Walt Disney 10-Q 11 May 10 2010 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information
	6 Months Ended Apr. 03, 2010	May. 04, 2010
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2010-04-03
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q2
Trading Symbol	DIS
Entity Registrant Name	WALT DISNEY CO/
Entity Central Index Key	0001001039
Current Fiscal Year End Date	--10-02
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		1,958,559,521

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $)
In Millions, except Per Share data	3 Months Ended Apr. 03, 2010	3 Months Ended Mar. 28, 2009	6 Months Ended Apr. 03, 2010	6 Months Ended Mar. 28, 2009
Revenues	$8,580	$8,087	$18,319	$17,686
Costs and expenses	(7,068)	(6,800)	(15,393)	(15,182)
Restructuring and impairment charges	(71)	(305)	(176)	(305)
Other income	70		97	114
Net interest expense	(130)	(128)	(233)	(267)
Equity in the income of investees	154	147	243	294
Income before income taxes	1,535	1,001	2,857	2,340
Income taxes	(537)	(348)	(1,015)	(836)
Net income	998	653	1,842	1,504
Less: Net income attributable to noncontrolling interests	(45)	(40)	(45)	(46)
Net income attributable to The Walt Disney Company (Disney)	$953	$613	$1,797	$1,458
Earnings per share attributable to Disney:
Diluted	0.48	0.33	0.93	0.78
Basic	0.49	0.33	0.94	0.79
Weighted average number of common and common equivalent shares outstanding:
Diluted	1,973	1,868	1,938	1,870
Basic	1,940	1,855	1,903	1,854

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Millions	6 Months Ended Apr. 03, 2010	12 Months Ended Oct. 03, 2009
Current assets
Cash and cash equivalents	$3,075	$3,417
Receivables	5,478	4,854
Inventories	1,225	1,271
Television costs	951	631
Deferred income taxes	1,162	1,140
Other current assets	596	576
Total current assets	12,487	11,889
Film and television costs	5,190	5,125
Investments	2,607	2,554
Parks, resorts and other property, at cost
Attractions, buildings and equipment	32,396	32,475
Accumulated depreciation	(17,884)	(17,395)
Parks, resorts and other property, at cost before projects in progress and land, Total	14,512	15,080
Projects in progress	1,664	1,350
Land	1,158	1,167
Property, Plant and Equipment, Net, Total	17,334	17,597
Intangible assets, net	5,091	2,247
Goodwill	23,691	21,683
Other assets	2,360	2,022
Total assets	68,760	63,117
Current liabilities
Accounts payable and other accrued liabilities	4,879	5,616
Current portion of borrowings	2,241	1,206
Unearned royalties and other advances	2,932	2,112
Total current liabilities	10,052	8,934
Borrowings	11,000	11,495
Deferred income taxes	3,085	1,819
Other long-term liabilities	5,654	5,444
Commitments and contingencies
Disney Shareholders' equity
Preferred stock, $.01 par value Authorized - 100 million shares, Issued - none
Common stock, $.01 par value Authorized - 3.6 billion shares, Issued - 2.7 billion shares	28,100	27,038
Retained earnings	32,173	31,033
Accumulated other comprehensive loss	(1,559)	(1,644)
Stockholders' Equity Subtotal Before Treasury Stock, Total	58,714	56,427
Treasury stock, at cost, 730.8 million shares at April 3, 2010 and 781.7 million shares at October 3, 2009	(21,234)	(22,693)
Total Disney Shareholders' equity	37,480	33,734
Noncontrolling interests	1,489	1,691
Total equity	38,969	35,425
Total liability and equity	$68,760	$63,117

1_CONDENSED CONSOLIDATED BALANC

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
	Apr. 03, 2010	Oct. 03, 2009
Preferred stock, par value	0.01	0.01
Preferred stock, authorized	100,000,000	100,000,000
Preferred stock, issued	0	0
Common stock, par value	0.01	0.01
Common stock, authorized	3,600,000,000	3,600,000,000
Common stock, issued	2,700,000,000	2,700,000,000
Treasury stock, shares	730,800,000	781,700,000

