of our businesses have reopened with limited operations. We have incurred and a decrease at Media Networks, partially offset by growth at Parks, Experienceswill continue to incur additional costs to address government regulations and Products.
Revenues
Service revenues for the quarter increased 4%, or $0.5 billion, to $13.0 billion due to the consolidationsafety of 21CFour employees, talent and Hulu, higher affiliate fees and growth in guest spending at ourguests. For example, as we reopened theme parks and resorts, partially offset by lower theatrical distribution revenueretail stores, we incurred and a decrease in program sales at our Media Networks segment. Service revenues reflected an approximate 1 percentage point decrease duewill continue to an unfavorable movementincur costs for such things as additional custodial services, personal protection equipment, temperature screenings and testing, sanitizer and cleaning supplies and signage, among other items. As we resume production of film and television content, including live sporting events, we anticipate incurring similar costs and productions may take longer to complete. The timing, duration and extent of these costs will depend on the timing and scope of the U.S. dollar against major currencies includingresumption of our operations. We currently estimate these costs may total approximately $1 billion in fiscal 2021. Some of these costs may be capitalized and amortized over future periods. With the unknown duration of COVID-19 and yet to be determined timing of the phased reopening of certain businesses, it is not possible to precisely estimate the impact of COVID-19 on our hedging program (FX Impact).
Product revenues for the quarter decreased 6%, or $0.1 billion, to $1.9 billion due to lower home entertainment volumes, partially offset by guest spending growth atoperations in future quarters. As we reopen our theme parks and resorts. Product revenues reflected an approximate 1 percentage point decrease due to an unfavorable FX Impact.
Costs and expenses
Cost of services for the quarter increased 14%, or $0.9 billion, to $7.2 billion duebusinesses, we will no longer benefit from certain savings related to the consolidationclosure of 21CFthose businesses, such as related furloughs. The reopening or closure of our businesses is dependent on applicable government requirements, which vary by location, and Hulu, higher programmingare subject to ongoing changes, which could result from increasing COVID-19 cases.
Additionally, see Part II. Other Information, Item 1A. Risk Factors - The adverse impact of COVID-19 on our businesses will continue for an unknown length of time and production costs, an increase in technical support costs atmay continue to impact certain of our DTC business and labor cost inflation at our theme parks and resorts.key sources of revenue.
Cost of products for the quarter decreased 2%, or $19 million, to $1.2 billion due to lower home entertainment volumes partially offset by higher guest spending costs at our theme parks and resorts. Cost of products reflected an approximate 2 percentage point decrease due to a favorable FX Impact.
32
Selling, general, administrative and other costs increased 4%, or $88 million, to $2.3 billion driven by the consolidation of 21CF and Hulu and costs associated with the acquisition of 21CF. Selling, general, administrative and other costs reflected an approximate 3 percentage point decrease due to a favorable FX Impact.
Depreciation and amortization increased 13%, or $97 million, to $828 million, due to the consolidation of 21CF and Hulu and depreciation of technology investments at our Direct-to-Consumer & International segment.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


Fox Sports Media Business in Mexico
In connection with the acquisition of TFCF in fiscal 2019, the Company agreed with the Instituto Federal de Telecomunicaciones (IFT) to sell TFCF’s sports operations in Mexico (the “Mexican Divestiture”). The deadline set by the IFT for the Company to complete the Mexican Divestiture was May 7, 2021. The IFT has given the Company until May 21, 2021 to effectuate the Mexican Divestiture, and the Company continues to pursue the Mexican Divestiture. If the Company is unable to complete the Mexican Divestiture, the IFT resolution provides that a trust would be appointed to complete the Mexican Divestiture, or to liquidate TFCF’s sports operations in Mexico if the trust is unable to complete a sale.
CURRENT QUARTER RESULTS COMPARED TO PRIOR-YEAR QUARTER
Revenues for the quarter decreased 13%, or $2.4 billion, to $15.6 billion; net income attributable to Disney increased $0.4 billion, to $0.9 billion; and diluted earnings per share from continuing operations attributable to Disney (EPS) was $0.50 compared to $0.26 in the prior-year quarter. The EPS increase for the quarter was due to an increase in operating results at DMED and a lower effective income tax rate, partially offset by lower operating results at DPEP.
Revenues
Service revenues for the quarter decreased 10%, or $1.7 billion, to $14.5 billion due to the closure/reduced operating capacity of our theme parks and resorts and lower theatrical revenues, both of which were driven by the impact of COVID-19, lower electronic home entertainment sales volume, a decrease in advertising revenue and a decrease in TV/SVOD distribution revenue. These decreases were partially offset by higher DTC subscription revenue. The decrease in TV/SVOD distribution revenue and home entertainment volumes was driven by the impact of COVID-19, which limited our ability to release films theatrically and produce content in previous quarters. The decrease in advertising revenue was due to lower advertising at our Linear Networks, partially offset by higher advertising at Hulu.
Product revenues for the quarter decreased 41%, or $0.7 billion, to $1.1 billion due to lower merchandise, food and beverage sales at our theme parks and resorts and to a lesser extent, a decrease in home entertainment volumes.
Costs and expenses
Cost of services for the quarter decreased 16%, or $1.8 billion, to $8.9 billion due to the closure/reduced operating capacity of our theme parks and resorts, lower production cost amortization and distribution costs at Content Sales/Licensing and Other and to a lesser extent, lower programming and production costs at Linear Networks. The decrease in production cost amortization and distribution costs at Content Sales/Licensing and Other was due to lower TV/SVOD revenues and the benefit of a lower average amortization rate, a decrease in theatrical revenue and lower home entertainment volumes. These decreases were partially offset by increased programming, production and technology costs at Direct-to-Consumer.
Cost of products for the quarter decreased 32%, or $0.4 billion, to $0.9 billion due to lower merchandise, food and beverage sales at our theme parks and resorts and to a lesser extent, a decrease in home entertainment volumes.
Selling, general, administrative and other costs decreased 8%, or $0.3 billion, to $3.1 billion due to lower marketing costs driven by no significant worldwide theatrical releases and a decrease in spending at the theme parks and resorts businesses, partially offset by an increase at Direct-to-Consumer.
Depreciation and amortization decreased 5%, or $0.1 billion, to $1.3 billion, due to lower amortization of intangible assets arising from the acquisition of TFCF and Hulu reflecting an impairment recorded in the third quarter of the prior year related to the International Channels intangible assets arising from the acquisition.
Restructuring and impairment charges
Restructuring and impairment charges of $662$414 million for the current quarter were due to asset impairments and severance costs related to the planned closure of an animation studio and a substantial number of our Disney-branded retail stores as well as severance at our parks and resorts businesses.
Restructuring and impairment charges of $145 million for the prior-year quarter were primarily for severance and related charges and equity based compensation costs in connection with the acquisition and integration of 21CF.
Restructuring and impairment charges of $13 million in the prior-year quarter were primarily severance costs.
Other incomeTFCF.
Other income of $5.0 billion inIncome, net
In the current year was due toquarter, the Hulu gain.Company recognized the DraftKings Gain for $305 million.
Other income of $41 million in the prior-year quarter was due to insurance recoveries related to a legal matter.
33
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)
Interest expense, net
Interest expense, net is as follows: 
Quarter Ended 
Quarter Ended
(in millions)March 30,
2019		 March 31,
2018		 
% Change
Better/(Worse)
(in millions)April 3,
2021		March 28,
2020		% Change
Better (Worse)
Interest expense$(198) $(172) (15) %Interest expense$(415)$(365)(14) %
Interest income, investment income and other55
 29
 90 %Interest income, investment income and other95    65    46  %
Interest expense, net$(143) $(143) — %Interest expense, net$(320)$(300)(7) %
The increase in interest expense was due to higher average interest rates and financing costs related to the 21CF acquisition,debt balances, partially offset by market value adjustments on pay-floatinglower average interest rate swap options and higher capitalized interest.rates.
The increase in interest income, investment income and other was due to the inclusion of a $22 million benefit related tohigher investment gains, partially offset by higher pension and postretirement benefit costs, other than service cost. The Company adopted new accounting guidance in fiscal 2019 and now presents the elements of pension and postretirement plan costs, other than service cost, in “Interest expense, net.” The comparable benefit of $6 million in the prior-year quarter was reported in “Costs and expenses.” The benefit in the current quarter was due to the expected return on pension plan assets exceeding interest expense on plan liabilities and amortization of prior net actuarial losses.
Equity in the income / (loss) of investees
Equity in the income / (loss) of investees decreased $318increased $78 million to a loss of $312$213 million forin the current quarter driven by higher income from A+E Television Networks due to an impairment of our investment in Vice,lower programming costs and higher program sales, partially offset by the impact of consolidating Hulu. In the current quarter, 11 days of Hulu’s results are reported in revenues and expenses. Prior to the consolidation of Hulu, the Company recognized its ownership share of Hulu’s results in equity in the income of investees.lower advertising revenue.
Effective Income Tax Rate
Quarter Ended
April 3,
2021		March 28,
2020		Change
Better (Worse)
Effective income tax rate - continuing operations8.8%49.8%41.0 ppt
 Quarter Ended  
 March 30,
2019		 March 31,
2018		 
Change
Better/(Worse)
Effective income tax rate22.8% 20.7% (2.1)ppt
The increasedecrease in the effective income tax rate was due to lower U.S. tax on foreign income, a benefit from the comparison to a $0.1 billion benefit related to the Tax Act recognized in the prior-year quarter and an unfavorable impactresolution of various tax matters in the current year from a change in our full year estimated effectivequarter and higher excess tax rate. The estimated full year effective rate is used to determine the quarterly income tax provision and is adjusted each quarter basedbenefits on information available at the end of that quarter. These increases were partially offset by a reductionemployee share-based awards in the Company’s U.S. statutory federal income tax rate to 21.0% in fiscal 2019 from 24.5% in fiscal 2018.current quarter.
Noncontrolling Interests
Quarter Ended  Quarter Ended
(in millions)March 30,
2019		 March 31,
2018		 
% Change
Better/(Worse) 
(in millions)April 3,
2021		March 28,
2020		% Change
Better (Worse) 
Net income attributable to noncontrolling interests$(159) $(178) 11%
Net income from continuing operations attributable to noncontrolling interestsNet income from continuing operations attributable to noncontrolling interests$(210)$(60)>(100) %
The decreaseincrease in net income from continuing operations attributable to noncontrolling interests was due to a higher loss fromdriven by lower losses at Shanghai Disney Resort, Hong Kong Disneyland Resort and our direct-to-consumerDTC sports business and the consolidation of a losshigher results at Hulu, partially offset by growth at ESPN and Hong Kong Disneyland Resort.ESPN.
Net income attributable to noncontrolling interests is determined on income after royalties and management fees, financing costs and income taxes, as applicable.
Certain Items Impacting Results in the Quarter
Results for the quarter ended April 3, 2021 were impacted by the following:
•TFCF and Hulu acquisition amortization of $605 million
•Restructuring and impairment charges of $414 million
•DraftKings Gain of $305 million
Results for the quarter ended March 28, 2020 were impacted by the following:
•TFCF and Hulu acquisition amortization of $723 million
•Restructuring charges of $145 million
34
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


Certain Items Impacting Comparability
Results for the quarter ended March 30, 2019 were impacted by the following:
•The Hulu gain of $4.9 billion
•A benefit of $46 million from insurance recoveries related to a legal matter
•Restructuring charges of $662 million
•An impairment of our investment in Vice of $353 million
Amortization of $105 million related to 21CF and Hulu intangible assets and fair value step-up on film and television costs
Results for the quarter ended March 31, 2018 were impacted by the following:
•A benefit of $134 million from the Tax Act
•A benefit of $38 million from insurance recoveries related to a legal matter
•Restructuring charges of $13 million
A summary of the impact of these items on EPS is as follows:
(in millions, except per share data)Pre-Tax Income (Loss)
Tax Benefit (Expense)(1)
After-Tax Income (Loss)
EPS Favorable (Adverse)(2)
Quarter Ended April 3, 2021:
TFCF and Hulu acquisition amortization$(605)$141  $(464)$(0.24)   
Restructuring and impairment charges(414)97  (317)   (0.17)
DraftKings Gain305 (71)   234    0.13 
Total$(714)$167  $(547)$(0.28)
Quarter Ended March 28, 2020:
TFCF and Hulu acquisition amortization$(723)$167 $(556)$(0.28)   
Restructuring and impairment charges(145)34 (111)   (0.06)
Total$(868)$201 $(667)$(0.34)
(1)Tax benefit (expense) amounts are determined using the tax rate applicable to the individual item.
(2)EPS is net of noncontrolling interest share, where applicable. Total may not equal the sum of the column due to rounding.
(in millions, except per share data)Pre-Tax Income/(Loss) 
Tax Benefit/(Expense)(1)
 After-Tax Income/(Loss) 
EPS Favorable/(Adverse) (2)
Quarter Ended March 30, 2019:       
Hulu gain$4,917
 $(1,131) $3,786
 $2.46
Insurance recoveries related to a legal matters46
 (11) 35
 0.02
Restructuring and impairment charges(662) 152
 (510) (0.33)
Impairment of Vice(353) 81
 (272) (0.18)
Amortization of 21CF and Hulu intangible assets and fair value step-up on film and television costs(105) 24
 (81) (0.05)
Total$3,843
 $(885) $2,958
 $1.92
        
Quarter Ended March 31, 2018:       
Net benefit from the Tax Act$—
 $(134) $(134) $0.09
Insurance recoveries related to a legal matter38
 (10) 28
 0.02
Restructuring and impairment charges(13) 3
 (10) (0.01)
Total$25
 $(141) $(116) $0.10
(1)
Tax benefit/expense adjustments are determined using the tax rate applicable to the individual item affecting comparability.
(2)
EPS is net of noncontrolling interest share, where applicable. Total may not equal the sum of the column due to rounding.

Six-Month ResultsCURRENT SIX-MONTH PERIOD RESULTS COMPARED TO PRIOR-YEAR SIX-MONTH PERIOD
Revenues for the six-monthcurrent period increased 1%, or $326 million,decreased $7.0 billion, to $30.2$31.9 billion; net income attributable to Disney increased 12%, or $0.9decreased $1.6 billion, to $8.2$0.9 billion; and EPS increased 12% from $4.86decreased to $5.42.$0.52 compared $1.43 in the prior-year period. The EPS increase for the six-month perioddecrease was due the Hulu gain,lower segment operating results driven by lower operating results at DPEP, partially offset by the comparison to a benefit from the Tax Act in the prior year, lower segmenthigher operating income and severance and related charges and equity compensation costs in connection with the acquisition and integration of 21CF. The decrease in segment operating income was due to lower results at Studio Entertainment and increased losses at Direct-to-Consumer & International, partially offset by growth at Parks, Experiences and Products.DMED.
Revenues
Service revenues for the six-monthcurrent period increased 1%decreased 14%, or $368 million,$4.9 billion, to $25.9$29.4 billion, due to the consolidationclosure/reduced operating capacity of 21CFour theme parks and resorts, lower theatrical revenues, a decrease in TV/SVOD distribution revenue and to a lesser extent, lower electronic home entertainment sales volumes. All of these revenue decreases reflected the impact of COVID-19. These decreases were partially offset by higher DTC subscription revenue and to a lesser extent, advertising revenue growth. The decrease in TV/SVOD distribution revenue also reflected the shift from licensing our content to third parties to distribution on our DTC services. Advertising revenue growth was due to higher advertising at Hulu, higher guest spendingpartially offset by lower advertising at our Linear Networks.
Product revenues for the current period decreased 47%, or $2.1 billion, to $2.5 billion, due to lower merchandise, food and beverage sales at our theme parks and resorts affiliate fee growth and an increasea decrease in home entertainment volumes.
Costs and expenses
Cost of services for the current period decreased 11%, or $2.4 billion, to $19.7 billion, due to lower production cost amortization and distribution costs at DMED, and a decrease in costs as a result of the closure/reduced operating capacity of our theme parks and resorts. Lower production cost amortization and distribution costs were driven by a decrease in theatrical and TV/SVOD distribution revenue.revenues, the benefit of a lower average amortization rate on TV/SVOD sales, and a decrease in home entertainment volumes. These increasesdecreases were partially offset by increased programming, production and technology costs at Direct-to-Consumer.
Cost of products for the current period decreased 35%, or $1.0 billion, to $1.9 billion, due to lower merchandise, food and beverage sales at our theme parks and resorts and a decrease in home entertainment volumes.

Selling, general, administrative and other costs for the current period decreased 15%, or $1.1 billion, to $6.0 billion, due to lower marketing costs driven by limited worldwide theatrical distribution revenue.releases and a decrease in spending at the theme parks and resorts businesses, partially offset by an increase at Direct-to-Consumer.
Depreciation and amortization for the current period decreased 2%, or $0.1 billion, to $2.6 billion, due to lower amortization of intangible assets from the acquisition of TFCF and Hulu reflecting an impairment recorded in the third quarter of the prior year related to the International Channels intangible assets arising from the acquisition.
Restructuring and impairment charges
Restructuring and impairment charges of $527 million for the current period were due to asset impairments and severance costs primarily related to the planned closure of an animation studio and a substantial number of our Disney-branded retail stores as well as severance at our other businesses.
35
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


Product revenues for the six-month period decreased 1%, or $42 million, to $4.4 billion due to lower domestic home entertainment volumes, partially offset by increases in guest spending at our theme parks and resorts. Product revenues reflected an approximate 1 percentage point decrease due to an unfavorable FX Impact.
Costs and expenses
Cost of services for the six-month period increased 8%, or $1.1 billion, to $14.7 billion, due to the consolidation of 21CF and Hulu, higher programming and production costs, higher technical support costs at our DTC business and labor cost inflation at our theme parks and resorts. These increases were partially offset by a decrease in film cost amortization driven by the impact of lower theatrical distribution revenue.
Cost of products for the six-month period was comparable to the prior-year period at $2.6 billion as labor cost inflation at our theme parks and resorts was offset by lower home entertainment volumes. Cost of products reflected an approximate 2 percentage point decrease due to a favorable FX Impact.
Selling, general, administrative and other costs for the six-month period increased 4%, or $0.2 billion, to $4.5 billion, primarily due to the consolidation of 21CF and Hulu, costs associated with the acquisition of 21CF and higher marketing costs. Selling, general, administrative and other costs reflected an approximate 2 percentage point decrease due to a favorable FX Impact.
Depreciation and amortization increased 6%, or $87 million, to $1,560 million, due to the consolidation of 21CF and Hulu and depreciation of technology investments at our Direct-to-Consumer & International segment.
Restructuring and impairment charges
Restructuring and impairment charges of $662$295 million for the currentprior-year period were forprimarily due to severance andcosts related charges and equity compensation costs in connection withto the acquisition and integration of 21CF.TFCF.
Restructuring and impairment charges of $28 million in the prior-year period were primarily severance costs.Other Income, net
Other income
Other income of $5.0 billion in the current period was due toincludes the Hulu gain.fuboTV Gain of $186 million and the DraftKings Gain of $119 million.
Other income of $94 million for the prior-year period reflects a gain from the sale of property rights and insurance recoveries related to a legal matter.
Interest expense, net
Interest expense, net is as follows: 
Six Months Ended  Six Months Ended
(in millions)March 30,
2019		 March 31,
2018		 
% Change
Better/(Worse)
(in millions)April 3,
2021		March 28,
2020		% Change
Better (Worse)
Interest expense$(361) $(318) (14) %Interest expense$(819)$(727)(13) %
Interest income, investment income and other155
 46
 >100 %Interest income, investment income and other175    144    22  %
Interest expense, net$(206) $(272) 24 %Interest expense, net$(644)$(583)(10) %
The increase in interest expense forin the six-monthcurrent period was due to financing costs related to the 21CF acquisition and higher average interest rates,debt balances, partially offset by higher capitalized interest, market value adjustments on pay-floating interest rate swap options and lower average debt balances.interest rates.
The increase in interest income, investment income and other was due to unrealizedhigher investment gains, in the current six month period and the inclusion of a $47 million benefit related topartially offset by higher pension and postretirement benefitbenefits costs, other than service cost. The comparable benefit of $13 million in the prior-year six month period was reported in “Costs and expenses.” The benefit in the current six month period was due to the expected return on pension plan assets exceeding interest expense on plan liabilities and amortization of prior net actuarial losses.
Equity in the income / (loss) of investees
Equity in the income / (loss) of investees decreased $285increased $78 million to a loss of $236$437 million forin the current period primarily due to an impairment of our investment in Vice, partially offset by lower equity losses from Hulu as a result of our consolidation of Hulu following the 21CF acquisition and higher income from A+E Television Network (A+E). Hulu results wereNetworks due to lower programming costs and higher subscription and advertising revenue,program sales, partially offset by lower advertising revenue.
Effective Income Tax Rate 
Six Months Ended
April 3,
2021		March 28,
2020		Change
Better (Worse)
Effective income tax rate - continuing operations9.7%26.7%17.0 ppt
The decrease in the effective income tax rate was due to a benefit from the resolution of various tax matters in the current period and higher programming costs. excess tax benefits on employee share-based awards, partially offset by the impact of higher foreign losses for which the Company is unable to recognize a tax benefit.
Noncontrolling Interests 
Six Months Ended
(in millions)April 3,
2021		March 28,
2020		% Change
Better (Worse) 
Net income from continuing operations attributable to noncontrolling interests$(211)$(100)>(100) %
The increase in net income from continuing operations attributable to noncontrolling interests for the current period includes the impact of higher results at A+E was drivenNational Geographic and lower losses at our DTC sports business and Shanghai Disney Resort, partially offset by higher program sales revenue, lower marketing costsresults at ESPN.
Certain Items Impacting Results in the Year
Results for the six months ended April 3, 2021 were impacted by the following:
•TFCF and affiliate revenue growth.Hulu acquisition amortization of $1,222 million
•Restructuring and impairment charges of $527 million
•The fuboTV Gain of $186 million and DraftKings Gain of $119 million
Results for the six months ended March 28, 2020 were impacted by the following:
•TFCF and Hulu acquisition amortization of $1,423 million
•Restructuring charges of $295 million
36
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


