The Walt Disney Company

02/02/2026 | Press release | Distributed by Public on 02/02/2026 05:45

Quarterly Report for Quarter Ending December 27, 2025 (Form 10-Q)

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
•Current Quarter Results Compared to Prior-Year Quarter
•Seasonality
•Business Segment Results
•Corporate and Unallocated Shared Expenses
•Financial Condition
•Market Risk
•Commitments and Contingencies
•Other Matters
•Supplemental Guarantor Financial Information
CONSOLIDATED RESULTS
Quarter Ended % Change
Better
(Worse)
(in millions, except per share data) December 27,
2025 		December 28,
2024
Revenues:
Services $ 23,206 $ 22,048 5 %
Products 2,775 2,642 5 %
Total revenues 25,981 24,690 5 %
Costs and expenses:
Cost of services (exclusive of depreciation and amortization) (15,003) (13,789) (9) %
Cost of products (exclusive of depreciation and amortization) (1,666) (1,617) (3) %
Selling, general, administrative and other (4,121) (3,930) (5) %
Depreciation and amortization (1,316) (1,276) (3) %
Total costs and expenses (22,106) (20,612) (7) %
Restructuring and impairment charges - (143) 100 %
Interest expense, net (275) (367) 25 %
Equity in the income of investees 93 92 1 %
Income before income taxes 3,693 3,660 1 %
Income taxes (1,209) (1,016) (19) %
Net income 2,484 2,644 (6) %
Net income attributable to noncontrolling interests (82) (90) 9 %
Net income attributable to Disney
$ 2,402 $ 2,554 (6) %
Diluted earnings per share attributable to Disney
$ 1.34 $ 1.40 (4) %
CURRENT QUARTER RESULTS COMPARED TO PRIOR-YEAR QUARTER
Revenues for the quarter increased 5%, or $1.3 billion, to $26.0 billion; net income attributable to Disney decreased to $2.4 billion compared to $2.6 billion in the prior-year quarter; and diluted earnings per share (EPS) attributable to Disney decreased to $1.34 compared to $1.40 in the prior-year quarter. The net income and EPS decreases were due to lower operating income at Entertainment and a higher effective income tax rate. These decreases were partially offset by higher operating income at Experiences, the comparison to charges taken in connection with the Star India Transaction and a legal settlement in the prior-year quarter and lower intangible amortization and interest expense.
Revenues
Service revenues for the quarter increased 5%, or $1.2 billion, to $23.2 billion, which included an approximate 1 percentage point increase from the Fubo Transaction and an approximate 1 percentage point decrease from the Star India
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Transaction. Aside from these impacts, service revenues increased due to an increase in content sales, growth at our parks and experiences businesses and, to a lesser extent, higher subscription and affiliate fees.
Product revenues for the quarter increased 5%, or $0.1 billion, to $2.8 billion due to growth at our parks and experiences businesses.
Costs and expenses
Cost of services for the quarter increased 9%, or $1.2 billion, to $15.0 billion, which included an approximate 2 percentage point increase from the Fubo Transaction and an approximate 1 percentage point decrease due to the Star India Transaction. Aside from these impacts, cost of services increased due to higher programming and production costs and, to a lesser extent, the impact of inflation and increased volumes at our parks and experiences businesses.
Selling, general, administrative and other costs increased 5%, or $0.2 billion, to $4.1 billion, due to higher marketing costs.
Depreciation and amortization increased 3% to $1.3 billion driven by higher depreciation at our parks and experiences and Entertainment businesses, partially offset by lower amortization of intangible assets.
Restructuring and impairment charges
In the prior-year quarter, the Company recorded a $143 million loss in connection with the Star India Transaction.
Interest expense, net
Interest expense, net is as follows:
Quarter Ended
(in millions) December 27,
2025 		December 28,
2024 		% Change
Better (Worse)
Interest expense $ (443) $ (487) 9 %
Interest income, investment income and other 168 120 40 %
Interest expense, net $ (275) $ (367) 25 %
The decrease in interest expense was due to lower average debt balances and an increase in capitalized interest.