2_CONDENSED CONSOLIDATED STATEM

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions	6 Months Ended Apr. 03, 2010	6 Months Ended Mar. 28, 2009
OPERATING ACTIVITIES
Net income	$1,842	$1,504
Depreciation and amortization	847	802
Gains on sales of equity investments	(75)	(114)
Deferred income taxes	235	(49)
Equity in the income of investees	(243)	(294)
Cash distributions received from equity investees	202	258
Net change in film and television costs	(481)	(537)
Equity-based compensation	272	225
Impairment charges	96	203
Other	(78)	(72)
Changes in operating assets and liabilities:
Receivables	(348)	454
Inventories	66	(74)
Other assets	58	(32)
Accounts payable and other accrued liabilities	330	(182)
Income taxes	(234)	(25)
Cash provided by operations	2,489	2,067
INVESTING ACTIVITIES
Investments in parks, resorts and other property	(807)	(749)
Proceeds from sales of equity investments	115	185
Acquisitions	(2,261)	(146)
Other	(25)	(3)
Cash used in investing activities	(2,978)	(713)
FINANCING ACTIVITIES
Commercial paper borrowings/(repayments), net	974	(919)
Borrowings		1,739
Reduction of borrowings	(243)	(726)
Dividends	(653)	(648)
Repurchases of common stock	(240)	(104)
Exercise of stock options and other	309	(328)
Cash provided by (used in) financing activities	147	(986)
(Decrease)/increase in cash and cash equivalents	(342)	368
Cash and cash equivalents, beginning of period	3,417	3,001
Cash and cash equivalents, end of period	$3,075	$3,369

3_CONDENSED CONSOLIDATED STATEM

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (USD $)
In Millions	Disney Shareholders	Non-controlling Interests	Total
Beginning Balance at Sep. 27, 2008	$32,323	$1,344	$33,667
Net income	1,458	46	1,504
Other comprehensive income:
Market value adjustments for hedges and investments	136		136
Pension and postretirement medical adjustments	(9)		(9)
Foreign currency translation and other	(99)	(19)	(118)
Other comprehensive income	28	(19)	9
Comprehensive income	1,486	27	1,513
Equity compensation activity	148		148
Dividends	(648)		(648)
Common stock repurchases	(104)		(104)
Acquisition of Jetix		(84)	(84)
Adoption of new pension and postretirement medical plan measurement date (net of tax of $37 million)	65		65
Distributions and other	2	(260)	(258)
Ending Balance at Mar. 28, 2009	33,272	1,027	34,299
Beginning Balance at Dec. 27, 2008	32,655	1,260	33,915
Net income	613	40	653
Other comprehensive income:
Market value adjustments for hedges and investments	45		45
Pension and postretirement medical adjustments	(8)		(8)
Foreign currency translation and other	(67)	(15)	(82)
Other comprehensive income	(30)	(15)	(45)
Comprehensive income	583	25	608
Equity compensation activity	33		33
Distributions and other	1	(258)	(257)
Ending Balance at Mar. 28, 2009	33,272	1,027	34,299
Beginning Balance at Oct. 03, 2009	33,734	1,691	35,425
Net income	1,797	45	1,842
Other comprehensive income:
Market value adjustments for hedges and investments	20		20
Pension and postretirement medical adjustments	90		90
Foreign currency translation and other	(25)	(14)	(39)
Other comprehensive income	85	(14)	71
Comprehensive income	1,882	31	1,913
Equity compensation activity	870		870
Dividends	(653)		(653)
Common stock repurchases	(240)		(240)
Acquisition of Marvel	1,887	90	1,977
Distributions and other		(323)	(323)
Ending Balance at Apr. 03, 2010	37,480	1,489	38,969
Beginning Balance at Jan. 02, 2010	36,180	1,778	37,958
Net income	953	45	998
Other comprehensive income:
Market value adjustments for hedges and investments	4		4
Pension and postretirement medical adjustments	63		63
Foreign currency translation and other	(29)	(11)	(40)
Other comprehensive income	38	(11)	27
Comprehensive income	991	34	1,025
Equity compensation activity	526		526
Common stock repurchases	(215)		(215)
Distributions and other	(2)	(323)	(325)
Ending Balance at Apr. 03, 2010	$37,480	$1,489	$38,969

