SEC Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended
 
Commission File Number 1-11605
April 2, 2016
 
 
 
 
 
 
 
 
Incorporated in Delaware
 
I.R.S. Employer Identification
 
 
No. 95-4545390
500 South Buena Vista Street, Burbank, California 91521
(818) 560-1000
 
 
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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one).
Large accelerated filer
 
x
 
Accelerated filer
 
¨
 
 
 
 
 
Non-accelerated filer (do not check if smaller reporting company)
 
¨
 
Smaller reporting company
 
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  x
There were 1,622,440,708 shares of common stock outstanding as of May 4, 2016.



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 Ended
 
Six Months Ended
 
April 2,
2016
 
March 28,
2015
 
April 2,
2016
 
March 28,
2015
Revenues:
 
 
 
 
 
 
 
Services
$
11,171

 
$
10,552

 
$
23,793

 
$
21,279

Products
1,798

 
1,909

 
4,420

 
4,573

Total revenues
12,969

 
12,461

 
28,213

 
25,852

Costs and expenses:
 
 
 
 
 
 
 
Cost of services (exclusive of depreciation and amortization)
(5,566
)
 
(5,543
)
 
(12,622
)
 
(11,677
)
Cost of products (exclusive of depreciation and amortization)
(1,298
)
 
(1,147
)
 
(2,865
)
 
(2,669
)
Selling, general, administrative and other
(2,137
)
 
(2,081
)
 
(4,162
)
 
(4,016
)
Depreciation and amortization
(605
)
 
(584
)
 
(1,212
)
 
(1,176
)
Total costs and expenses
(9,606
)
 
(9,355
)
 
(20,861
)
 
(19,538
)
Restructuring and impairment charges
—

 
—

 
(81
)
 
—

Interest income/(expense), net
(67
)
 
8

 
(91
)
 
(50
)
Equity in the income of investees
150

 
206

 
624

 
418

Income before income taxes
3,446

 
3,320

 
7,804

 
6,682

Income taxes
(1,170
)
 
(1,092
)
 
(2,618
)
 
(2,210
)
Net income
2,276

 
2,228

 
5,186

 
4,472

Less: Net income attributable to noncontrolling interests
(133
)
 
(120
)
 
(163
)
 
(182
)
Net income attributable to The Walt Disney Company (Disney)
$
2,143

 
$
2,108

 
$
5,023

 
$
4,290

 
 
 
 
 
 
 
 
Earnings per share attributable to Disney:
 
 
 
 
 
 
 
Diluted
$
1.30

 
$
1.23

 
$
3.04

 
$
2.50

 
 
 
 
 
 
 
 
Basic
$
1.31

 
$
1.24

 
$
3.06

 
$
2.52

 
 
 
 
 
 
 
 
Weighted average number of common and common equivalent shares outstanding:
 
 
 
 
 
 
 
Diluted
1,643

 
1,715

 
1,655

 
1,716

 
 
 
 
 
 
 
 
Basic
1,633

 
1,699

 
1,643

 
1,700

 
 
 
 
 
 
 
 
Dividends declared per share
$
—

 
$
—

 
$
0.71

 
$
1.15

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
 
April 2,
2016
 
March 28,
2015
 
April 2,
2016
 
March 28,
2015
Net income
$
2,276

 
$
2,228

 
$
5,186

 
$
4,472

Other comprehensive income/(loss), net of tax:
 
 
 
 
 
 
 
Market value adjustments for investments
(1
)
 
(54
)
 
(4
)
 
(70
)
Market value adjustments for hedges
(204
)
 
129

 
(229
)
 
264

Pension and postretirement medical plan adjustments
40

 
34

 
82

 
78

Foreign currency translation and other
54

 
(84
)
 
(59
)
 
(179
)
Other comprehensive income/(loss)
(111
)
 
25

 
(210
)
 
93

Comprehensive income
2,165

 
2,253

 
4,976

 
4,565

Less: Net income attributable to noncontrolling interests
(133
)
 
(120
)
 
(163
)
 
(182
)
Less: Other comprehensive (income)/loss attributable to noncontrolling interests
(19
)
 
12

 
32

 
32

Comprehensive income attributable to Disney
$
2,013

 
$
2,145

 
$
4,845

 
$
4,415

See Notes to Condensed Consolidated Financial Statements





3

THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited; in millions, except per share data)
 
April 2,
2016
 
October 3,
2015
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
5,015

 
$
4,269

Receivables
8,874

 
8,019

Inventories
1,352

 
1,571

Television costs and advances
977

 
1,170

Deferred income taxes
—

 
767

Other current assets
781

 
962

Total current assets
16,999

 
16,758

Film and television costs
6,484

 
6,183

Investments
3,247

 
2,643

Parks, resorts and other property
 
 
 
Attractions, buildings and equipment
43,577

 
42,745

Accumulated depreciation
(25,857
)
 
(24,844
)
 
17,720

 
17,901

Projects in progress
7,454

 
6,028

Land
1,247

 
1,250

 
26,421

 
25,179

Intangible assets, net
7,052

 
7,172

Goodwill
27,817

 
27,826

Other assets
2,244

 
2,421

Total assets
$
90,264

 
$
88,182

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities
 
 
 
