Walt Disney : at the MoffettNathanson Media, Internet & Communications Conference Financial Reconciliations
DIS
Published on 05/14/2026 at 02:40 pm EDT
Diluted earnings per share (EPS) excluding certain items (also referred to as adjusted EPS), total segment operating income, free cash flow, Entertainment SVOD operating income and SVOD operating margin are not measures of performance defined by, or calculated in accordance with, generally accepted accounting principles (GAAP).
These measures should be reviewed in conjunction with the most comparable GAAP financial measures and are not presented as alternative measures of diluted EPS, income before income taxes, cash provided by operations, Entertainment segment operating income or Entertainment segment operating margin as determined in accordance with GAAP. Diluted EPS excluding certain items, total segment operating income, free cash flow, Entertainment SVOD operating income and SVOD operating margin as we have calculated them may not be comparable to similarly titled measures reported by other companies.
Our definitions and calculations of diluted EPS excluding certain items, total segment operating income, free cash flow, Entertainment SVOD operating income and SVOD operating margin, as well as quantitative reconciliations of each of these measures to the most directly comparable GAAP financial measure, are provided below.
The Company is not providing the forward-looking measure for diluted EPS, income before income taxes, Entertainment segment operating income or Entertainment segment operating margin, which are the most directly comparable GAAP measures to diluted EPS excluding certain items, total segment operating income, Entertainment SVOD operating income and SVOD operating margin, respectively, or reconciliations of forward-looking diluted EPS excluding certain items, total segment operating income, Entertainment SVOD operating income and SVOD operating margin to those most directly comparable GAAP measures. The Company is unable to predict or estimate with reasonable certainty the ultimate outcome of certain significant items required for such GAAP measures without unreasonable effort.
Information about other adjusting items that is currently not available to the Company could have a potentially unpredictable and significant impact on future GAAP financial results.
Diluted EPS excluding certain items
The Company uses diluted EPS excluding (1) certain items affecting comparability of results from period to period and (2) amortization of intangible assets, including purchase accounting step-up adjustments for released content recognized in the fiscal 2019 acquisition of TFCF and Hulu and business acquisitions occurring after fiscal 2025 (Acquisition Amortization), to facilitate the evaluation of the performance of the Company's operations exclusive of these items, and these adjustments reflect how senior management is evaluating segment performance.
The Company believes that providing diluted EPS exclusive of certain items impacting comparability is useful to investors, particularly where the impact of the excluded items is significant in relation to reported earnings and because the measure allows for comparability between periods of the operating performance of the Company's business and allows investors to evaluate the impact of these items separately.
The following table reconciles reported diluted EPS to diluted EPS excluding certain items for the second quarter:
($ in millions except EPS)
Pre-Tax Income/ Loss
Tax Benefit/ Expense(1)
After-Tax Income/ Loss(2)
Diluted EPS(3)
Change vs. prior-year period
Quarter Ended March 28, 2026
As reported
$ 3,367
$ (902)
$ 2,465
$ 1.27
(30) %
Exclude:
Acquisition Amortization(4)
313
(70)
243
0.12
Restructuring and impairment charges(5)
239
(22)
217
0.12
Non-cash tax charge resulting from the NFL
Transaction
-
115
115
0.05
Excluding certain items $ 3,919 $ (879) $ 3,040 $ 1.57 8 %
Quarter Ended March 29, 2025
As reported
$ 3,087
$ 314
$ 3,401
$ 1.81
Exclude:
Resolution of a prior-year tax matter
-
(1,016)
(1,016)
(0.56)
Acquisition Amortization(4)
396
(92)
304
0.16
Restructuring and impairment charges(5)
109
(25)
84
0.05
Excluding certain items $ 3,592 $ (819) $ 2,773 $ 1.45
(1) Tax benefit/expense is determined using the tax rate applicable to the individual item.
(2) Before noncontrolling interest share.
(3) Net of noncontrolling interest share, where applicable. Total may not equal the sum of the column due to rounding.
(4) For the current quarter, intangible asset amortization was $249 million and step-up amortization was $64 million. For the prior-year quarter, intangible asset amortization was $327 million, step-up amortization was $66 million and amortization of intangible assets related to an equity investee was $3 million.
(5) Amounts for the current quarter included an impairment of an equity investment ($147 million) and severance costs ($92 million). Amounts for the prior-year quarter included content impairments ($109 million).
The following table reconciles reported diluted EPS to diluted EPS excluding certain items for the six-month period:
($ in millions except EPS)
Pre-Tax Income/ Loss
Tax Benefit/ Expense(1)
After-Tax Income/ Loss(2)
Diluted EPS(3)
Change vs. prior year
Six Months Ended March 28, 2026:
As reported
$ 7,060
$ (2,111)
$ 4,949
$ 2.61
(19) %
Exclude:
Acquisition Amortization(4)
613
(140)
473
0.24
Non-cash tax charges resulting from the
Fubo and NFL Transactions
-
422
422
0.22
Restructuring and impairment charges(5)
239
(22)
217
0.12
Excluding certain items $ 7,912 $ (1,851) $ 6,061 $ 3.20 (1) %
Six Months Ended March 29, 2025:
As reported
$ 6,747
$ (702)
$ 6,045
$ 3.21
Exclude:
Acquisition Amortization(4)
793
(184)
609
0.32
Restructuring and impairment charges(5)
252
188
440
0.25
Resolution of a prior-year tax matter
-
(1,016)
(1,016)
(0.56)
Excluding certain items $ 7,792 $ (1,714) $ 6,078 $ 3.22
(1) Tax benefit/expense is determined using the tax rate applicable to the individual item.