4_CONDENSED CONSOLIDATED STATEM

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) (USD $)
In Millions	6 Months Ended Mar. 28, 2009
Adoption of new pension and postretirement medical plan measurement date, tax	$37

Principles of Consolidation

Principles of Consolidation
	6 Months Ended Apr. 03, 2010
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 statement of the results for the interim period. Operating results for the quarter and six months ended April3, 2010 are not necessarily indicative of the results that may be expected for the year ending October2, 2010. Certain reclassifications have been made in the prior year financial statements to conform to the current year presentation. These financial statements should be read in conjunction with the Companys 2009 Annual Report on Form 10-K as amended on Form 8-K dated February18, 2010. In December 1999, DVD Financing, Inc. (DFI), a subsidiary of Disney Vacation Development, Inc. and an indirect subsidiary of the Company, completed a receivables sale transaction that established a facility that permitted DFI to sell receivables arising from the sale of vacation club memberships on a periodic basis. In connection with this facility, DFI prepares separate financial statements, although its separate assets and liabilities are also consolidated in these financial statements. DFIs ability to sell new receivables under this facility ended on December4, 2008. (See Note 13 for further discussion of this facility) 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.

Segment Information

Segment Information
	6 Months Ended Apr. 03, 2010
Segment Information	2. Segment Information The operating segments reported below are the segments of the Company for which separate financial information is available and for which segment results are evaluated regularly by the Chief Executive Officer in deciding how to allocate resources and in assessing performance. The Company reports the performance of its operating segments including equity in the income of investees, which consists primarily of cable businesses included in the Media Networks segment. Quarter Ended SixMonthsEnded April3, 2010 March28, 2009 April3, 2010 March28, 2009 Revenues(1) : Media Networks $ 3,844 $ 3,620 $ 8,019 $ 7,523 Parks and Resorts 2,449 2,407 5,111 5,072 Studio Entertainment 1,536 1,435 3,471 3,380 Consumer Products 596 496 1,342 1,269 Interactive Media 155 129 376 442 $ 8,580 $ 8,087 $ 18,319 $ 17,686 Segment operating income (loss) (1): Media Networks $ 1,306 $ 1,306 $ 2,030 $ 1,961 Parks and Resorts 150 171 525 553 Studio Entertainment 223 13 466 200 Consumer Products 133 97 376 362 Interactive Media (55) (61) (65) (106) $ 1,757 $ 1,526 $ 3,332 $ 2,970 (1) Studio Entertainment segment revenues and operating income include an allocation of Consumer Products and Interactive Media revenues which is meant to reflect royalties on sales of merchandise based on certain Studio film properties. The increases/(decreases) related to these allocations on segment revenues and operating income as reported in the above table are as follows: QuarterEnded Six Months Ended April3, 2010 March28, 2009 April3, 2010 March28, 2009 Studio Entertainment $ 45 $ 25 $ 85 $ 77 Consumer Products (41) (22) (79) (65) Interactive Media (4) (3) (6) (12) $ $ $ $ A reconciliation of segment operating income to income before income taxes is as follows: Quarter Ended SixMonthsEnded April3, 2010 March28, 2009 April3, 2010 March28, 2009 Segment operating income $ 1,757 $ 1,526 $ 3,332 $ 2,970 Corporate and unallocated shared expenses (91) (92) (163) (172) Restructuring and impairment charges (71) (305) (176) (305) Other income 70 97 114 Net interest expense (130) (128) (233) (267) Income before income taxes $ 1,535 $ 1,001 $ 2,857 $ 2,340