Accounts payable and other accrued liabilities
$
7,252

 
$
7,844

Current portion of borrowings
5,755

 
4,563

Unearned royalties and other advances
4,066

 
3,927

Total current liabilities
17,073

 
16,334

Borrowings
15,367

 
12,773

Deferred income taxes
4,044

 
4,051

Other long-term liabilities
5,770

 
6,369

Commitments and contingencies (Note 10)


 


Equity
 
 
 
Preferred stock, $.01 par value, Authorized – 100 million shares, Issued – none
—

 
—

Common stock, $.01 par value, Authorized – 4.6 billion shares, Issued – 2.9 billion
shares at April 2, 2016 and 2.8 billion shares at October 3, 2015
35,448

 
35,122

Retained earnings
62,870

 
59,028

Accumulated other comprehensive loss
(2,599
)
 
(2,421
)
 
95,719

 
91,729

Treasury stock, at cost, 1.2 billion shares
(51,595
)
 
(47,204
)
Total Disney Shareholders’ equity
44,124

 
44,525

Noncontrolling interests
3,886

 
4,130

Total equity
48,010

 
48,655

Total liabilities and equity
$
90,264

 
$
88,182

See Notes to Condensed Consolidated Financial Statements

4


THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in millions)
 
Six Months Ended
 
April 2,
2016
 
March 28,
2015
OPERATING ACTIVITIES
 
 
 
Net income
$
5,186

 
$
4,472

Depreciation and amortization
1,212

 
1,176

Gains on sales of investments
(27
)
 
(56
)
Deferred income taxes
797

 
202

Equity in the income of investees
(624
)

(418
)
Cash distributions received from equity investees
383

 
349

Net change in film and television costs and advances
35

 
(33
)
Equity-based compensation
205

 
213

Other
124

 
175

Changes in operating assets and liabilities:
 
 
 
Receivables
(542
)
 
(208
)
Inventories
218

 
129

Other assets
63

 
(110
)
Accounts payable and other accrued liabilities
(746
)
 
(847
)
Income taxes
(522
)
 
(271
)
Cash provided by operations
5,762

 
4,773

 
 
 
 
INVESTING ACTIVITIES
 
 
 
Investments in parks, resorts and other property
(2,556
)
 
(1,905
)
Sales of investments
42

 
81

Acquisitions
(400
)
 
—

Other
(124
)
 
(3
)
Cash used in investing activities
(3,038
)
 
(1,827
)
 
 
 
 
FINANCING ACTIVITIES
 
 
 
Commercial paper borrowings, net
709

 
1,954

Borrowings
3,766

 
117

Reduction of borrowings
(626
)
 
(1,953
)
Dividends
(1,168
)
 
(1,948
)
Repurchases of common stock
(4,391
)
 
(1,788
)
Proceeds from exercise of stock options
160

 
235

Contributions from noncontrolling interest holders
—

 
829

Other
(431
)
 
209

Cash used in financing activities
(1,981
)
 
(2,345
)
 
 
 
 
Impact of exchange rates on cash and cash equivalents
3

 
(277
)
 
 
 
 
Change in cash and cash equivalents
746

 
324

Cash and cash equivalents, beginning of period
4,269

 
3,421

Cash and cash equivalents, end of period
$
5,015

 
$
3,745

See Notes to Condensed Consolidated Financial Statements

5


THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(unaudited; in millions)
 
 
Quarter Ended
 
April 2, 2016
 
March 28, 2015
 
Disney
Shareholders
 
Non-
controlling
Interests
 
Total
Equity
 
Disney
Shareholders
 
Non-
controlling
Interests
 
Total
Equity
Beginning balance
$
43,958

 
$
4,240

 
$
48,198

 
$
44,165

 
$
3,628

 
$
47,793

Comprehensive income
2,013

 
152

 
2,165

 
2,145

 
108

 
2,253

Equity compensation activity
194

 
—

 
194

 
244

 
—

 
244

Common stock repurchases
(2,039
)
 
—

 
(2,039
)
 
(485
)
 
—

 
(485
)
Contributions
—

 
—

 
—

 
—

 
478

 
478

Distributions and other
(2
)
 
(506
)
 
(508
)
 
(31
)
 
(515
)
 
(546
)
Ending balance
$
44,124

 
$
3,886

 
$
48,010

 
$
46,038

 
$
3,699

 
$
49,737

See Notes to Condensed Consolidated Financial Statements



6


THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(unaudited; in millions)
 
 
Six Months Ended
 
April 2, 2016
 
March 28, 2015
 
Disney
Shareholders
 
Non-
controlling
Interests
 
Total
Equity
 
Disney
Shareholders
 
Non-
controlling
Interests
 
Total
Equity
Beginning balance
$
44,525

 
$
4,130

 
$
48,655

 
$
44,958

 
$
3,220

 
$
48,178

Comprehensive income
4,845

 
131

 
4,976

 
4,415

 
150

 
4,565

Equity compensation activity
322

 
—

 
322

 
423

 
—

 
423

Dividends
(1,168
)
 
—

 
(1,168
)
 
(1,948
)
 
—

 
(1,948
)
Common stock repurchases
(4,391
)
 
—

 
(4,391
)
 
(1,788
)
 
—

 
(1,788
)
Contributions
—

 
—

 
—

 
—

 
829

 
829

Distributions and other
(9
)
 
(375
)
 
(384
)
 
(22
)
 
(500
)
 
(522
)
Ending balance
$
44,124

 
$
3,886

 
$
48,010

 
$
46,038

 
$
3,699

 
$
49,737

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
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 ended April 2, 2016 are not necessarily indicative of the results that may be expected for the year ending October 1, 2016. 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 Company’s 2015 Annual Report on Form 10-K.
The Company enters into relationships or investments with other entities that may be a variable interest entity (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 to the VIE (as defined by ASC 810-10-25-38). Disneyland Paris, Hong Kong Disneyland Resort (HKDL) and Shanghai Disney Resort (collectively the International Theme Parks) are VIEs. Company subsidiaries (the Management Companies) have management agreements with the International 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 International Theme Parks. In addition, the Management Companies receive management fees under these arrangements that we believe could be significant to the International Theme Parks. Therefore, the Company has consolidated the International Theme Parks in its financial statements.
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.
 
