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  • 英国石油公司(BP)2024年第一季度财报(英文版)(37页).pdf

    Resilient performance,committed distributionsFinancial summaryFirstFourthFirstquarterquarterquarter$.

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  • 比亚迪股份有限公司2024年第一季度财报(英文版)(25页).pdf

    Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement,make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.比亞迪股份有限公司BYD COMPANY LIMITED(a joint stock company incorporated in the Peoples Republic of China with limited liability)Stock Code:01211(HKD counter)and 81211(RMB counter)Website:http:/2024 FIRST QUARTERLY REPORTThis announcement is published simultaneously by BYD Company Limited(the“Company”,together with its subsidiaries,the“Group”)in the mainland of the Peoples Republic of China pursuant to the Rules Governing Listing of Stocks on Shenzhen Stock Exchange and in Hong Kong pursuant to the disclosure obligations under Rule 13.09,Rule 13.10B and the Inside Information Provision of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.IMPORTANT NOTICE:1.The Board of Directors,Supervisory Committee and the Directors,Supervisors and senior management of the Company guarantee that the contents of this quarterly report are true,accurate and complete and do not contain false information,misleading statements or material omissions,and individually and collectively accept legal responsibility thereof.2.The Chairman of the Company,Person in charge of Accounting,and Head of Accounting Department(Accounting Supervisor)hereby declare that they guarantee the truthfulness,accuracy and completeness of the financial information contained in this quarterly report.3.Whether the first quarterly report is audited or notYes No1I.MAJOR FINANCIAL DATA(I)Major Accounting Data and Financial IndicatorsRetrospective adjustments to or restatement of the accounting data for the prior year by the CompanyYes NoThe Reporting PeriodThecorrespondingperiod of last yearIncrease/decrease for the Reporting Period as compared with the corresponding period of last year(%)Operating revenue(RMB)124,944,397,000.00120,173,608,000.003.97%Net profit attributable to shareholders of the listed company(RMB)4,568,793,000.004,130,063,000.0010.62%Net profit attributable to shareholders of the listed company after deduction of extraordinary gains or losses(RMB)3,751,980,000.003,565,127,000.005.24%Net cash flow from operating activities(RMB)10,227,984,000.0014,465,699,000.00-29.29sic earnings per share(RMB/share)1.571.4210.56%Diluted earnings per share(RMB/share)1.571.4210.56%Weighted average rate of return on net assets(%)3.24%3.65%-0.41%As at the end ofthe ReportingPeriodAs at the end ofthe previous yearIncrease/decrease as at the end of the Reporting Period as compared with that at the end of the previous year(%)Total assets(RMB)677,783,621,000.00679,547,670,000.00-0.26%Total owners equity attributable to shareholders of the listed company(RMB)143,090,246,000.00138,810,065,000.003.08%2(II)Extraordinary Gain or Loss Items and Amounts Applicable N/AUnit:RMBItemAmount for theReporting PeriodExplanationGains or losses on disposal of non-current assets(including the written-off portion of provisions for asset impairment)-261,472,000.00Government grants(except for government grants which are closely related to normal business operations of the Company,in compliance with national policies and regulations,and conform with the amount or quantities at certain standards on an ongoing basis)charged to gains or losses for the period865,127,000.00Reversal of provisions for impairment of receivables individually tested for impairment3,712,000.00Gains or losses arising from changes in fair value of financial assets held for trading and financial liabilities held for trading,investment gains from disposal of financial assets held for trading,financial liabilities held for trading and financial assets available for sale,other than effective hedging activities associated with normal business operations of the Company307,841,000.00Other non-operating income and expenses apart from those stated above175,864,000.00Less:Effect on income tax219,966,000.00 Effect on minority interests(after tax)54,293,000.00Total816,813,000.003Particulars of other gain or loss items conforming with the definition of extraordinary gains or losses:Applicable N/AThere are no particulars of other gain or loss items of the Company conforming with the definition of extraordinary gains or losses.Particulars of items of extraordinary gains or losses illustrated in“Notice on Explanation of Information Disclosure of Companies Publicly Issuing Securities No.1 Extraordinary Gains or Losses”(公開發行證券的公司信息披露解釋性公告第1號非經常性損益)that are defined as items of recurring gains or lossesApplicable N/AThere were no items of extraordinary gains or losses of the Company illustrated in“Notice on Explanation of Information Disclosure of Companies Publicly Issuing Securities No.1 Extraordinary Gains or Losses”(公開發行證券的公司信息披露解釋性公告第1號非經常性損益)that are defined as items of recurring gains or losses.4(III)Changes in Major Accounting Data and Financial Indicators and the Reasons Thereof Applicable N/ABALANCE SHEETUnit:RMBItem31 March 202431 December 2023ChangeAttributable reasonsPrepayments3,010,857,000.002,215,413,000.0035.90%Mainly due to the increase in prepayments for procurement of materialsLong-term deferred expenditures5,376,231,000.004,062,529,000.0032.34%Mainly due to the increase in improvement costs of right-of-use assetsFinancial liabilities held for trading98,177,000.007,713,000.001172.88%Mainly due to the changes in forward purchase and settlement of foreign exchange transactionsOther current liabilities2,582,963,000.001,829,276,000.0041.20%Mainly due to the increase intaxes to be written off5STATEMENT OF PROFIT OR LOSSUnit:RMBItemJanuary toMarch 2024January toMarch 2023ChangeAttributable reasonsSales expenses6,803,589,000.004,648,263,000.0046.37%Mainly due to the increase in advertising and exhibition expenses and depreciation and amortizationResearch and development expenses10,610,654,000.006,237,909,000.0070.10%Mainly due to the increase in employee remuneration and material consumptionFinance expenses-193,961,000.005,910,000.00-3381.91%Mainly due to the changes in foreign exchange gains or losses as a result of the fluctuations in exchange ratesOther income1,796,253,000.00687,719,000.00161.19%Mainly due to increase in government grants related to daily operating activitiesGains from investment621,940,000.00245,494,000.00153.34%Mainly due to the increase in gains from investment in joint venturesGains from changes in fair value142,762,000.0080,659,000.0076.99%Mainly due to the changes in the valuation of invested companiesImpairment losses on credit-326,448,000.00-229,620,000.0042.17%Mainly due to the increase in provision for bad debtsImpairment losses on asset-642,724,000.00-492,291,000.0030.56%Mainly due to the increase in provision for inventoryGains from disposal of