The increase in interest income, investment income and other was due to a favorable comparison related to pension and postretirement benefit costs, other than service cost.
Income Taxes
Quarter Ended
December 27,
2025 		December 28,
2024
Income before income taxes
$ 3,693 $ 3,660
Income tax (benefit) expense
1,209 1,016
Effective income tax rate
32.7 % 27.8 %
The increase in the effective income tax rate in the current quarter compared to the prior-year quarter was due to a non-cash tax charge in the current quarter resulting from the Fubo Transaction and an unfavorable impact in the current quarter for adjustments related to prior years, partially offset by a non-cash tax-charge in the prior-year quarter in connection with the Star India Transaction.
Noncontrolling Interests
Quarter Ended
(in millions) December 27,
2025 		December 28,
2024 		% Change
Better (Worse)
Net income attributable to noncontrolling interests
$ (82) $ (90) 9 %
Net income attributable to noncontrolling interests is determined on income after royalties and management fees, financing costs and income taxes, as applicable.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Certain Items Impacting Results in the Quarter
Results for the quarter ended December 27, 2025 were impacted by the following:
•Non-cash tax charge of $307 million resulting from the Fubo Transaction
•Acquisition Amortization of $300 million
Results for the quarter ended December 28, 2024 were impacted by the following:
•An impairment charge of $143 million recorded in connection with the Star India Transaction. Tax expense includes a $31 million tax benefit on the impairment charge and a non-cash tax charge of $244 million related to the Star India Transaction
•Acquisition Amortization of $397 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 December 27, 2025:
Non-cash tax charge resulting from the Fubo Transaction
$ - $ (307) $ (307) $ (0.17)
Acquisition Amortization
(300) 70 (230) (0.12)
Total $ (300) $ (237) $ (537) $ (0.29)
Quarter Ended December 28, 2024:
Star India Transaction
$ (143) $ (213) $ (356) $ (0.20)
Acquisition Amortization
(397) 93 (304) (0.16)
Total $ (540) $ (120) $ (660) $ (0.36)
(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.
SEASONALITY
The Company's businesses are subject to the effects of seasonality. Consequently, the operating results for the quarter ended December 27, 2025 for each business segment, and for the Company as a whole, are not necessarily indicative of results to be expected for the full year.
Entertainment revenues are subject to seasonal and other cyclical advertising patterns, changes in viewership and subscriber levels, timing and performance of theatrical releases, and the timing of and demand for film and television programs. In general, domestic advertising revenues are typically somewhat higher during the fall and somewhat lower during the summer months and domestic advertising revenue is typically higher during election cycles. Affiliate and subscriptions fees vary with the subscriber trends of multi-channel video programming distributors (i.e. cable, satellite telecommunications and digital over-the-top service providers) and our streaming services. Theatrical release dates are determined by several factors, including competition and the timing of vacation and holiday periods.
Sports revenues are subject to seasonal advertising patterns, changes in viewership and subscriber levels, and the availability of and demand for sports programming. Advertising revenues generated from sports programming are also impacted by the timing of sports seasons and events, which timing may vary throughout the year or may take place periodically (e.g. biannually, quadrennially).
Experiences revenues fluctuate with changes in theme park attendance and resort occupancy resulting from the seasonal nature of vacation travel and leisure activities, the opening of new guest offerings and pricing and promotional offers. Peak attendance and resort occupancy generally occur during the summer months when school vacations occur and during early winter and spring holiday periods. In addition, theme park and resort revenues may be higher during significant celebrations such as theme park or character anniversaries and lower in the periods preceding or following such celebrations. Consumer products revenue fluctuates with consumer purchasing behavior, which generally results in higher revenues during the Company's first and fourth fiscal quarters. In addition, licensing revenues fluctuate with the timing and performance of theatrical and game releases and direct-to-consumer content.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
BUSINESS SEGMENT RESULTS
The Company evaluates the performance of its operating businesses based on segment revenue and segment operating income.