Effective Income Tax Rate
 Six Months Ended  
 March 30,
2019		 March 31,
2018		 
Change
Better/(Worse)
Effective income tax rate21.5% 1.1% (20.4)ppt
The increase in the effective income tax rate reflected the comparison to a $1.7 billion (22.1 percentage point) net benefit related to the Tax Act that was recognized in the prior-year period. The current period benefited from a reduction in the Company’s U.S. statutory federal income tax rate to 21.0% in fiscal 2019 from 24.5% in fiscal 2018.
Refer to Note 8 of the Condensed Consolidated Financial Statements for further information on the impact of the Tax Act on the Company.
Noncontrolling Interests
 Six Months Ended  
(in millions)March 30,
2019		 March 31,
2018		 
% Change
Better/(Worse) 
Net income attributable to noncontrolling interests$(157) $(228) 31%
The decrease in net income attributable to noncontrolling interests for the six-month period was due to higher losses from our direct-to-consumer sports business, lower earnings at ESPN (largely due to a Tax Act benefit recognized in the prior-year period) and the consolidation of losses from Hulu.
Certain Items Impacting Comparability
Results for the six months ended March 30, 2019 were impacted by the following:
•The Hulu gain totaling $4.9 billion
•A benefit of $46 million from insurance recoveries related to a legal matter
•A benefit of $34 million from the Tax Act
•Restructuring charges of $662 million
•An impairment of our investment in Vice of $353 million
Amortization of $105 million related to 21CF and Hulu intangible assets and fair value step-up on film and television costs
Results for the six months ended March 31, 2018 were impacted by the following:
•A benefit of $1.7 billion from the Tax Act
•Gains of $53 million from the sale of property rights
•A benefit of $38 million from insurance recoveries related to a legal matter
•Restructuring charges of $28 million
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


A summary of the impact of these items on EPS is as follows:
(in millions, except per share data)Pre-Tax Income (Loss)
Tax Benefit
(Expense)(1)
After-Tax Income (Loss)
EPS Favorable
(Adverse)(2)
Six Months Ended April 3, 2021:
Amortization of TFCF and Hulu intangible assets and fair value step-up on film and television costs(3)
$(1,222)$285    $(937)   $(0.50)
Restructuring and impairment charges(527)124    (403) (0.22)
Other income305 (71) 234    0.13 
Total$(1,444)$338  $(1,106)$(0.59)   
Six Months Ended March 28, 2020:
Amortization of TFCF and Hulu intangible assets and fair value step-up on film and television costs(3)
$(1,423)$330    $(1,093)   $(0.57)
Restructuring and impairment charges(295)68    (227)   (0.13)
Total$(1,718)$398  $(1,320)$(0.70)
(in millions, except per share data)Pre-Tax Income/(Loss) 
Tax Benefit/(Expense)(1)
 After-Tax Income/(Loss) 
EPS Favorable/(Adverse) (2)
Six Months Ended March 30, 2019:       
Hulu gain$4,917
 $(1,131) $3,786
 $2.50
Insurance recoveries related to a legal matter46
 (11) 35
 0.02
Net benefit from the Tax Act—
 34
 34
 0.02
Restructuring and impairment charges(662) 152
 (510) (0.33)
Impairment of Vice(353) 81
 (272) (0.18)
Amortization of 21CF and Hulu intangible assets and fair value step-up on film and television costs(105) 24
 (81) (0.05)
Total$3,843
 $(851) $2,992
 $1.98
        
Six Months Ended March 31, 2018:       
Net benefit from the Tax Act$—
 $(1,691) $(1,691) $1.10
Gain from sale of property rights53
 (12) 41
 0.03
Insurance recoveries related to a legal matter38
 (10) 28
 0.02
Restructuring and impairment charges(28) 6
 (22) (0.01)
Total$63
 $(1,707) $(1,644) $1.14
(1)Tax benefit/expense adjustments are determined using the tax rate applicable to the individual item affecting comparability.
(2)EPS is net of noncontrolling interest share, where applicable. Total may not equal the sum of the column due to rounding.
(3)Includes amortization of intangibles related to TFCF equity investees.
(1)
Tax benefit/expense adjustments are determined using the tax rate applicable to the individual item affecting comparability.
(2)
EPS is net of noncontrolling interest share, where applicable. Total may not equal the sum of the column due to rounding.
SEASONALITY
The Company’s businesses are subject to the effects of seasonality. Consequently, the operating results for the six months ended March 30, 2019April 3, 2021 for each business segment, and for the Company as a whole, are not necessarily indicative of results to be expected for the full year.
Disney Media Networksand Entertainment Distribution revenues are subject to seasonal advertising patterns, changes in viewership and subscriber levels, timing and performance of film releases in the theatrical and home entertainment markets, timing of program sales.and demand for film and television programs, and the demand for sports programming. In general, domestic advertising revenues are typically somewhat higher during the fall and somewhat lower during the summer months. Affiliate feesIn addition, advertising revenues generated from sports programming are generally recognized ratably throughout the year. Effective at the beginning of fiscal 2019, the Company adopted ASC 606, which changedimpacted by the timing of affiliate revenue recognition for certain contracts,sports seasons and events, which varies throughout the year or may result in higher revenue intake place periodically (e.g. biannually, quadrennially). Affiliate revenues vary with the first quartersubscriber trends of our fiscal year.MVPDs. Theatrical release dates are determined by several factors, including competition and the timing of vacation and holiday periods.
Disney Parks, Experiences and Products revenues fluctuate with changes in theme park attendance and resort occupancy resulting from the seasonal nature of vacation travel and leisure activities, and seasonal consumer purchasing behavior, which generally results in increasedhigher revenues during the Company’s first and fourth fiscal quarter.quarters. Peak attendance and resort occupancy generally occur during the summer months when school vacations occur and during early-winterearly winter and spring-holidayspring holiday periods. Consumer products revenue fluctuates with consumer purchasing behavior, which generally results in higher revenues during the Company’s first fiscal quarter due to the winter holiday season and in the fourth quarter due to back-to-school. In addition, licensing revenues fluctuate with the timing and performance of our theatrical releases and cable programming broadcasts.
Studio Entertainment revenues fluctuate due to the timing and performance of releases in the theatrical, home entertainmentfilm and television markets. Release dates are determined by several factors, including competition and the timing of vacation and holiday periods.content.
Direct-to-Consumer & International revenues fluctuate based on: the timing and performance of releases of our digital media content; viewership levels on our cable channels and digital platforms; changes in subscriber levels; and the demand for sports and Disney content. Each of these may depend on the availability of content, which varies from time to time throughout the year based on, among other things, sports seasons and content production schedules.
37
In general, 21CF revenues are similar to revenues generated at Media Networks and Studio Entertainment and are subject to similar fluctuations.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


BUSINESS SEGMENT RESULTS
The Company evaluates the performance of its operating segments based on segment operating income, which is shown below along with segment revenues:
 Quarter Ended % Change Six Months Ended % Change
(in millions)March 30,
2019		 March 31,
2018		 Better/
(Worse)		 March 30,
2019		 March 31,
2018		 Better/
(Worse)
Revenues:           
Media Networks$5,525
 $5,508
 — % $11,446
 $11,063
 3 %
Parks, Experiences and Products6,169
 5,903
 5 % 12,993
 12,430
 5 %
Studio Entertainment2,134
 2,499
 (15) % 3,958
 5,008
 (21) %
Direct-to-Consumer & International955
 831
 15 % 1,873
 1,762
 6 %
21CF373
 —
 nm
 373
 —
 nm
Eliminations(234) (193) (21) % (418)
(364) (15) %
 $14,922
 $14,548
 3 % $30,225
 $29,899
 1 %
Segment operating income/(loss):           
Media Networks$2,185
 $2,258
 (3) % $3,515
 $3,501
 — %
Parks, Experiences and Products1,506
 1,309
 15 % 3,658
 3,263
 12 %
Studio Entertainment534
 874
 (39) % 843
 1,699
 (50) %
Direct-to-Consumer & International(393) (188) >(100) % (529) (230) >(100) %
21CF25
 —
 nm
 25
 —
 nm
Eliminations(41) (16) >(100) % (41) (10) >(100) %
 $3,816
 $4,237
 (10) % $7,471
 $8,223
 (9) %
The following table reconciles income from continuing operations before income taxes to total segment operating income:
 Quarter Ended% Change
Better
(Worse)		Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Income from continuing operations before income taxes$1,230 $1,051 17  %$1,276 $3,677 (65) %
Add:
Corporate and unallocated shared expenses201 188 (7)  %433 425 (2)  %
Restructuring and impairment charges414 145 >(100) %527 295 (79) %
Other income, net(305)— nm(305)— nm
Interest expense, net320 300 (7) %644 583 (10) %
TFCF and Hulu acquisition amortization605   723   16  %1,222   1,423   14  %
Total segment operating income$2,465 $2,407 2  %$3,797 $6,403 (41) %

The following is a summary of segment revenue and operating income: 
 Quarter Ended% Change
Better
(Worse)		Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Revenues:
Disney Media and Entertainment Distribution$12,440 $12,365 1  %$25,101 $25,662 (2) %
Disney Parks, Experiences and Products3,173 5,660 (44) %6,761 13,240 (49) %
$15,613 $18,025 (13) %$31,862 $38,902 (18) %
Segment operating income:
Disney Media and Entertainment Distribution$2,871 $1,651 74  %$4,322 $3,125 38  %
Disney Parks, Experiences and Products(406)  756 nm(525) 3,278 nm
$2,465 $2,407 2  %$3,797 $6,403 (41) %
Depreciation expense is as follows: 
 Quarter Ended% Change
Better
(Worse)		Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Disney Media and Entertainment Distribution$133 $137 3 %$300 $279 (8) %
Disney Parks, Experiences and Products
Domestic391   408   4  %779   806   3  %
International184 175 (5) %360 344 (5) %
Total Disney Parks, Experiences and Products575 583 1  %1,139 1,150 1  %
Corporate46 46 —  %92 77 (19) %
Total depreciation expense$754 $766 2  %$1,531 $1,506 (2) %
38
 Quarter Ended % Change Six Months Ended % Change
(in millions)March 30,
2019		 March 31,
2018		 Better/
(Worse)		 March 30,
2019		 March 31,
2018		 Better/
(Worse)
Income from continuing operations before income taxes$7,237
 $3,928
 84 % $10,668
 $7,673
 39 %
Add/(subtract):           
Corporate and unallocated shared expenses279
 194
 (44) % 440
 344
 (28) %
Restructuring and impairment charges662
 13
 >(100) % 662
 28
 >(100) %
Other income(4,963) (41) >100 % (4,963) (94) >100 %
Interest expense, net143

143
 — % 206

272

24 %
Amortization of 21CF and Hulu intangible assets and fair value step-up on film and television costs105
 —
 nm
 105
 —
 nm
Impairment of equity investment353
 —
 nm
 353
 —
 nm
Segment Operating Income$3,816

$4,237
 (10) % $7,471
 $8,223
 (9) %
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


Depreciation expense is as follows:
 Quarter Ended % Change Six Months Ended % Change
(in millions)March 30,
2019		 March 31,
2018		 Better/
(Worse)		 March 30,
2019		 March 31,
2018		 Better/
(Worse)
Media Networks           
Cable Networks$25
 $28
 11 % $49
 $57
 14 %
Broadcasting20
 23
 13 % 40
 46
 13 %
Total Media Networks45
 51
 12 % 89
 103
 14 %
Parks, Experiences and Products    

      
Domestic367
 364
 (1) % 719
 727
 1 %
International182
 185
 2 % 368
 367
 — %
Total Parks, Experiences and Products549
 549
 — % 1,087
 1,094
 1 %
Studio Entertainment16
 14
 (14) % 30
 27
 (11) %
Direct-to-Consumer & International35
 27
 (30) % 67
 49
 (37) %
21CF4
 —
 nm
 4
 —
 nm
Corporate42
 46
 9 % 81
 91
 11 %
Total depreciation expense$691
 $687
 (1) % $1,358
 $1,364
 — %
Amortization of intangible assets is as follows:
 Quarter Ended% Change
Better
(Worse)		Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Disney Media and Entertainment Distribution$44$43(2) %$91$89(2) %
Disney Parks, Experiences and Products2727—  %5454—  %
TFCF and Hulu44749810  %8949849  %
Total amortization of intangible assets$518$5689  %$1,039$1,1278  %

BUSINESS SEGMENT RESULTS - Current Quarter Results Compared to Prior-Year Quarter
 Quarter Ended % Change Six Months Ended % Change
(in millions)March 30,
2019		 March 31,
2018		 Better/
(Worse)		 March 30,
2019		 March 31,
2018		 Better/
(Worse)
Media Networks$—
 $—
 nm
 $—
 $—
 nm
Parks, Experiences and Products27
 28
 4 % 54
 55
 2 %
Studio Entertainment15
 15
 — % 31
 32
 3 %
Direct-to-Consumer & International23
 1
 >(100) % 45
 22
 >(100) %
21CF and Hulu72
 —
 nm
 72
 —
 nm
Total amortization of intangible assets$137
 $44
 >(100) % $202
 $109
 (85) %
Disney Media and Entertainment Distribution
Revenue and operating results for the Disney Media and Entertainment Distribution segment are as follows:
 Quarter Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Revenues:
Linear Networks$6,746   $7,025   (4) %
Direct-to-Consumer3,999 2,515 59  %
Content Sales/Licensing and Other1,916 3,011 (36) %
Elimination of Intrasegment Revenue(1)
(221)(186)(19) %
$12,440 $12,365 1  %
Segment operating income (loss):
Linear Networks$2,849 $2,481 15  %
Direct-to-Consumer(290) (805)64  %
Content Sales/Licensing and Other312 (25)nm
$2,871 $1,651 74  %
(1) Reflects fees received by the Linear Networks from other DMED businesses for the right to air our linear networks and related services.
Linear Networks
Operating results for Linear Networks are as follows:
 Quarter Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Revenues
Affiliate fees$4,815 $4,715 2  %
Advertising1,815   2,171   (16) %
Other116 139 (17) %
Total revenues6,746 7,025 (4) %
Operating expenses(3,191)(3,776)15  %
Selling, general, administrative and other(890)(888)—  %
Depreciation and amortization(36)(57)37  %
Equity in the income of investees220 177 24  %
Operating Income$2,849 $2,481 15  %
39
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


Revenues
Media Networks
Operating results for the Media Networks segment areAffiliate revenue is as follows:
 Quarter Ended % Change
(in millions)March 30,
2019		 March 31,
2018		 Better/
(Worse)
Revenues     
Affiliate fees$3,177
 $3,043
 4 %
Advertising1,596
 1,643
 (3) %
TV/SVOD distribution and other752
 822
 (9) %
Total revenues5,525
 5,508
 — %
Operating expenses(3,012) (2,917) (3) %
Selling, general, administrative and other(465) (464) — %
Depreciation and amortization(45) (51) 12 %
Equity in the income of investees182
 182
 — %
Operating Income$2,185
 $2,258
 (3) %
Revenues
 Quarter Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Domestic Channels$3,927 $3,745 5  %
International Channels888 970 (8) %
$4,815 $4,715   2  %
The increase in affiliate feesrevenue at our Domestic Channels was due to growthan increase of 7%8% from higher contractual rates, partially offset by a 2% decrease of 4% from fewer subscribers and a 1% decrease from the adoption of ASC 606.subscribers.
The decrease in advertising revenuesaffiliate revenue at the International Channels was due to decreases of $31 million at Broadcasting,5% from $898 millionfewer subscribers, driven by channel closures primarily in Europe, and 3% from an unfavorable foreign exchange impact.
Advertising revenue is as follows:
 Quarter Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Cable$711 $918 (23) %
Broadcasting722 911 (21) %
Domestic Channels1,433 1,829 (22) %
International Channels382 342 12  %
$1,815 $2,171 (16) %
The decrease in Cable advertising revenue was due to $867 million,decreases of 20% from lower impressions reflecting lower average viewership and $16 million at Cable Networks,2% from $745 million to $729 million.lower rates.
The decrease in Broadcasting advertising revenue reflected a decreasewas due to decreases of 9%14% from lower network impressions, due toreflecting lower average viewership, 12% from a shift in the timing of The Academy Awards at ABC and 7% from the owned television stations driven by lower political advertising and the timing of The Academy Awards. The Academy Awards aired in the third quarter in the current year compared to the second quarter in the prior year. These decreases were partially offset by an increase of 5%9% from higher network rates. Cable Networks
The increase in the International Channels advertising revenue reflected a decreasewas due to increases of 7% from lower rates, partially offset by an increase of 5%8% from higher impressions. Ratesimpressions, reflecting higher average viewership and 2% from higher rates. The increase in viewership reflected the impactbenefit from Board of the shiftControl for Cricket in the mix of College Football Playoff (CFP) games. Three “host” games and the championship were aired inIndia (BCCI) matches that shifted into the current quarter whereas one host game, two semi-finals and the championship were airedas a result of COVID-19. BCCI cricket matches generally occur in the prior-yearour first fiscal quarter. Semi-final games generally generate more advertising revenue than host games. The increase in impressions reflected more units delivered, partially offset by lower average viewership.
TV/SVOD distribution and other revenue decreased $70 million due to lower program sales including lower sales of Grey’s Anatomy, Agents of S.H.I.E.L.D. and Criminal Minds,partially offset by higher sales of How to Get Away With Murder.
Costs and Expenses
Operating expenses includeprimarily consist of programming and production costs, which increased $104 million, from $2,766 million to $2,870 million. At Broadcasting,are as follows:
 Quarter Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Cable$(1,515) $(1,871)  19  %
Broadcasting(658) (803) 18  %
Domestic Channels(2,173) (2,674) 19  %
International Channels(607) (686) 12  %
$(2,780) $(3,360) 17  %
The decrease in programming and production costs increased $71 millionat Cable was due to higherthe timing of the College Football Playoffs (CFP) relative to our fiscal periods, lower production cost write-downscosts for live sporting events and fewer hours of original episodic programming in the current quarter. The current quarter and an increaseincluded one CFP bowl game compared to four in the average cost of network programming. At Cable Networks, programming andprior-year quarter. Lower production costs increased $33 million due to contractual rate increases for CFP, NBA, college sports and NFL programming and higher sports production costs. These increaseslive sporting events were partially offsetdriven by the timing of sports costs allocated between quarters due to the shift in the mix of CFP bowl games. Host games generally have a lower cost than semi-final games.savings initiatives.
Segment Operating Income
40
Segment operating income decreased 3%, or $73 million, to $2,185 million due to a decrease at the ABC Network and lower income from program sales, partially offset by an increase at ESPN.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


The decrease in programming and production costs at Broadcasting was primarily due to the shift of The Academy Awards.
The decrease in programming and production costs at the International Channels was driven by a higher percentage of content costs being allocated to Disney+ as we continue to launch the service in additional markets, and lower costs as a result of channel closures. These decreases were partially offset by higher sports programming costs due to costs for BCCI matches that shifted into the current quarter as a result of COVID-19.
Depreciation and amortization decreased $21 million, to $36 million from $57 million, driven by a shift in the allocation of technology assets and related depreciation primarily between Linear Networks and Content Sales/Licensing and Other.
Equity in the Income of Investees
Income from equity investees increased $43 million, to $220 million from $177 million, primarily due to higher income from A+E Television Networks due to lower programming costs and higher program sales, partially offset by lower advertising revenue.
Operating Income from Linear Networks
Operating income from Linear Networks increased $368 million, to $2,849 million from $2,481 million, due to increases at Cable, the International Channels and Broadcasting and higher income from our equity investees.
The following table presentsprovides supplemental revenue and operating income detail for the Media Networks segment:Linear Networks: 
 Quarter Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Supplemental revenue detail
Domestic Channels$5,418 $5,638 (4) %
International Channels1,328 1,387 (4) %
$6,746 $7,025 (4) %
Supplemental operating income detail
Domestic Channels$2,281 $2,031 12  %
International Channels348 273 27  %
Equity in the income of investees220 177 24  %
$2,849 $2,481 15  %

 Quarter Ended % Change
(in millions)March 30,
2019		 March 31,
2018		 Better/
(Worse)
Supplemental revenue detail     
Cable Networks$3,708
 $3,653
 2 %
Broadcasting1,817
 1,855
 (2) %
 $5,525
 $5,508
 — %
Supplemental operating income detail     
Cable Networks$1,756
 $1,728
 2 %
Broadcasting247
 348
 (29) %
Equity in the income of investees182
 182
 — %
 $2,185
 $2,258
 (3) %
Direct-to-Consumer