assets-4,293,000.0042,022,000.00-110.22%Mainly due to the increase in losses from disposal of assetsNon-operating income247,476,000.00141,832,000.0074.49%Mainly due to the increase in liquidated damages from suppliersNon-operating expenses328,597,000.00223,197,000.0047.22%Mainly due to the increase in losses on disposal of non-current assets6STATEMENT OF CASH FLOWSUnit:RMBItemJanuary toMarch 2024January to March 2023ChangeAttributable reasonsNet cash flows from financing activities-5,183,543,000.0012,050,081,000.00-143.02%Mainly due to the increase in cash paid for repayment of debts during the PeriodII.SHAREHOLDER INFORMATION(I)Table of the total number of shareholders of ordinary shares and number of shareholders of preference shares with voting rights restored and shareholding of top ten shareholdersUnit:sharesTotal number of shareholders of ordinary shares at the end of the Reporting Period361,939(361,831 were holders of A shares and 108 were holders of H shares)Total number of shareholders of preference shares with voting rights restored at the end of the Reporting Period(if any)0Shareholding of top ten shareholders(excluding shares lent under the securities lending and refinancing arrangement)Name of shareholdersNature ofshareholdersPercentage of shareholdingNumber ofshares heldNumber ofshares heldsubject tolock-upPledged,marked or frozenStatus ofsharesNumberHKSCC NOMINEES LIMITEDOverseas legal person37.70%1,097,461,820(Note 1)0Wang Chuan-fuDomestic natural person17.64Q3,623,850(Note 2)385,217,887Lv Xiang-yangDomestic natural person8.22#9,228,620179,421,465Pledged50,015,498Youngy Investment Holding Group Co.,Ltd.(融捷投資控股集團有限公司)Domestic non-state owned legal person5.335,072,702 0Pledged35,590,000Hong Kong Securities Clearing Company LimitedOverseas legal person3.29,905,9990Xia Zuo-quanDomestic natural person2.84,635,607(Note 3)61,976,705Pledged1,255,0007Shareholding of top ten shareholders(excluding shares lent under the securities lending and refinancing arrangement)(contd)Name of shareholdersNature ofshareholdersPercentageof shareholdingNumber ofshares heldNumber ofshares heldsubject tolock-upPledged,marked or frozenStatus ofsharesNumberWang Nian-qiangDomestic natural person0.63,299,7400Pledged3,760,000Central Huijin Asset Management Ltd.State-owned legal person0.41,976,6330Li KeDomestic natural person0.37,861,4008,146,050Pledged4,053,000Industrial and Commercial Bank of China Huatai-Pinebridge CSI 300 Exchange Traded Open-ended Index Securities Investment Fund(中國工商銀行股份有 限公司華泰柏瑞滬深300交易型開放 式指數證券投資基金)Other0.34%9,799,3200Note 1:The number includes the 1,000,000 H shares held by Mr.Wang Chuan-fu,the 195,000 H shares and the 305,000 H shares respectively held by Mr.Xia Zuo-quan and SIGN INVESTMENTS LIMITED,an overseas company controlled by Mr.Xia Zuo-quan;and it also includes the H shares transferred from WESTERN CAPITAL GROUP LLC,a company 100%controlled by BERKSHIRE HATHAWAY ENERGY COMPANY(formerly known as MIDAMERICAN ENERGY HOLDINGS COMPANY)to HKSCC NOMINEES LIMITED;Note 2:The number does not include the 1,000,000 H shares held by Mr.Wang Chuan-fu and the 3,727,700 A shares held by Mr.Wang Chuan-fu in No.1 Assets Management Plan through E Fund BYD;Note 3:The number does not include the 195,000 H shares and the 305,000 H shares held by Mr.Xia Zuo-quan and SIGN INVESTMENTS LIMITED,an overseas company controlled by Mr.Xia Zuo-quan.8Shareholding of top ten shareholders not subject to lock-upName of shareholdersNumber of sharesnot subject tolock-up heldClass of sharesClass of sharesNumberHKSCC NOMINEES LIMITED1,097,461,820(Note 1)Overseas listed foreign shares1,097,461,820Youngy Investment Holding Group Co.,Ltd.(融捷投資控股集團有限公司)155,072,702RMB ordinary shares155,072,702Wang Chuan-fu128,405,963(Note 2)RMB ordinary shares128,405,963Hong Kong Securities Clearing Company Limited95,905,999RMB ordinary shares95,905,999Lv Xiang-yang59,807,155RMB ordinary shares59,807,155Xia Zuo-quan20,658,902(Note 3)RMB ordinary shares20,658,902Wang Nian-qiang18,299,740RMB ordinary shares18,299,740Central Huijin Asset Management Ltd.11,976,633RMB ordinary shares11,976,633Industrial and Commercial Bank of China Huatai-Pinebridge CSI 300 Exchange Traded Open-ended Index Securities Investment Fund(中國工商銀行股份 有限公司華泰柏瑞滬深300交易型 開放式指數證券投資基金)9,799,320RMB ordinary shares9,799,320National Social Security Fund Portfolio No.1148,871,922RMB ordinary shares8,871,922Note 1:The number includes the 1,000,000 H shares held by Mr.Wang Chuan-fu,the 195,000 H shares and the 305,000 H shares respectively held by Mr.Xia Zuo-quan and SIGN INVESTMENTS LIMITED,an overseas company controlled by Mr.Xia Zuo-quan;and it also includes the H shares transferred from WESTERN CAPITAL GROUP LLC,a company 100%controlled by BERKSHIRE HATHAWAY ENERGY COMPANY(formerly known as MIDAMERICAN ENERGY HOLDINGS COMPANY)to HKSCC NOMINEES LIMITED;Note 2:The number does not include the 1,000,000 H shares held by Mr.Wang Chuan-fu and the 3,727,700 A shares held by Mr.Wang Chuan-fu in No.1 Assets Management Plan through E Fund BYD;Note 3:The number does not include the 195,000 H shares and the 305,000 H shares held by Mr.Xia Zuo-quan and SIGN INVESTMENTS LIMITED,an overseas company controlled by Mr.Xia Zuo-quan.9Details of the connections among,or concerted actions taken by the above shareholders1.Mr.Lv Xiang-yang is an older cousin of Mr.Wang Chuan-fu.Mr.Lv Xiang-yang and his spouse,Ms.Zhang Chang-hong are interested in the equity of Youngy Investment Holding Group Co.,Ltd.(融捷投資控股集團有限公司)as to 89.5%and 10.5%respectively;2.Shares held by HKSCC NOMINEES LIMITED are the aggregate of H shares of the Company traded on the trading platform of HKSCC NOMINEES LIMITED on its behalf held by shareholders;3.The Company is not aware of any connections among other shareholders nor any parties acting in concert as defined in the Administrative Measures for Acquisitions by Listed Companies.Details of top ten shareholders participating in securities margin trading(if any)1.According to the information provided by China Securities Finance Corporation Limited,Youngy Investment Holding Group Co.,Ltd.(融捷投資控股集團有限公司),a shareholder of the Company,lent out 971,900 shares and 76,900 shares for refinancing at the beginning of the Reporting Period and at the end of the Reporting Period,respectively;2.According to the information provided by China Securities Finance Corporation Limited,Industrial and Commercial Bank of China Huatai-Pinebridge CSI 300 Exchange Traded Open-ended Index Securities Investment Fund(中國工商銀行股份有限公司華泰柏瑞滬深300交易型開放式指數證券投資基金),a shareholder of the Company,lent out 3,500 shares for refinancing at the beginning of the Reporting Period and there were no shares lent out for refinancing at the end of the Reporting Period;3.According to the information provided by China Securities Finance Corporation Limited,save for Youngy Investment Holding Group Co.,Ltd.