Acquisitions

Acquisitions
	6 Months Ended Apr. 03, 2010
Acquisitions	3. Acquisitions The Disney Stores Japan On March31, 2010, the Company acquired all of the outstanding shares of Retail Networks Company Limited (The Disney Stores Japan) including $13 million in cash in exchange for a $17 million note. In connection with the acquisition, the Company recognized a $22 million non-cash gain from the deemed termination of the existing licensing arrangement. The gain is reported in Other income in the fiscal 2010 Condensed Consolidated Statements of Income. Marvel On December31, 2009, the Company completed a cash and stock acquisition for the outstanding capital stock of Marvel Entertainment, Inc. (Marvel), a character-based entertainment company. Disney believes that this acquisition is consistent with the Companys strategic value creation through utilization of intellectual properties across Disneys multiple platforms and territories. The acquisition purchase price totaled $4.2 billion. In accordance with the terms of the acquisition, Marvel shareholders received $30 per share in cash and 0.7452 Disney shares for each Marvel share they owned. In total, the Company paid $2.4 billion in cash and distributed shares valued at $1.9 billion (approximately 59million shares of Disney common stock at a price of $32.25). The Company is required to allocate the 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 finalizing the valuation of the assets acquired and liabilities assumed and therefore, the fair values set forth below are subject to adjustment once the valuations are completed. The following table summarizes our preliminary allocation of the purchase price: EstimatedFair Value Cash and cash equivalents $ 105 Accounts receivable and other assets 137 Film costs 304 Intangible assets 2,870 Goodwill 2,269 Total assets acquired 5,685 Accounts payable and other liabilities (320) Deferred income taxes (1,033) Total liabilities assumed (1,353) Noncontrolling interests (90) $ 4,242 Intangible assets primarily consist of character-based intellectual property with an estimated useful life of approximately 40 years. The goodwill reflects the value to Disney from leveraging Marvel intellectual property across our distribution channels, taking advantage of Disneys established global reach. The goodwill recorded as part of this acquisition is not amortizable for tax purposes. Jetix Europe In December 2008, the Company acquired an additional 26% interest in Jetix Europe N.V., a publicly traded pan-European kids entertainment company, for approximately $354 million (bringing our total ownership interest to over 99%). The Company intends to acquire the remaining outstanding shares through statutory buy-out proceedings. UTV On May9, 2008, the Company acquired a 24% interest (bringing its undiluted interest to 37%) in UTV Software Communications Limited (UTV), a media comp

Dispositions

Dispositions
	6 Months Ended Apr. 03, 2010
Dispositions	4. Dispositions On January27, 2010, the Company sold its investment in a pay television service in Central Europe for $78 million, resulting in a pre-tax gain of $48 million reported in Other income in the Fiscal 2010 Condensed Consolidated Statements of Income. On November25, 2009, the Company sold its investment in a television service in Europe for $37 million, resulting in a pre-tax gain of $27 million reported in Other income in the Fiscal 2010 Condensed Consolidated Statements of Income. On December22, 2008, the Company sold its investment in two pay television services in Latin America, for approximately $185 million, resulting in a pre-tax gain of $114 million reported in Other income in the Fiscal 2009 Condensed Consolidated Statements of Income.

Borrowings

Borrowings
	6 Months Ended Apr. 03, 2010
Borrowings	5. Borrowings During the six months ended April3, 2010, the Companys borrowing activity was as follows: October3, 2009 Additions Payments Other Activity April3, 2010 Commercial paper borrowings $ $ 974 $ $ $ 974 U.S. medium-term notes 7,618 2 7,620 European medium-term notes 347 (88) (8) 251 Other foreign currency denominated debt 904 (4) 900 Film financing 350 (93) 18 275 Other 614 (32) 582 Euro Disney borrowings(1) 2,344 (62) (140) 2,142 Hong Kong Disneyland borrowings 524 (27) 497 Total $ 12,701 $ 974 $ (243) $ (191) $ 13,241 (1) The other activity is primarily the impact of foreign currency translation as a result of the strengthening of the U.S. dollar against the Euro.