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. Fiscal 2015 segment financial information has been restated to reflect the combination of the Consumer Products and Interactive segments into a single segment effective at the beginning of fiscal 2016.
Segment operating results reflect earnings before corporate and unallocated shared expenses, restructuring and impairment charges, interest income/(expense), income taxes and noncontrolling interests. Segment operating income includes equity in the income of investees. Corporate and unallocated shared expenses principally consist of corporate functions, executive management and certain unallocated administrative support functions.
Equity in the income of investees is included in segment operating income as follows: 
 
Quarter Ended
 
Six Months Ended
 
April 2,
2016
 
March 28,
2015
 
April 2,
2016
 
March 28,
2015
Media Networks
 
 
 
 
 
 
 
Cable Networks
$
175

 
$
223

 
$
389

 
$
465

Broadcasting
(24
)
 
(18
)
 
(96
)
 
(47
)
Equity in the income of investees included in segment operating income
151

 
205

 
$
293

 
$
418

Vice Gain
—

 
—

 
332

 
—

Other
(1
)
 
1

 
(1
)
 
—

Total equity in the income of investees
$
150

 
$
206

 
$
624

 
$
418

During the six months ended April 2, 2016, the Company recognized its share of a net gain recorded by A&E Television Networks (A&E), a joint venture owned 50% by the Company, in connection with A&E’s acquisition of an interest in Vice

8
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


Group Holding, Inc. (Vice) (Vice Gain). The Company’s $332 million share of the Vice Gain is recorded in "Equity in the income of investees" in the Condensed Consolidated Statement of Income but is not included in segment operating income. See Note 3 for further discussion of the transaction.
 
Quarter Ended
 
Six Months Ended
 
April 2,
2016
 
March 28,
2015
 
April 2,
2016
 
March 28,
2015
Revenues (1):
 
 
 
 
 
 
 
Media Networks
$
5,793

 
$
5,810

 
$
12,125

 
$
11,670

Parks and Resorts
3,928

 
3,760

 
8,209

 
7,670

Studio Entertainment
2,062

 
1,685

 
4,783

 
3,543

Consumer Products & Interactive Media
1,186

 
1,206

 
3,096

 
2,969

 
$
12,969

 
$
12,461

 
$
28,213

 
$
25,852

Segment operating income (1):
 
 
 
 
 
 
 
Media Networks
$
2,299

 
$
2,101

 
$
3,711

 
$
3,596

Parks and Resorts
624

 
566

 
1,605

 
1,371

Studio Entertainment
542

 
427

 
1,556

 
971

Consumer Products & Interactive Media
357

 
388

 
1,217

 
1,089

 
$
3,822

 
$
3,482

 
$
8,089

 
$
7,027


(1) Studio Entertainment segment revenues and operating income include an allocation of Consumer Products & Interactive Media revenues, which is meant to reflect royalties on sales of merchandise based on certain film properties. The increase to Studio Entertainment revenues and operating income and corresponding decrease to Consumer Products & Interactive Media revenues and operating income totaled $180 million and $133 million for the quarters ended April 2, 2016 and March 28, 2015, respectively, and $442 million and $278 million for the six months ended April 2, 2016 and March 28, 2015, respectively.
A reconciliation of segment operating income to income before income taxes is as follows:
 
Quarter Ended
 
Six Months Ended
 
April 2,
2016
 
March 28,
2015
 
April 2,
2016
 
March 28,
2015
Segment operating income
$
3,822

 
$
3,482

 
$
8,089

 
$
7,027

Corporate and unallocated shared expenses
(162
)
 
(170
)
 
(298
)
 
(295
)
Restructuring and impairment charges
—

 
—

 
(81
)
 
—

Interest income/(expense), net
(67
)
 
8

 
(91
)
 
(50
)
Vice Gain
—

 
—

 
332

 
—

Infinity Charge(1)
(147
)
 
—

 
(147
)
 
—

Income before income taxes
$
3,446

 
$
3,320

 
$
7,804

 
$
6,682

 
(1) For the quarter ended April 2, 2016, the Company recorded charges related to the discontinuation of our self-published console games business, principally Infinity (Infinity Charge). The Infinity Charge was primarily due to an inventory write-down. The charge also included severance and other asset impairments. The charge was reported in Cost of products in the Condensed Consolidated Statement of Income.