Parks, Experiences and Products
Operating results for the Parks Experiences, and Products segmentDirect-to-Consumer are as follows:
 Quarter Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Revenues
Subscription fees$3,000 $1,796 67  %
Advertising717   558   28  %
TV/SVOD distribution and other282 161 75  %
Total revenues3,999 2,515 59  %
Operating expenses(3,214)(2,465)(30) %
Selling, general, administrative and other(1,010)(794)(27) %
Depreciation and amortization(65)(60)(8) %
Equity in the loss of investees— (1)100  %
Operating Loss$(290)$(805)64  %
41
 Quarter Ended % Change
(in millions)March 30,
2019		 March 31,
2018		 Better/
(Worse)
Revenues     
Theme park admissions$1,768
 $1,690
 5 %
Parks & Experiences merchandise, food and beverage1,411
 1,352
 4 %
Resorts and vacations1,501
 1,461
 3 %
Merchandise licensing and retail992
 980
 1 %
Parks licensing and other497
 420
 18 %
Total revenues6,169
 5,903
 5 %
Operating expenses(3,339) (3,245) (3) %
Selling, general, administrative and other(748) (765) 2 %
Depreciation and amortization(576) (577) — %
Equity in the loss of investees—
 (7) — %
Operating Income$1,506
 $1,309
 15 %
Revenues
Parks, Experiences and Products results include an adverse impact from a shift in the timing of the Easter holiday. In the current year, the entire Easter holiday falls in the third quarter, while the second quarter of the prior year included one week of the Easter holiday.
The increase in theme parks admissions revenue was due to an increase of 5% from higher average ticket prices, partially offset by a decrease of 1% from an unfavorable FX Impact.
Parks & Experiences merchandise, food and beverage revenue growth was due to an increase of 5% from higher average guest spending.
The increase in resorts and vacations revenue was primarily due to increases of 1% each from average ticket prices for cruise line sailings, passenger cruise days and average daily hotel room rates.
Merchandise licensing and retail revenues were higher due to an increase of 5% from higher revenue at our games business, partially offset by decreases of 1% from lower merchandise licensing revenue and 1% from our retail stores. The increase in games revenue was due to the sale of rights to a video game and royalties from the licensed title, Kingdom Hearts III, which was released in the current quarter. Lower merchandise licensing revenues were due to a decrease in minimum guarantee shortfall recognition from the adoption of ASC 606, partially offset by a favorable FX Impact. The decrease at our retail stores was primarily due to lower comparable store sales.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


Revenues
The increase in parks licensingsubscription fees was due to higher subscribers driven by growth at Disney+, Hulu, and to a lesser extent, ESPN+, and higher rates due to an increase in retail pricing at Hulu. The growth at Disney+ included the benefit of launches in additional markets, certain of which have a lower average monthly revenue per paid subscriber compared to the average in the prior-year quarter.
Higher advertising revenue reflected an increase of 29% from higher impressions due to growth at Hulu.
The increase in TV/SVOD distribution and other revenue was driven bydue to Disney+ Premier Access revenues from Raya and the adoptionLast Dragon and higher Ultimate Fighting Championship (UFC) pay-per-view fees. The increase in UFC fees reflected the benefit of ASC 606, which required certain cost reimbursements from licenseesfour events in the current quarter compared to be recognized as revenue (rather than recorded asthree in the prior-year quarter, an offset to operating expenses).increase in average buys per event and higher pricing.
The following table presents supplemental parkthe number of paid subscribers(1) (in millions) for Disney+, ESPN+ and hotel statistics: Hulu as of:
 Domestic 
International (2)
 Total
 Quarter Ended Quarter Ended Quarter Ended
 Mar. 30,
2019		 Mar. 31,
2018		 Mar. 30,
2019		 Mar. 31,
2018		 Mar. 30,
2019		 Mar. 31,
2018
Parks           
Increase/(decrease)           
Attendance1% 5% (3) % 1% —% 4%
Per Capita Guest Spending4% 6% 10 % 10% 6% 7%
Hotels (1)
           
Occupancy93% 90% 79 % 84% 89% 88%
Available Room Nights (in thousands)2,484
 2,509
 787
 787
 3,271
 3,296
Per Room Guest Spending
$351
 
$347
 
$287
 
$277
 
$337
 
$331
(1)
Per room guest spending consists of the average daily hotel room rate, as well as food, beverage and merchandise sales at the hotels. Hotel statistics include rentals of Disney Vacation Club units.
(2)
Per capita guest spending growth rate is stated on a constant currency basis. Per room guest spending is stated at the fiscal 2018 second quarter average foreign exchange rate.
Costs and Expenses
April 3,
2021		March 28,
2020		% Change
Better
(Worse)
Disney+(2)
103.6 33.5 >100 %
ESPN+13.8   7.9   75 %
Hulu
SVOD Only37.8 28.8 31 %
Live TV + SVOD3.8 3.3 15 %
Total Hulu41.6 32.1 30 %
Operating expenses include operating labor,The following table presents the average monthly revenue per paid subscriber(3) for the quarter ended:
 % Change
Better
(Worse)
April 3,
2021		March 28,
2020
Disney+(2)
$3.99 $5.63 (29) %
ESPN+$4.55 $4.24 7  %
Hulu
SVOD Only$12.08 $12.06 —  %
Live TV + SVOD$81.83 $67.75 21  %
(1)A subscriber for which increased $41 million, from $1,474 millionwe recognized subscription revenue. A subscriber ceases to $1,515 million, costbe a paid subscriber as of goods sold and distribution costs, which increased $18 million, from $585 million to $603 million, and infrastructure costs, which decreased $3 million, from $600 million to $597 million. The increase in operating labor was due to inflation, partially offset by the comparison totheir effective cancellation date or as a special domestic employee bonusresult of a failed payment method. A subscription bundle is considered a paid subscriber for each service included in the prior-year quarterbundle. Subscribers include those who receive the service through wholesale arrangements in which we receive a fee for the distribution of Disney+ to each subscriber to an existing content distribution tier. When we aggregate the total number of paid subscribers across our DTC services, whether acquired individually, through a wholesale arrangement or via the bundle, we refer to them as paid subscriptions.
(2)Includes Disney+ Hotstar. Disney+ Hotstar launched on April 3, 2020 in India (as a conversion of the preexisting Hotstar service) and a favorable FX Impact. Higher coston September 5, 2020 in Indonesia. Disney+ Hotstar average monthly revenue per paid subscriber is significantly lower than the average monthly revenue per paid subscriber for Disney+ in other markets.
(3)Revenue per paid subscriber is calculated based on the average of goods sold and distribution costs were driven by inflation. Infrastructure costs were comparable to the prior-year quartermonthly average paid subscribers for each month in the period. The monthly average paid subscribers is calculated as the comparison to costs incurred insum of the prior-year quarterbeginning of the month and end of the month paid subscriber count, divided by two. Disney+ average monthly revenue per paid subscriber is calculated using a daily average of paid subscribers for the dry-dockperiod. Revenue includes subscription fees, advertising (excluding revenue earned from selling advertising spots to other Company businesses) and premium and feature add-on revenue but excludes Premier Access and Pay-Per-View revenue. The average revenue per subscriber is net of discounts offered on bundled services. The discount is allocated to each service based on the relative retail price of each service on a standalone basis. In general, wholesale arrangements have a lower average monthly revenue per paid subscriber than subscribers that we acquire directly or through third party platforms like Apple.Disney Magic was largely offset by an increase in property taxes. Other operating expenses, which include costs
The average monthly revenue per paid subscriber for such items as supplies, commissions and entertainment offerings, increased $38 million,Disney+ decreased from $586 million$5.63 to $624 million$3.99 due to the recognitionlaunch of certain cost reimbursements as revenue (rather than recorded as an offset to operating expenses).Disney+ Hotstar.
Selling, general, administrative and other costs decreased $17 million from $765 million to $748 million driven by a favorable FX Impact.
42
Segment Operating Income
Segment operating income increased 15%, or $197 million, to $1,506 million due to increases at our domestic theme parks and resorts, consumer products business, cruise line and Hong Kong Disneyland Resort.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


The following table presents supplementalaverage monthly revenue per paid subscriber for ESPN+ increased from $4.24 to $4.55 due to an increase in retail pricing.
The average monthly revenue per paid subscriber for the Hulu SVOD Only service increased from $12.06 to $12.08 due to a lower mix of wholesale subscribers and an increase in per-subscriber premium add-on revenue, partially offset by a decrease in per-subscriber advertising revenue and operating income detaila higher mix of subscribers to the bundled offering. The average monthly revenue per paid subscriber for the Parks, ExperiencesHulu Live TV + SVOD service increased from $67.75 to $81.83 due to increases in retail pricing, per-subscriber advertising revenue and Products segment to provide continuity with our legacy reporting:a lesser extent, per-subscriber premium and feature add-on revenue, partially offset by a higher mix of subscribers to the bundled offering.
Costs and Expenses
 Quarter Ended 
% Change
Better /
(Worse)
(in millions)March 30,
2019		 March 31,
2018		 
Supplemental revenue detail     
Parks & Experiences     
Domestic$4,206
 $3,965
 6%
International929
 914
 2%
Consumer Products1,034
 1,024
 1%
 $6,169
 $5,903
 5%
Supplemental operating income detail     
Parks & Experiences     
Domestic$1,046
 $931
 12%
International44
 23
 91%
Consumer Products416
 355
 17%
 $1,506
 $1,309
 15%

Studio Entertainment
Operating results for the Studio Entertainment segmentexpenses are as follows:
 Quarter Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Programming and production costs$(2,586) $(1,964) (32) %
Other operating expense(628) (501) (25) %
$(3,214) $(2,465) (30) %
 Quarter Ended % Change
(in millions)March 30,
2019		 March 31,
2018		 Better/
(Worse)
Revenues     
Theatrical distribution$745
 $956
 (22) %
Home entertainment263
 471
 (44) %
TV/SVOD distribution and other1,126
 1,072
 5 %
Total revenues2,134
 2,499
 (15) %
Operating expenses(965) (993) 3 %
Selling, general, administrative and other(604) (603) — %
Depreciation and amortization(31) (29) (7) %
Operating Income$534
 $874
 (39) %
Revenues
The decreaseincrease in theatrical distribution revenueprogramming and production costs was due to higher costs at Disney+, Hulu and to a lesser extent, ESPN+. The increase at Disney+ was driven by the success of Black Panther andongoing expansion including launches in additional markets. Higher costs at Hulu were primarily due to an increase in subscriber-based fees for programming the continued performance of Star Wars:live television service. The Last Jedi in the prior-year quarter comparedincrease at ESPN+ was driven by higher costs for UFC programming rights due to Captain Marvel and no comparable Star Wars title in the current quarter. This decrease was partially offset by two Disney live-action titles and the international distribution of Glassan additional event in the current quarter compared to one Disney live-action title in the prior-year quarter. The current quarter included the continued performance of Mary Poppins Returns and release of Dumbo, while the prior-year quarter included A Wrinkle in Time.
Lower home entertainment revenue wasand a new contract for soccer programming rights. Other operating expenses, which include technical support and distribution costs, increased due to decreases of 36%higher distribution costs at Disney+ driven by subscriber growth.
Selling, general, administrative and other costs increased $216 million, to $1,010 million from unit sales and 9% from net effective pricing. The decrease in unit sales was$794 million, due to the performance of Thor: Ragnarok and Star Wars: The Last Jedi in the prior-year quarter compared to no comparable Marvel or Star Wars titles in the current quarter. The decrease in net effective pricing washigher marketing costs at Disney+ driven by a decreaselaunches in sales of new release titles, which have a higher sales price comparedadditional markets.
Operating Loss from Direct-to-Consumer
The operating loss from Direct-to-Consumer decreased $515 million, to catalog titles. Net effective pricing is the wholesale selling price adjusted for discounts, sales incentives and returns.
Growth in TV/SVOD distribution and other revenue was$290 million from $805 million, due to an increaseimproved results at Hulu, and to a lesser extent, ESPN+.
Content Sales/Licensing and Other
Operating results for Content Sales/Licensing and Other are as follows: 
 Quarter Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Revenues
TV/SVOD distribution$1,344 $1,524 (12) %
Theatrical distribution109   603   (82) %
Home entertainment219   489   (55) %
Other244 395 (38) %
Total revenues1,916 3,011 (36) %
Operating expenses(1,136)(2,110)46  %
Selling, general, administrative and other(398)(836)52  %
Depreciation and amortization(76)(63)(21) %
Equity in the income of investees6 (27)nm
Operating Income$312 $(25)nm
COVID-19
Our Content Sales/Licensing business has been impacted by COVID-19 in a number of 8% from TV/SVOD distributionways. As a result of theater closures or theaters operating at reduced capacity, we have delayed or, in some cases, shortened or canceled, theatrical releases. Film and an increase of 2% from higher music revenues, partially offset by a decrease of 3% from Lucasfilm’s special effects business due to fewer projects during the current quarter. The increase from TV/SVOD distributiontelevision content production was due to the adoption of ASC 606suspended in March 2020, and although most production activities resumed
43
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


increasesbeginning in domestic pay television title availabilities and rates, partially offset by lower free television sales in part in anticipationthe fourth quarter of the launchfiscal 2020, we continue to see disruption of Disney+.
Costs and Expenses
Operating expenses include a decrease of $14 million in film cost amortization, from $702 million to $688 million, due to lower revenues, partially offset by higher average film cost amortization rates forproduction activities depending on local circumstances. Reduced theatrical releases and production delays have impacted the availability of film content to be sold in the current quarter. Operating expenses also include cost of goods sold and distribution costs, which decreased $14 million, from $291 million to $277 million due to lowersubsequent home entertainment volumes and fewer projects at Lucasfilm’s special effects business, partially offset by higher music distribution costs driven by higher sales.
Selling, general, administrative and other costs was comparable to the prior-year quarter at $604 million, as higher theatrical marketing expense was largely offset by lower home entertainment marketing expenses, an insurance recovery in the current quarter and a favorable FX Impact. The increase in theatrical marketing expense was due to Captain Marvel and Dumbo in the current quartercompared to Black Panther and A Wrinkle in Time in the prior-year quarter.
Segment Operating Income
Segment operating income decreased 39%, or $340 million, to $534 million due to lower theatrical and home entertainment distribution results, partially offset by an increase in TV/SVOD distribution.

Direct-to-Consumer & International
Operating results for the Direct-to-Consumer & International segment are as follows:
 Quarter Ended % Change
(in millions)March 30,
2019		 March 31,
2018		 Better/
(Worse)
Revenues     
Affiliate fees$335
 $354
 (5) %
Advertising357
 301
 19 %
Subscription fees and other263
 176
 49 %
Total revenues955
 831
 15 %
Operating expenses(947) (547) (73) %
Selling, general, administrative and other(202) (275) 27 %
Depreciation and amortization(58) (28) >(100) %
Equity in the loss of investees(141) (169) 17 %
Operating Loss$(393) $(188) >(100) %
distribution windows.
Revenues
The decrease in affiliate feesTV/SVOD distribution revenue was primarily due to lower film content sales, which primarily reflected the impact of COVID-19, and a decrease in sales of episodic content.
The decrease in theatrical distribution revenue was due to the ongoing impact of COVID-19. The current quarter included Soul and Raya and the Last Dragon, whereas the prior-year quarter included Star Wars: The Rise of Skywalker, Frozen II and Spies in Disguise. Other titles in the prior-year quarter included Onward and Call of the Wild.
The decrease in home entertainment revenue reflected decreases of 46% due to lower unit sales of new release titles and 11% from lower average net effective pricing. New release titles in the current quarter included Soul and Mulan, whereas the prior-year quarter included Frozen II, Maleficent: Mistress of Evil,Ford V Ferrari,Star Wars: The Rise of Skywalker and Onward. The decrease in average net effective pricing was due to a decreaselower mix of 11% from an unfavorable FX Impact, partially offset by an increase of 7% fromnew release titles, which have a higher contractual rates.sales price than catalog titles.
The increasedecrease in advertising revenuesother revenue was due to an increase of 20% from higher addressable ad sales driven by the consolidation of Hulu as of March 20, 2019. The Company’s share of Hulu results was previously reported in equity in the loss of investees.
Subscription fees and other revenue increased due to the consolidation of Hulu and subscription fees for ESPN+, which launched in April 2018, partially offset by lower revenue from streaming technology services.stage plays reflecting the impact of COVID-19. As a result of COVID-19, stage play performances were suspended in March 2020 with a limited number of performances returning in the first quarter of fiscal 2021.
Costs and Expenses
Operating expenses include a $252 million increase in programming and production costs, from $388 million to $640 million and a $148 million increase in other operating expenses, from $159 million to $307 million. are as follows: 
 Quarter Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Programming and production costs$(915) $(1,744)48 %
Cost of goods sold and distribution costs(221) (366)40 %
$(1,136) $(2,110)46 %
The increasedecrease in programming and production costs was due to the consolidationlower production cost amortization related to TV/SVOD sales reflecting a lower average amortization rate and a decrease in revenue, a decrease in theatrical revenues, lower film and television cost impairments, and a decrease in home entertainment volumes.
The decrease in cost of Hulugoods sold and higher sports programming costs. The increase in sports programmingdistribution costs was due to lower costs for stage plays as result of a limited number of performances in the launchcurrent quarter and a decrease in theatrical distribution costs as a result of ESPN+,fewer releases.
Selling, general administrative and other costs decreased $438 million, to $398 million from $836 million, primarily due to lower theatrical and home entertainment marketing costs.
Depreciation and amortization increased $13 million, to $76 million from $63 million, driven by a shift in the allocation of technology assets and related depreciation primarily between Linear Networks and Content Sales/Licensing and Other.
Equity in the Income of Investees
Income from equity investments increased $33 million, to income of $6 million from a loss of $27 million, driven by the sale of our interest in Endemol Shine in July 2020.
Operating Income from Content Sales/Licensing and Other
Operating income from Content Sales/Licensing and Other increased $337 million, to income of $312 million in the current quarter from a loss of $25 million in the prior-year quarter, due to higher TV/SVOD distribution results and lower film and television cost impairments, partially offset by a decrease in soccer rights costs for our International Channels. Other operating expenses, which include technical support andhome entertainment distribution costs, increased primarily due to the realignment of our technical support operations and technology cost growth. As a result of the realignment, certain costs that were previously reported in general and administrative are now being reported as operating expense.results.
44
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


Selling, general, administrative and other costs decreased $73 millionItems Excluded from $275 million to $202 million due to the realignment of our technical support operations and a favorable FX Impact, partially offset by higher marketing costs. The increase in marketing costs was driven by the consolidation of Hulu and marketing costs for ESPN+.
Depreciation and amortization increased $30 million from $28 million to $58 million driven by increased investment in technology.
Equity in the Loss of Investees
Loss from equity investees decreased $28 million, from $169 million to $141 million, due to the consolidation of Hulu. In the current quarter, 11 days of Hulu’s results are reported in revenues and expenses. Prior to the consolidation of Hulu, the Company recognized its ownership share of Hulu’s results in equity in the loss of investees.
Segment Operating LossIncome Related to Disney Media and Entertainment Distribution
Segment operating loss increased to $393 million due to our ongoing investment in ESPN+, which launched in April 2018, costs associated with the upcoming launch of Disney+, the consolidation of a loss at Hulu and a loss from streaming technology services, partially offset by an increase at our International Channels.
The following table presents supplemental revenueinformation for items related to the Disney Media and Entertainment Distribution segment that are excluded from segment operating income:
Quarter Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
TFCF and Hulu acquisition amortization(1)
$(603)$(721)16  %
Restructuring and impairment charges(2)
(223)(124)(80) %
(1)In the current quarter, amortization of step-up on film and television costs was $154 million and amortization of intangible assets was $445 million. In the prior-year quarter, amortization of step-up on film and television costs was $217 million and amortization of intangible assets was $496 million.
(2)The current quarter includes asset impairments and severance costs related to the planned closure of an animation studio and severance costs related to workforce reductions. The prior-year quarter includes severance costs in connection with the acquisition and integration of TFCF.
Disney Parks, Experiences and Products
Operating results for the Disney Parks, Experiences and Products segment are as follows: 
 Quarter Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Revenues
Theme park admissions$597 $1,554 (62) %
Parks & Experiences merchandise, food and beverage558   1,276   (56) %
Resorts and vacations513 1,377 (63) %
Merchandise licensing and retail1,145 1,017 13  %
Parks licensing and other360 436 (17) %
Total revenues3,173 5,660 (44) %
Operating expenses(2,308)(3,555)35  %
Selling, general, administrative and other(660)(733)10  %
Depreciation and amortization(602)(610)1  %
Equity in the loss of investees(9)(6)(50) %
Operating Income (Loss)$(406)$756 nm
COVID-19
Revenues at the Disney Parks, Experiences and Products segment were adversely impacted by COVID-19 as a result of the closure/reduced operating capacity of our theme parks and resorts. Disneyland Resort and Disneyland Paris were closed and our cruise business was suspended for the entire current quarter, whereas these businesses closed in mid-March of the prior-year quarter. Hong Kong Disneyland Resort was open for approximately 30 days during the current quarter, compared to approximately 25 days in the prior-year quarter. Walt Disney World Resort, Shanghai Disney Resort and Tokyo Disney Resort were open during the entire current quarter, although operating at significantly reduced capacities. In the prior-year quarter, Walt Disney World Resort closed in mid-March, Shanghai Disney Resort closed in late January and Tokyo Disney Resort closed in late February. We estimate that the adverse impact of COVID-19 compared to the prior-year quarter was a decrease in segment operating income detail forof approximately $1.2 billion, which is net of cost reductions from initiatives to mitigate the Direct-to-Consumer & International segmentimpacts of COVID-19.
Revenues
The decrease in revenues from theme park admissions, merchandise, food and beverage sales, and resorts and vacations was due to provide informationthe closure and reduced operating capacity of the parks and resorts and suspension of cruise ship sailings.
Merchandise licensing and retail revenue growth was due to an increase of 9% from merchandise licensing and 4% from retail. The revenue growth at merchandise licensing was driven by higher revenues from merchandise based on International Channels that were historically reportedStar Wars, including The Mandalorian, Disney Princesses, Mickey and Minnie and an increase in the Media Networks segment:royalties from licensed games, partially
45
 Quarter Ended % Change
(in millions)March 30, 2019 March 31, 2018 
Better /
(Worse)
Supplemental revenue detail     
International Channels$440
 $458
 (4) %
Direct-to-Consumer businesses and other515
 373
 38 %
 $955
 $831
 15 %
Supplemental operating income/(loss) detail     
International Channels$91
 $49
 86 %
Direct-to-Consumer businesses and other(343) (68) >(100) %
Equity in the loss of investees(141) (169) 17 %
 $(393) $(188) >(100) %


MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


Eliminations
Intersegment content transactions are as follows:
 Quarter Ended % Change
(in millions)March 30,
2019		 March 31,
2018		 Better/
(Worse)
Revenues     
Studio Entertainment:    

Content transactions with Media Networks$(13) $(64) 80 %
Content transactions with Direct-to-Consumer & International(82) (8) >(100) %
Media Networks:     
Content transactions with Direct-to-Consumer & International(139) (121) (15) %
Total$(234) $(193) (21) %
      
Operating income    

Studio Entertainment:    

Content transactions with Media Networks$5
 $(16) nm
Content transactions with Direct-to-Consumer & International(46) —
 nm
Media Networks:     
Content transactions with Direct-to-Consumer & International—
 —
 nm
Total$(41) $(16) >(100) %


BUSINESS SEGMENT RESULTS - Six Month Results

Media Networks
Operating results for the Media Networks segment are as follows:
 Six Months Ended % Change
(in millions)March 30,
2019		 March 31,
2018		 Better/
(Worse)
Revenues     
Affiliate Fees$6,252
 $5,910
 6 %
Advertising3,619
 3,606
 — %
TV/SVOD distribution and other1,575
 1,547
 2 %
Total revenues11,446
 11,063
 3 %
Operating expenses(7,260) (6,880) (6) %
Selling, general, administrative and other(943) (920) (3) %
Depreciation and amortization(89) (103) 14 %
Equity in the income of investees361
 341
 6 %
Operating Income$3,515
 $3,501
 — %
Revenues
offset by a decrease in revenues from merchandise based on Frozen. The increase in affiliate feesroyalties from licensed games was due to an increasethe current year release of 7%Marvel’sSpider-Man: Miles Morales and higher royalties from higher contractual rates, Twisted Wonderland, partially offset by a 1% decreaselower royalties from fewer subscribers.
Star Wars Jedi: Fallen Order. The increase in advertisingretail revenues was primarily due to an increase of $23 million at Broadcasting, from $1,860 million to $1,883 million,higher online sales, partially offset by a decrease of $10 millionin sales at Cable Networks, from $1,746 million to $1,736 million. Broadcasting advertisingour retail stores.
The decrease in parks licensing and other revenue reflected increases of 7% from higher network rates and 4% at the the owned television stations due to an increase in rates, partially offset by a decrease of 10% from lower network impressionswas primarily due to lower sponsorship revenue as a result of park closures and a decrease in royalties from Tokyo Disney Resort as a result of the park operating at reduced capacity in the current quarter.
In addition to revenue, costs and operating income, management uses the following key metrics to analyze trends and evaluate the overall performance of our theme parks and resorts, and we believe these metrics are useful to investors in analyzing the business: 
 Domestic
International(1)
Total
 Quarter EndedQuarter EndedQuarter Ended
 Apr 3,
2021		Mar 28,
2020		Apr 3,
2021		Mar 28,
2020		Apr 3,
2021		Mar 28,
2020
Parks
Increase (decrease)
Attendance(2)
(66) %(11) %(41) %(50) %(61) %(22) %
Per Capita Guest Spending(3)
8  %13  %(9) %(5) %—  %14  %
Hotels
Occupancy(4)
35  %77  %9  %47  %29  %70  %
Available Room Nights (in thousands)(5)
2,6492,617     787794     3,4363,411     
Per Room Guest Spending(6)
$336$372 $356$258 $338$354 
(1)Per capita guest spending growth rate is stated on a constant currency basis. Per room guest spending is stated at the average viewership. Cableforeign exchange rate for the same period in the prior year.
(2)Attendance is used to analyze volume trends at our theme parks and is based on the number of unique daily entries, i.e. a person visiting multiple theme parks in a single day is counted only once. Our attendance count includes complimentary entries but excludes entries by children under the age of three.
(3)Per capita guest spending is used to analyze guest spending trends and is defined as total revenue from ticket sales and sales of food, beverage and merchandise in our theme parks, divided by total theme park attendance.
(4)Occupancy is used to analyze the usage of available capacity at hotels and is defined as the number of room nights occupied by guests as a percentage of available hotel room nights.
(5)Available hotel room nights are defined as the total number of room nights that are available at our hotels and at Disney Vacation Club (DVC) properties located at our theme parks and resorts that are not utilized by DVC members. Available hotel room nights include rooms temporarily taken out of service.
(6)Per room guest spending is used to analyze guest spending at our hotels and is defined as total revenue from room rentals and sales of food, beverage and merchandise at our hotels, divided by total occupied hotel room nights.
Costs and Expenses
Operating expenses are as follows:
 Quarter Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Operating labor$(1,012)$(1,661)39 %
Infrastructure costs(543)(654)17 %
Cost of goods sold and distribution costs(421)(626)33 %
Other operating expense(332)(614)46 %
$(2,308)$(3,555)35 %
46
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


Networks advertising revenue reflected a decreaseThe decreases in operating labor, infrastructure costs and cost of 1% from lower rates. Impressions at Cable Networksgoods sold and distribution costs were comparable to the prior-year period as higher units delivered were offset by lower average viewership.
TV/SVOD distribution and other revenue increased $28 million due to the adoption of ASC 606 and higher program sales.
Costs and Expenses
Operatinglower volumes. The decrease in other operating expenses include programming and production costs, which increased $381 million, from $6,590 million to $6,971 million. At Cable Networks, programming and production costs increased $218 millionwas due to contractual rate increaseslower volumes and a decline in charges for college sports, NFL and NBA programming. At Broadcasting, programming and production costs increased $163 million due to higher average cost of network programming and an increase in production cost write-downs.capital project abandonments.
Selling, general, administrative and other costs increased $23decreased $73 million, to $660 million from $920 million to $943$733 million, due to higher marketing costs at the ABC Network and Freeform.cost reductions.
Depreciation and amortization decreased $14 million, from $103 million to $89 million, due to higher asset write-offs in the prior year.
Equity in the Income of Investees
Income from equity investees increased $20 million, from $341 million to $361 million, due to higher income from A+E driven by higher program sales revenue, lower marketing costs and affiliate revenue growth.
Segment Operating Income (Loss)
Segment operating income was comparabledecreased from a profit of $0.8 billion to the prior-year period asa loss of $0.4 billion due to a decrease at our domestic parks and experiences businesses, partially offset by an increase at the owned television stations, growth at the Domestic Disney Channels, an increase at A+E and higher income from program sales were largely offset by decreases at the ABC Network, ESPN and Freeform.our consumer products business.
The following table providespresents supplemental revenue and segment operating income (loss) detail for the Media NetworksDisney Parks, Experiences and Products segment:
Quarter Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Supplemental revenue detail
Parks & Experiences
Domestic$1,735 $4,139 (58) %
International262   480   (45) %
Consumer Products1,176 1,041 13  %
$3,173 $5,660 (44) %
Supplemental operating income (loss) detail
Parks & Experiences
Domestic$(587)$661 nm
International(380)(343)(11) %
Consumer Products561 438 28  %
$(406)$756 nm
Items Excluded from Segment Operating Income Related to Disney Parks, Experiences and Products
The following table presents supplemental information for items related to the Disney Parks, Experiences and Products segment that are excluded from segment operating income:
Quarter Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Restructuring and impairment charges(1)
$(189)  $(2)  >(100) %
TFCF and Hulu acquisition amortization(2)  (2)  —  %

(1)The current quarter includes asset impairments and severance costs related to the planned closure of a substantial number of our Disney-branded retail stores and severance costs related to workforce reductions.

47
 Six Months Ended % Change
(in millions)March 30,
2019		 March 31,
2018		 Better/
(Worse)
Revenues     
Cable Networks$7,694
 $7,486
 3 %
Broadcasting3,752
 3,577
 5 %
 $11,446
 $11,063
 3 %
Segment operating income     
Cable Networks$2,499
 $2,521
 (1) %
Broadcasting655
 639
 3 %
Equity in the income of investees361
 341
 6 %
 $3,515
 $3,501
 — %

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


Parks, Experiences and ProductsBUSINESS SEGMENT RESULTS - Current Six-Month Period Results Compared to the Prior-Year Six-Month Period
Operating
Disney Media and Entertainment Distribution
Revenue and operating results for the Parks, ExperiencesDisney Media and ProductsEntertainment Distribution segment are as follows:
 Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Revenues:
Linear Networks$14,439   $14,561   (1) %
Direct-to-Consumer7,503 4,540 65  %
Content Sales/Licensing and Other3,618 6,921 (48) %
Elimination of Intrasegment Revenue(1)
(459)(360)(28) %
$25,101 $25,662 (2) %
Segment operating income (loss):
Linear Networks$4,578 $4,289 7  %
Direct-to-Consumer(756) (1,915)61  %
Content Sales/Licensing and Other500 751 (33) %
$4,322 $3,125 38  %
(1) Reflects fees received by the Linear Networks from other DMED businesses for the right to air our linear networks and related services.
 Six Months Ended % Change
(in millions)March 30,
2019		 March 31,
2018		 Better/
(Worse)
Revenues     
Theme park admissions$3,701
 $3,522
 5 %
Parks & Experiences merchandise, food and beverage2,976
 2,847
 5 %
Resorts and vacations3,032
 2,924
 4 %
Merchandise licensing and retail2,292
 2,322
 (1) %
Parks licensing and other992
 815
 22 %
Total revenues12,993
 12,430
 5 %
Operating expenses(6,745) (6,574) (3) %
Selling, general, administrative and other(1,437) (1,430) — %
Depreciation and amortization(1,141) (1,149) 1 %
Equity in the loss of investees(12) (14) 14 %
Operating Income$3,658
 $3,263
 12 %
Linear Networks
Operating results for Linear Networks are as follows:
 Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Revenues
Affiliate fees$9,455  $9,329  1  %
Advertising4,650 4,902 (5) %
Other334 330 1  %
Total revenues14,439 14,561 (1) %
Operating expenses(8,612)(8,734)1  %
Selling, general, administrative and other(1,614) (1,806)11  %
Depreciation and amortization(89)(123)28  %
Equity in the income of investees454 391 16  %
Operating Income$4,578 $4,289 7  %
Revenues
The increase in theme parks admissionsAffiliate revenue was due to an increase of 7% from higher average ticket prices, partially offset by a decrease of 1% from an unfavorable FX Impact.is as follows: 
Parks & Experiences merchandise, food and beverage revenue growth was due to an increase of 5% from higher average guest spending.
 Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Domestic Channels$7,700   $7,395 4  %
International Channels1,755 1,934 (9) %
$9,455 $9,329   1  %
The increase in resorts and vacations revenue was primarily due to increases of 2% from higher average daily hotel room rates, 1% from an increase in average ticket prices for cruise line sailings and 1% from higher occupied hotel room nights.
48
Merchandise licensing and retail revenues were lower driven by decreases of 2% from our merchandise licensing business and 1% from our publishing business, partially offset by an increase of 2% from our games business. The decrease in merchandise licensing and publishing revenues was primarily due to lower licensing revenue from products based on Star Wars, partially offset by higher licensing revenues from products based on Disney Classics and an increase in licensee settlements. The increase in games revenue was due to the sale of rights to a video game and royalties from the licensed title, Kingdom Hearts III, which was released in the current period.
The increase in parks licensing and other revenue was driven by the adoption of ASC 606, which required certain cost reimbursements from licensees to be recognized as revenue (rather than recorded as an offset to operating expenses).
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


The increase in affiliate revenue at our Domestic Channels was due to an increase of 8% from higher contractual rates, partially offset by a decrease of 4% from fewer subscribers.
The following table presents supplemental parkdecrease in affiliate revenue at the International Channels was due to decreases of 6% from fewer subscribers, driven by channel closures primarily in Europe, and hotel statistics:2% from an unfavorable foreign exchange impact.
Advertising revenue is as follows:
 Domestic 
International (2)
 Total
 Six Months Ended Six Months Ended Six Months Ended
 March 30,
2019		 March 31,
2018		 March 30,
2019		 March 31,
2018		 March 30,
2019		 March 31,
2018
Parks           
Increase/(decrease)           
Attendance1% 5% (4) % 6% (1) % 5%
Per Capita Guest Spending6% 6% 9 % 9% 7 % 7%
Hotels (1)
           
Occupancy93% 90% 83 % 84% 91 % 89%
Available Room Nights (in thousands)4,975
 5,024
 1,587
 1,587
 6,562
 6,611
Per Room Guest Spending
$355
 
$345
 
$304
 
$294
 
$344
 
$334
 Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Cable$1,928   $2,227 (13) %
Broadcasting1,706 1,852 (8) %
Domestic Channels3,634 4,079 (11) %
International Channels1,016 823   23  %
$4,650 $4,902 (5) %
(1)
The decrease in Cable advertising revenue was due to a decrease of 19% from lower impressions reflecting lower average viewership, partially offset by an increase of 6% from higher rates.
The decrease in Broadcasting advertising revenue was due to decreases of 10% from lower network impressions, reflecting lower average viewership and 6% from a shift in the timing of The Academy Awards at ABC. These decreases were partially offset by increases of 4% from higher network rates and 1% from the owned television stations. The increase at the owned television stations was due to higher political advertising, partially offset by the timing of The Academy Awards.
The increase in the International Channels advertising revenue was due to an increase of 23% from higher impressions. The increase in impressions reflected higher average viewership, partially offset by lower units delivered. The increase in viewership reflected a shift of Indian Premier League (IPL) cricket matches for the 2020 season from the third quarter of the prior fiscal year to the first quarter of the current fiscal year as a result of COVID-19. IPL cricket matches generally occur during our third fiscal quarter.
Per room guest spending consists of the average daily hotel room rate, as well as food, beverage and merchandise sales at the hotels. Hotel statistics include rentals of Disney Vacation Club units.
(2)
Per capita guest spending growth rate is stated on a constant currency basis. Per room guest spending is stated at the fiscal 2018 six-month average foreign exchange rate.
Costs and Expenses
Operating expenses include operating labor, which increased $93 million from $2,915 million to $3,008 million, costprimarily consist of salesprogramming and distributionproduction costs, which increased $21 million from $1,313 million to $1,334 million,are as follows:
 Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Cable$(4,919)  $(4,992)   1  %
Broadcasting(1,405)(1,558)10  %
Domestic Channels(6,324)(6,550)3  %
International Channels(1,521)(1,372)(11) %
$(7,845)(7,922)1  %
The decrease in programming and infrastructureproduction costs which decreased $17 million from $1,164 million to $1,147 million.at Cable was driven by lower production costs for live sporting events, fewer hours of original programming, a decrease in development costs and lower television cost impairments. These decreases were partially offset by higher sports programming and production costs. The increase in operating labor was due to inflation,sports programming and production costs reflected higher NBA programming costs, the shift of the 2020 Masters tournament into the current fiscal year and contractual increases for sports programming, partially offset by fewer events and savings initiatives. As a favorable FX Impact. Higher costresult of sales and distribution costs weredelays due to inflation. COVID-19, four NBA Finals games were played in the current period, whereas these games would normally have occurred in the third quarter of the prior year.
The decrease in infrastructureprogramming and production costs at Broadcasting was primarily due to the comparisonshift of The Academy Awards.
The increase in programming and production costs at the International Channels was due to higher sports programming costs incurreddriven by the shift of 2020 IPL cricket matches into the current period, partially offset by fewer BCCI matches in the prior-year quarter for the dry-dock of the Disney Magic. Other operating expenses, which includecurrent period. The increase in sports programming costs for such items as supplies, commissions and entertainment offerings, increased $74 million, from $1,182 million to $1,256 million, due to the recognition of certain cost reimbursements as revenue (rather than recorded as an offset to operating expenses) and higher third-party royalty expense,was partially offset by a favorable FX Impacthigher percentage of content costs being allocated to Disney+ as we continue to launch the service in additional markets, and lower operations support costs.
Segment Operating Income
Segment operating income increased 12%, or $395 million, to $3,658 million due to growth at our domestic theme parks and resorts.
The following table presents supplemental revenue and operating income detail for the Parks Experiences, and Products segment to provide continuity with our legacy reporting:costs as a result of channel closures.
49
 Six Months Ended 
% Change
Better /
(Worse)
(in millions)March 30,
2019		 March 31,
2018		 
Supplemental revenue detail     
Parks & Experiences     
Domestic$8,679
 $8,136
 7 %
International1,941
 1,899
 2 %
Consumer Products2,373
 2,395
 (1)%
 $12,993
 $12,430
 5 %
Supplemental operating income detail     
Parks & Experiences     
Domestic$2,527
 $2,171
 16 %
International143
 132
 8 %
Consumer Products988
 960
 3 %
 $3,658
 $3,263
 12 %
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)



Studio Entertainment
Operating results for the Studio Entertainment segment are as follows:
 Six Months Ended % Change
(in millions)March 30,
2019		 March 31,
2018		 Better/
(Worse)
Revenues     
Theatrical distribution$1,118
 $2,125
 (47) %
Home entertainment688
 832
 (17) %
TV/SVOD distribution and other2,152
 2,051
 5 %
Total revenues3,958
 5,008
 (21) %
Operating expenses(1,841) (2,019) 9 %
Selling, general, administrative and other(1,213) (1,231) 1 %
Depreciation and amortization(61) (59) (3) %
Operating Income$843
 $1,699
 (50) %
Revenues
TheSelling, general, administrative and other costs decreased $192 million, to $1,614 million from $1,806 million, due to lower marketing costs and a decrease in theatrical distribution revenue wasbad debt expense.
Depreciation and amortization decreased $34 million, to $89 million from $123 million, driven by a shift in the allocation of technology assets and related depreciation primarily between Linear Networks and Content Sales/Licensing and Other.
Equity in the Income of Investees
Income from equity investees increased $63 million, to $454 million from $391 million, due to the comparison of two Marvel titles, Black Panther and Thor: Ragnarok, and Star Wars: The Last Jedi in the prior-year period compared to one Marvel title, Captain Marvel, and no comparable Star Wars title in the current period. Other significant releases in the current period included Ralph Breaks the Internet, Mary Poppins Returns, The Nutcracker and the Four Realms and Dumbo, while the prior-year period included Coco and A Wrinkle in Time.
Lower home entertainment revenue was due to decreases of 13%higher income from lower unitA+E Television Networks driven by higher program sales and 5%lower programming costs, partially offset by lower advertising revenue.
Operating Income from net effective pricing. The decrease in unit sales was dueLinear Networks
Operating income from Linear Networks increased $289 million, to the release of Thor: Ragnarok and Star Wars: The Last Jedi in the prior-year period compared to Ant-Man and the Wasp and no comparable Star Wars release in the current period. Other significant titles in the current period included Incredibles 2, Ralph Breaks the Internet, Christopher Robin and Mary Poppins Returns, whereas the prior-year period included Cars 3, Pirates of the Caribbean: Dead Men Tell No Tales and Coco.
Higher TV/SVOD distribution and other revenue was$4,578 million from $4,289 million, due to an increase of 9%at Broadcasting, higher income from TV/SVOD distribution, partially offset by a decrease of 3% from Lucasfilm’s special effects business due to fewer projects duringour equity investees and an increase at the current period. International Channels.
The following table provides supplemental revenue and operating income detail for Linear Networks: 
 Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Supplemental revenue detail
Domestic Channels$11,488 $11,631 (1) %
International Channels2,951 2,930 1  %
$14,439 $14,561 (1) %
Supplemental operating income detail
Domestic Channels$3,401 $3,237 5  %
International Channels723 661 9  %
Equity in the income of investees454 391 16  %
$4,578 $4,289 7  %

Direct-to-Consumer
Operating results for Direct-to-Consumer are as follows: 
 Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Revenues
Subscription fees$5,546 $3,122 78  %
Advertising1,599 1,157 38  %
TV/SVOD distribution and other358 261 37  %
Total revenues7,503 4,540 65  %
Operating expenses(6,135)(4,808)(28) %
Selling, general, administrative and other(1,980)(1,526)(30) %
Depreciation and amortization(144)(120)(20) %
Equity in the loss of investees—(1)100  %
Operating Loss$(756)$(1,915)61  %
Revenues
The increase in TV/SVOD distributionsubscription fees was due to the impact of the adoption of ASC 606, higher pay televisionsubscribers driven by growth at Disney+, Hulu and to a lesser extent, ESPN+, and higher rates and more title availabilities in the current period, partially offset by lower free television sales in part in anticipation of the launch of Disney+.
Costs and Expenses
Operating expenses include a decrease of $107 million in film cost amortization, from $1,413 million to $1,306 million, due to the impact of lower revenues, partially offset by higher average film cost amortization rates. Operating expenses also include cost of goods sold and distribution costs, which decreased $71 million, from $606 million to $535 million, due to lower theatrical distribution costs and decreased costs at Lucasfilm’s special effects business.
Segment Operating Income
Segment operating income decreased 50%, or $856 million, to $843 million due to decreases in theatrical and home entertainment distribution results, partially offset by an increase in TV/SVOD distribution.retail pricing at Hulu. The growth at Disney+ included the benefit of launches in additional markets, certain of which have a lower average monthly revenue per paid subscriber compared to the average in the prior-year period.