(融捷投資控股集團有限公司)and Industrial and Commercial Bank of China Huatai-Pinebridge CSI 300 Exchange Traded Open-ended Index Securities Investment Fund(中國工商銀行股份有限公司華泰柏瑞滬深300交易型開放式指數證券投資基金),none of the other top ten shareholders and top ten shareholders not subject to lock-up had lent out any shares for refinancing at the beginning and end of the Reporting Period.10Shares lent out by shareholders with a shareholding of more than 5%,top ten shareholders and top ten shareholders not subject to lock-up for participating in refinancing business Applicable N/AUnit:ShareShares lent out by shareholders with a shareholding of more than 5%,top ten shareholders and top ten shareholders not subject to lock-up for participating in refinancing businessNameOpening shareholdings through common accounts and credit accountsOpening shares lent out and outstanding for refinancingClosing shareholdings through common accounts and credit accountsClosing shares lent out and outstanding for refinancingTotalPercentage of total share capitalTotalPercentage of total share capitalTotalPercentage of total share capitalTotalPercentage of total share capitalYoungy Investment Holding Group Co.,Ltd.(融捷投資 控股集團有限公司)154,177,7025.29611,9000.03345,072,7025.3269v,9000.0026%Industrial and Commercial Bank of China Huatai-Pinebridge CSI 300 Exchange Traded Open-ended Index Securities Investment Fund(中國工商 銀行股份有限公司華泰 柏瑞滬深300交易型開放式 指數證券投資基金)6,856,5570.2355%3,5000.0001%9,799,3200.3366Changes of top ten shareholders and top ten shareholders not subject to lock-up over the previous period due to lending out/returning shares for refinancingApplicable N/A(II)Table showing total number of shareholders of preference shares of the Company and shareholding of top ten shareholders of preference sharesApplicable N/A11III.OTHER SIGNIFICANT EVENTS Applicable N/ADuring the Reporting Period,the Resolution on the Consideration of the 2024 Share Repurchase Plan,the Resolution on the Grant of Mandate to the Board and its Authorized Persons by the General Meeting to Deal with Matters in relation to the Repurchase of Shares in Full Discretion and the Resolution on the Convening of the First Extraordinary General Meeting of BYD Company Limited in 2024 were considered and approved at the 5th meeting of the eighth session of the Board and the 3rd meeting of the eighth session of the supervisory committee held on 6 March 2024.With confidence in the prospect of the new energy industry and the future development of the Company under the national goal of“dual-carbon”and in recognition of the Companys value,in order to safeguard the interests of all Shareholders,enhance investor confidence,and stabilize and enhance the value of the Company,the Company had decided to repurchase part of its A shares for cancellation to reduce its registered capital with a repurchase amount of RMB400 million.For details,please refer to the Announcement on the Resolutions Passed at the 5th Meeting of the Eighth Session of the Board(Announcement No.2024018),the Announcement on the Resolutions Passed at the 3rd Meeting of the Eighth Session of the Supervisory committee(Announcement No.2024019)and the Announcement on the 2024 Share Repurchase Plan(Announcement No.2024020)and the Notice of the Convening of the First Extraordinary General Meeting of 2024,the First Class Meeting of Holders of A Shares of 2024 and the First Class Meeting of Holders of H shares of 2024(Announcement No.2024024)disclosed by the Company on Securities Times,China Securities Journal,Shanghai Securities Journal,Securities Daily and CNINFO()on 7 March 2024 and 20 March 2024,respectively.12IV.QUARTERLY FINANCIAL STATEMENTS(I)Financial Statements1.Consolidated Balance SheetPrepared by:BYD Company Limited31 March 2024Unit:RMBItemBalance at the end of the periodBalance at thebeginning of the yearCurrent assets:Monetary fund86,796,529,000.00109,094,408,000.00 Financial assets held for trading9,384,994,000.009,562,550,000.00 Trade receivable61,265,729,000.0061,866,019,000.00 Receivables financing6,823,700,000.005,564,924,000.00 Prepayments3,010,857,000.00 2,215,413,000.00 Other receivables2,813,027,000.00 2,757,912,000.00 Including:Interests receivableDividends receivable Inventories98,778,886,000.0087,676,748,000.00 Contract assets2,316,586,000.002,660,319,000.00 Long-term receivables due within one year8,209,299,000.007,508,351,000.00 Other current assets13,494,167,000.0013,214,802,000.00Total current assets292,893,774,000.00302,121,446,000.0013ItemBalance at the end of the periodBalance at thebeginning of the yearNon-current assets:Long-term receivables8,134,667,000.008,238,190,000.00 Long-term equity investments18,102,324,000.0017,647,212,000.00 Other equity instrument investments6,566,004,000.005,327,283,000.00 Other non-current financial assets2,787,301,000.002,696,374,000.00 Investment properties61,508,000.0082,510,000.00 Fixed assets231,093,876,000.00230,903,820,000.00 Construction in progress39,909,856,000.0034,726,196,000.00 Right-of-use assets10,406,389,000.009,678,956,000.00 Intangible assets36,957,988,000.0037,236,261,000.00 Development expenditure637,605,000.00541,000,000.00 Goodwill4,427,571,000.004,427,571,000.00 Long-term deferred expenditures5,376,231,000.004,062,529,000.00 Deferred tax assets7,092,056,000.006,584,422,000.00 Other non-current assets13,336,471,000.0015,273,900,000.00Total non-current assets384,889,847,000.00377,426,224,000.00Total assets677,783,621,000.00679,547,670,000.00IV.QUARTERLY FINANCIAL STATEMENTS(CONTINUED)(I)Financial Statements(Continued)1.Consolidated Balance Sheet(Continued)Unit:RMB14ItemBalance at the end of the periodBalance at thebeginning of the yearCurrent liabilities:Short-term borrowings13,718,585,000.0018,323,216,000.00 Financial liabilities held for trading98,177,000.007,713,000.00 Bills payable3,309,360,000.004,053,314,000.00 Trade payable196,133,876,000.00194,429,817,000.00 Contract liabilities38,363,374,000.0034,698,510,000.00 Employee benefits payable16,291,131,000.0017,138,836,000.00 Taxes payable6,557,025,000.007,852,324,000.00 Other payables156,163,109,000.00164,972,849,000.00 Including:Interests payableDividends payable Provision2,693,025,000.002,620,325,000.00 Non-current liabilities due within one year8,170,073,000.007,740,491,000.00 Other current liabilities2,582,963,000.001,829,276,000.00Total current liabilities444,080,698,000.00453,666,671,000.00IV.QUARTERLY FINANCIAL STATEMENTS(CONTINUED)(I)Financial Statements(Continued)1.Consolidated Balance Sheet(Continued)Unit:RMB15ItemBalance at the end of the periodBalance at thebeginning of the yearNon-current liabilities:Long-term borrowings13,995,641,000.0011,975,139,000.00 Lease liabilities9,099,131,000.008,847,186,000.00 Deferred tax liabilities3,705,331,000.003,950,836,000.00 Other non-current liabilities51,955,785,000.0050,645,725,000.00Total non-current liabilities78,755,888,000.0075,418,886,000.00Total liabilities522,836,586,000.00529,085,557,000.00Shareholders equity:Share capital2,911,143,000.002,911,143,000.00 Capital reserve62,178,342,000.0062,041,774,000.00 Less:treasury