9
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


3.
Acquisitions
Vice/A&E
Vice is a media company targeting a millennial audience through news and pop culture content and creative brand integration. During the first quarter of fiscal 2016, A&E acquired an 8% interest in Vice in exchange for a 49.9% interest in one of A&E’s cable channels, H2, which has been rebranded as Viceland and programmed with Vice content. As a result of this exchange, A&E recognized a net non-cash gain based on the estimated fair value of H2. The Company’s share of the Vice Gain totaled $332 million and was recorded in "Equity in the income of investees" in the Condensed Consolidated Statement of Income for the six months ended April 2, 2016. At April 2, 2016, A&E had a 20% interest in Vice.
In addition, during the first quarter of fiscal 2016, the Company acquired an 11% interest in Vice for $400 million of cash.
The Company accounts for its interests in A&E and Vice as equity method investments.
Maker Studios
On May 7, 2014, the Company acquired Maker Studios, Inc. (Maker), a leading network of online video content, for approximately $500 million of cash consideration. Maker shareholders were eligible to receive up to $450 million of additional cash upon Maker’s achievement of certain performance targets for calendar years 2014 and 2015. At the date of the acquisition, the Company recorded a $198 million liability for the fair value of the contingent consideration (determined by a probability weighting of potential payouts). In fiscal 2015, the Company paid $105 million, and in January 2016, the Company made a final payment of $70 million for the contingent consideration.

4.
Borrowings
During the six months ended April 2, 2016, the Company’s borrowing activity was as follows: 
 
October 3,
2015
 
Borrowings
 
Payments
 
Other
Activity
 
April 2,
2016
Commercial paper with original maturities less than three months(1)
$
2,330

 
$
—

 
$
(1,221
)
 
$
4

 
$
1,113

Commercial paper with original maturities greater than three months
100

 
3,630

 
(1,700
)
 
1

 
2,031

U.S. medium-term notes
13,873

 
2,987

 
(500
)
 
9

 
16,369

Foreign currency denominated debt and other(2)
714

 
160

 
(126
)
 
43

 
791

International Theme Parks borrowings(3)
319

 
607

 
—

 
(108
)
 
818

Total
$
17,336

 
$
7,384

 
$
(3,547
)
 
$
(51
)
 
$
21,122

(1) 
Borrowings and payments are reported net.
(2) 
The other activity is primarily market value adjustments for debt with qualifying hedges.
(3) 
The other activity is primarily the conversion of HKDL debt into equity. See Note 5 for further discussion of the transaction.
The Company has bank facilities with a syndicate of lenders to support commercial paper borrowings. The following is a summary of the bank facilities at April 2, 2016:
 
Committed
Capacity
 
Capacity
Used
 
Unused
Capacity
Facility expiring March 2017
$
1,500

 
$
—

 
$
1,500

Facility expiring March 2019
2,250

 
—

 
2,250

Facility expiring March 2021
2,250

 
—

 
2,250

Total
$
6,000

 
$
—

 
$
6,000

The Company had bank facilities for $1.5 billion and $2.25 billion, which were expiring in March 2016 and June 2017, respectively. These facilities were refinanced in the second quarter of fiscal 2016 and the maturities were extended to March 2017 and 2021, respectively. All 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 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

10
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


from 0.23% to 1.63%. The Company also has the ability to issue up to $800 million of letters of credit under the facility expiring in March 2019, which if utilized, reduces available borrowings under this facility. As of April 2, 2016, $192 million of letters of credit were outstanding, of which none were issued under this facility. The facilities contain only one financial covenant, relating to interest coverage, which the Company met on April 2, 2016 by a significant margin, and specifically exclude certain entities, including the International Theme Parks, from any representations, covenants, or events of default.

Interest income/(expense), net
Interest and investment income and interest expense are reported net in the Condensed Consolidated Statements of Income and consist of the following (net of capitalized interest):
 
Quarter Ended
 
Six Months Ended
 
April 2,
2016
 
March 28,
2015
 
April 2,
2016
 
March 28,
2015
Interest expense
$
(81
)
 
$
(66
)
 
$
(147
)
 
$
(135
)
Interest and investment income
14

 
74

 
56

 
85

Interest income/(expense), net
$
(67
)
 
$
8

 
$
(91
)
 
$
(50
)

Interest and investment income includes gains and losses on the sale of publicly and non-publicly traded investments, investment impairments and interest earned on cash and cash equivalents and certain receivables.
Realized net gains on publicly and non-publicly traded investments are as follows:
 
Quarter Ended
 
Six Months Ended
 
April 2,
2016
 
March 28,
2015
 
April 2,
2016
 
March 28,
2015
Publicly traded
$
—

 
$
48

 
$
—

 
$
48

Non-publicly traded
—

 
7

 
26

 
7

Realized net gains
$
—

 
$
55

 
$
26

 
$
55



11
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


5.
International Theme Park Investments
At April 2, 2016, the Company had an 81% effective ownership interest in the operations of Disneyland Paris, a 47% ownership interest in the operations of HKDL and a 43% ownership interest in the operations of Shanghai Disney Resort, all of which are VIEs consolidated in the Company’s financial statements. See Note 1 for the Company’s policy on consolidating VIEs.
The following tables present summarized balance sheet information for the Company as of April 2, 2016 and October 3, 2015, reflecting the impact of consolidating the International Theme Parks balance sheets.
 