Euro Disney and Hong Kong Disne

Euro Disney and Hong Kong Disneyland
	6 Months Ended Apr. 03, 2010
Euro Disney and Hong Kong Disneyland	6. Euro Disney and Hong Kong Disneyland The Company has a 51% effective ownership interest in the operations of Euro Disney and a 47% ownership interest in the operations of Hong Kong Disneyland, both of which are consolidated in the Companys financial statements. The following table presents a condensed consolidating balance sheet for the Company as of April3, 2010, reflecting the impact of consolidating the balance sheets of Euro Disney and Hong Kong Disneyland. Before Euro Disney and Hong Kong Disneyland Consolidation Euro Disney, Hong Kong Disneylandand Adjustments Total Cash and cash equivalents $ 2,548 $ 527 $ 3,075 Other current assets 9,204 208 9,412 Total current assets 11,752 735 12,487 Investments 3,557 (950) 2,607 Fixed assets 13,104 4,230 17,334 Other assets 36,281 51 36,332 Total assets $ 64,694 $ 4,066 $ 68,760 Current portion of borrowings $ 2,118 $ 123 $ 2,241 Other current liabilities 7,289 522 7,811 Total current liabilities 9,407 645 10,052 Borrowings 8,484 2,516 11,000 Deferred income taxes and other long-term liabilities 8,575 164 8,739 Equity 38,228 741 38,969 Total liabilities and equity $ 64,694 $ 4,066 $ 68,760 The following table presents summarized income statement information of the Company for the six months ended April3, 2010, reflecting the impact of consolidating the income statements of Euro Disney and Hong Kong Disneyland. Before Euro Disney and Hong Kong Disneyland Consolidation Euro Disney, Hong Kong Disneylandand Adjustments Total Revenues $ 17,392 $ 927 $ 18,319 Cost and expenses (14,379) (1,014) (15,393) Restructuring and impairment charges (176) (176) Other income 97 97 Net interest expense (175) (58) (233) Equity in the income of investees 168 75 243 Income before income taxes 2,927 (70) 2,857 Income taxes (1,010) (5) (1,015) Net income $ 1,917 $ (75) $ 1,842 The following table presents a condensed consolidating cash flow statement of the Company for the six months ended April3, 2010, reflecting the impact of consolidating the cash flow statements of Euro Disney and Hong Kong Disneyland. Before Euro Disney and Hong Kong Disneyland Consolidation Euro Disney, Hong Kong Disneyland and Adjustments Total Cash provided by operations $ 2,455 $ 34 $ 2,489 Investments in parks, resorts and other property (722) (85) (807) Other investing activities (2,205) 34 (2,171) Cash used by financing activities 209 (62) 147 Decrease in cash and cash equivalents (263) (79) (342) Cash and cash equivalents

Pension and Other Benefit Progr

Pension and Other Benefit Programs
	6 Months Ended Apr. 03, 2010
Pension and Other Benefit Programs	7. 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 April3, 2010 March28, 2009 April3, 2010 March28, 2009 April3, 2010 March28, 2009 April3, 2010 March28, 2009 Service cost $ 66 $ 41 $ 132 $ 83 $ 6 $ 4 $ 11 $ 8 Interest cost 99 91 198 181 18 18 35 36 Expected return on plan assets (103) (93) (207) (186) (7) (7) (13) (13) Amortization of prior year service costs 4 4 7 7 (1) (1) (1) Recognized net actuarial loss 38 (2) 77 (4) 1 (2) 3 (4) Net periodic benefit cost $ 104 $ 41 $ 207 $ 81 $ 17 $ 13 $ 35 $ 26 During the six months ended April3, 2010, the Company did not make any material contributions to its pension and postretirement medical plans. The Company expects pension and post-retirement medical plan contributions in fiscal 2010 to range from $350 million to $450 million. Final minimum funding requirements for fiscal 2010 will be determined based on our January1, 2010 funding actuarial valuation which will be available later in fiscal 2010.