The following table presents revenues from our operating segments:
Quarter Ended % Change
Better
(Worse)
(in millions) December 27,
2025 		December 28,
2024
Entertainment $ 11,609 $ 10,872 7 %
Sports 4,909 4,850 1 %
Experiences 10,006 9,415 6 %
Eliminations (1)
(543) (447) (21) %
Revenues $ 25,981 $ 24,690 5 %
(1)Reflects fees paid by (a) the Entertainment vMVPD services to ESPN and the Entertainment linear networks for the right to air the networks on Hulu Live and Fubo and (b) the Entertainment segment to the Sports segment to program certain sports content on ABC Network and Disney+.
The following table presents income from our operating segments and other components of income before income taxes:
Quarter Ended % Change
Better
(Worse)
(in millions) December 27,
2025 		December 28,
2024
Entertainment operating income $ 1,100 $ 1,703 (35) %
Sports operating income
191 247 (23) %
Experiences operating income 3,309 3,110 6 %
Corporate and unallocated shared expenses (304) (460) 34 %
Equity in the loss of India joint venture
(28) (33) 15 %
Restructuring and impairment charges - (143) 100 %
Interest expense, net (275) (367) 25 %
Acquisition Amortization
(300) (397) 24 %
Income before income taxes
$ 3,693 $ 3,660 1 %
Depreciation expense is as follows:
Quarter Ended % Change
Better
(Worse)
(in millions) December 27,
2025 		December 28,
2024
Entertainment $ 205 $ 165 (24) %
Sports 24 10 >(100) %
Experiences
Domestic 524 461 (14) %
International 208 191 (9) %
Total Experiences 732 652 (12) %
Corporate 79 82 4 %
Total depreciation expense $ 1,040 $ 909 (14) %
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Amortization of intangible assets is as follows:
Quarter Ended % Change
Better
(Worse)
(in millions) December 27,
2025 		December 28,
2024
Entertainment $ 13 $ 13 - %
Experiences 27 27 - %
Acquisition amortization - intangible assets
236 327 28 %
Total amortization of intangible assets $ 276 $ 367 25 %
BUSINESS SEGMENT RESULTS - Current Quarter Results Compared to Prior-Year Quarter
Entertainment
Operating results for Entertainment are as follows:
Quarter Ended % Change
Better
(Worse)
(in millions) December 27,
2025 		December 28,
2024
Revenues
Subscription and affiliate fees $ 7,250 $ 6,720 8 %
Advertising 1,775 1,898 (6) %
Content sales 1,936 1,585 22 %
Other 648 669 (3) %
Total revenues 11,609 10,872 7 %
Operating expenses (7,783) (6,815) (14) %
Selling, general, administrative and other (2,626) (2,294) (14) %
Depreciation and amortization (218) (178) (22) %
Equity in the income of investees 118 118 - %
Operating Income $ 1,100 $ 1,703 (35) %
Revenues - Subscription and affiliate fees
Growth in subscription and affiliate fees was due to increases of 4% from higher effective rates, 4% from the Fubo Transaction and 1% from more subscribers, partially offset by decreases of 1% from the Star India Transaction and 1% from the temporary suspension of carriage with an affiliate in the current quarter.
Revenues - Advertising
The decline in advertising revenue was due to decreases of 5% from the Star India Transaction and 5% from lower rates, partially offset by increases of 3% from higher impressions and 1% from the Fubo Transaction. Rates and impressions included an impact from less political advertising.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Revenues - Content sales
Content sales revenue increased due to an increase of 25% from theatrical distribution, partially offset by a decrease of 6% from home entertainment distribution. Higher theatrical distribution revenue was attributable to more significant titles released in the current quarter compared to the prior-year quarter. The current quarter included Zootopia 2, Avatar: Fire and Ash, Predator: Badlandsand Tron: Ares. The prior-year quarter included Moana 2and Mufasa: The Lion King.