As of April 2, 2016
 
Before 
International
Theme Parks
Consolidation
 
International
Theme Parks
and Adjustments
 
Total
Cash and cash equivalents
$
4,129

 
$
886

 
$
5,015

Other current assets
11,701

 
283

 
11,984

Total current assets
15,830

 
1,169

 
16,999

Investments/Advances
8,016

 
(4,769
)
 
3,247

Parks, resorts and other property
17,586

 
8,835

 
26,421

Other assets
43,521

 
76

 
43,597

Total assets
$
84,953

 
$
5,311

 
$
90,264

 
 
 
 
 
 
Current portion of borrowings
$
5,755

 
$
—

 
$
5,755

Other current liabilities
10,124

 
1,194

 
11,318

Total current liabilities
15,879

 
1,194

 
17,073

Borrowings
14,549

 
818

 
15,367

Deferred income taxes and other long-term liabilities
9,591

 
223

 
9,814

Equity
44,934

 
3,076

 
48,010

Total liabilities and equity
$
84,953

 
$
5,311

 
$
90,264

 
 
As of October 3, 2015
 
Before 
International
Theme Parks
Consolidation
 
International
Theme Parks
and Adjustments
 
Total
Cash and cash equivalents
$
3,488

 
$
781

 
$
4,269

Other current assets
12,237

 
252

 
12,489

Total current assets
15,725

 
1,033

 
16,758

Investments/Advances
7,505

 
(4,862
)
 
2,643

Parks, resorts and other property
17,431

 
7,748

 
25,179

Other assets
43,540

 
62

 
43,602

Total assets
$
84,201

 
$
3,981

 
$
88,182

 
 
 
 
 
 
Current portion of borrowings
$
4,562

 
$
1

 
$
4,563

Other current liabilities
11,331

 
440

 
11,771

Total current liabilities
15,893

 
441

 
16,334

Borrowings
12,454

 
319

 
12,773

Deferred income taxes and other long-term liabilities
10,225

 
195

 
10,420

Equity
45,629

 
3,026

 
48,655

Total liabilities and equity
$
84,201

 
$
3,981

 
$
88,182


12
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


The following table presents summarized income statement information of the Company for the six months ended April 2, 2016, reflecting the impact of consolidating the International Theme Parks income statements.
 
Before 
International
Theme Parks
Consolidation(1)
 
International
Theme Parks
and Adjustments
 
Total
Revenues
$
27,313

 
$
900

 
$
28,213

Cost and expenses
(19,680
)
 
(1,181
)
 
(20,861
)
Restructuring and impairment charges
(81
)
 
—

 
(81
)
Interest expense, net
(68
)
 
(23
)
 
(91
)
Equity in the income of investees
412

 
212

 
624

Income before income taxes
7,896

 
(92
)
 
7,804

Income taxes
(2,618
)
 
—

 
(2,618
)
Net income
$
5,278

 
$
(92
)
 
$
5,186

 
(1) 
In the six months ended April 2, 2016, royalty and management fees from the International Theme Parks totaling $65 million are included in Revenues, and our share of the net income/(loss) of the International Theme Parks is included in Equity in the income of investees.
 
The following table presents summarized cash flow statement information of the Company for the six months ended April 2, 2016, reflecting the impact of consolidating the International Theme Parks cash flow statements. 
 
Before 
International
Theme Parks
Consolidation
 
International
Theme Parks
and Adjustments
 
Total
Cash provided by operations
$
5,654

 
$
108

 
$
5,762

Investments in parks, resorts and other property
(1,384
)
 
(1,172
)
 
(2,556
)
Cash (used in)/provided by other investing activities
(1,043
)
 
561

 
(482
)
Cash (used in)/provided by financing activities
(2,588
)
 
607

 
(1,981
)
Impact of exchange rates on cash and cash equivalents
2

 
1

 
3

Change in cash and cash equivalents
641

 
105

 
746

Cash and cash equivalents, beginning of period
3,488

 
781

 
4,269

Cash and cash equivalents, end of period
$
4,129

 
$
886

 
$
5,015

Disneyland Paris    
During calendar 2015, Disneyland Paris completed a recapitalization consisting of the following:
•
A €0.4 billion equity rights offering of which the Company funded €0.2 billion in February 2015. The Company purchased shares that were unsubscribed by other Disneyland Paris shareholders, which increased the Company’s effective ownership by approximately four percentage points.
•
In February 2015, the Company converted €0.6 billion of its loans to Disneyland Paris into equity at a conversion price of €1.25 per share. The conversion increased the Company’s effective ownership by an additional 23 percentage points. In addition, Disneyland Paris repaid €0.3 billion that was outstanding under then existing lines of credit from the Company. These lines of credit have been replaced by a new €0.4 billion line of credit from the Company bearing interest at EURIBOR plus 2% and maturing in 2023. There is no outstanding balance under the new line of credit at April 2, 2016. As of April 2, 2016, the total outstanding balance of loans provided by the Company to Disneyland Paris was €1.0 billion.
•
In September 2015, the Company completed a mandatory tender offer to the other Disneyland Paris shareholders and acquired €0.1 billion in shares at €1.25 per share, which increased the Company’s effective ownership by an additional eight percentage points.