stocks1,266,944,000.001,266,944,000.00 Other comprehensive income177,964,000.00603,663,000.00 Special reserve22,889,000.0022,370,000.00 Surplus reserve7,374,087,000.007,374,087,000.00 Undistributed profit71,692,765,000.0067,123,972,000.00Total shareholders equity attributable to the parent company143,090,246,000.00138,810,065,000.00 Non-controlling interests11,856,789,000.0011,652,048,000.00Total shareholders equity154,947,035,000.00150,462,113,000.00Total liabilities and shareholders equity677,783,621,000.00679,547,670,000.00Legal representative:Wang Chuan-fuPerson in charge of Accounting:Zhou Ya-linHead of Accounting Department:Liu HuiIV.QUARTERLY FINANCIAL STATEMENTS(CONTINUED)(I)Financial Statements(Continued)1.Consolidated Balance Sheet(Continued)Unit:RMB16IV.QUARTERLY FINANCIAL STATEMENTS(CONTINUED)(I)Financial Statements(Continued)2.Consolidated Income StatementUnit:RMBItemAmount for thecurrent periodAmount for theprevious periodI.Total operating revenue124,944,397,000.00120,173,608,000.00Including:Operating revenue124,944,397,000.00120,173,608,000.00II.Total operating costs120,733,401,000.00115,208,987,000.00Including:Operating costs97,603,387,000.0098,706,595,000.00Tax and surcharge2,141,223,000.002,244,609,000.00Sales expense6,803,589,000.004,648,263,000.00Administrative expenses3,768,509,000.003,365,701,000.00Research and development expenses10,610,654,000.006,237,909,000.00Finance expenses-193,961,000.005,910,000.00 Including:Interest expenses580,449,000.00307,133,000.00Interest income595,128,000.00539,969,000.00Add:Other income1,796,253,000.00687,719,000.00Investment income (loss is represented by“-”)621,940,000.00245,494,000.00Including:Investment income in associates and joint ventures456,861,000.00215,063,000.00Gains from changes in fair value (loss is represented by“-”)142,762,000.0080,659,000.00Impairment loss on credit (loss is represented by“-”)-326,448,000.00-229,620,000.00Impairment loss on assets (loss is represented by“-”)-642,724,000.00-492,291,000.00Gains from disposal of assets(loss is represented by“-”)-4,293,000.0042,022,000.0017ItemAmount for thecurrent periodAmount for theprevious periodIII.Operating profit (loss is represented by“-”)5,798,486,000.005,298,604,000.00Add:Non-operating income247,476,000.00141,832,000.00Less:Non-operating expenses328,597,000.00223,197,000.00IV.Total profit (total loss is represented by“-”)5,717,365,000.005,217,239,000.00Less:Income tax expense946,486,000.00847,244,000.00V.Net profit (net loss is represented by“-”)4,770,879,000.004,369,995,000.00(I)Classified by continuity of operation1.Net profit from continued operation(net loss is represented by“-”)4,770,879,000.004,369,995,000.002.Net profit from discontinued operation(net loss is represented by“-”)(II)Classified by ownership1.Net profit attributable to shareholders of the parent company4,568,793,000.004,130,063,000.002.Non-controlling interests202,086,000.00239,932,000.00IV.QUARTERLY FINANCIAL STATEMENTS(CONTINUED)(I)Financial Statements(Continued)2.Consolidated Income Statement(Continued)Unit:RMB18ItemAmount for thecurrent periodAmount for theprevious periodVI.Other comprehensive income,net of tax-425,437,000.0078,372,000.00Other comprehensive income attributable to shareholders of the parent company,net of tax-425,699,000.0071,805,000.00(I)Other comprehensive income that cannot be reclassified to profit or loss-270,918,000.00106,081,000.001.Changes from re-measurement of defined benefit plans2.Other comprehensive income that cannot be transferred to profit or loss under the equity method3.Changes in fair value of other equity instrument investments-360,774,000.00142,131,000.004.Changes in fair value of the companys own credit risk5.Income tax effect89,856,000.00-36,050,000.006.OthersIV.QUARTERLY FINANCIAL STATEMENTS(CONTINUED)(I)Financial Statements(Continued)2.Consolidated Income Statement(Continued)Unit:RMB19ItemAmount for thecurrent periodAmount for theprevious period(II)Other comprehensive income that will be reclassified to profit or loss-154,781,000.00-34,276,000.001.Other comprehensive income that may be transferred to profit or loss under the equity method2.Changes in fair value of other debt investments3.Amount of financial assets reclassified to other comprehensive income4.Credit impairment provisions for other debt investments5.Reserves for cash flows hedges-99,585,000.000.006.Difference on foreign currency translation-61,795,000.0042,644,000.007.Changes in fair value of receivables financing6,599,000.00-95,030,000.008.Credit impairment provisions for receivables financing0.0018,110,000.009.OthersOther comprehensive income attributable to minority shareholders,net of tax262,000.006,567,000.00IV.QUARTERLY FINANCIAL STATEMENTS(CONTINUED)(I)Financial Statements(Continued)2.Consolidated Income Statement(Continued)Unit:RMB20ItemAmount for thecurrent periodAmount for theprevious periodVII.Total comprehensive income4,345,442,000.004,448,367,000.00Total comprehensive income attributable to shareholders of the parent company4,143,094,000.004,201,868,000.00Total comprehensive income attributable to minority shareholders202,348,000.00246,499,000.00VIII.Earnings per share:(I)Basic earnings per share1.571.42(II)Diluted earnings per share1.571.42For the business combination under common control effected in the current period,the net profit recognised by the merged party before the combination was RMB0.00,and the net profit recognised by the merged party in the previous period was RMB0.00.Legal representative:Wang Chuan-fuPerson in charge of Accounting:Zhou Ya-linHead of Accounting Department:Liu HuiIV.QUARTERLY FINANCIAL STATEMENTS(CONTINUED)(I)Financial Statements(Continued)2.Consolidated Income Statement(Continued)Unit:RMB21IV.QUARTERLY FINANCIAL STATEMENTS(CONTINUED)(I)Financial Statements(Continued)3.Consolidated Cash Flow StatementUnit:RMBItemAmount for thecurrent periodAmount for theprevious periodI.Cash flows from operating activities:Cash received from sales of goods and provision of services124,156,838,000.0093,703,601,000.00Tax rebates received3,605,599,000.002,516,381,000.00Cash received from other activities relating to operations3,519,489,000.006,028,151,000.00Sub-total of cash inflows from operating activities131,281,926,000.00102,248,133,000.00Cash paid for goods and services85,416,879,000.0058,842,560,000.00Cash paid to and on behalf of employees23,477,009,000.0018,250,085,000.00Cash paid for various types of taxes7,927,455,000.006,517,453,000.00Cash paid for other activities relating to operations4,232,599,000.004,172,336,000.00Sub-total of cash outflows from operating activities121,053,942,000.0087,782,434,000.00Net cash flows from operating activities10,227,984,000.0014,465,699,000.0022ItemAmount for thecurrent periodAmount for theprevious periodII.Cash flows from investing activities:Cash received from gains in investment114,226,000.00138,036,000.00Net cash received from disposals of fixed assets,intangible assets and other long-term