Operating expenses
Quarter Ended % Change
Better
(Worse)
(in millions) December 27,
2025 		December 28,
2024
Programming and production costs $ (6,314) $ (5,475) (15) %
Other operating expenses (1,469) (1,340) (10) %
$ (7,783) $ (6,815) (14) %
The increase in programming and production costs was due to increases of 11% from theatrical distribution, 4% from the Fubo Transaction and 3% from our streaming services. Higher programming and production costs at our streaming services were primarily due to an increase in subscriber-based license fees.
The increase in other operating expenses was primarily due to higher technology and distribution costs.
Selling, general, administrative and other
Selling, general, administrative and other costs increased $332 million to $2,626 million from $2,294 million due to higher marketing costs at theatrical distribution and our streaming services. Higher theatrical marketing costs were due to more significant releases in the current quarter.
Depreciation and amortization
Depreciation and amortization increased $40 million to $218 million from $178 million due to new technology and facilities assets placed in service.
Operating Income from Entertainment
Segment operating income decreased $603 million to $1,100 million from $1,703 million due to lower theatrical distribution results.
Items Excluded from Segment Operating Income Related to Entertainment
The following table presents supplemental information for items related to the Entertainment segment that are excluded from segment operating income:
Quarter Ended % Change
Better
(Worse)
(in millions) December 27,
2025 		December 28,
2024
Acquisition Amortization(1)
$ (298) $ (321) 7 %
(1)In the current quarter, amortization of intangible assets was $234 millionand amortization of step-up on film and television costs was $64 million. In the prior-year quarter, amortization of intangible assets was $251 million and amortization of step-up on film and television costs was $67 million.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Sports
Operating results for Sports are as follows:
Quarter Ended % Change
Better
(Worse)
(in millions) December 27,
2025 		December 28,
2024
Revenues
Subscription and affiliate fees $ 2,983 $ 3,057 (2) %
Advertising 1,477 1,342 10 %
Other 449 451 - %
Total revenues 4,909 4,850 1 %
Operating expenses (4,389) (4,293) (2) %
Selling, general, administrative and other (308) (310) 1 %
Depreciation and amortization (24) (10) >(100) %
Equity in the income of investees 3 10 (70) %
Operating Income
$ 191 $ 247 (23) %
Revenues - Subscription and affiliate fees
Lower subscription and affiliate fees reflected decreases of 4% from fewer subscribers, 3% from the temporary suspension of carriage with an affiliate in the current quarter and 1% from the Star India Transaction, partially offset by an increase of 6% from higher effective rates.
Revenues - Advertising
Advertising revenue growth was primarily due to an increase of 8% from higher rates.
Operating expenses
Quarter Ended % Change
Better
(Worse)
(in millions) December 27,
2025 		December 28,
2024
Programming and production costs $ (4,132) $ (4,043) (2) %
Other operating expenses (257) (250) (3) %
$ (4,389) $ (4,293) (2) %
Programming and production costs increased in the current quarter compared to the prior-year quarter driven by contractual rate increases and costs for new sports rights, partially offset by the timing of NBA and college sports rights costs under new agreements, including the impact of fewer regular season NBA games.
Depreciation and amortization
Depreciation and amortization increased $14 million, to $24 million from $10 million, due to new technology assets placed in service.
Operating Income from Sports
Segment operating income decreased $56 million, to $191 million from $247 million, driven by an increase in programming and production costs and a decrease in subscription and affiliate fees, partially offset by higher advertising revenue.