Earnings Per Share

Earnings Per Share
	6 Months Ended Apr. 03, 2010
Earnings Per Share	8. 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. Options excluded from the diluted earnings per share calculation, as they were anti-dilutive, were 30million and 166million shares for the quarters ended April3, 2010 and March28, 2009, respectively, and 52million and 152million for the six months ended April3, 2010 and March28, 2009, respectively. A reconciliation of the weighted average number of common and common equivalent shares outstanding is as follows: Quarter Ended Six Months Ended April3, 2010 March28, 2009 April3, 2010 March28, 2009 Shares (in millions): Weighted average number of common shares outstanding (basic) 1,940 1,855 1,903 1,854 Weighted average dilutive impact of equity-based compensation awards 33 13 35 16 Weighted average number of common and common equivalent shares outstanding (diluted) 1,973 1,868 1,938 1,870

Equity

Equity
	6 Months Ended Apr. 03, 2010
Equity	9. Equity The Company declared a $653 million dividend ($0.35 per share) on December2, 2009 related to fiscal 2009 for shareholders of record on December14, 2009, which was paid on January19, 2010. The Company paid a $648 million dividend ($0.35 per share) during the second quarter of fiscal 2009 related to fiscal 2008. During the six months ended April3, 2010, the Company repurchased 8million shares of its common stock for approximately $240 million. As of April3, 2010, the Company had remaining authorization in place to repurchase approximately 171million additional shares. The repurchase program does not have an expiration date. The Company received proceeds of $748 million from the exercise of 32million employee stock options during the first six months of fiscal 2010. Accumulated other comprehensive income (loss), net of tax, is as follows: April3, 2010 October3, 2009 Market value adjustments for investments and hedges $ 38 $ 18 Foreign currency translation and other 80 105 Unrecognized pension and postretirement medical expense (1,677) (1,767) Accumulated other comprehensive income (loss) (1) $ (1,559) $ (1,644) (1) Accumulated other comprehensive income (loss) and components of other comprehensive income (loss) are recorded net of tax using a 37% estimated tax rate

Equity-Based Compensation

Equity-Based Compensation
	6 Months Ended Apr. 03, 2010
Equity-Based Compensation	10. Equity-Based Compensation The amount of compensation expense related to stock options and restricted stock units (RSUs) is as follows: Quarter Ended Six Months Ended April3, 2010 March28, 2009 April3, 2010 March28, 2009 Stock options $ 55 $ 51 $ 122 $ 113 RSUs 82 60 150 112 Total equity-based compensation expense $ 137 $ 111 $ 272 $ 225 Unrecognized compensation cost related to unvested stock options and RSUs totaled approximately $315 million and $661 million, respectively, as of April3, 2010. In January 2010, the Company made stock compensation grants, which included its regular annual grant, consisting of 11.5million stock options and 13.4million RSUs, of which 0.4million RSUs included market and/or performance conditions. The weighted average grant date fair values of options issued during the six months ended April3, 2010, and March28, 2009, were $9.42 and $7.52, respectively.

Commitments and Contingencies

Commitments and Contingencies
	6 Months Ended Apr. 03, 2010
Commitments and Contingencies	11. Commitments and Contingencies Legal Matters The Company, together with, in some instances, certain of its directors and officers, is a defendant or codefendant in various legal actions involving copyright, breach of contract and various other claims incident to the conduct of its businesses. Management does not expect the Company to suffer any material liability by reason of such 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. In the event of a debt service shortfall, the Company will be responsible to fund the shortfall. As of April3, 2010, the remaining debt service obligation guaranteed by the Company was $370 million, of which $94 million was principal. To the extent that tax revenues exceed the debt service payments in subsequent periods, the Company would be reimbursed for any previously funded shortfalls. To date, tax revenues have exceeded the debt service payments for the Anaheim bonds. ESPNSTAR Sports, a joint venture in which ESPN owns a 50% equity interest, has an agreement forglobal programming rights to International Cricket Council events from 2007through 2015.Under the terms of the agreement,ESPN and the other joint-venture partner have jointly guaranteed the programming rights obligation of approximately $0.9 billion over the remaining term of the agreement. Accounts Receivable Risk In light of the recent turmoil in the domestic and global economy, our estimates and judgments with respect to the collectibility of our receivables have become subject to greater uncertainty than in more stable periods. Income Taxes During the quarter the Company settled certain tax matters with state and federal taxing authorities. As a result of these settlements, the Company reduced its unrecognized tax benefits by $87 million. During the quarter the Company recorded a $72 million charge related to the enactment of health care reform legislation in March 2010. Under this legislation the Companys deductions for retiree prescription drug benefits will be reduced by the amount of Medicare Part D drug subsidies received beginning in fiscal year 2014. Under applicable accounting rules, the Company is required to reduce its existing deferred tax asset, which was established for the future deductibility of retiree prescription drug benefit costs, to reflect the lost deductions. The reduction must be recorded as a charge to earnings in the period the legislation is enacted. In the next twelve months, it is reasonably possible that our unrecognized tax benefits could change due to payments for or resolution of open tax matters for post-2002 years. These resolutions and payments would reduce our unrecognized tax benefits by $109 million.