assets36,987,000.00166,393,000.00Cash received from other activities relating to investments440,000,000.0010,237,081,000.00Sub-total of cash inflows from investing activities591,213,000.0010,541,510,000.00Cash paid for purchase and construction of fixed assets,intangible assets and other long-term assets26,094,349,000.0032,357,737,000.00Cash paid for investments1,606,462,000.00384,141,000.00Cash paid for other activities relating to investments160,000,000.00497,000,000.00Sub-total of cash outflows from investing activities27,860,811,000.0033,238,878,000.00Net cash flows from investing activities-27,269,598,000.00-22,697,368,000.00IV.QUARTERLY FINANCIAL STATEMENTS(CONTINUED)(I)Financial Statements(Continued)3.Consolidated Cash Flow Statement(Continued)Unit:RMB23ItemAmount for thecurrent periodAmount for theprevious periodIII.Cash flows from financing activities:Cash received from capital injectionIncluding:Cash received by subsidiaries from minority shareholders investmentCash received from borrowings12,703,500,000.0013,214,038,000.00Cash received relating to other financing activitiesSub-total of cash inflows from financing activities12,703,500,000.0013,214,038,000.00Cash paid for repayment of debts17,136,272,000.00647,470,000.00Cash payments for distribution of dividends,profits or interest expenses232,182,000.00241,502,000.00Including:Dividends and profits paid to minority shareholders by subsidiariesCash paid relating to other financing activities518,589,000.00274,985,000.00Sub-total of cash outflows from financing activities17,887,043,000.001,163,957,000.00Net cash flows from financing activities-5,183,543,000.0012,050,081,000.00IV.QUARTERLY FINANCIAL STATEMENTS(CONTINUED)(I)Financial Statements(Continued)3.Consolidated Cash Flow Statement(Continued)Unit:RMB24ItemAmount for thecurrent periodAmount for theprevious periodIV.Effect of foreign exchange rate changes on cash and cash equivalents-107,840,000.00-109,036,000.00V.Net increase in cash and cash equivalents-22,332,997,000.003,709,376,000.00Add:Cash and cash equivalents at the beginning of the period108,511,745,000.0051,182,457,000.00VI.Cash and cash equivalents at the end of the period86,178,748,000.0054,891,833,000.00(II)Audit ReportWhether the first quarterly report is audited or notYes NoThe first quarterly report of the Company is unaudited.By Order of the BoardBYD Company LimitedWang Chuan-fuChairmanShenzhen,PRC,29 April 2024As at the date of this announcement,the Board of the Company consists of Mr.Wang Chuan-fu being the executive Director,Mr.Lv Xiang-yang and Mr.Xia Zuo-quan being the non-executive Directors,and Mr.Cai Hong-ping,Mr.Zhang Min and Ms.Yu Ling being the independent non-executive Directors.This announcement is prepared in Chinese and translated into English,and the Chinese text shall prevail over the English text in case of any inconsistency.IV.QUARTERLY FINANCIAL STATEMENTS(CONTINUED)(I)Financial Statements(Continued)3.Consolidated Cash Flow Statement(Continued)Unit:RMB25

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    UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-Q(Mark One)QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934For the quarterly period ended March 31,2024ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934For the transition period fromtoCommission file number 001-14905BERKSHIRE HATHAWAY INC.(Exact name of registrant as specified in its charter)Delaware47-0813844(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification Number)3555 Farnam Street,Omaha,Nebraska 68131(Address of principal executive office)(Zip Code)(402)346-1400(Registrants telephone number,including area code)(Former name,former address and former fiscal year,if changed since last report)Securities registered pursuant to Section 12(b)of the Act:Title of each class Trading SymbolsName of each exchange on which registeredClass A Common StockClass B Common Stock0.000%Senior Notes due 20251.125%Senior Notes due 20272.150%Senior Notes due 20281.500%Senior Notes due 20302.000%Senior Notes due 20341.625%Senior Notes due 20352.375%Senior Notes due 20390.500%Senior Notes due 20412.625%Senior Notes due 2059BRK.ABRK.BBRK25BRK27BRK28BRK30BRK34BRK35BRK39BRK41BRK59New York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeIndicate 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 No Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the Registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,smaller reporting company,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filerNon-accelerated filerSmaller reporting companyEmerging growth companyIf an emerging growth company,indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the Registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No Number of shares of common stock outstanding as of April 19,2024:Class A 562,539Class B 1,311,384,8831BERKSHIRE HATHAWAY INC.Page No.Part I Financial Information Item 1.Financial Statements Consolidated Balance SheetsMarch 31,2024 and December 31,20232 Consolidated Statements of EarningsFirst Quarter 2024 and 20234 Consolidated Statements of Comprehensive IncomeFirst Quarter 2024 and 20235 Consolidated Statements of Changes in Shareholders EquityFirst Quarter 2024 and 20235 Consolidated Statements of Cash FlowsFirst Quarter 2024 and 20236 Notes to Consolidated Financial Statements7Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations28Item 3.Quantitative and Qualitative Disclosures About Market Risk46Item 4.Controls and Procedures46Part II Other Information 46Item 1.Legal Proceedings46Item 1A.Risk Factors46Item 2.Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities47Item 3.Defaults Upon Senior Securities47Item 4.Mine Safety Disclosures47Item 5.Other Information47Item 6.Exhibits48Signature 48 2Part I Financial InformationItem 1.Financial StatementsBERKSHIRE HATHAWAY INC.and SubsidiariesCONSOLIDATED BALANCE SHEETS(dollars in millions)March 31,2024December 31,2023(Unaudited)ASSETSInsurance and Other:Cash and cash equivalents*$28,891$33,672Short-term investments in U.S.Treasury Bills153,444129,619Investments in fixed maturity securities17,16723,758Investments in equity securities335,864353,842Equity method investments29,58529,066Loans and finance receivables25,43524,681Other receivables46,77244,174Inventories23,67024,159Property,plant and equipment22,05822,030Equipment held for lease17,15416,947Goodwill50,81350,868Other intangible assets29,04529,327Deferred charges-retroactive reinsurance9,3189,495Other20,39819,568 809,614811,206Railroad,Utilities and Energy:Cash and cash equivalents*6,6584,350Receivables6,0637,086Property,plant and equipment178,288177,616Goodwill33,73633,758Regulatory assets5,5705,565Other30,10630,397 260,421258,772$1,070,035$1,069,978*Includes U.S.Treasury Bills with maturities of three months or less when purchased of$4.0 billion at March 31,2024 and$4.8 billion at December 31,2023.See accompanying Notes to Consolidated Financial Statements3BERKSHIRE HATHAWAY