(2) Before noncontrolling interest share.
(3) Net of noncontrolling interest share, where applicable. Total may not equal the sum of the column due to rounding.
(4) For the current period, intangible asset amortization was $485 million and step-up amortization was $128 million. For the prior-year period, intangible asset amortization was $654 million, step-up amortization was $133 million and amortization of intangible assets related to an equity investee was $6 million.
(5) Amounts for the current period included an impairment of an equity investment ($147 million) and severance costs ($92 million). Impairment charges for the prior-year period related to the formation of the India joint venture ($143 million) and content ($109 million). Tax expense includes a $56 million tax benefit on the impairment charges and a non-cash tax charge of $244 million related to the formation of the India joint venture.
Total segment operating income
The Company evaluates the performance of its operating segments based on segment operating income, and management uses total segment operating income (the sum of segment operating income from all of the Company's segments) as a measure of the performance of operating businesses separate from non-operating factors. The Company believes that information about total segment operating income assists investors by allowing them to evaluate changes in the operating results of the Company's portfolio of businesses separate from non-operational factors that affect net income, thus providing separate insight into both operations and other factors that affect reported results.
The following table reconciles income before income taxes to total segment operating income:
Quarter Ended Six Months Ended
March 28,
March 29,
March 28,
March 29,
($ in millions)
2026
2025
Change
2026
2025
Change
Income before income taxes
$ 3,367
$ 3,087
9 %
$ 7,060
$ 6,747
5 %
Add (subtract):
Corporate and unallocated shared expenses
380
395
4 %
684
855
20 %
Equity in the loss of India joint venture
64
103
38 %
92
136
32 %
Restructuring and impairment charges
239
109
>(100) %
239
252
5 %
Interest expense, net
240
346
31 %
515
713
28 %
Acquisition Amortization
313
396
21 %
613
793
23 %
Total segment operating income
$ 4,603 $ 4,436
4 %
$ 9,203 $ 9,496
(3) %
Free cash flow
The Company uses free cash flow (cash provided by operations less investments in parks, resorts and other property), among other measures, to evaluate the ability of its operations to generate cash that is available for purposes other than capital expenditures. Management believes that information about free cash flow provides investors with an important perspective on the cash available to service debt obligations, make strategic acquisitions and investments and pay dividends or repurchase shares.
The following table presents a summary of the three major categories of the Company's consolidated cash flows:
Quarter Ended Six Months Ended
March 28,
March 29,
March 28,
March 29,
($ in millions)
2026
2025
2026
2025
Cash provided by operations
$ 6,914
$ 6,753
$ 7,649
$ 9,958
Cash used in investing activities
(2,732)
(1,898)
(5,469)
(4,473)
Cash used in financing activities
(4,146)
(4,556)
(2,162)
(5,553)
The following table reconciles the Company's consolidated cash provided by operations to free cash flow:
Quarter Ended Six Months Ended
March 28,
March 29,
March 28,
March 29,
($ in millions)
2026
2025
Change
2026
2025
Change
Cash provided by operations
$ 6,914
$ 6,753
$
161
$ 7,649
$ 9,958
$
(2,309)
Investments in parks, resorts and other property
(1,973)
(1,862)
(111)
(4,986)
(4,328)
(658)
Free cash flow
$ 4,941 $ 4,891 $ 50 $ 2,663 $ 5,630
$
(2,967)
Entertainment SVOD operating income
Entertainment SVOD operating income consists of operating income for the Disney+, Hulu subscription video-on-demand and Disney+ Hotstar (through November 14, 2024) streaming services (collectively, "Entertainment SVOD" or "SVOD"), which excludes results for the Hulu Live TV and Fubo vMVPD services.
The Company uses Entertainment SVOD operating income (and related SVOD operating margin) as a measure of the performance of Entertainment SVOD, and we believe Entertainment SVOD operating income (and related SVOD operating margin) assists investors by allowing them to evaluate the performance of Entertainment SVOD separately from our other Entertainment businesses.
The following table reconciles Entertainment SVOD operating income to Entertainment segment operating income:
Quarter Ended
March 28, March 29,
($ in millions)
2026
2025
Change
Entertainment segment operating income(1)
$ 1,336
$ 1,258
6 %
Subtract: Other Entertainment businesses operating income
754
948
(20) %
Entertainment SVOD operating income(1) $ 582 $ 310 88 %
(1) For the current quarter, Entertainment segment operating margin and SVOD operating margin were 11.4% and 10.6%, respectively. Entertainment segment operating margin is calculated as Entertainment segment operating income divided by Entertainment segment revenue, and SVOD operating margin is calculated as Entertainment SVOD operating income divided by Entertainment SVOD revenue.
Disclaimer
The Walt Disney Company published this content on May 14, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 14, 2026 at 18:39 UTC.