New Accounting Pronouncements

New Accounting Pronouncements
	6 Months Ended Apr. 03, 2010
New Accounting Pronouncements	12. New Accounting Pronouncements Revenue Arrangements with Multiple Deliverables In October 2009, the Financial Accounting Standards Board (FASB) issued guidance on revenue arrangements with multiple deliverables effective for the Companys 2011 fiscal year. The guidance revises the criteria for separating, measuring, and allocating arrangement consideration to each deliverable in a multiple element arrangement. The guidance requires companies to allocate revenue using the relative selling price of each deliverable, which must be estimated if the Company does not have a history of selling the deliverable on a stand-alone basis or third-party evidence of selling price. The Company is assessing the potential effect of this guidance on its financial statements. Variable Interest Entities In June 2009, the FASB issued guidance to revise the approach to determine when a variable interest entity (VIE) should be consolidated. The new consolidation model for VIEs considers whether an entity has the power to direct the activities that most significantly impact the VIEs economic performance and shares in the significant risks and rewards of the entity. The guidance on VIEs requires companies to continually reassess VIEs to determine if consolidation is appropriate and provide additional disclosures. The guidance is effective for the Companys 2011 fiscal year. The Company is assessing the potential effect this guidance will have on its financial statements. Collaborative Arrangements In December 2007, the FASB issued guidance that defines collaborative arrangements and establishes accounting and reporting requirements for such arrangements. A collaborative arrangement is a contractual arrangement that involves a joint operating activity, for example an agreement to co-produce and distribute a motion picture with another studio. The Company adopted the provisions of this collaborative arrangement guidance at the beginning of fiscal year 2010. The adoption did not have a material impact on the Companys financial statements. Business Combinations In December 2007, the FASB issued guidance that establishes principles and requirements for determining how a company recognizes and measures the fair value of certain assets and liabilities acquired in a business combination, including noncontrolling interests, contingent consideration, and certain acquired contingencies. The guidance on business combinations also requires acquisition-related transaction expenses and restructuring costs be expensed as incurred rather than capitalized. The Company adopted the provisions of this business combination guidance and applied the guidance prospectively beginning fiscal year 2010. Noncontrolling Interests In December 2007, the FASB issued guidance on the accounting and reporting for a noncontrolling interest in a subsidiary which requires that noncontrolling interests be reported as a separate component of shareholders equity and that net income attributable to the noncontrolling interests and net income attributable to the shareholders of the Company be presented separately in the consolidated statement of income. The Company adopte