INC.and SubsidiariesCONSOLIDATED BALANCE SHEETS(dollars in millions)March 31,2024December 31,2023(Unaudited)LIABILITIES AND SHAREHOLDERS EQUITYInsurance and Other:Unpaid losses and loss adjustment expenses$111,482$111,082Unpaid losses and loss adjustment expenses-retroactive reinsurance contracts34,24534,647Unearned premiums31,97530,507Life,annuity and health insurance benefits17,98720,213Other policyholder liabilities10,66211,545Accounts payable,accruals and other liabilities31,58332,402Aircraft repurchase liabilities and unearned lease revenues8,3758,253Notes payable and other borrowings40,72342,692 287,032291,341Railroad,Utilities and Energy:Accounts payable,accruals and other liabilities20,64922,461Regulatory liabilities6,8876,818Notes payable and other borrowings82,03185,579 109,567114,858Income taxes,principally deferred95,65193,009Total liabilities492,250499,208Redeemable noncontrolling interests3,261Shareholders equity:Common stock88Capital in excess of par value34,98234,480Accumulated other comprehensive income(4,050)(3,763)Retained earnings619,925607,350Treasury stock,at cost(79,375)(76,802)Berkshire Hathaway shareholders equity571,490561,273Noncontrolling interests6,2956,236Total shareholders equity577,785567,509$1,070,035$1,069,978See accompanying Notes to Consolidated Financial Statements 4BERKSHIRE HATHAWAY INC.and SubsidiariesCONSOLIDATED STATEMENTS OF EARNINGS(dollars in millions except per share amounts)(Unaudited)First Quarter20242023Revenues:Insurance and Other:Insurance premiums earned$21,474$19,796Sales and service revenues37,47238,388Leasing revenues2,2222,044Interest,dividend and other investment income4,3053,229 65,47363,457Railroad,Utilities and Energy:Freight rail transportation revenues5,6376,001Utility and energy operating revenues17,69014,917Service revenues and other income1,0691,018 24,39621,936Total revenues89,86985,393Investment gains(losses)1,87634,758Costs and expenses:Insurance and Other:Insurance losses and loss adjustment expenses13,44814,221Life,annuity and health benefits945785Insurance underwriting expenses3,7533,587Cost of sales and services29,39530,319Cost of leasing1,6911,477Selling,general and administrative expenses4,7735,602Interest expense316328 54,32156,319Railroad,Utilities and Energy:Freight rail transportation expenses3,9384,161Utilities and energy cost of sales and other expenses16,26813,846Other expenses1,005871Interest expense1,000890 22,21119,768Total costs and expenses76,53276,087Earnings before income taxes and equity method earnings15,21344,064Equity method earnings493688Earnings before income taxes15,70644,752Income tax expense2,8748,995Net earnings12,83235,757Earnings attributable to noncontrolling interests130253Net earnings attributable to Berkshire Hathaway shareholders$12,702$35,504Net earnings per average equivalent Class A share$8,825$24,377Net earnings per average equivalent Class B share*$5.88$16.25Average equivalent Class A shares outstanding1,439,3701,456,438Average equivalent Class B shares outstanding2,159,055,1342,184,657,109*Net earnings per average equivalent Class B share outstanding are equal to one-fifteen-hundredth of the equivalent Class A amount.See Note 19.See accompanying Notes to Consolidated Financial Statements 5BERKSHIRE HATHAWAY INC.and SubsidiariesCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(dollars in millions)(Unaudited)First Quarter20242023Net earnings$12,832$35,757Other comprehensive income:Unrealized gains(losses)on investments(35)247Applicable income taxes6(53)Foreign currency translation(539)249Applicable income taxes6Long-duration insurance contract discount rate changes351(367)Applicable income taxes(67)76Defined benefit pension plans650Applicable income taxes(2)(6)Other,net(30)(120)Other comprehensive income,net(310)82Comprehensive income12,52235,839Comprehensive income attributable to noncontrolling interests107259Comprehensive income attributable to Berkshire Hathaway shareholders$12,415$35,580CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY(dollars in millions)(Unaudited)Berkshire Hathaway shareholders equityCommon stockand capital inexcess of parvalueAccumulatedothercomprehensiveincomeRetainedearningsTreasurystockNon-controllinginterestsTotalFor the first quarter of 2024Balance at December 31,2023$34,488$(3,763)$607,350$(76,802)$6,236$567,509Net earnings12,70213012,832Adoption of ASU 2023-02(127)(127)Other comprehensive income,net(287)(23)(310)Acquisitions of common stock(2,573)(2,573)Transactions with noncontrolling interests and other502(48)454Balance at March 31,2024$34,990$(4,050)$619,925$(79,375)$6,295$577,785For the first quarter of 2023Balance at December 31,2022$35,175$(5,052)$511,127$(67,826)$8,257$481,681Net earnings35,50425335,757Other comprehensive income,net76682Acquisitions of common stock(4,439)(4,439)Transactions with noncontrolling interests and other(11)7(4)Balance at March 31,2023$35,164$(4,976)$546,631$(72,265)$8,523$513,077See accompanying Notes to Consolidated Financial Statements6BERKSHIRE HATHAWAY INC.and SubsidiariesCONSOLIDATED STATEMENTS OF CASH FLOWS(dollars in millions)(Unaudited)First Quarter20242023Cash flows from operating activities:Net earnings$12,832$35,757Adjustments to reconcile net earnings(loss)to operating cash flows:Investment(gains)losses(1,876)(34,758)Depreciation and amortization3,1683,051Other(2,863)(1,293)Changes in operating assets and liabilities:Unpaid losses and loss adjustment expenses11722Deferred charges-retroactive reinsurance177172Unearned premiums1,4941,686Receivables and originated loans469(922)Inventories516(15)Other assets(415)(987)Other liabilities(5,486)(2,649)Income taxes2,4338,629Net cash flows from operating activities10,5668,693Cash flows from investing activities:Purchases of equity securities(2,691)(2,873)Sales of equity securities19,97213,283Purchases of U.S.Treasury Bills and fixed maturity securities(103,167)(45,515)Sales of U.S.Treasury Bills and fixed maturity securities7,45212,982Redemptions and maturities of U.S.Treasury Bills and fixed maturity securities80,11425,364Acquisitions of businesses,net of cash acquired(327)(7,629)Purchases of property,plant and equipment and equipment held for lease(4,393)(3,713)Other(163)182Net cash flows from investing activities(3,203)(7,919)Cash flows from financing activities:Proceeds from borrowings of insurance and other businessesRepayments of borrowings of insurance and other businesses(1,142)(4,946)Proceeds from borrowings of railroad,utilities and energy businesses5,084Repayments of borrowings of railroad,utilities and energy businesses(5,906)(1,244)Changes in short-term borrowings,net(2,612)1,098Acquisitions of treasury stock(2,562)(4,450)Other,principally transactions with noncontrolling interests(2,664)(380)Net cash flows from financing activities(9,802)(9,922)Effects of foreign currency exchange rate changes(44)47Increase(decrease)in cash and cash equivalents and restricted cash(2,483)(9,101)Cash and cash equivalents and restricted cash at the beginning of the year*38,64336,399Cash and cash equivalents and restricted cash at the end of the first quarter*$36,160$27,298*Cash and cash equivalents and restricted cash are comprised of:Beginning of the yearInsurance and Other$33,672$32,260Railroad,Utilities and Energy4,3503,551Restricted cash included in other assets621588$38,643$36,399End of the first quarterInsurance and Other$28,891$23,805Railroad,Utilities and Energy6,6582,942Restricted cash included in other assets611551$36,160$27,298See accompanying Notes to Consolidated Financial Statements 7BERKSHIRE HATHAWAY INC.and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSMarch 31,2024Note 1.General The accompanying unaudited Consolidated Financial Statements include the accounts of Berkshire Hathaway Inc.