Items Excluded from Segment Operating Income Related to Sports
The following table presents supplemental information for items related to the Sports segment that are excluded from segment operating income:
Quarter Ended % Change
Better
(Worse)
(in millions) December 27,
2025 		December 28,
2024
Acquisition Amortization(1)
$ - $ (74) 100 %
(1)Represents amortization of intangible assets.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Experiences
Operating results for the Experiences segment are as follows:
Quarter Ended % Change
Better
(Worse)
(in millions) December 27,
2025 		December 28,
2024
Revenues
Theme park admissions $ 3,301 $ 3,087 7 %
Resorts and vacations 2,410 2,221 9 %
Parks & Experiences merchandise, food and beverage 2,348 2,181 8 %
Merchandise licensing and retail 1,337 1,318 1 %
Parks licensing and other 610 608 - %
Total revenues 10,006 9,415 6 %
Operating expenses (4,976) (4,678) (6) %
Selling, general, administrative and other (962) (948) (1) %
Depreciation and amortization (759) (679) (12) %
Operating Income $ 3,309 $ 3,110 6 %
Revenues - Theme park admissions
Theme park admissions revenue growth was due to increases of 4% from higher average per capita ticket revenue and 2% from increased attendance at our international and domestic parks. Attendance growth at our domestic parks benefited from the comparison to the adverse impact of Hurricane Milton in the prior-year quarter.
Revenues - Resorts and vacations
Higher resorts and vacations revenue was primarily attributable to an increase of 6% from additional passenger cruise days, reflecting the launches of the Disney Treasure in December 2024 and the Disney Destinyin November 2025.
Revenues - Park & Experiences merchandise, food and beverage
Parks & Experiences merchandise, food and beverage revenue growth was primarily due to increases of 3% from higher average guest spending and 2% from volume growth.
Key Metrics
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)
Quarter Ended Quarter Ended
December 27,
2025 		December 28,
2024 		December 27,
2025 		December 28,
2024
Parks
Increase (decrease)
Attendance(2)
1 % (2) % 6 % 4 %
Per Capita Guest Spending(3)
4 % 4 % 2 % 3 %
Hotels
Occupancy(4)
87 % 85 % 87 % 86 %
Available Hotel Room Nights (in thousands)(5)
2,550 2,540 797 798
Change in Per Room Guest Spending(6)
4 % 5 % 1 % 17 %
(1)Per capita guest spending growth rate and per room guest spending growth rate exclude the impact of changes in foreign exchange rates.
(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.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
(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 is 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.
Operating expenses
Quarter Ended % Change
Better
(Worse)
(in millions) December 27,
2025 		December 28,
2024
Operating labor $ (2,285) $ (2,164) (6) %
Infrastructure costs (846) (801) (6) %
Cost of goods sold and distribution costs (943) (929) (2) %
Other operating expense (902) (784) (15) %
$ (4,976) $ (4,678) (6) %
Higher operating labor was due to inflation, an unfavorable foreign exchange impact, new guest offerings and increased operations support. The increase in infrastructure costs was primarily due to new guest offerings. Higher cost of goods sold and distribution costs were primarily attributable to volume growth, partially offset by lower third-party royalty expense. The increase in other operating expense was primarily due to new guest offerings, volume growth and increased operations support costs.
Depreciation and amortization
Depreciation and amortization increased $80 million, to $759 million from $679 million, due to higher depreciation at our domestic parks and experiences driven by an increase at Disney Cruise Line.
Operating Income from Experiences
Segment operating income increased $199 million, to $3,309 million from $3,110 million, due to growth at domestic parks and experiences.
Supplemental revenue and operating income
The following table presents supplemental revenue and operating income detail for the Experiences segment:
Quarter Ended % Change
Better
(Worse)
(in millions) December 27,
2025 		December 28,
2024
Supplemental revenue detail
Parks & Experiences
Domestic $ 6,910 $ 6,432 7 %
International 1,753 1,646 7 %
Consumer Products 1,343 1,337 - %
$ 10,006 $ 9,415 6 %
Supplemental operating income detail
Parks & Experiences
Domestic $ 2,149 $ 1,982 8 %
International 428 420 2 %
Consumer Products 732 708 3 %
$ 3,309 $ 3,110 6 %
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
CORPORATE AND UNALLOCATED SHARED EXPENSES
Quarter Ended % Change
Better
(Worse)
(in millions) December 27,
2025 		December 28,
2024
Corporate and unallocated shared expenses $ (304) $ (460) 34 %
Corporate and unallocated shared expenses decreased $156 million for the quarter, from $460 million to $304 million, primarily due to the comparison to a legal settlement in the prior-year quarter.