13
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


•
Following the completion of the mandatory tender offer and to offset the dilution caused by the loan conversion, in November 2015 certain Disneyland Paris shareholders purchased €0.05 billion in shares from the Company at €1.25 per share, which decreased the Company’s effective ownership by four percentage points.
As of April 2, 2016, the Company had an 81% effective ownership interest in Disneyland Paris.
Hong Kong Disneyland Resort
At April 2, 2016, the Government of the Hong Kong Special Administrative Region (HKSAR) and the Company had 53% and 47% equity interests in HKDL, respectively. HKSAR holds a right to receive additional shares over time to the extent HKDL exceeds certain return on asset performance targets. The amount of additional shares HKSAR can receive is capped on both an annual and cumulative basis and could decrease the Company’s equity interest by up to an additional 7 percentage points over a period no shorter than 16 years.
HKDL is building a third hotel at the resort, which is expected to open in 2017 and cost approximately $550 million. To fund the construction, the Company contributed $219 million of equity and HKSAR converted an equal amount of its outstanding loan to HKDL into equity. Additionally, the Company and HKSAR will provide shareholder loans of up to approximately $149 million and $104 million, respectively. The loans will mature on dates from fiscal 2022 through fiscal 2025 and bear interest at a rate of three month HIBOR plus 2%. To date, the outstanding balances of these loans provided by the Company and HKSAR to HKDL were $17 million and $11 million, respectively.
Shanghai Disney Resort
The Company and Shanghai Shendi (Group) Co., Ltd (Shendi) are constructing a Disney Resort (Shanghai Disney Resort) in the Pudong district of Shanghai that initially includes a theme park, two hotels and a retail, dining and entertainment complex. The park opening is planned for June 16, 2016.
The investment in Shanghai Disney Resort will be funded in accordance with each shareholder’s ownership percentage, with approximately 67% from equity contributions and 33% from shareholder loans. As of April 2, 2016, the outstanding balance of loans provided by the Company and Shendi to Shanghai Disney Resort were 3.8 billion yuan ($585 million) and 5.0 billion yuan ($774 million), respectively. The Company and Shendi have committed to fund an additional 1.1 billion yuan ($164 million) and 1.4 billion yuan ($218 million) of loans, respectively. Shanghai Disney Resort is owned through two joint venture companies, in which Shendi owns 57% and the Company owns 43%. A management company, in which the Company has a 70% interest and Shendi a 30% interest, is responsible for designing, constructing and operating Shanghai Disney Resort.

6.
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
 
April 2, 2016
 
March 28, 2015
 
April 2, 2016
 
March 28, 2015
 
April 2, 2016
 
March 28, 2015
 
April 2, 2016
 
March 28, 2015
Service costs
$
79

 
$
83

 
$
159

 
$
166

 
$
3

 
$
3

 
$
6

 
$
7

Interest costs
114

 
131

 
229

 
262

 
15

 
17

 
30

 
34

Expected return on plan assets
(186
)
 
(178
)
 
(374
)
 
(356
)
 
(11
)
 
(9
)
 
(22
)
 
(19
)
Amortization of prior-year service costs
4

 
4

 
7

 
8

 
—

 
(1
)
 
—

 
(1
)
Recognized net actuarial loss
60

 
61

 
121

 
123

 
2

 
2

 
4

 
5

Net periodic benefit cost
$
71

 
$
101

 
$
142

 
$
203

 
$
9

 
$
12

 
$
18

 
$
26

During the six months ended April 2, 2016, the Company made $521 million of contributions to its pension and postretirement medical plans. The Company expects total pension and postretirement medical plan contributions in fiscal 2016 of approximately $900 million to $950 million. Final minimum pension plan funding requirements for fiscal 2016 will be

14
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


determined based on our January 1, 2016 funding actuarial valuation, which will be available in the fourth quarter of fiscal 2016.

7.
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 Awards excluded from the diluted earnings per share calculation, as they were anti-dilutive, are as follows: 
 
Quarter Ended
 
Six Months Ended
 
April 2,
2016
 
March 28,
2015
 
April 2,
2016
 
March 28,
2015
Shares (in millions):
 
 
 
 
 
 
 
Weighted average number of common and common equivalent shares outstanding (basic)
1,633

 
1,699

 
1,643

 
1,700

Weighted average dilutive impact of Awards
10

 
16

 
12

 
16

Weighted average number of common and common equivalent shares outstanding (diluted)
1,643

 
1,715

 
1,655

 
1,716

Awards excluded from diluted earnings per share
12

 
5

 
8

 
7

 
8.
Equity
The Company paid the following dividends in fiscal 2016 and 2015:
Per Share
 
Total Paid
 
Payment Timing
 
Related to Fiscal Period
$0.71
$1.2 billion
 
Second Quarter of Fiscal 2016
Second Half 2015
$0.66
 
$1.1 billion
 
Fourth Quarter of Fiscal 2015
 
First Half 2015
$1.15
$1.9 billion
 
Second Quarter of Fiscal 2015
2014
During the six months ended April 2, 2016, the Company repurchased 42 million shares of its common stock for $4.4 billion. As of April 2, 2016, the Company had remaining authorization in place to repurchase approximately 314 million additional shares. The repurchase program does not have an expiration date.