(“Berkshire”or“Company”)consolidated with the accounts of all its subsidiaries and affiliates in which Berkshire holds controlling financial interests as of the financial statement date.In these notes,the terms“us,”“we”or“our”refer to Berkshire and its consolidated subsidiaries.Reference is made to Berkshires most recently issued Annual Report on Form 10-K(“Annual Report”),which includes information necessary or useful to understanding Berkshires businesses and financial statement presentations.Our significant accounting policies and practices were presented as Note 1 to the Consolidated Financial Statements included in the Annual Report.Financial information in this Quarterly Report reflects all adjustments that are,in the opinion of management,necessary to a fair statement of results for the interim periods in accordance with accounting principles generally accepted in the United States(“GAAP”).For several reasons,our results for interim periods are not normally indicative of results to be expected for the year.The timing and magnitude of catastrophe losses incurred by insurance subsidiaries and the estimation error inherent to the process of determining liabilities for unpaid losses of insurance subsidiaries can be more significant to results of interim periods than to results for a full year.Given the size of our equity security investment portfolio,changes in market prices and the related changes in unrealized gains and losses on equity securities will produce significant volatility in our interim and annual earnings.In addition,gains and losses from the periodic revaluation of certain assets and liabilities denominated in foreign currencies and asset impairment charges may cause significant variations in periodic net earnings.Significant estimates are used in the preparation of our Consolidated Financial Statements,including those associated with evaluations of certain long-lived assets,goodwill and other intangible assets for impairment,expected credit losses on amounts owed to us and the estimations of certain losses assumed under insurance and reinsurance contracts.These estimates may be subject to significant adjustments in future periods due to ongoing macroeconomic and geopolitical events,as well as changes in industry or company-specific factors or events.Note 2.New accounting pronouncements In March 2023,the Financial Accounting Standards Board(“FASB”)issued Accounting Standards Update 2023-02,“Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method”(“ASU 2023-02”).ASU 2023-02 permits reporting entities to elect to account for tax equity investments from which the income tax credits are received using the proportional amortization method at the program level if certain conditions are met.We elected to apply the proportional accounting method to eligible affordable housing tax credit investments using the modified retrospective method.We recorded a charge to retained earnings of$127 million,representing the cumulative effect of applying the proportional method to these investments as of January 1,2024.In November 2023,the FASB issued Accounting Standards Update 2023-07,“Improvements to Reportable Segment Disclosures”(“ASU 2023-07”),which requires disclosures of significant expenses by segment and interim disclosure of items that were previously required only on an annual basis.ASU 2023-07 is to be applied on a retrospective basis and is effective for our 2024 annual Consolidated Financial Statements and interim periods beginning in 2025.In December 2023,the FASB issued Accounting Standards Update 2023-09,“Improvements to Income Tax Disclosures”(“ASU 2023-09”),which provides for additional income tax rate reconciliation and income taxes paid disclosures.ASU 2023-09 may be adopted on a prospective or retrospective basis and is effective for fiscal years beginning after December 15,2024,with early adoption permitted.On March 6,2024,the U.S.Securities Exchange Commission(“SEC”)issued Release No.33-11275 and No.34-99678“The Enhancement and Standardization of Climate-Related Disclosures for Investors”(“Climate Disclosure Rules”).Among its provisions,the Climate Disclosure Rules will require certain disclosures related to severe weather events and other natural conditions,and other disclosures about climate-related risks that materially impacted or are reasonably likely to materially impact the business strategy,results of operations or financial condition of the registrant.The Climate Disclosure Rules are currently effective for large-accelerated SEC filers in annual reports for years beginning on or after January 1,2025.However,on April 4,2024,the SEC stayed implementation of the Climate Disclosure Rules,pending the completion of judicial review.We are evaluating the impacts ASUs 2023-07 and 2023-09 and the Climate Disclosure Rules will have on disclosures in our Consolidated Financial Statements.8Notes to Consolidated Financial Statements Note 3.Significant business acquisitions Our long-held acquisition strategy is to acquire businesses that have consistent earning power,good returns on equity and able and honest management.Financial results attributable to business acquisitions are included in our Consolidated Financial Statements beginning on their respective acquisition dates.On January 31,2023,we acquired an additional 41.4%interest in Pilot Travel Centers,LLC(“Pilot”)for approximately$8.2 billion.The acquisition increased our interest to 80%,representing a controlling interest in Pilot for financial reporting purposes as of that date.Accordingly,we began consolidating Pilots financial statements in our Consolidated Financial Statements on February 1,2023.Prior to that date,we accounted for our 38.6%interest in Pilot under the equity method.Pilot operates more than 650 travel center and 75 fuel-only locations across 44 U.S.states and five Canadian provinces,primarily under the names Pilot or Flying J,as well as large wholesale fuel and fuel marketing businesses in the U.S.Pilot also sells diesel fuel at other locations in the U.S.and Canada through various arrangements with third party travel centers and operates a water disposal business in the oil fields