FINANCIAL CONDITION
The change in cash and cash equivalents is as follows:
Quarter Ended % Change
Better
(Worse)
(in millions) December 27,
2025 		December 28,
2024
Cash provided by operations $ 735 $ 3,205 (77) %
Cash used in investing activities (2,737) (2,575) (6) %
Cash provided by (used in) financing activities 1,984 (997) nm
Impact of exchange rates on cash, cash equivalents and restricted cash 5 (153) nm
Change in cash, cash equivalents and restricted cash $ (13) $ (520) 98 %
Operating Activities
Cash provided by operations decreased from $3.2 billion in the prior-year quarter to $0.7 billion for the current quarter due to higher tax payments and, to a lesser extent, an increase in spending on content at Entertainment and Sports. The current quarter included payment of U.S. federal and California state income tax liabilities for fiscal 2025 and a portion of fiscal 2024, pursuant to relief related to 2025 wildfires in California.
Produced and licensed programming costs
The Entertainment and Sports segments incur costs to produce and license film, episodic, sports and other content. Production costs include spend on content internally produced at our studios such as live-action and animated films and episodic series. Production costs also include original content commissioned from third-party studios. Programming costs include content rights licensed from third parties for use on the Company's sports and general entertainment networks and DTC streaming services. Programming assets are generally recorded when the programming becomes available to us with a corresponding increase in programming liabilities.
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 quarter ended December 27, 2025 and December 28, 2024 are as follows:
Quarter Ended
(in millions) December 27,
2025 		December 28,
2024
Beginning balances:
Produced and licensed programming assets $ 33,390 $ 34,409
Programming liabilities (3,353) (3,692)
30,037 30,717
Spending:
Programming licenses and rights 3,239 2,931
Produced film and television content 2,822 2,534
6,061 5,465
Amortization:
Programming licenses and rights (4,246) (4,097)
Produced film and television content (2,968) (2,509)
(7,214) (6,606)
Change in produced and licensed content costs (1,153) (1,141)
Other non-cash activity (93) 266
Ending balances:
Produced and licensed programming assets 32,450 33,662
Programming liabilities (3,659) (3,820)
$ 28,791 $ 29,842
The Company currently expects its fiscal 2026 spend on produced and licensed content, including sports rights, to be approximately $24 billion.
Investing Activities
Investing activities consist principally of investments in parks, resorts and other property and acquisition and divestiture activity. The Company's investing activities for the quarter ended December 27, 2025 and December 28, 2024 are as follows:
Quarter Ended
(in millions)
December 27,
2025 		December 28,
2024
Investments in parks, resorts and other property:
Entertainment
$ (293) $ (268)
Sports
- (1)
Experiences
Domestic (2,303) (1,786)
International (357) (293)
Total Experiences
(2,660) (2,079)
Corporate (60) (118)
Total investments in parks, resorts and other property
(3,013) (2,466)
Other investing activities, net
276 (109)
Cash used in investing activities $ (2,737) $ (2,575)
Capital expenditures at the Entertainment segment primarily reflect investments in technology and in facilities and equipment for expanding and upgrading broadcast centers, production facilities and television station facilities.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Capital expenditures at the Experiences segment are principally for theme park and resort expansion, new attractions, cruise ships, capital improvements and technology. The increase in the current period compared to the prior-year period was due to higher spend on cruise ship fleet expansion and, to a lesser extent, new theme park attractions.
Capital expenditures at Corporate primarily reflect investments in corporate facilities, technology and equipment. The decrease in the current period compared to the prior-year period was due to lower spend on facilities.