15
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 changes in each component of accumulated other comprehensive income (loss) (AOCI) including our proportional share of equity method investee amounts, net of 37% estimated tax:
 
 
 
 
 
Unrecognized
Pension and 
Postretirement
Medical 
Expense
 
Foreign
Currency
Translation
and Other
 
AOCI
 
Market Value Adjustments
 
 
Investments, net
 
Cash Flow Hedges
 
Balance at January 2, 2016
$
10

 
$
309

 
$
(2,455
)
 
$
(333
)
 
$
(2,469
)
Quarter Ended April 2, 2016:
 
 
 
 
 
 
 
 
 
Unrealized gains (losses) arising
  during the period
(1
)
 
(162
)
 
(2
)
 
35

 
(130
)
Reclassifications of net (gains)
  losses to net income
—

 
(42
)
 
42

 
—

 
—

Balance at April 2, 2016
$
9

 
$
105

 
$
(2,415
)
 
$
(298
)
 
$
(2,599
)
 
 
 
 
 
 
 
 
 
 
Balance at December 27, 2014
$
84

 
$
339

 
$
(2,152
)
 
$
(151
)
 
$
(1,880
)
Quarter Ended March 28, 2015:
 
 
 
 
 
 
 
 
 
Unrealized gains (losses) arising
  during the period
(24
)
 
183

 
(9
)
 
(72
)
 
78

Reclassifications of net (gains)
  losses to net income
(30
)
 
(54
)
 
43

 
—

 
(41
)
Balance at March 28, 2015
$
30

 
$
468

 
$
(2,118
)
 
$
(223
)
 
$
(1,843
)
 
 
 
 
 
 
 
 
 
 
Balance at October 3, 2015
$
13

 
$
334

 
$
(2,497
)
 
$
(271
)
 
$
(2,421
)
Six Months Ended April 2, 2016:
 
 
 
 
 
 
 
 
 
Unrealized gains (losses) arising
  during the period
(4
)
 
(121
)
 
(2
)
 
(27
)
 
(154
)
Reclassifications of net (gains)
  losses to net income
—

 
(108
)
 
84

 
—

 
(24
)
Balance at April 2, 2016
$
9

 
$
105

 
$
(2,415
)
 
$
(298
)
 
$
(2,599
)
 
 
 
 
 
 
 
 
 
 
Balance at September 27, 2014
$
100

 
$
204

 
$
(2,196
)
 
$
(76
)
 
$
(1,968
)
Six Months Ended March 28, 2015:
 
 
 
 
 
 
 
 
 
Unrealized gains (losses) arising
  during the period
(40
)
 
359

 
(9
)
 
(147
)
 
163

Reclassifications of net (gains)
  losses to net income
(30
)
 
(95
)
 
87

 
—

 
(38
)
Balance at March 28, 2015
$
30

 
$
468

 
$
(2,118
)
 
$
(223
)
 
$
(1,843
)


16
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:
Gains/(losses) in net income:
 
Affected line item in the
  Condensed Consolidated
  Statements of Income:
 
Quarter Ended
 
Six Months Ended
 
 
April 2,
2016
 
March 28,
2015
 
April 2,
2016
 
March 28,
2015
Investments, net
 
Interest income/(expense), net
 
$
—

 
$
48

 
$
—

 
$
48

Estimated tax
 
Income taxes
 
—

 
(18
)
 
—

 
(18
)
 
 
 
 
—

 
30

 
—

 
30

 
 
 
 
 
 
 
 
 
 
 
Cash flow hedges
 
Primarily revenue
 
67

 
86

 
172

 
151

Estimated tax
 
Income taxes
 
(25
)
 
(32
)
 
(64
)
 
(56
)
 
 
 
 
42

 
54

 
108

 
95

 
 
 
 
 
 
 
 
 
 
 
Pension and postretirement
  medical expense
 
Costs and expenses
 
(67
)
 
(68
)
 
(134
)
 
(138
)
Estimated tax
 
Income taxes
 
25

 
25

 
50

 
51

 
 
 
 
(42
)
 
(43
)
 
(84
)
 
(87
)
 
 
 
 
 
 
 
 
 
 
 
Total reclassifications for the period
 
 
 
$
—

 
$
41

 
$
24

 
$
38

At April 2, 2016 and October 3, 2015, the Company held available-for-sale investments in unrecognized gain positions totaling $18 million and $21 million, respectively, and no investments in significant unrecognized loss positions.

9.
Equity-Based Compensation
Compensation expense related to stock options, stock appreciation rights and restricted stock units (RSUs) is as follows:
 
Quarter Ended
 
Six Months Ended
 
April 2,
2016
 
March 28,
2015
 
April 2,
2016
 
March 28,
2015
Stock options/rights (1)
$
23

 
$
27

 
$
46

 
$
52

RSUs
76

 
83

 
159

 
162

Total equity-based compensation expense (2)
$
99

 
$
110

 
$
205

 
$
214

Equity-based compensation expense capitalized during the period
$
19

 
$
14

 
$
34

 
$
29

 
(1) 
Includes stock appreciation rights.
(2) 
Equity-based compensation expense is net of capitalized equity-based compensation and excludes amortization of previously capitalized equity-based compensation costs. During the quarter and six months ended April 2, 2016, amortization of previously capitalized equity-based compensation totaled $17 million and $34 million, respectively. During the quarter and six months ended March 28, 2015, amortization of previously capitalized equity-based compensation totaled $9 million and $18 million, respectively.
Unrecognized compensation cost related to unvested stock options/rights and RSUs totaled approximately $199 million and $697 million, respectively, as of April 2, 2016.
The weighted average grant date fair values of options issued during the six months ended April 2, 2016 and March 28, 2015 were $31.16 and $22.64, respectively.
During the six months ended April 2, 2016, the Company made equity compensation grants consisting of 3.8 million stock options and 3.2 million RSUs.