Fair Value Measurements

Fair Value Measurements
	6 Months Ended Apr. 03, 2010
Fair Value Measurements	13. 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. Assets and liabilities carried at fair value are classified in 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 Companys assets and liabilities measured at fair value on a recurring basis as of April3, 2010 are summarized in the following table: Level1 Level2 Level3 Total Assets Investments $ 39 $ 46 $ 2 $ 87 Derivatives (1) Interest rate 152 152 Foreign exchange 371 371 Residual Interests 53 53 Liabilities Derivatives (1) Foreign exchange (214) (214) Other derivatives (17) (17) Other (8) (8) Total $ 39 $ 338 $ 47 $ 424 (1) The Company has a master netting arrangement by counterparty with respect to certain derivative contracts. Contracts in a liability position totaling $160 million have been netted against contracts in an asset position in the April3, 2010 Condensed Consolidated Balance Sheet The fair value of Level 2 investments is primarily determined by reference to market prices based on recent trading activity and other relevant information including pricing for similar securities as determined by third-party pricing services. The fair values of Level 2 derivatives, which consist of interest rate and foreign currency hedges, are primarily determined based on the present value of future cash flows using internal 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 3 residual interests consist of our residual interests in securitized vacation ownership mortgage receivables and are valued using a discounted cash flow model that considers estimated interest rates, discount rates, prepayment, and defaults. There were no material changes in the residual interests in the first six months of fiscal 2010. Transfers of Financial Assets Through December4, 2008, the Company sold mortgage receivables arising from sales of its vacation ownership units under a facility that expired on December4, 2008 and was not renewed.The Company sold $17 mill

Derivative Instruments

Derivative Instruments
	6 Months Ended Apr. 03, 2010
Derivative Instruments	14. 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. The following table summarizes the fair value of the Companys derivative positions as of April3, 2010: Current Assets Other Assets Other Accrued Liabilities Other Long-Term Liabilities Derivatives designated as hedges Foreign exchange $ 132 $ 75 $ (137) $ (29) Interest rate 1 151 (2) Derivatives not designated as hedges Foreign exchange 80 84 (33) (15) Interest rate (15) Gross fair value of derivatives 213 310 (170) (61) Counterparty netting (116) (44) 118 42 Total Derivatives (1) $ 97 $ 266 $ (52) $ (19) The following table summarizes the fair value of the Companys derivative positions as of October3, 2009: Current Assets Other Assets Other Accrued Liabilities Other Long-Term Liabilities Derivatives designated as hedges Foreign exchange $ 84 $ 111 $ (115) $ (55) Interest rate 4 186 Derivatives not designated as hedges Foreign exchange 37 127 (70) (37) Interest rate (18) Other derivative (2) Gross fair value of derivatives 125 424 (187) (110) Counterparty netting (98) (72) 103 67 Total Derivatives (1) $ 27 $ 352 $ (84) $ (43) (1) Refer to Note 13 for further information on derivative fair values and counterparty netting. Interest Rate Risk Management The Company is exposed to the impact of interest rate changes primarily through its borrowing activities. The Companys objective is to mitigate the impact of interest rate changes on earnings and cash flows and on the market value of its investments and 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 typically uses pay-floating and pay-fixed interest rate swaps to facilitate its interest rate 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 April3, 2010 and October3, 2009, the total notional amount of the Companys pay-floating interest rate swaps was $1.5 billion and $1.6 billion, respectively. The following table summarizes adjustments related to fair value hedges included in net interest expense in the Consolidated Statements of Income. QuarterEnded SixMonthsEnded April3, 2010

Restructuring and Impairment Ch

Restructuring and Impairment Charges
	6 Months Ended Apr. 03, 2010
Restructuring and Impairment Charges	15. Restructuring and Impairment Charges The Company recorded $176 million of restructuring and impairment charges in the current six months related to organizational and cost structure initiatives primarily at our Studio Entertainment and Media Networks segments. Impairment charges of $96 million, of which $57 million were recorded in the current quarter, consisted of write-offs of capitalized costs primarily related to abandoned film projects and the closure of a studio production facility. Restructuring charges of $80 million, of which $14 million were recorded in the current quarter, were primarily severance and related costs. In the prior-year six months, the Company recorded $305 million of restructuring and impairment charges which included non-cash impairment charges of $203 million and restructuring costs of $102 million. The most significant of the impairment charges were $108 million related to radio FCC licenses and $46 million related to our investment in UTV Group. The restructuring charges consisted of severance and other related costs as a result of various organizational and cost structure initiatives across our businesses, roughly half of which related to the Parks and Resorts segment. All of the charges were recorded in the second quarter of the prior year.