The Company currently expects its fiscal 2026 capital expenditures to be approximately $9 billion compared to fiscal 2025 capital expenditures of $8 billion. The projected increase in capital expenditures is primarily due to higher spending at Experiences, attributable to theme park and resort expansion and new attractions, partially offset by lower spending on cruise ship fleet expansion. to theme park and resort expansion and new attractions
Financing Activities
Financing activities for the quarter ended December 27, 2025 and December 28, 2024 are as follows:
Quarter Ended
(in millions)
December 27,
2025 		December 28,
2024
Change in borrowings
$ 4,182 $ (63)
Repurchases of common stock
(2,034) (794)
Other financing activities, net(1)
(164) (140)
Cash provided by (used in) financing activities
$ 1,984 $ (997)
(1)Primarily consists of dividends to noncontrolling interest holders and equity award activity.
See Note 5 to the Condensed Consolidated Financial Statements for a summary of the Company's borrowing activities during the quarter ended December 27, 2025 and information regarding the Company's bank facilities. The Company may use cash balances, operating cash flows, commercial paper borrowings up to the amount of its unused $12.25 billion bank facilities and incremental term debt issuances to retire or refinance other borrowings before or as they come due.
See Note 10 to the Condensed Consolidated Financial Statements for a summary of dividends and share repurchases. The Company is targeting $7 billion in share repurchases in fiscal 2026.
The Company's operating cash flow and access to the capital markets can be impacted by factors outside of its control. We believe that the Company's financial condition is 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, contractual obligations, upcoming debt maturities, as well as future capital expenditures related to the expansion of existing businesses and development of new projects. In addition, the Company could undertake other measures to ensure sufficient liquidity, such as raising additional financing, reducing or not declaring future dividends; reducing or stopping share repurchases; reducing capital spending; reducing film and episodic content investments; or implementing further cost-saving initiatives.
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 ratios. As of December 27, 2025, Moody's Ratings' long- and short-term debt ratings for the Company were A2 and P-1 (Stable), respectively, and S&P Global Ratings' long- and short-term debt ratings for the Company were A and A-1 (Stable), respectively. The Company's bank facilities contain only one financial covenant, relating to interest coverage of three times earnings before interest, taxes, depreciation and amortization, including both intangible amortization and amortization of our film and television production and programming costs. On December 27, 2025, the Company met this covenant 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.
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.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
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 flows 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, British pound, Japanese yen, Chinese yuan and Canadian dollar. Cross-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 are intended to offset changes in the U.S. dollar equivalent value of the related exposures. The economic or political conditions in a country have reduced and in the future 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.
COMMITMENTS AND CONTINGENCIES
Legal Matters
As disclosed in Note 12 to the Condensed Consolidated Financial Statements, the Company has exposure for certain legal matters.
Tax Matters
As disclosed in Note 9 to the Consolidated Financial Statements in the 2025 Annual Report on Form 10-K, the Company has exposure for certain tax matters.
Contractual Commitments
See Note 14 to the Consolidated Financial Statements in the 2025 Annual Report on Form 10-K.
OTHER MATTERS
Accounting Policies and Estimates
For a discussion of each of our critical accounting estimates, including information and analysis of estimates and assumptions involved in their application, see "Critical Accounting Policies and Estimates" included in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Annual Report on Form 10-K.
New Accounting Pronouncements
See Note 15 to the Condensed Consolidated Financial Statements for information regarding new accounting pronouncements.
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
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
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 December 27, 2025 was as follows:
TWDC Legacy Disney
(in millions) Par Value Carrying Value Par Value Carrying Value
Registered debt with unconditional guarantee $ 29,583 $ 30,448 $ 6,450 $ 6,402
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.
Set forth below is 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 GAAP.
Results of operations (in millions) Quarter Ended December 27, 2025
Revenues $ -
Costs and expenses -
Net income (loss) (799)
Net income (loss) attributable to TWDC shareholders (799)
Balance Sheet (in millions) December 27,
2025 		September 27,
2025
Current assets $ 1,776 $ 2,295
Noncurrent assets 3,553 3,613
Current liabilities 14,360 9,592
Noncurrent liabilities (excluding intercompany to non-Guarantors) 36,139 36,314
Intercompany payables to non-Guarantors 167,047 167,091
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