17
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


10.
Commitments and Contingencies
Legal Matters
Beef Products, Inc. v. American Broadcasting Companies, Inc. On September 13, 2012, plaintiffs filed an action in South Dakota state court against certain subsidiaries and employees of the Company and others, asserting claims for defamation arising from alleged false statements and implications, statutory and common law product disparagement and tortious interference with existing and prospective business relationships. The claims arise out of ABC News reports published in March and April 2012 about a product, Lean Finely Textured Beef, that was included in ground beef and hamburger meat. Plaintiffs’ complaint sought actual and consequential damages in excess of $400 million (which in March 2016 they asserted could be as much as $1.9 billion), statutory damages (including treble damages) pursuant to South Dakota’s Agricultural Food Products Disparagement Act, and punitive damages. Trial is set for June 2017. At this time, the Company is not able to predict the ultimate outcome of this matter, nor can it estimate the range of possible loss.
The Company, together with, in some instances, certain of its directors and officers, is a defendant or codefendant in various other legal actions involving copyright, breach of contract and various other claims incident to the conduct of its businesses.
Management does not believe that the Company has incurred a probable material loss by reason of any of the above 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 April 2, 2016, the remaining debt service obligation guaranteed by the Company was $321 million, of which $56 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 these bonds.
Long-Term Receivables and the Allowance for Credit Losses
The Company has accounts receivable with original maturities greater than one year related to the sale of television program rights and vacation ownership units. 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 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 television program sales receivables recorded in other non-current assets, net of an immaterial allowance for credit losses, was $0.9 billion as of April 2, 2016. The activity in the current period related to the allowance for credit losses was not material.
The Company estimates the allowance for credit losses related to receivables from sales of its vacation ownership units 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 approximately $0.7 billion as of April 2, 2016. The activity in the current period related to the allowance for credit losses was not material.
Income Taxes
During the six months ended April 2, 2016, the Company decreased its gross unrecognized tax benefits by $32 million to $880 million, including a $13 million decrease to income tax expense.
In the next twelve months, it is reasonably possible that our unrecognized tax benefits could change due to resolutions of open tax matters. These resolutions would reduce our unrecognized tax benefits by approximately $190 million, of which $72 million would reduce our income tax expense and effective tax rate if recognized. 


18
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


11. 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 classified in one of the following three 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 2, 2016
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
 Investments
$
31

 
$
—

 
$
—

 
$
31

Derivatives
 
 
 
 
 
 
 
Interest rate
—

 
152

 
—

 
152

Foreign exchange
—

 
706

 
—

 
706

Other
—

 
1

 
—

 
1

Liabilities
 
 
 
 
 
 
 
Derivatives
 
 
 
 
 
 
 
Foreign exchange
—

 
(373
)
 
—

 
(373
)
Other
—

 
(21
)
 
—

 
(21
)
Total recorded at fair value
$
31

 
$
465

 
$
—

 
$
496

Fair value of borrowings
$
—

 
$
20,599

 
$
1,333

 
$
21,932

 
 
Fair Value Measurement at October 3, 2015
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
 Investments
$
36

 
$
—

 
$
—

 
$
36

Derivatives
 
 
 
 
 
 
 
Interest rate
—

 
101

 
—

 
101

Foreign exchange
—

 
910

 
—

 
910

Liabilities
 
 
 
 
 
 
 
Derivatives
 
 
 
 
 
 
 
Foreign exchange
—

 
(178
)
 
—

 
(178
)
Other
—

 
(38
)
 
—

 
(38
)
Other
—

 
—

 
(96
)
 
(96
)
Total recorded at fair value
$
36

 
$
795

 
$
(96
)
 
$
735

Fair value of borrowings
$
—

 
$
17,036

 
$
752

 
$
17,788

 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 borrowings, which include commercial paper and U.S. medium-term notes, are valued based on quoted prices for similar instruments in active markets.

19
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)


The fair value of the Level 3 other liabilities represents the fair value of the contingent consideration for Maker.
Level 3 borrowings, which include International Theme Park borrowings and other foreign currency denominated borrowings, are generally valued based on historical market transactions, prevailing market interest rates and the Company’s current borrowing cost and credit risk.
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.

12. 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 Company’s derivative positions measured at fair value are summarized in the following tables: 
 
As of April 2, 2016
 
Current
Assets
 
Other Assets
 
Other
Accrued
Liabilities
 
Other Long-
Term
Liabilities
Derivatives designated as hedges
 
 
 
 
 
 
 
Foreign exchange
$
281

 
$
241

 
$
(108
)
 
$
(94
)
Interest rate
—

 
152

 
—

 
—

Other
—

 
1

 
(18
)
 
(3
)
Derivatives not designated as hedges
 
 
 
 
 
 
 
Foreign exchange
104

 
80

 
(156
)
 
(15
)
Gross fair value of derivatives
385

 
474

 
(282
)
 
(112
)
Counterparty netting
(150
)
 
(214
)
 
262

 
102

Cash collateral received
(116
)
 
(120
)
 
—

 
—

Net derivative positions
$
119

 
$
140

 
$
(20
)
 
$
(10
)
 
 
As of October 3, 2015
 
Current
Assets
 
Other Assets
 
Other
Accrued
Liabilities
 
Other Long-
Term
Liabilities
Derivatives designated as hedges
 
 
 
 
 
 
 
Foreign exchange
$
406

 
$
271

 
$
(54
)
 
$
(17
)
Interest rate
—

 
101

 
—

 
—

Other
—

 
—

 
(18
)
 
(3
)
Derivatives not designated as hedges
 
 
 
 
 
 
 
Foreign exchange
146