Higher advertising revenue reflected an increase of 39% from higher impressions due to growth at Hulu.
50
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


Direct-to-Consumer & International
Operating results for the Direct-to-Consumer & International segment are as follows:
 Six Months Ended % Change
(in millions)March 30,
2019		 March 31,
2018		 Better/
(Worse)
Revenues     
Affiliate fees$658
 $692
 (5) %
Advertising774
 712
 9 %
Subscription fees and other441
 358
 23 %
Total revenues1,873
 1,762
 6 %
Operating expenses(1,602) (1,135) (41) %
Selling, general, administrative and other(456) (508) 10 %
Depreciation and amortization(112) (71) (58) %
Equity in the loss of investees(232) (278) 17 %
Operating Loss$(529) $(230) >(100) %
Revenues
The decreaseincrease in affiliate feesTV/SVOD distribution and other revenue was due to a decrease of 12%Disney+ Premier Access revenues from an unfavorable FX Impact, partially offset by increases of 6% fromRaya and the Last Dragon and higher contractual rates and 1% from subscriber growth.
UFC pay-per-view fees. The increase in advertising revenues wasUFC fees reflected the benefit of seven events in the current period compared to six in the prior-year period, higher pricing and an increase in average buys per event.
The following table presents the average monthly revenue per paid subscriber for the six-month period ended (see additional discussion of metrics under the quarterly analysis of Business Segment Results):
 % Change
Better
(Worse)
April 3,
2021		March 28,
2020
Disney+$4.01   $5.60   (28) %
ESPN+$4.52 $4.32 5  %
Hulu
SVOD Only$12.77 $12.66 1  %
Live TV + SVOD$78.31 $63.66 23  %
The average monthly revenue per paid subscriber for Disney+ decreased from $5.60 to $4.01 due to the launch of Disney+ Hotstar.
The average monthly revenue per paid subscriber for ESPN+ increased from $4.32 to $4.52 due to an increase of 13% fromin retail pricing and higher addressable ad sales,per-subscriber advertising revenue, partially offset by a decreasehigher mix of 4%subscribers to the bundled offering.
The average monthly revenue per paid subscriber for the Hulu SVOD Only service increased from ad sales at our International Channels. The$12.66 to $12.77 due to a lower mix of wholesale subscribers and an increase in addressable ad sales was due to the consolidation of Hulu and higher impressions. Lower ad sales at our International Channels was driven by a decrease in impressions and an unfavorable FX Impact.
Subscription fees and otherper-subscriber premium add-on revenue, increased $83 million due to the consolidation of Hulu and subscription fees for ESPN+, which launched in April 2018, partially offset by lowera higher mix of subscribers to the bundled offering. The average monthly revenue per paid subscriber for the Hulu Live TV + SVOD service increased from streaming technology services.$63.66 to $78.31 due to increases in retail pricing, per-subscriber advertising revenue and to a lesser extent, per-subscriber premium and feature add-on revenue, partially offset by a higher mix of subscribers to the bundled offering.
Costs and Expenses
Operating expenses include a $294 million increase in programming and production costs, from $792 million to $1,086 million, and a $173 million increase in other operating expenses, from $343 million to $516 million. are as follows: 
 Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Programming and production costs$(4,965) $(3,884)(28) %
Other operating expense(1,170) (924)(27) %
$(6,135) $(4,808) (28) %
The increase in programming and production costs was due to higher sports rights costs at Disney+, Hulu and the consolidation of Hulu.to a lesser extent, ESPN+. The increase at Disney+ was driven by the ongoing expansion including launches in sports rightsadditional markets. Higher costs wasat Hulu were primarily due to an increase in subscriber-based fees for programming on the launch oflive television service. The increase at ESPN+, partially offset was driven by a decrease in soccer rightshigher costs for our International Channels.UFC programming rights due to one additional event in the current period compared to the prior-year period and a new contract for soccer programming rights. Other operating expenses, which include technical support and distribution costs, increased due to technology cost growth and the realignment of our technical support operations. As a result of the realignment, certainhigher distribution costs that were previously reported in general and administrative are now being reported as operating expense.at Disney+ driven by subscriber growth.
Selling, general, administrative and other costs decreased $52increased $454 million, to $1,980 million from $508 million to $456$1,526 million, due to a favorable FX Impact and the realignment of our technical support operations, partially offset by higher marketing costs. The increasecosts at Disney+ driven by launches in marketing costs was due to marketing costs for ESPN+ and the consolidation of Hulu.additional markets.
Depreciation and amortization increased $41$24 million, to $144 million from $71 million to $112 million, primarily due to increased investment in technology.
Equity in the Loss of Investees
Loss from equity investees decreased $46 million, from $278 million to $232 million, driven by a lower loss from Hulu due to increases in advertising and subscription revenue, partially offset by higher programming costs.
Segment Operating Loss
Segment operating loss increased from $230 million to $529$120 million, due to ourthe ongoing investment in ESPN+, which launched in April 2018, costs associated with the upcoming launchexpansion of Disney+ and a higher.
Operating Loss from Direct-to-Consumer
The operating loss from streaming technology services. These impacts were partially offset by an increaseDirect-to-Consumer decreased $1,159 million, to $756 million from $1,915 million, due to improved results at our International Channels.Hulu, and to a lesser extent, ESPN+ and Disney+.
51
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


Content Sales/Licensing and Other
Operating results for Content Sales/Licensing and Other are as follows: 
 Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Revenues
TV/SVOD distribution$2,366 $2,963 (20) %
Theatrical distribution140   2,011   (93) %
Home entertainment519   1,085   (52) %
Other593 862 (31) %
Total revenues3,618 6,921 (48) %
Operating expenses(2,210)(4,108)46  %
Selling, general, administrative and other(757)(1,931)61  %
Depreciation and amortization(158)(125)(26) %
Equity in the income of investees7 (6)nm
Operating Income$500 $751 (33) %
COVID-19
Our Content Sales/Licensing business has been impacted by COVID-19 in a number of ways. As a result of theater closures or theaters operating at reduced capacity, we have delayed or, in some cases, shortened or canceled, theatrical releases. Film and television content production was suspended in March 2020, and although most production activities resumed beginning in the fourth quarter of fiscal 2020, we continue to see disruption of production activities depending on local circumstances. Reduced theatrical releases and production delays has impacted the availability of film content to be sold in the subsequent home entertainment and TV/SVOD distribution windows.
Revenues
The decrease in TV/SVOD distribution revenue was driven by the shift from licensing our content to third parties to distribution on our DTC services and the ongoing impact of COVID-19.
The following table presents supplementaldecrease in theatrical distribution revenue was due to the ongoing impact of COVID-19. The current period included Soul and operating income detail forRaya and the Direct-to-Consumer & International segment to provide information on International Channels that were historically reportedLast Dragon, whereas the prior-year period included Frozen II, Star Wars: The Rise of Skywalker and Maleficent: Mistress of Evil.Other titles in the Media Networks segment:prior-year period included Ford V Ferrari, Spies in Disguise, Terminator: Dark Fate and Call of the Wild.
 Six Months Ended % Change
(in millions)March 30, 2019 March 31, 2018 
Better /
(Worse)
Supplemental revenue detail     
International Channels$934
 $968
 (4) %
Direct-to-Consumer businesses and other939
 794
 18 %
 $1,873
 $1,762
 6 %
Supplemental operating income/(loss) detail     
International Channels$228
 $157
 45 %
Direct-to-Consumer businesses and other(525) (109) >(100) %
Equity in the loss of investees(232) (278) 17 %
 $(529) $(230) >(100) %


Eliminations
Intersegment content transactions are as follows:
 Six Months Ended % Change
(in millions)March 30,
2019		 March 31,
2018		 Better/
(Worse)
Revenues     
Studio Entertainment:    

Content transactions with Media Networks$(34) $(95) 64 %
Content transactions with Direct-to-Consumer & International(100) (16) >(100) %
Media Networks:     
Content transactions with Direct-to-Consumer & International(284) (253) (12) %
Total$(418) $(364) (15) %
      
Operating income    

Studio Entertainment:    

Content transactions with Media Networks$5
 $(9) nm
Content transactions with Direct-to-Consumer & International(44) —
 nm
Media Networks:     
Content transactions with Direct-to-Consumer & International(2) (1) (100) %
Total$(41) $(10) >(100) %

CORPORATE AND UNALLOCATED SHARED EXPENSES
 Quarter Ended % Change Six Months Ended % Change
(in millions)March 30,
2019		 March 31,
2018		 Better/
(Worse)		 March 30,
2019		 March 31,
2018		 Better/
(Worse)
Corporate and unallocated shared expenses$(279) $(194) (44) % $(440) $(344) (28) %
CorporateThe decrease in home entertainment revenue reflected decreases of 44% primarily due to lower unit sales of new release titles and unallocated shared expenses increased $85 million to $279 million9% from a lower average net effective pricing. New release titles in the current quarter period included Mulan, whereas the prior-year period included Frozen II, The Lion King,Toy Story 4, Maleficent: Mistress of Evil and increased $96 million to $440 million for the six-month periodAladdin. The decrease in average net effective pricing was due to costs incurreda lower mix of new release titles, which have a higher sales price than catalog titles.
The decrease in connectionother revenue was due to lower revenue from stage plays reflecting the impact of COVID-19, partially offset by an increase in revenue from Lucasfilm’s special effect business due to more productions. As a result of COVID-19, stage play performances were suspended in March 2020 with a limited number of performances returning in the 21CF acquisition.first quarter of fiscal 2021.
Costs and Expenses
Operating expenses are as follows: 
 Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Programming and production costs$(1,792)$(3,306)46  %
Cost of goods sold and distribution costs(418)(802)48  %
$(2,210)$(4,108)46  %
52
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


The decrease in programming and production costs was due to lower theatrical revenue, a decrease in production cost amortization related to TV/SVOD sales reflecting a lower average amortization rate and a decrease in revenue, lower film and television cost impairments and a decrease in home entertainment revenue.
RESTRUCTURING IN CONNECTION WITH THE ACQUISITION OF 21CFThe decrease in cost of goods sold and distribution costs was due to lower costs for stage plays as result of a limited number of performances in the current period, a decrease in theatrical distribution costs due to fewer theatrical releases, and lower home entertainment volumes.
As discussedSelling, general, administrative and other costs decreased $1,174 million, to $757 million from $1,931 million, primarily due to lower theatrical, home entertainment and stage play marketing costs.
Depreciation and amortization increased $33 million, to $158 million from $125 million, driven by a shift in Note 16the allocation of technology assets and related depreciation primarily between Linear Networks and Content Sales/Licensing and Other.
Operating Income from Content Sales/Licensing and Other
Operating income from Content Sales/Licensing and Other decreased $251 million, to $500 million from $751 million, due to lower theatrical distribution and home entertainment results, partially offset by lower film and television cost impairments.
Items Excluded from Segment Operating Income Related to Disney Media and Entertainment Distribution
The following table presents supplemental information for items related to the Condensed Consolidated Financial Statements,Disney Media and Entertainment Distribution segment that are excluded from segment operating income:
Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
TFCF and Hulu acquisition amortization(1)
$(1,218)$(1,419)14  %
Restructuring and impairment charges(2)
(304)(251)(21) %
(1)In the current period, amortization of step-up on film and television costs was $321 million and amortization of intangible assets was $890 million. In the prior-year period, amortization of step-up on film and television costs was $423 million and amortization of intangible assets was $980 million.
(2)The current period includes asset impairments and severance costs related to the closure of an animation studio. The prior-year period includes severance costs in connection with the acquisition of 21CF, The Company has begun implementing a restructuring and integration planof TFCF.
Disney Parks, Experiences and Products
Operating results for the Disney Parks, Experiences and Products segment are as follows: 
 Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Revenues
Theme park admissions$1,146 $3,621 (68) %
Parks & Experiences merchandise, food and beverage1,111 2,967 (63) %
Resorts and vacations946 3,008 (69) %
Merchandise licensing and retail2,843 2,686 6  %
Parks licensing and other715 958 (25) %
Total revenues6,761 13,240 (49) %
Operating expenses(4,738)(7,258)35  %
Selling, general, administrative and other(1,338)(1,491)10  %
Depreciation and amortization(1,193)(1,204)1  %
Equity in the loss of investees(17)(9)(89) %
Operating Income (Loss)$(525)  $3,278   nm
COVID-19
Revenues at the Disney Parks, Experiences and Products segment were adversely impacted by COVID-19 as a partresult of its initiativethe closure/reduced operating capacity of our theme parks and resorts. Disneyland Resort was closed and our cruise business
53
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)
was suspended for the entire current period, whereas these businesses closed in mid-March of the prior-year period. In the current period, Disneyland Paris was open for approximately 30 days and Hong Kong Disneyland Resort was open for approximately 75 days compared to realize previously announced cost synergies fromapproximately 165 days and 115 days, respectively in the acquisition of 21CF. Although our plans are not yet finalized, we currently anticipateprior-year period. Walt Disney World Resort, Shanghai Disney Resort and Tokyo Disney Resort were open during the entire current period, although operating at significantly reduced capacities. In the prior-year period, Walt Disney World Resort closed in mid-March, Shanghai Disney Resort closed in late January and Tokyo Disney Resort closed in late February. We estimate that the total severanceadverse impact of COVID-19 compared to the prior-year period was a decrease in segment operating income of approximately $3.8 billion, which is net of cost reductions from initiatives to mitigate the impacts of COVID-19.
Revenues
The decrease in revenues from theme park admissions, merchandise, food and related costs could bebeverage sales, and resorts and vacations was due to the closure and reduced operating capacity of the parks and resorts and suspension of cruise ship sailings.
Merchandise licensing and retail revenue growth was due to an increase of 5% from merchandise licensing driven by higher revenues from merchandise based on Star Wars, including The Mandalorian, Spider-Man, Mickey and Minnie and Disney Princesses, partially offset by a decrease in revenues from merchandise based on Frozen. Higher licensing revenues from Spider-Man were driven by the orderfiscal 2021 release of $1.5 billion. To date, we have recorded severanceMarvel’sSpider-Man: Miles Morales game.
The decrease in parks licensing and related costs totaling $403 millionother revenue was primarily due to lower sponsorship revenue as a result of park closures and a decrease in connection with the plan. royalties from Tokyo Disney Resort.
In addition to revenue, costs and operating income, management uses the following key metrics to analyze trends and evaluate the overall performance of our theme parks and resorts, and we recorded charges totaling $259 million for equity based compensation, primarily for 21CF awards thatbelieve these metrics are useful to investors in analyzing the business (see additional discussion of metrics under the quarterly analysis of Business Segment Results): 
 DomesticInternationalTotal
 Six Months EndedSix Months EndedSix Months Ended
 April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Parks
Increase (decrease)
Attendance(70) %(4)  %(54) %(29) %(67) %(11) %
Per Capita Guest Spending4  %11  %(10) %—  %(2) %12  %
Hotels
Occupancy31  %84  %11  %60  %27  %79  %
Available Room Nights (in thousands)5,2935,150     1,5871,594     6,8806,744     
Per Room Guest Spending(6)
$349$373 $354$293 $350$359 
Costs and Expenses
Operating expenses are as follows:
 Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Operating labor$(2,042)  $(3,253)37  %
Infrastructure costs(1,065)(1,259)15  %
Cost of goods sold and distribution costs(1,008)(1,529)34  %
Other operating expense(623)(1,217)49  %
$(4,738)$(7,258)  35  %
The decreases in operating labor, infrastructure costs, cost of goods sold and distribution costs and other operating expenses were acceleratedall due to vest upon the closing of the 21CF acquisition. These charges are recorded in “Restructuringlower volumes.
Selling, general, administrative and impairment charges” in the Condensed Consolidated Statements of Income. The Company may incur other costs in connection with the plan such as lease termination costs, but is unabledecreased $153 million, to estimate those amounts$1,338 million from $1,491 million, due to marketing cost reductions.
54
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)
Segment Operating Income (Loss)
Segment operating income decreased from a profit of $3.3 billion to a loss of $0.5 billion due to a decrease at this time. For the prior-year quarterour parks and six-month period, restructuring and impairment charges were not material.experiences businesses, partially offset by an increase at our consumer products business.
The following table summarizespresents supplemental revenue and operating income (loss) detail for the changes in restructuring reserves:Disney Parks, Experiences and Products segment:
Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Supplemental revenue detail
Parks & Experiences
Domestic$3,224 $9,078 (64) %
International640   1,430   (55) %
Consumer Products2,897 2,732 6  %
$6,761 $13,240 (49) %
Supplemental operating income (loss) detail
Parks & Experiences
Domestic$(1,385)$2,233 nm
International(642)(292)>(100) %
Consumer Products1,502 1,337 12  %
$(525)$3,278 nm
Items Excluded from Segment Operating Income Related to Disney Parks, Experiences and Products
The following table presents supplemental information for items related to the Disney Parks, Experiences and Products segment that are excluded from segment operating income:
Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020
Restructuring and impairment charges(1)
$(217)  $(8)  >(100) %
TFCF and Hulu acquisition amortization(4)  (4)  —  %

(1)The current period includes asset impairments and severance costs related to the planned closure of a substantial number of our Disney-branded retail stores and severance costs related to workforce reductions.
CORPORATE AND UNALLOCATED SHARED EXPENSES
 Quarter Ended% Change
Better
(Worse)		Six Months Ended% Change
Better
(Worse)
(in millions)April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Corporate and unallocated shared expenses$(201)$(188)(7) %$(433)$(425)(2)  %

55
 
Beginning
Balance
 Additions Payments Other 
Ending
Balance
Quarter ended March 30, 2019:         
Restructuring reserves$39
 $403
 $(19) $—
 $423
MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)
FINANCIAL CONDITION
The change in cash and cash equivalents is as follows:
Six Months Ended % Change
Better/
(Worse)		 Six Months Ended% Change
Better
(Worse)
(in millions)March 30,
2019		 March 31,
2018		 (in millions)April 3,
2021		March 28,
2020
Cash provided by operations - continuing operations$6,014
 $6,763
 (11) %Cash provided by operations - continuing operations$1,468 $4,787 (69) %
Cash used in investing activities - continuing operations(12,683) (3,805) >(100) %Cash used in investing activities - continuing operations(1,327)(2,606)49  %
Cash provided by / (used in) financing activities - continuing operations12,696
 (2,882) nm
Cash used in operations - discontinued operations(35) —
 nm
Cash provided by (used in) financing activities - continuing operationsCash provided by (used in) financing activities - continuing operations(2,241)   6,616    nm
Cash provided by operations - discontinued operationsCash provided by operations - discontinued operations4 4 — %
Cash provided by investing activities - discontinued operationsCash provided by investing activities - discontinued operations4 198 (98) %
Impact of exchange rates on cash, cash equivalents and restricted cash75
 55
 36 %Impact of exchange rates on cash, cash equivalents and restricted cash70 (76)nm
Change in cash, cash equivalents and restricted cash$6,067
 $131
 >100 %Change in cash, cash equivalents and restricted cash$(2,022)$8,923 nm
Operating Activities
Cash provided by continuing operating activities decreased 11%69% to $6.0$1.5 billion for the current six monthssix-month period compared to $6.8$4.8 billion in the prior-year six monthssix-month period. The decrease in cash provided by operations was due to lower operating cash flow at DPEP, which was driven by lower operating cash flows at Direct to Consumer & Internationalreceipts due to increaseddecreased revenues, partially offset by lower cash disbursements due to lower operating expenses.
Produced and licensed programming and technical support costs and higher payments for interest and income taxes.
Film and Television Costs
The Company’s StudioDisney Media and Entertainment Media Networks and Direct-to-Consumer & International segments and 21CF incurDistribution segment incurs costs to acquireproduce and producelicense feature film and television programming.content. Film and television production costs include all internally produced content such as live-action and animated feature films, animated direct-to-video programming, television series, television specials and theatrical stage plays or other similar product.plays. Programming costs include film or television productcontent rights licensed for a specific period from third parties for airinguse on the Company’s broadcastLinear Networks and cable networks, television stations and direct-to-consumer streamingDTC services. Programming assets are generally recorded when the programming becomes available to us with a corresponding increase in programming liabilities. Accordingly, we analyze our
The Company’s film and television production and programming assets net ofactivity for the related liability.six months ended April 3, 2021 and March 28, 2020 are as follows: 
 Six Months Ended
(in millions)April 3,
2021		March 28,
2020
Beginning balances:
Produced and licensed programming assets$27,193 $27,407 
Programming liabilities(4,099)  (4,061)  
23,094 23,346 
Spending:
Programming licenses and rights6,649 6,880 
Produced film and television content5,607 5,400 
12,256 12,280 
Amortization:
Programming licenses and rights(6,762)(6,440)
Produced film and television content(3,809)(4,915)
(10,571)(11,355)
Change in internally produced and licensed content costs1,685 925 
Other non-cash activity139 (37)
Ending balances:
Produced and licensed programming assets29,062 28,626 
Programming liabilities(4,144)(4,392)
$24,918 $24,234 
56
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


The Company’s film and television production and programming activity for the six months ended March 30, 2019 and March 31, 2018 are as follows:
 Six Months Ended
(in millions)March 30,
2019		 March 31,
2018
Beginning balances:   
Production and programming assets$9,202
 $8,759
Programming liabilities(1,178) (1,108)
 8,024
 7,651
Spending:   
Television program licenses and rights4,710
 4,092
Film and television production2,896
 3,011
 7,606
 7,103
Amortization:   
Television program licenses and rights(4,959) (4,411)
Film and television production(2,366) (2,202)
 (7,325) (6,613)
    
Change in film and television production and programming costs281
 490
Net film and television production costs from the 21CF acquisition and consolidation of Hulu14,141
 —
Other non-cash activity372
 (146)
Ending balances:   
Production and programming assets29,761
 9,188
Programming liabilities(6,943) (1,193)
 $22,818
 $7,995
Investing Activities
Investing activities consist principally of investments in parks, resorts and other property and acquisition and divestiture activity. The Company’s investments in parks, resorts and other property for the six months ended April 3, 2021 and March 30, 2019 and March 31, 201828, 2020 are as follows:
(in millions)April 3,
2021		March 28,
2020
Disney Media and Entertainment Distribution$369   $426   
Disney Parks, Experiences and Products
Domestic656 1,549 
International355 441 
Total Disney Parks, Experiences and Products1,011 1,990 
Corporate150 169 
$1,530 $2,585 
 Six Months Ended
(in millions)March 30,
2019		 March 31,
2018
Media Networks   
Cable Networks$41
 $63
Broadcasting55
 45
Total Media Networks96
 108
Parks, Experiences and Products   
Domestic1,678
 1,419
International415
 310
Total Parks, Experiences and Products2,093
 1,729
Studio Entertainment39
 52
Direct-to-Consumer & International83
 81
21CF5
 —
Corporate74
 74
 $2,390
 $2,044
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


Capital expenditures at Disney Media and Entertainment Distribution primarily reflect investments in technology and in facilities and equipment for expanding and upgrading broadcast centers, production facilities and television station facilities.
Capital expenditures for the Disney Parks, Experiences and Products segment are principally for theme park and resort expansion, new attractions, cruise ships, capital improvements and systems infrastructure.technology. The increasedecrease in the current period compared to the prior-year period was primarily due to the suspension of certain capital expenditures was driven by higher spending on new attractions at our domestic theme parks and resorts.
Capital expenditures at Media Networks primarily reflect investments in facilities and equipment for expanding and upgrading broadcast centers, production facilities and television station facilities.
Capital expenditures at Direct-to-Consumer & International primarily reflect investments in technology.projects as a result of COVID-19.
Capital expenditures at Corporate primarily reflect investments in corporate facilities, information technology infrastructure and equipment.
The Company currently expects its fiscal 20192021 capital expenditures will be approximately $1 billion higher thancomparable to fiscal 20182020 capital expenditures of $4.5$4.0 billion, dueas increased spending on facilities at Corporate and on technology for our DTC services are anticipated to increasedbe offset by lower investments at our domestic and international parks and resorts.
Other Investing Activities
Cash used for acquisitions of $9.9 billionresorts, in the current period reflects $35.7 billion of cash paidpart reflecting a reduction in spending in response to acquire 21CF less $25.7 billion of cash acquired in the transaction (See Note 4 to the Condensed Consolidated Financial Statements).

COVID-19.
Financing Activities
Cash provided byused in financing activities was $12.7$2.2 billion in the current six-month period, which reflected net bridge loan borrowing to finance the acquisition of 21CF, partially offset by dividend payments.
Cash provided by financing activities of $12.7 billion in the current six-month period was $15.6 billion higher than the $2.9 billion used in the prior-year six-month period as higher net borrowings in the current period compared to the prior-year six-month period ($14.1 billion increase in the current six-month period compared to $1.1cash provided by financing activities of $6.6 billion increase in the prior-year six-month period) andperiod. In the current six-month period, the Company had a decrease in net borrowings of $1.9 billion compared to an increase in net borrowings of $2.6$8.2 billion duein the prior-year six-month period. Additionally, the prior-year six-month period included a dividend payment of $1.6 billion compared to no repurchases of common stockdividend payments in the current period.six-month period (see Note 10 to the Condensed Consolidated Financial Statements for a summary of the Company’s dividend payments).
See Note 64 to the Condensed Consolidated Financial Statements for a summary of the Company’s borrowing activities during the six months ended March 30, 2019April 3, 2021 and information regarding the Company’s bank facilities. The Company may use operating cash flows, commercial paper borrowings up to the amount of its unused $12.25 billion bank facilities maturing in conjunction withMarch 2022, March 2023 and March 2025, and incremental term debt issuance and operating cash flow,issuances to retire or refinance other borrowings before or as they come due.
See Note 11The Company’s operating cash flow and access to the Condensed Consolidated Financial Statements for a summarycapital markets can be impacted by factors outside of its control, including COVID-19, which has had an adverse impact on the Company’s dividendsoperating cash flows. We have taken a number of measures to mitigate the impact on the Company’s financial position. We have significantly increased the Company’s cash balances through the issuance of senior notes in fiscal 2019March and 2018. DuringMay 2020. See Significant Developments for the six month ended March 30, 2019, the Company did not repurchase any of its common stock to hold as treasury shares.impact COVID-19 has had on our operations and mitigating measures we have taken.
We believe that the Company’s financial condition isremains strong and that its cash balances, other liquid assets, operating cash flows, access to debt and equity capital markets and borrowing capacity under current bank facilities, taken together, provide adequate resources to fund ongoing operating requirements and upcoming debt maturities as well as future capital expenditures related to the expansion of existing businesses and development of new projects. However, the Company’s operating cash flow and access to the capital markets can be impacted by macroeconomic factors outsideprojects, although certain of its control.these activities have been scaled back or suspended in light of COVID-19. In addition to macroeconomic factors,measures the Company has already taken in response to COVID-19, the Company may take additional mitigating actions in the future such as continuing to not declare dividends (which the Company did not declare with respect to fiscal 2020 operations); reducing, or not making certain payments, such as some contributions to our pension and postretirement medical plans; raising additional financing; further suspending capital spending; reducing film and television content investments; or implementing additional furloughs or reductions in force.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)
The Company’s borrowing costs can also be impacted by short- and long-term debt ratings assigned by nationally recognized rating agencies, which are based, in significant part, on the Company’s performance as measured by certain credit metrics such as leverage and interest coverage and leverage ratios. As of March 30, 2019,April 3, 2021, Moody’s Investors Service’s long- and short-term debt ratings for the Company were A2 and P-1, respectively, Standard and Poor’s long- and short-term debt ratings for the Company were ABBB+ and A-1,A-2, respectively, and Fitch’s long- and short-term debt ratings for the Company were AA- and F1,F2, respectively. Each of Moody’s Investors Service,In addition, Fitch had the Company’s long-term ratings on Negative Outlook. On March 25, 2021, Standard and& Poor’s and Fitch had placed the Company’s long- and short-term debtlong-term ratings on review for downgrade as a result of the pending acquisition of 21CF. On October 8, 2018, Moody’s Investor Service affirmedStable Outlook (previously Negative Outlook). Subsequently, on April 28, 2021, Fitch revised the Company’s long- and short-term debtlong-term ratings of A2 and P-1, respectively, with stable outlook following its review of the impact of the acquisition. On January 18, 2019, Fitch affirmed the Company’s long- and short-term debt ratings of A and F1, respectively, with stable outlook. On March 12, 2019, Standard and Poor’s finalized its review of the Company’s debt ratings and lowered the Company’s long- and short-term ratings to A and A-1, from A+ and A-1+Stable (previously Negative). The Company’s bank facilities contain only one financial covenant, relating to interest coverage, which the Company met on March 30, 2019,April 3, 2021, by a significant margin. The Company’s bank facilities also specifically exclude certain entities, including the Asia Theme Parks, from any representations, covenants or events of default.

The duration of business closures and other impacts related to COVID-19, and the corresponding duration of the impacts on our operating cash flows, are subject to substantial uncertainty and may require us to rely more heavily on external funding sources, such as debt and other types of financing.
SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
On March 20, 2019 as part of the acquisition of TFCF, The Walt Disney Company (“TWDC”) became the ultimate parent of TWDC Enterprises 18 Corp. (formerly known as The Walt Disney Company) (“Legacy Disney”). Legacy Disney and TWDC are collectively referred to as “Obligor Group”, and individually, as a “Guarantor”. Concurrent with the close of the TFCF acquisition, $16.8 billion of TFCF’s assumed public debt (which then constituted 96% of such debt) was exchanged for senior notes of TWDC (the “exchange notes”) issued pursuant to an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to an Indenture, dated as of March 20, 2019, between TWDC, Legacy Disney, as guarantor, and Citibank, N.A., as trustee (the “TWDC Indenture”) and guaranteed by Legacy Disney. On November 26, 2019, $14.0 billion of the outstanding exchange notes were exchanged for new senior notes of TWDC registered under the Securities Act, issued pursuant to the TWDC Indenture and guaranteed by Legacy Disney. In addition, contemporaneously with the closing of the March 20, 2019 exchange offer, TWDC entered into a guarantee of the registered debt securities issued by Legacy Disney under the Indenture dated as of September 24, 2001 between Legacy Disney and Wells Fargo Bank, National Association, as trustee (the “2001 Trustee”) (as amended by the first supplemental indenture among Legacy Disney, as issuer, TWDC, as guarantor, and the 2001 Trustee, as trustee).
Other subsidiaries of the Company do not guarantee the registered debt securities of either TWDC or Legacy Disney (such subsidiaries are referred to as the “non-Guarantors”). The par value and carrying value of total outstanding and guaranteed registered debt securities of the Obligor Group at April 3, 2021 was as follows:
TWDCLegacy Disney
(in millions)Par ValueCarrying ValuePar ValueCarrying Value
Registered debt with unconditional guarantee$37,847$39,608$11,846$11,937
The guarantees by TWDC and Legacy Disney are full and unconditional and cover all payment obligations arising under the guaranteed registered debt securities. The guarantees may be released and discharged upon (i) as a general matter, the indebtedness for borrowed money of the consolidated subsidiaries of TWDC in aggregate constituting no more than 10% of all consolidated indebtedness for borrowed money of TWDC and its subsidiaries (subject to certain exclusions), (ii) upon the sale, transfer or disposition of all or substantially all of the equity interests or all or substantially all, or substantially as an entirety, the assets of Legacy Disney to a third party, and (iii) other customary events constituting a discharge of a guarantor’s obligations. In addition, in the case of Legacy Disney’s guarantee of registered debt securities issued by TWDC, Legacy Disney may be released and discharged from its guarantee at any time Legacy Disney is not a borrower, issuer or guarantor under certain material bank facilities or any debt securities.
Operations are conducted almost entirely through the Company’s subsidiaries. Accordingly, the Obligor Group’s cash flow and ability to service its debt, including the public debt, are dependent upon the earnings of the Company’s subsidiaries and the distribution of those earnings to the Obligor Group, whether by dividends, loans or otherwise. Holders of the guaranteed registered debt securities have a direct claim only against the Obligor Group.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)

Set forth below are summarized financial information for the Obligor Group on a combined basis after elimination of (i) intercompany transactions and balances between TWDC and Legacy Disney and (ii) equity in the earnings from and investments in any subsidiary that is a non-Guarantor. This summarized financial information has been prepared and presented pursuant to the Securities and Exchange Commission Regulation S-X Rule 13-01, “Financial Disclosures about Guarantors and Issuers of Guaranteed Securities” and is not intended to present the financial position or results of operations of the Obligor Group in accordance with U.S. GAAP.
Results of operations (in millions)Quarter Ended April 3, 2021
Revenues$—
Costs and expenses—
Net income (loss) from continuing operations(922)
Net income (loss)(922)
Net income (loss) attributable to TWDC shareholders(922)

Balance Sheet (in millions)April 3, 2021October 3, 2020
Current assets$10,056$12,899
Noncurrent assets1,8952,076
Current liabilities6,2106,155
Noncurrent liabilities (excluding intercompany to non-Guarantors)55,73557,809
Intercompany payables to non-Guarantors145,867146,748

COMMITMENTS AND CONTINGENCIES
Legal Matters
As disclosed in Note 1312 to the Condensed Consolidated Financial Statements, the Company has exposure for certain legal matters.
Guarantees
SeeAs disclosed in Note 1412 to the Condensed Consolidated Financial Statements, in the 2018 Annual Report on Form 10-K for information regarding the Company’sCompany has exposure to certain guarantees.
Tax Matters
As disclosed in Note 910 to the Consolidated Financial Statements in the 20182020 Annual Report on Form 10-K, the Company has exposure for certain tax matters.
Contractual Commitments
See Note 1415 to the Consolidated Financial Statements in the 20182020 Annual Report on Form 10-K and Note 12 to the Condensed Consolidated Financial Statements in this Form 10Q for information regarding the Company’s contractual commitments and see Note 4 to the Condensed Consolidated Financial Statements for contractual commitments assumed in the 21CF acquisition.commitments.
OTHER MATTERS
Accounting Policies and Estimates
We believe that the application of the following accounting policies, which are important to our financial position and results of operations, require significant judgments and estimates on the part of management. For a summary of our significant accounting policies, including the accounting policies discussed below, see Note 2 to the Consolidated Financial Statements in the 20182020 Annual Report on Form 10-K. In addition,
Produced and Acquired/Licensed Content Costs
We amortize and test for our revenue recognition policy, seeimpairment capitalized film and television production costs based on whether the content is predominantly monetized individually or as a group. See Note 36 to the Condensed Consolidated Financial Statements.Statements for further discussion.
Film and Television Revenues and Costs
We expense film and television production, participation and residualProduction costs over the applicable product life cyclethat are classified as individual are amortized based upon the ratio of the current period’s revenues to the estimated remaining total revenues (Ultimate Revenues) for each production. If our estimate of Ultimate Revenues decreases, amortization of film and television costs may be accelerated. Conversely, if our estimate of Ultimate Revenues increases, film and television cost amortization may be slowed. For film productions, Ultimate Revenues include revenues from all sources that will be earned within ten years from the date of the initial theatrical release. For television series, Ultimate Revenues include revenues that will be earned within ten years from delivery of the first episode, or if still in production, five years from delivery of the most recent episode, if later..
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)
With respect to produced films intended for theatrical release, the most sensitive factor affecting our estimate of Ultimate Revenues (and therefore affecting future film cost amortization and/or impairment) is theatrical performance. Revenues derived from other markets subsequent to the theatrical release (e.g., the home entertainment or television markets) have historically beenare generally highly correlated with the theatrical performance. Theatrical performance varies primarily based upon the public interest and demand for a particular film, the popularity of competing films at the time of release and the level of marketing effort. Upon a film’s release and determination of the theatrical performance, the Company’s estimates of revenues from succeeding windows and markets are revised based on historical relationships and an analysis of current market trends. The most sensitive factor affecting our estimate of Ultimate Revenues for released films is the level of expected home entertainment sales. Home entertainment sales vary based on the number and quality of competing home entertainment products, as well as the manner in which retailers market and price our products.
With respect to capitalized television series or other television productions intended for broadcast,production costs that are classified as individual, the most sensitive factors affecting estimates of Ultimate Revenues are program ratings and the strength of the advertising market.content on our licensees’ platforms. Program ratings, which are an indication of market acceptance, directly affect the Company’sprogram’s ability to generate advertising and subscriber revenues duringand are correlated with the airinglicense fees we can charge for the content in subsequent windows and for subsequent seasons.
Ultimate Revenues are reassessed each reporting period and the impact of any changes on amortization of production cost is accounted for as if the change occurred at the beginning of the program. In addition, television series with greater market acceptance are more likely to generate incremental revenues through the licensingcurrent fiscal year. If our estimate of program rights worldwide to television distributors, SVOD services and in home entertainment formats. Alternatively, poor ratings may result in cancellationUltimate Revenues decreases, amortization of the program, which would require an immediate write-down of any unamortized production costs. A significant decline in the advertising market would also negatively impact our estimates.
We expense the cost of television broadcast rights for acquired series, movies and other programs based on the number of times the program is expected to be aired or on a straight-line basis over the useful life, as appropriate. Amortization of those television programming assets being amortized on a number of airings basiscosts may be accelerated or result in an impairment. Conversely, if we reduce the estimated future airings and slowed if we increase the estimated future airings. The numberour estimate of future airingsUltimate Revenues increases, cost amortization may be slowed.
Produced content costs that are part of a particular program is
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


impacted primarily by the program’s ratingsgroup and acquired/licensed content costs are amortized based on projected usage typically resulting in previous airings, expected advertising ratesan accelerated or straight-line amortization pattern. The determination of projected usage requires judgment and availability and quality of alternative programming. Accordingly, planned usage is reviewed periodically and revised if necessary. We amortize rights costs for changes. If projected usage changes we may need to accelerate or slow the recognition of amortization expense.
The amortization of multi-year sports programming arrangements during the applicable seasons based on the estimated relative value of each year in the arrangement. The estimated value of each yearrights is based on our projections of revenues over the contract period, which include advertising revenue and an allocation of affiliate revenue.revenue (relative value). If the annual contractual payments related to each season approximate each season’s estimated relative value, we expense the related contractual payments during the applicable season. If planned usage patterns or estimated relative values by year were to change significantly, amortization of our sports rights costs may be accelerated or slowed.
Costs of film and television productions are subject to regular recoverability assessments, which compare the estimated fair values with the unamortized costs. The net realizable values of television broadcast program licenses and rights are reviewed using a daypart methodology. A daypart is defined as an aggregation of programs broadcast during a particular time of day or programs of a similar type. The Company’s dayparts are: primetime, daytime, late night, news and sports (includes broadcast and cable networks). The net realizable values of other cable programming assets are reviewed on an aggregated basis for each cable network. Individual programs are written off when there are no plans to air or sublicense the program. Estimated values are based upon assumptions about future demand and market conditions. If actual demand or market conditions are less favorable than our projections, film, television and programming cost write-downs may be required.
Revenue Recognition
The Company has revenue recognition policies for its various operating segments that are appropriate to the circumstances of each business. We have updatedRefer to Note 2 to the Consolidated Financial Statements in the 2020 Annual Report on Form 10-K for our revenue recognition policies in conjunction with our adoption of the new revenue recognition guidance as further described in Note 3 to the Condensed Consolidated Financial Statements.
Fixed license fees charged for the right to use our television and motion picture productions are recognized as revenue when the content is available for use by the licensee. TV/SVOD distribution contracts may contain more than one title and/or provide that certain titles are only available for use during defined periods of time during the contract term. In these instances, each title and/or period of availability is generally considered a separate performance obligation. For these contracts, license fees are allocated to each title and period of availability at contract inception based on relative standalone selling price using management’s best estimate. Estimates used to determine a performance obligations’ standalone selling price impact the timing of revenue recognition, but not the total revenue to be recognized under the arrangements.policies.
Pension and Postretirement Medical Plan Actuarial Assumptions
The Company’s pension and postretirement medical benefit obligations and related costs are calculated using a number of actuarial assumptions. Two critical assumptions, the discount rate and the expected return on plan assets, are important elements of expense and/or liability measurement, which we evaluate annually. Refer to the 20182020 Annual Report on Form 10-K for estimated impacts of changes in these assumptions. Other assumptions include the healthcare cost trend rate and employee demographic factors such as retirement patterns, mortality, turnover and rate of compensation increase.
The discount rate enables us to state expected future cash payments for benefits as a present value on the measurement date. A lower discount rate increases the present value of benefit obligations and increases pension and postretirement medical expense. The guideline for setting this rate is a high-quality long-term corporate bond rate. 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.
To determine the expected long-term rate of return on the plan assets, we consider the current and expected asset allocation, as well as historical and expected returns on each plan asset class. A lower expected rate of return on pension plan assets will increase pension and postretirement medical expense.
Goodwill, Other Intangible Assets, Long-Lived Assets and Investments
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. Goodwill is allocated to various reporting units, which are an operating segment or one level below the operating segment. The Company compares the fair value of each 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.
The impairment test for goodwill requires judgment related to the identification of reporting units, the assignment of assets and liabilities to reporting units including goodwill, and the determination of fair value of the reporting units. To determine the fair value of our reporting units, we apply what we believe to be the most appropriate valuation methodology for each of our reporting units. We generally use a present value technique (discounted cash flows) corroborated by market multiples when available and as appropriate. We apply what we believe to be the most appropriate valuation methodology for each of our reporting units. The discounted cash flow analyses are sensitive to our estimates of future revenue growth and margins for these businesses. We include in the projected cash flows an estimate of the revenue we believe the reporting unit would receive if the intellectual property developed by the reporting unit that is being used by other
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


reporting units was licensed to an unrelated third party at its fair market value. We believe our estimates of fair value are consistent with how a marketplace participant would value our reporting units.
growth and margins for these businesses. In times of adverse economic conditions in the global economy, the Company’s long-term cash flow projections are subject to a greater degree of uncertainty than usual. If we had established different reporting units or utilized different valuation methodologies or assumptions, the impairment test results could differ, and we could be required to record impairment charges.
The Company is required to compare the fair values of other indefinite-lived intangible assets to their carrying amounts. 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 other indefinite-lived intangible assets are determined based on discounted cash flows or appraised values, as appropriate.
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 an asset group to the carrying value 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 or segments.assets. If the carrying value of an asset group exceeds the estimated undiscounted future cash flows, an impairment would beis measured as the difference between the fair value of the group’s long-lived assetsasset group and the carrying value of the group’s long-lived assets. The impairment is allocated to the long-lived assets of the group on a pro rata basis using the relative carrying amounts, but only to the extent the carrying value of each asset is above its fair value.group. For assets held for sale, to the extent the carrying value is greater than the asset’s fair value less costs to sell, an impairment loss is recognized for the difference. Determining whether a long-lived asset is impaired requires various estimates and assumptions, including whether a triggering event has occurred, the identification of the asset groups, estimates of future cash flows and the discount rate used to determine fair values. If we had established different asset groups or utilized different valuation methodologies or assumptions, the impairment test results could differ, and we could be required to record impairment charges.
The Company has cost andinvestments in equity investments. Thesecurities. For equity securities that do not have a readily determinable fair value, of these investments is dependent on thewe consider forecasted financial performance of the investee companies, as well as volatility inherent in the external markets for these investments. In assessing the potential impairment of these investments, we consider these factors as well as the forecasted financial performance of the investees and market values, where available. If these forecasts are not met, or market values indicate an other-than-temporary decline in value, impairment charges may be required.recorded.
Allowance for Doubtful AccountsCredit Losses
We evaluate our allowance for doubtful accountscredit losses and estimate collectability of accounts receivable based on our analysis of historical bad debt experience, in conjunction with our assessment of the financial condition of individual companies with which we do business.business, current market conditions, and reasonable and supportable forecasts of future economic conditions. In times of domestic or global economic turmoil, including COVID-19, our estimates and judgments with respect to the collectability of our receivables are subject to greater uncertainty than in more stable periods. If our estimate of uncollectible accounts is too low, costs and expenses may increase in future periods, and if it is too high, costs and expenses may decrease in future periods. See Note 3 to the Condensed Consolidated Financial Statements for additional discussion.
Contingencies and Litigation
We are currently involved in certain legal proceedings and, as required, have accrued estimates of the probable and estimable losses for the resolution of these proceedings. These estimates are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies and have been developed in consultation with outside counsel as appropriate. From time to time, we mayare also be involved in other contingent matters for which we have accruedaccrue estimates for a probable and estimable loss. It is possible, however, that future results of operations for any particular quarterly or annual period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to legal proceedings or our assumptions regarding other contingent matters. See Note 1312 to the Condensed Consolidated Financial Statements for more detailed information on litigation exposure.
Income Tax Audits
As a matter of course, the Company is regularly audited by federal, state and foreign tax authorities. From time to time, these audits result in proposed assessments. Our determinations regarding the recognition of income tax benefits are made in consultation with outside tax and legal counsel, where appropriate, and are based upon the technical merits of our tax positions in consideration of applicable tax statutes and related interpretations and precedents and upon the expected outcome of
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)


proceedings (or negotiations) with taxing and legal authorities. The tax benefits ultimately realized by the Company may differ from those recognized in our future financial statements based on a number of factors, including the Company’s decision to settle rather than litigate a matter, relevant legal precedent related to similar matters and the Company’s success in supporting its filing positions with taxing authorities.
Impacts of COVID-19 on Accounting Policies and Estimates
In light of the currently unknown ultimate duration of COVID-19, we face a greater degree of uncertainty than normal in making the judgments and estimates needed to apply our significant accounting policies and may make changes to these estimates and judgments over time. This could result in meaningful impacts to our financial statements in future periods. A more detailed discussion of the impact of COVID-19 on the Accounting Policies and Estimates follows.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)
Produced and Acquired/Licensed Content Costs
Certain of our completed or in progress film and television productions have had their initial release dates delayed. The duration of the delay, market conditions when we release the content, or a change in our release strategy (e.g. bypassing certain distribution windows) could have an impact on Ultimate Revenues, which may accelerate amortization or result in an impairment of capitalized film and television production costs.
Given the ongoing uncertainty around live sporting events continuing uninterrupted, the amount and timing of revenues derived from the broadcast of these events may differ from the projections of revenues that support our amortization pattern of the rights costs we pay for these events. Such changes in revenues could result in an acceleration or slowing of the amortization of our sports rights costs.
Revenue Recognition
Certain of our affiliate contracts contain commitments with respect to the content to be aired on our television networks (e.g. live sports or original content). If there are delays or cancellations of live sporting events or disruptions to film and television content production activities, we may need to assess the impact on our contractual obligations and adjust the revenue that we recognize related to these contracts.
Goodwill, Other Intangible Assets, Long-Lived Assets and Investments
Given the ongoing impacts of COVID-19 across our businesses, the projected cash flows that we use to assess the fair value of our businesses and assets for purposes of impairment testing are subject to greater uncertainty than normal. If in the future we reduce our cash flow projections, we may need to impair some of these assets.
Income Tax (See Note 7 to the Condensed Consolidated Financial Statements)
The determination of interim period tax provisions generally requires the use of a forecasted full year effective tax rate, which in turn requires a full year forecast of earnings before tax and tax expense. Given the uncertainties created by COVID-19, these forecasts are subject to greater than normal variability, which could lead to volatility in our reported quarterly effective tax rates.
Risk Management Contracts
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.
As a result of the impact of COVID-19 on our businesses, our projected cash flows or projected usage of commodities are subject to a greater degree of uncertainty, which may cause us to recognize gains or losses on hedging instruments in different periods than the hedged transaction.
New Accounting Pronouncements
See Note 1816 to the Condensed Consolidated Financial Statements for information regarding new accounting pronouncements.
MARKET RISK
The Company is exposed to the impact of interest rate changes, foreign currency fluctuations, commodity fluctuations and changes in the market values of its investments.
Policies and Procedures
In the normal course of business, we employ established policies and procedures to manage the Company’s exposure to changes in interest rates, foreign currencies and commodities using a variety of financial instruments.
Our objectives in managing exposure to interest rate changes are to limit the impact of interest rate volatility on earnings and cash flows and to lower overall borrowing costs. To achieve these objectives, we primarily use interest rate swaps to manage net exposure to interest rate changes related to the Company’s portfolio of borrowings. By policy, the Company targets fixed-rate debt as a percentage of its net debt between minimum and maximum percentages.
Our objective in managing exposure to foreign currency fluctuations is to reduce volatility of earnings and cash flow in order to allow management to focus on core business issues and challenges. Accordingly, the Company enters into various contracts that change in value as foreign exchange rates change to protect the U.S. dollar equivalent value of its existing foreign currency assets, liabilities, commitments and forecasted foreign currency revenues and expenses. The Company utilizes option strategies and forward contracts that provide for the purchase or sale of foreign currencies to hedge probable, but not firmly committed, transactions. The Company also uses forward and option contracts to hedge foreign currency assets and liabilities. The principal foreign currencies hedged are the euro, Japanese yen, British pound, Chinese yuan and Canadian dollar. Cross-currencyCross-
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (continued)
currency swaps are used to effectively convert foreign currency denominated borrowings to U.S. dollar denominated borrowings. By policy, the Company maintains hedge coverage between minimum and maximum percentages of its forecasted foreign exchange exposures generally for periods not to exceed four years. The gains and losses on these contracts offset changes in the U.S. dollar equivalent value of the related exposures. The economic or political conditions in a country could reduce our ability to hedge exposure to currency fluctuations in the country or our ability to repatriate revenue from the country.
Our objectives in managing exposure to commodity fluctuations are to use commodity derivatives to reduce volatility of earnings and cash flows arising from commodity price changes. The amounts hedged using commodity swap contracts are based on forecasted levels of consumption of certain commodities, such as fuel oil and gasoline.
Our objectives in managing exposures to market-based fluctuations in certain retirement liabilities are to use total return swap contracts to reduce the volatility of earnings arising from changes in these retirement liabilities. The amounts hedged using total return swap contracts are based on estimated liability balances.
It is the Company’s policy to enter into foreign currency and interest rate derivative transactions and other financial instruments only to the extent considered necessary to meet its objectives as stated above. The Company does not enter into these transactions or any other hedging transactions for speculative purposes.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk.
See Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Note 1514 to the Condensed Consolidated Financial Statements.

Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures – We have established disclosure controls and procedures to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and made known to the officers who certify the Company’s financial reports and to other members of senior management and the Board of Directors as appropriate to allow timely decisions regarding required disclosure.
Based on their evaluation as of March 30, 2019,April 3, 2021, the principal executive officer and principal financial officer of the Company have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective.
Changes in Internal Controls – There have been no changes in our internal controlscontrol over financial reporting during the second quarter of fiscal 20192021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except as noted below.reporting.
During the quarter ended March 30, 2019, we completed the 21CF acquisition (see Note 4 to the Condensed Consolidated Financial Statements for more information). We are currently integrating 21CF into our operations and internal control processes and, pursuant to the SEC’s guidance that an assessment of a recently acquired business may be omitted from the scope of an assessment in the year of acquisition, the scope of our assessment of the effectiveness of our internal controls over financial reporting at September 28, 2019 will not include 21CF.
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PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
As disclosed in Note 1312 to the Condensed Consolidated Financial Statements, the Company is engaged in certain legal matters, and the disclosure set forth in Note 1312 relating to certain legal matters is incorporated herein by reference.

ITEM 1A. Risk Factors
The Private Securities Litigation Reform Act of 1995 (the Act) provides a safe harbor for “forward-looking statements” made by or on behalf of the Company. We may from time to time make written or oral statements that are “forward-looking,” including statements contained in this report and other filings with the Securities and Exchange Commission and in reports to our shareholders. Such statements may, for example, express expectations, projections, estimates or future impacts; actions that we may take (or not take); or other statements that are not historical in nature. All forward-looking statements are made on the basis of management’s views and assumptions regarding future events and business performance as of the time the statements are made and the Company does not undertake any obligation to update its disclosure relating to forward-looking matters. Actual results may differ materially from those expressed or implied. Such differences may result from actions taken by the Company, including restructuring or strategic initiatives (including capital investments, or asset acquisitions or dispositions)dispositions or changes to businesses), as well as from developments beyond the Company’s control, including: global pandemics and health concerns; changes in domestic and global economic conditions,conditions; competitive conditions and consumer preferences; adverse weather conditions or natural disasters; health concerns; international, political or military developments; and technological developments. Such developments may affect (or further affect, as applicable) entertainment, travel and leisure businesses generally and may, among other things, affect (or further affect, as applicable) the performance of the Company’s theatrical and home entertainment releases, the advertising market for broadcast and cable television programming, demand for our products and services, expenses of providing medical and pension benefits, performance of some or all companyCompany businesses either directly or through their impact on those who distribute our products.products, the industries in which the Company operates and the Company’s expenses.
In addition to the factors affecting specific business operations identified in connection with the description of these operations and the financial results of these operations elsewhere in our filings with the SEC, the most significant factors affecting our business include the following, as well as the additional risk factors discussed in our 2020 Annual Report on Form 10-K under Item 1A, “Risk Factors”:
BUSINESS, ECONOMIC, MARKET and OPERATING CONDITION RISKS
The adverse impact of COVID-19 on our businesses will continue for an unknown length of time and may continue to impact certain of our key sources of revenue.
Since early 2020, the world has been, and continues to be, impacted by COVID-19. COVID-19 and measures to prevent its spread are impacting our segments in a number of ways, most significantly at DPEP where our theme parks have been closed or operating at significantly reduced capacity and cruise ship sailings and guided tours have been suspended. We have delayed, or in some cases, shortened or canceled, theatrical releases, and stage play performances have been suspended in March 2020 with a limited number of performances returning in the first quarter of fiscal 2021. Since March 2020, we have experienced significant disruptions in the production and availability of content. Although most film and television production activities resumed beginning in the fourth quarter of fiscal 2020, we continue to see disruption in production activities depending on local circumstances. Many of our businesses have been closed or suspended consistent with government mandates or guidance. We have continued to pay for certain sports rights, including for certain events that have been deferred or canceled. The impacts to our content have resulted in decreased viewership and advertising revenues and demands for affiliate fee reductions related to certain of our television networks. Following our second quarter, the 2021 IPL cricket season was postponed. Continued or increased unavailability of sports content are likely to exacerbate the impacts to our content. Other of our offerings will be exposed to additional financial impacts in the event of future significant unavailability of content. COVID-19 impacts could also hasten the erosion of historical sources of revenue at our Linear Networks businesses. We have experienced significantly reduced numbers of reservations at our hotels and cruises. We granted rent waivers to some of our tenants, and they have not paid rent while certain of our facilities have been closed. We have experienced increased returns and refunds and customer requests for payment deferrals. Collectively, our impacted businesses have historically been the source of the majority of our revenue. Some of our businesses remain closed and those that are open are operating subject to restrictions and increased expenses. These and other impacts of COVID-19 on our businesses will continue for an unknown length of time. COVID-19 impacts that have subsided may again impact our businesses in the future and new impacts may emerge from COVID-19 developments or other pandemics. For example, some of our parks closed due to government mandates or guidance following their initial reopening.
Consumers may change their behavior and consumption patterns in response to the prolonged suspension of certain of our businesses, such as subscription to pay television packages (which experienced accelerated decline during some periods after the onset of COVID-19) or theater-going to watch movies. Certain of our customers, including individuals as well as businesses such as theatrical distributors, affiliates, licensees of rights to use our programming and intellectual property, advertisers and
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others, have been negatively impacted by the economic downturn caused by COVID-19, which may result in decreased purchases of our goods and services even after certain operations resume. Some industries in which our customers operate, such as theatrical distribution, retail and travel, could experience contraction, which could impact the profitability of our businesses going forward. Additionally, we have incurred and will continue to incur incremental costs to implement health and safety measures, reopen our parks and restart our halted projects and operations. As we have resumed production of content, including live sporting events, we have incurred costs to implement health and safety measures and productions will generally take longer to complete.
Our mitigation efforts in response to the impacts of COVID-19 on our businesses have had, or may have, negative impacts. The Company (or our Board of Directors, as applicable) issued senior notes in March and May 2020, entered into an additional $5.0 billion credit facility in April 2020 (which has now been terminated), did not declare a dividend with respect to fiscal year 2020 operations; suspended certain capital projects; reduced certain discretionary expenditures (such as spending on marketing); temporarily reduced management compensation; temporarily eliminated Board of Director retainers and committee fees; furloughed over half of our employees (some of whom remain furloughed and continue to receive Company provided medical benefits); and reduced our employee population. Such mitigation measures have resulted in the delay or suspension of certain projects in which we have invested, particularly at our parks and resorts and studio operations. We may take additional mitigation actions in the future such as raising additional financing; not declaring future dividends; reducing, or not making, certain payments, such as some contributions to our pension and postretirement medical plans; further suspending capital spending; reducing film and television content investments; implementing additional furloughs or reductions in force or modifying our operating strategy. These and other of our mitigating actions may have an adverse impact on our businesses. Additionally, there are certain limitations on our ability to mitigate the adverse financial impact of COVID-19, including the fixed costs of our theme park business and the impact COVID-19 may have on capital markets and our cost of borrowing. Further, the benefit of certain mitigation efforts will not continue to be available going forward. For example, as our employees return from furlough, the cost reductions of the related furloughs will no longer be available.
Even our operations that were not suspended or that have resumed continue to be adversely impacted by government mandated restrictions (such as density limitations and travel restrictions and requirements); measures we voluntarily implement; measures we are contractually obligated to implement; the distancing practices and health concerns of consumers, talent and production workers; and logistical limitations. Upon reopening our parks and resorts business we have seen lower demand. Geographic variation in government requirements and ongoing changes to restrictions have disrupted and could further disrupt our businesses, including our production operations. Our operations could be suspended or re-suspended by government action or otherwise in the future. For example, both Hong Kong Disneyland Resort and Disneyland Paris have reopened and closed multiple times since the onset of COVID-19. Some of our businesses have not yet been permitted to open, such as our cruise business. Some of our employees who returned to work have been refurloughed. Our operations or reputation could be further negatively impacted by a significant COVID-19 outbreak impacting our employees, customers or others interacting with our businesses, including our supply chain.
In fiscal year 2020, we operated at a net loss. We have impaired goodwill and intangible assets at our International Channels businesses and written down the value of certain of our retail store assets. Certain of our other assets could also become impaired, including further impairments of goodwill and intangible assets; we have increased, and may further increase, allowances for credit losses; and there may be changes in judgments in determining the fair-value of assets; and estimates related to variable consideration may change due to increased returns, reduced usage of our products or services and decreased royalties. Our leverage ratios have increased and are expected to remain elevated in the near-term as a result of COVID-19’s impact on our financial performance, causing certain of the credit rating agencies to downgrade our ratings. Our debt ratings may be further downgraded as a result of the COVID-19 impact, which may negatively impact our cost of borrowing. Due to reduced operating cash flow, we may utilize cash balances and/or future financings to fund a portion of our operations and investments in our businesses. Financial risks may be exacerbated by a number of factors, including the timing of customer deposit refunds and liquidity issues among our key customers, particularly advertisers, television affiliates, theatrical exhibitors and distributors, and licensees. These factors have impacted timely payments by such customers to the Company. Additionally, loss of or delay in the collection of receivables as a result of contractual performance short falls, meeting our contractual payment obligations, and investments we need to make in our business may result in increased financial risk. The Company has $12.7 billion in trade accounts receivable outstanding at April 3, 2021, with an allowance for credit losses of $0.3 billion. Our estimates and judgments with respect to the collectability of our receivables are subject to greater uncertainty due to the impacts of COVID-19. Economic or political conditions in a country outside the U.S. as a result of COVID-19 could also reduce our ability to hedge exposure to currency fluctuations in the country or our ability to repatriate revenue from the country.
The impacts of COVID-19 to our business have generally amplified, or reduced our ability to mitigate, the other risks discussed in our filings with the SEC and our remediation efforts may not be successful.
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COVID-19 also makes it more challenging for management to estimate future performance of our businesses. COVID-19 has already adversely impacted our businesses and net cash flow, and we expect the ultimate magnitude of these disruptions on our financial and operational results will be dictated by the length of time that such disruptions continue which will, in turn, depend on the currently unknowable duration and severity of the impacts of COVID-19, and among other things, the impact and duration of governmental actions imposed in response to COVID-19 and individuals’ and companies’ risk tolerance regarding health matters going forward. If actual performance in our international markets significantly underperforms management’s forecasts, the Company could have foreign currency hedge gains/losses which are not offset by the realization of exposures, resulting in excess hedge gains or losses. While we cannot be certain as to the duration of the impacts of COVID-19, we expect impacts of COVID-19 to affect our financial results at least through fiscal 2021.
Misalignment with public and consumer tastes and preferences for entertainment and consumer products could negatively impact demand for our entertainment offerings and products and adversely affect the profitability of any of our businesses.
Our businesses create entertainment, travel and consumer products whose success depends substantially on consumer tastes and preferences that change in often unpredictable ways. The success of our businesses depends on our ability to consistently create content, which may be distributed among other ways through broadcast, cable, internet or cellular technology, theme park attractions, hotels and other resort facilities and travel experiences and consumer products that meet the changing preferences of the broad consumer market and respond to competition from an expanding array of choices facilitated by technological developments in the delivery of content. The success of our theme parks, resorts, cruise ships and experiences, as well as our theatrical releases, depends on demand for public or out-of-home entertainment experiences. COVID-19 may impact consumer tastes and preferences. Many of our businesses increasingly depend on acceptance of our offerings and products by consumers outside the U.S., and their success therefore depends on our ability to successfully predict and adapt to changing consumer tastes and preferences outside as well as inside the U.S. Moreover, we must often invest substantial amounts in content production and acquisition, acquisition of sports rights, theme park attractions, cruise ships or hotels and other facilities or customer facing platforms before we know the extent to which these products will earn consumer acceptance. The impacts of COVID-19 are inhibiting and delaying our ability to earn returns on some of these and other investments. If our entertainment offerings and products, including our content offerings, modified as a result of COVID-19, as well as our methods to make our offerings and products available to consumers, do not achieve sufficient consumer acceptance, our revenue from advertising sales (which are based in part on ratings for the programs in which advertisements air), affiliate fees, subscription fees, theatrical film receipts, the license of rights to other distributors, theme park admissions, hotel room charges and merchandise, food and beverage sales, sales of licensed consumer products or from sales of our other consumer products and services, may decline, decline further or fail to grow to the extent we anticipate when making investment decisions and thereby further adversely affect the profitability of one or more of our businesses.
The success of our businesses is highly dependent on the existence and maintenance of intellectual property rights in the entertainment products and services we create.
The value to us of our intellectual property rights is dependent on the scope and duration of our rights as defined by applicable laws in the U.S. and abroad and the manner in which those laws are construed. If those laws are drafted or interpreted in ways that limit the extent or duration of our rights, or if existing laws are changed, our ability to generate revenue from our intellectual property may decrease, or the cost of obtaining and maintaining rights may increase.
The unauthorized use of our intellectual property may increase the cost of protecting rights in our intellectual property or reduce our revenues. The convergence of computing, communication and entertainment devices, increased broadband internet speed and penetration, increased availability and speed of mobile data transmission and increasingly sophisticated attempts to obtain unauthorized access to data systems have made the unauthorized digital copying and distribution of our films, television productions and other creative works easier and faster and protection and enforcement of intellectual property rights more challenging. The unauthorized distribution and access to entertainment content generally continues to be a significant challenge for intellectual property rights holders. Inadequate laws or weak enforcement mechanisms to protect entertainment industry intellectual property in one country can adversely affect the results of the Company’s operations worldwide, despite the Company’s efforts to protect its intellectual property rights. COVID-19 may increase incentives and opportunities to access content in unauthorized ways, as negative economic conditions coupled with a shift in government priorities could lead to less enforcement. These developments require us to devote substantial resources to protecting our intellectual property against unlicensed use and present the risk of increased losses of revenue as a result of unlicensed distribution of our content.
With respect to intellectual property developed by the Company and rights acquired by the Company from others, the Company is subject to the risk of challenges to our copyright, trademark and patent rights by third parties. Successful challenges to our rights in intellectual property may result in increased costs for obtaining rights or the loss of the opportunity to earn revenue from or utilize the intellectual property that is the subject of challenged rights. From time to time, the Company has been notified that it may be infringing certain intellectual property rights of third parties. Technological changes in
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industries in which the Company operates and extensive patent coverage in those areas may increase the risk of such claims being brought and prevailing.
A variety of uncontrollable events may reduce demand for or consumption of our products and services, impair our ability to provide our products and services or increase the cost or reduce the profitability of providing our products and services.
Demand for and consumption of our products and services, particularly our theme parks and resorts, is highly dependent on the general environment for travel and tourism. The environment for travel and tourism, as well as demand for and consumption of other entertainment products, can be significantly adversely affected in the U.S., globally or in specific regions as a result of a variety of factors beyond our control, including: health concerns (including as it has been by COVID-19); adverse weather conditions arising from short-term weather patterns or long-term change, catastrophic events or natural disasters (such as excessive heat or rain, hurricanes, typhoons, floods, tsunamis and earthquakes); international, political or military developments; and terrorist attacks. These events and others, such as fluctuations in travel and energy costs and computer virus attacks, intrusions or other widespread computing or telecommunications failures, may also damage our ability to provide our products and services or to obtain insurance coverage with respect to some of these events. An incident that affected our property directly would have a direct impact on our ability to provide goods and services and could have an extended effect of discouraging consumers from attending our facilities. Moreover, the costs of protecting against such incidents, including the costs of protecting against the spread of COVID-19, reduces the profitability of our operations.
For example, COVID-19 and measures to prevent the spread of COVID-19 are currently impairing our ability to provide our products and services and reducing consumption of those products and services. Further, prior to COVID-19, events in Hong Kong impacted profitability of our Hong Kong operations and may continue to do so, and past hurricanes have impacted the profitability of Walt Disney World Resort in Florida and future hurricanes may also do so.
The negative economic consequences of COVID-19 may be particularly challenging in markets where individuals and local businesses have limited access to government supported “safety nets”, which could lead to political instability and unrest, and further depress demand for our products and services over a longer timeframe.
In addition, we derive affiliate fees and royalties from the distribution of our programming, sales of our licensed goods and services by third parties, and the management of businesses operated under brands licensed from the Company, and we are therefore dependent on the successes of those third parties for that portion of our revenue. A wide variety of factors could influence the success of those third parties and if negative factors significantly impacted a sufficient number of those third parties, the profitability of one or more of our businesses could be adversely affected. Impacts of COVID-19 on third parties’ liquidity have impacted timely payments by such third parties to the Company.
We obtain insurance against the risk of losses relating to some of these events, generally including physical damage to our property and resulting business interruption, certain injuries occurring on our property and some liabilities for alleged breach of legal responsibilities. When insurance is obtained it is subject to deductibles, exclusions, terms, conditions and limits of liability. The types and levels of coverage we obtain vary from time to time depending on our view of the likelihood of specific types and levels of loss in relation to the cost of obtaining coverage for such types and levels of loss and we may experience material losses not covered by our insurance. For example, some losses related to impacts of COVID-19 will not be covered by insurance available to us and some insurers may contest coverage.
Changes in our business strategy or restructuring of our businesses may increase our costs or otherwise affect the profitability of our businesses or the value of our assets.
As changes in our business environment occur we have adjusted, and may further adjust our business strategies to meet these changes and we may otherwise decide to further restructure our operations or particular businesses or assets. For example, in October 2020 we announced a reorganization of our media and entertainment businesses to accelerate our DTC strategies, and in March 2021 we announced the closure of a substantial number of our Disney-branded retail stores. Our new organization and strategies may not produce the anticipated benefits, such as supporting our growth strategies and enhancing shareholder value. Our new organization and strategies could be less successful than our previous organizational structure and strategies. In addition, external events including changing technology, changing consumer purchasing patterns, acceptance of our theatrical and other content offerings and changes in macroeconomic conditions may impair the value of our assets. When these changes or events occur, we may incur costs to change our business strategy and may need to write-down the value of assets. For example, current conditions, including COVID-19 and our business decisions, have reduced the value of some of our assets. We have impaired goodwill and intangible assets at our International Channels businesses and impaired the value of certain of our retail store assets. We may write-down other assets as our strategy evolves to account for the current business environment. We also make investments in existing or new businesses, including investments in international expansion of our business and in new business lines. In recent years, such investments have included expansion and renovation of certain of our theme parks, expansion of our fleet of cruise ships, the acquisition of TFCF and investments related to DTC offerings. Some of these
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investments may have returns that are negative or low, the ultimate business prospects of the businesses related to these investments may be uncertain, these investments may impact the profitability of our other businesses, and these risks are exacerbated by COVID-19. In any of these events, our costs may increase, we may have significant charges associated with the write-down of assets or returns on new investments may be lower than prior to the change in strategy or restructuring.
Increased competitive pressures may reduce our revenues or increase our costs.
We face substantial competition in each of our businesses from alternative providers of the products and services we offer and from other forms of entertainment, lodging, tourism and recreational activities. This includes, among other types, competition for human resources, content and other resources we require in operating our business. For example:
•Our programming and production operations compete to obtain creative, performing and business talent, sports and other programming, story properties, advertiser support and market share with other studio operators, television networks, SVOD providers and other new sources of broadband delivered content.
•Our television networks and stations and DTC offerings compete for the sale of advertising time with other television and SVOD services, as well as with newspapers, magazines, billboards and radio stations. In addition, we increasingly face competition for advertising sales from internet and mobile delivered content, which offer advertising delivery technologies that are more targeted than can be achieved through traditional means.
•Our television networks compete for carriage of their programming with other programming providers.
•Our theme parks and resorts compete for guests with all other forms of entertainment, lodging, tourism and recreation activities.
•Our content sales/licensing operations compete for customers with all other forms of entertainment.
•Our consumer products business competes with other licensors and creators of intellectual property.
•Our DTC businesses compete for customers with competitors’ DTC offerings, all other forms of media and all other forms of entertainment, as well as for technology, creative, performing and business talent and for content. Competition in each of these areas may increase as a result of technological developments and changes in market structure, including consolidation of suppliers of resources and distribution channels. Increased competition may divert consumers from our creative or other products, or to other products or other forms of entertainment, which could reduce our revenue or increase our marketing costs.
Competition for the acquisition of resources can increase the cost of producing our products and services or deprive us of talent necessary to produce high quality creative material. Such competition may also reduce, or limit growth in, prices for our products and services, including advertising rates and subscription fees at our media networks, parks and resorts admissions and room rates, and prices for consumer products from which we derive license revenues.
Damage to our reputation or brands may negatively impact our Company across businesses and regions.
Our reputation and globally recognizable brands are integral to the success of our businesses. Because our brands engage consumers across our businesses, damage to our reputation or brands in one business may have an impact on our other businesses. Because some of our brands are globally recognized, brand damage may not be locally contained. Maintenance of the reputation of our Company and brands depends on many factors including the quality of our offerings, maintenance of trust with our customers and our ability to successfully innovate. Significant negative claims or publicity regarding the Company or its operations, products, management, employees, practices, business partners, business decisions, social responsibility and culture may damage our brands or reputation, even if such claims are untrue. Damage to our reputation or brands could impact our sales, business opportunities, profitability, recruiting and valuation of our securities.
The seasonality of certain of our businesses and timing of certain of our product offerings could exacerbate negative impacts on our operations.
Each of our businesses is normally subject to seasonal variations and variations in connection with the timing of our product offerings, including as describedfollows:
•Revenues in “Management’s Discussionour Disney Parks, Experiences and Analysis - Seasonality.”Products segment fluctuate with changes in theme park attendance and resort occupancy resulting from the seasonal nature of vacation travel and leisure activities and seasonal consumer purchasing behavior, which generally results in increased revenues during the Company’s first and fourth fiscal quarters. Peak attendance and resort occupancy generally occur during the summer months when school vacations occur and during early winter and spring holiday periods. Our parks, resorts and experiences are or may be operating at diminished capacity or are or may be closed during these periods as a result of COVID-19. In addition, licensing revenues fluctuate with the timing and performance of our theatrical releases and cable programming broadcasts, many of which have been delayed, canceled or modified.
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•Revenues from television networks and stations are subject to seasonal advertising patterns and changes in viewership levels. In general, advertising revenues are somewhat higher during the fall and somewhat lower during the summer months.
•Revenues from content sales/licensing fluctuate due to the timing of content releases across various distribution markets. Release dates are determined by a number of factors, including, among others, competition, the timing of vacation and holiday periods and impacts of COVID-19 to various distribution markets.
•DTC revenues fluctuate based on: changes in subscriber levels; viewership levels on our digital platforms; and the demand for sports and film and television content. Each of these may depend on the availability of content, which varies from time to time throughout the year based on, among other things, sports seasons, content production schedules and league shut downs.
Accordingly, if a short-term negative impactimpacts on our business occursoccurring during a time of typical high seasonal demand (such as hurricane damage to our parks during the summer travel season), the effect could have a disproportionate effect on the results of that business for the year. Examples include the ongoing impact of COVID-19 on various high seasons or hurricane damage to our parks during the summer travel season.
ConsummationSustained increases in costs of pension and postretirement medical and other employee health and welfare benefits may reduce our profitability.
With approximately 170,000 employees at April 3, 2021, our profitability is substantially affected by costs of pension and current and postretirement medical benefits. We may experience significant increases in these costs as a result of macroeconomic factors, which are beyond our control, including increases in the cost of health care. Impacts of COVID-19 may lead to an increase in the cost of medical insurance and expenses. In addition, changes in investment returns and discount rates used to calculate pension and postretirement medical expense and related assets and liabilities can be volatile and may have an unfavorable impact on our costs in some years. Our pension and postretirement medical plans were remeasured at the end of fiscal 2020 and the underfunded status and fiscal 2021 costs increased. These macroeconomic factors as well as a decline in the fair value of pension and postretirement medical plan assets may put upward pressure on the cost of providing pension and postretirement medical benefits and may increase future funding requirements. There can be no assurance that we will succeed in limiting cost increases, and continued upward pressure could reduce the profitability of our businesses.
The alteration or discontinuation of LIBOR may adversely affect our borrowing costs.
Certain of our interest rate derivatives and a portion of our indebtedness bear interest at variable interest rates, primarily based on LIBOR, which may be subject to regulatory guidance and/or reform that could cause interest rates under our current or future debt agreements to perform differently than in the past or cause other unanticipated consequences. In July 2017, the Chief Executive of the Acquisition has increased our exposureU.K. Financial Conduct Authority (the “FCA”), which regulates LIBOR, announced that the FCA will no longer persuade or compel banks to submit rates for the riskscalculation of operating internationally.
We are a diversified entertainment companyLIBOR after 2021. However, on November 30, 2020, ICE Benchmark Administration (“IBA”), indicated that offers entertainment, travelit would consult on its intention to cease publication of most USD LIBOR tenors beyond June 30, 2023. On March 5, 2021, IBA confirmed it would cease publication of Overnight, 1, 3, 6 and consumer products worldwide. Although many of our businesses increasingly depend on acceptance of our offerings and products by consumers outside of the U.S., the combination with 21CF has increased the importance of international operations to our future operations, growth and prospects. The risks of operating internationally that we face have increased12 Month USD LIBOR settings immediately following the completionLIBOR publication on June 30, 2023. IBA also intends to cease publishing 1 Week and 2 Month USD LIBOR settings immediately following the LIBOR publication on December 31, 2021. The Alternative Reference Rates Committee (ARCC), which was convened by the Federal Reserve Board and the New York Fed, has identified the Secured Oversight Financing Rate (SOFR) as the recommended risk-free alternative rate for USD LIBOR. The extended cessation date for most USD LIBOR tenors will allow for more time for existing legacy USD LIBOR contracts to mature and provide additional time to continue to prepare for the transition from LIBOR. At this time, it is not possible to predict the effect any discontinuance, modification or other reforms to LIBOR, or the establishment of alternative reference rates such as SOFR, or any other reference rate, will have on the Acquisition.Company. However, if LIBOR ceases to exist or if the methods of calculating LIBOR change from their current form, the Company’s borrowing costs may be adversely affected.
TFCF ACQUISITION RISKS
Our consolidated indebtedness has increased substantially following completion of the Acquisition.TFCF acquisition and may increase in connection with impacts of COVID-19. This increased level of indebtedness could adversely affect us, including by decreasing our business flexibility.
Our consolidated indebtedness and cash and cash equivalents as of September 29, 2018 waswere approximately $20.9 billion. Uponbillion and $4.2 billion, respectively. With the completion of the Acquisition, we assumed $23TFCF acquisition, our consolidated indebtedness and cash and cash equivalents as of September 28, 2019 were approximately $47.0 billion and $5.4 billion, respectively. As of outstanding debt of 21CF. In addition, we have $15April 3, 2021, our consolidated indebtedness and cash and cash equivalents were approximately $56.1 billion of additional debt under a 364-day credit agreement used to finance a portion of the cash consideration for the 21CF acquisition. We anticipate using proceeds from the sale of the 21CF RSNs to pay down indebtedness when those proceeds become available.
and $15.9 billion, respectively. The increased indebtedness could have the effect of, among other things, reducing our financial flexibility and reducing our flexibility to respond to changing business and economic conditions. The increasedconditions, such as those presented by COVID-19, among others. Increased levels of indebtedness could also reduce funds available for capital expenditures, share repurchases and dividends, and other activities and may create competitive disadvantages for us relative to other companies with lower debt levels. Our financial flexibility may be further constrainedSince
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April 2020, Standard and Poor’s has downgraded our long-term debt ratings by two notches to BBB+ and downgraded our short-term debt ratings by one notch to A-2. On March 25, 2021, Standard and Poor’s placed the issuance of shares of common stock inCompany’s long-term ratings on Stable Outlook (previously Negative Outlook). In May 2020, Fitch downgraded our long- and short-term credit ratings by one notch to A- and F2, respectively, and placed our long-term ratings on Negative Outlook. Subsequently, on April 28, 2021, Fitch revised the 21CF acquisition, because of dividend payments.Company’s long-term ratings outlook to Stable (previously Negative).
Risks that impact our business as a whole may also impact the success of our direct-to-consumer business.
We may not successfully execute on technology development, service promotion, or creative development. Consumers may not be willing to pay for an expanding set of Direct-to-Consumer (DTC) services, potentially exacerbated by an economic downturn. We face competition for creative talent and may not be successful in recruiting and retaining talent. Government regulation, including revised foreign content and ownership regulations, may impact the implementation of our DTC business plans. Poor quality broadband infrastructure in certain markets may impact our customers’ access to our DTC products and may diminish our customers’ experience with our DTC products. These and other risks may impact the profitability and success of our DTC businesses.
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Additional factors are discussed in the 2018 Annual Report on Form 10-K under the Item 1A, “Risk Factors.”


ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a)The following table provides information about Company purchases of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act during the quarter ended March 30, 2019:April 3, 2021: 
Period 
Total
Number of
Shares
Purchased (1)
 
Weighted
Average
Price Paid
per Share
 
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
 
Maximum
Number of
Shares that
May Yet Be
Purchased
Under the
Plans or
Programs (2)
December 30, 2018 - January 31, 2019 229,366
 $111.93
 —
 158 million
February 1, 2019 - February 28, 2019 24,341
 113.06
 —
 158 million
March 1, 2019 - March 30, 2019 25,285
 112.65
 —
 0
Total 278,992
 112.10
 —
 0
Period
Total
Number of
Shares
Purchased(1)
Weighted
Average
Price Paid
per Share		Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
Maximum
Number of
Shares that
May Yet Be
Purchased
Under the
Plans or
Programs(2)
January 3, 2021 - January 31, 202118,215$173.31—na
February 1, 2021 - February 28, 202118,230183.36—na
March 1, 2021 - April 3, 202118,820193.32—na
Total55,265183.44—na
 
(1)
(1)55,265 shares were purchased on the open market to provide shares to participants in the Walt Disney Investment Plan. These purchases were not made pursuant to a publicly announced repurchase plan or program.
(2)Not applicable as the Company no longer has a stock repurchase plan or program.
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278,992 shares were purchased on the open market to provide shares to participants in the Walt Disney Investment Plan (WDIP). These purchases were not made pursuant to a publicly announced repurchase plan or program.

(2)
On March 20, 2019, the Company terminated the repurchase program.



ITEM 5. Other Items
Costs Associated with Exit or Disposal ActivitiesNone.
The information set forth below is included herein for the purpose of providing the disclosure required under “Item 2.05 - Costs Associated with Exit or Disposal Activities” of Form 8-K.
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On May 8, 2019, the Company disclosed a restructuring and integration plan as part of its initiative to realize cost synergies from its previously announced acquisition of 21CF. We expect to complete the restructuring and integration plan by the end of Fiscal Year 2021.
The Company estimates it will incur severance and severance-related costs on the order of $1.5 billion. This amount represents an estimate which is subject to change as management finalizes its assessment. The Company may also incur other costs in connection with the plan, such as lease termination costs, but is unable to estimate those amounts at this time.


ITEM 6. Exhibits
See Index of Exhibits.

SIGNATURE
Pursuant to the requirements 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.
INDEX OF EXHIBITS
THE WALT DISNEY COMPANY
(Registrant)
By:/s/ CHRISTINE M. MCCARTHY
Christine M. McCarthy,
Senior Executive Vice President and Chief Financial Officer
May 8, 2019
Burbank, California


INDEX OF EXHIBITS
Number and Description of Exhibit

(Numbers Coincide with Item 601 of Regulation S-K)
Document Incorporated by Reference from a Previous Filing or Filed Herewith, as Indicated below
3.1Restated Certificate of Incorporation of The Walt Disney Company, effective as of March 19, 2019
Exhibit 3.1 to the Current Report on Form 8-K of the Company filed March 20, 2019
3.2Certificate of Amendment to the Restated Certificate of Incorporation of The Walt Disney Company, effective as of March 20, 2019
Exhibit 3.2 to the Current Report on Form 8-K of the Company filed March 20, 2019
3.3Amended and Restated Bylaws of The Walt Disney Company, effective as of March 20, 2019
Exhibit 3.3 to the Current Report on Form 8-K of the Company filed March 20, 2019
3.4Amended and Restated Certificate of Incorporation of TWDC Enterprises 18 Corp., effective as of March 20, 2019
Exhibit 3.1 to the Current Report on Form 8-K of Legacy Disney filed March 20, 2019
3.5Amended and Restated Bylaws of TWDC Enterprises 18 Corp., effective as of March 20, 2019
Exhibit 3.2 to the Current Report on Form 8-K of Legacy Disney filed March 20, 2019
4.1First Supplemental Indenture to the Indenture dated as of September 24, 2001 between TWDC Enterprises 18 Corp. and the 2001 Indenture Trustee, dated as of March 20, 2019, by and among TWDC Enterprises 18 Corp., as issuer, The Walt Disney Company, as guarantor, and Wells Fargo Bank, National Association, as trustee
Exhibit 4.1 to the Current Report on Form 8-K of the Company filed March 20, 2019
4.2Indenture, dated as of March 20, 2019, by and among The Walt Disney Company, as issuer, and TWDC Enterprises 18 Corp., as guarantor, and Citibank, N.A., as trustee
Exhibit 4.1 to the Current Report on Form 8-K of the Company filed March 20, 2019
4.3Form of Disney Make-Whole Notes (Disney 5.650% 2020 Notes, Disney 4.500% 2021 Notes, Disney 3.000% 2022 Notes, Disney 4.000% 2023 Notes, Disney 6.400% 2035 Notes, Disney 6.150% 2037 Notes, Disney 6.650% 2037 Notes, Disney 7.850% 2039 Notes, Disney 6.900% 2039 Notes, Disney 6.150% 2041 Notes and Disney 5.400% 2043 Notes)
Exhibit 4.2 to the Current Report on Form 8-K of the Company filed March 20, 2019
4.4Form of Disney Par Call Notes (Disney 3.700% 2024 Notes, Disney 3.700% 2025 Notes, Disney 3.375% 2026 Notes, Disney 4.750% 2044 Notes, Disney 4.950% 2045 Notes and Disney 4.750% 2046 Notes)
Exhibit 4.3 to the Current Report on Form 8-K of the Company filed March 20, 2019
4.5Form of Disney Non-Redeemable Notes (Disney 8.875% 2023 Notes, Disney 7.750% January 2024 Notes, Disney 7.750% February 2024 Notes, Disney 9.500% 2024 Notes, Disney 8.500% 2025 Notes, Disney 7.700% 2025 Notes, Disney 7.430% 2026 Notes, Disney 7.125% 2028 Notes, Disney 7.300% 2028 Notes, Disney 7.280% 2028 Notes, Disney 7.625% 2028 Notes, Disney 6.550% 2033 Notes, Disney 8.450% 2034 Notes, Disney 6.200% 2034 Notes, Disney 8.150% 2036 Notes, Disney 6.750% 2038 Notes, Disney 7.750% 2045 Notes, Disney 7.900% 2095 Notes and Disney 8.250% 2096 Notes )
Exhibit 4.4 to the Current Report on Form 8-K of the Company filed March 20, 2019
4.6Registration Rights Agreement, dated as of March 20, 2019, by and among The Walt Disney Company, as issuer, TWDC Enterprises 18 Corp., as guarantor, and Citigroup Global Markets Inc., J.P. Morgan Securities LLC, BNP Paribas Securities Corp., HSBC Securities (USA) Inc. and RBC Capital Markets, LLC, as dealer managers
Exhibit 4.5 to the Current Report on Form 8-K of the Company filed March 20, 2019

10.1
10.1
Exhibit 10.1 to the Current Report on Form 8-K of the Company filed March 20, 20198, 2021
10.2364-Day Credit Agreement, dated as of March 15, 2019, among The Walt Disney Company, as the borrower, the lenders party thereto, Citibank, N.A., as a co-administrative agent, and JPMorgan Chase Bank, N.A., as a co-administrative agent and as the designated agent
Exhibit 10.2 to the Current Report on Form 8-K of the Company filed March 20, 2019
10.3Amendment to Amended and Restated Employment Agreement, Dated as of October 6, 2011, as amended, between the Company and Robert A. Iger, dated March 4, 2019
Exhibit 10.1 to the Current Report on Form 8-K of Legacy Disney filed March 4, 2019
31(a)22Filed herewith
31(a)
Filed herewith
31(b)
Filed herewith
32(a)
Furnished
32(b)
Furnished
101
101The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 30, 2019April 3, 2021 formatted in Inline Extensible Business Reporting Language (XBRL)(iXBRL): (i) the Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Equity and (vi) related notesFiled herewith
104Cover Page Interactive Data File (embedded within the Inline XBRL document)Filed herewith

*A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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SIGNATURE
Pursuant to the requirements 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)
By:/s/ CHRISTINE M. MCCARTHY
Christine M. McCarthy,
Senior Executive Vice President and Chief Financial Officer
May 13, 2021
Burbank, California
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