sector.Since Pilots most significant business activities involve purchasing and selling fuel(energy)on a wholesale and retail basis,and other energy-related businesses,we include Pilot within the railroad,utilities and energy sections of our Consolidated Balance Sheets and Consolidated Statements of Earnings.In applying the acquisition method of accounting,we remeasured our previously held 38.6%investment in Pilot to fair value as of the acquisition date.We recognized a one-time,non-cash remeasurement gain of approximately$3.0 billion in the first quarter of 2023,representing the excess of the fair value of that interest over the carrying value under the equity method.In January 2024,we acquired the remaining noncontrolling interests in Pilot for$2.6 billion,increasing our ownership of Pilot to 100%.The acquisition of a noncontrolling interest represents an equity transaction and we recorded an increase of$517 million to capital in excess of par for the excess of the carrying value of the noncontrolling interest acquired over the consideration paid,net of deferred income tax liabilities arising from the transaction.A summary of the values of Pilots assets acquired,liabilities assumed and redeemable noncontrolling interests as of January 31,2023 follows(in millions).Assets acquiredLiabilities assumed and noncontrolling interestsProperty,plant and equipment$8,015 Notes payable$5,876Goodwill*6,605 Other liabilities4,918Other intangible assets6,853Other assets7,047 Liabilities assumed10,794 Noncontrolling interests,predominantly redeemable3,361Assets acquired$28,520 Liabilities assumed and noncontrolling interests$14,155Net assets$14,365*Goodwill from this acquisition is expected to be deductible for income tax purposes.Note 4.Investments in fixed maturity securities Investments in fixed maturity securities are summarized as follows(in millions).AmortizedCostUnrealizedGainsUnrealizedLossesFairValueMarch 31,2024U.S.Treasury,U.S.government corporations and agencies$4,517$3$(17)$4,503Foreign governments11,02039(62)10,997Corporate bonds1,210224(5)1,429Other22219(3)238$16,969$285$(87)$17,167December 31,2023U.S.Treasury,U.S.government corporations and agencies$10,308$14$(53)$10,269Foreign governments11,78858(41)11,805Corporate bonds1,212241(4)1,449Other21721(3)235$23,525$334$(101)$23,7589Notes to Consolidated Financial StatementsNote 4.Investments in fixed maturity securities As of March 31,2024,approximately 95%of our foreign government holdings were rated AA or higher by at least one of the major rating agencies.The amortized cost and estimated fair value of fixed maturity securities at March 31,2024 are summarized below by contractual maturity dates(in millions).Actual maturities may differ from contractual maturities due to prepayment rights held by issuers.Due in oneyear or lessDue after one year throughfive yearsDue after five years throughten yearsDue afterten yearsMortgage-backedsecuritiesTotalAmortized cost$12,218$3,869$600$135$147$16,969Fair value12,1773,88979814415917,167Note 5.Investments in equity securities Investments in equity securities are summarized as follows(in millions).Cost BasisNet Unrealized GainsFair ValueMarch 31,2024*Banks,insurance and finance$28,513$64,299$92,812Consumer products29,214134,364163,578Commercial,industrial and other46,02633,44879,474$103,753$232,111$335,864*Approximately 75%of the aggregate fair value was concentrated in five companies(American Express Company$34.5 billion;Apple Inc.$135.4 billion;Bank of America Corporation$39.2 billion;The Coca-Cola Company$24.5 billion and Chevron Corporation$19.4 billion).Cost BasisNet Unrealized GainsFair ValueDecember 31,2023*Banks,insurance and finance$27,136$51,176$78,312Consumer products34,248166,895201,143Commercial,industrial and other48,03226,35574,387$109,416$244,426$353,842*Approximately 79%of the aggregate fair value was concentrated in five companies(American Express Company$28.4 billion;Apple Inc.$174.3 billion;Bank of America Corporation$34.8 billion;The Coca-Cola Company$23.6 billion and Chevron Corporation$18.8 billion).In 2019,we invested$10 billion in non-voting Cumulative Perpetual Preferred Stock of Occidental Petroleum Corporation(“Occidental”)and in Occidental common stock warrants.During 2022,we began acquiring common stock of Occidental.Our aggregate voting interest in Occidental common stock exceeded 20%on August 4,2022,and we adopted the equity method as of that date.See Note 6.Our investments in the Occidental preferred stock and Occidental common stock warrants are recorded at fair value within Commercial,industrial and other in the tables above.Such investments are not in-substance common stock under GAAP and are not eligible for the equity method.The Occidental preferred stock accrues dividends at 8%per annum and is redeemable at the option of Occidental commencing in 2029 at a redemption price equal to 105%of the liquidation value,plus any accumulated and unpaid dividends.As of March 31,2024,our investment in Occidental preferred stock had an aggregate liquidation value of approximately$8.5 billion,which reflected mandatory redemptions by Occidental during 2023 of approximately$1.5 billion.The Occidental common stock warrants allow us to purchase up to 83.86 million shares of Occidental common stock at an exercise price of$59.62 per share.The warrants are exercisable in whole or in part until one year after the date the preferred stock is fully redeemed.10Notes to Consolidated Financial StatementsNote 5.Investments in equity securitiesOn March 31,2024,we owned 151.6 million shares of American Express Company(“American Express”)common stock representing 21.1%of its outstanding common stock.Since 1995,we have been party to an agreement with American Express whereby we agreed to vote a significant portion of our shares in accordance with the recommendations of the American Express Board of Directors.We have also agreed to passivity commitments as requested by the Board of Governors of the Federal Reserve System,which collectively,in our judgment,restrict our ability to exercise significant influence over the operating and financial policies of American Express.Accordingly,we do not use the equity method with respect to our investment in American Express common stock,and we continue to record our investment at fair value.Note 6.Equity method investments Berkshire and its subsidiaries hold investments in certain businesses that are accounted for pursuant to the equity method.Currently,the most significant of these are our investments in the common stock of The Kraft Heinz Company(“Kraft Heinz”)and Occidental.As of March 31,2024,we owned 26.8%of the outstanding Kraft Heinz common stock and 28.2%of the outstanding Occidental common stock,which excluded the potential effect of the exercise of the Occidental common stock warrants.Kraft Heinz manufactures and markets food and beverage products,including condiments and sauces,cheese and dairy,meals,meats,refreshment beverages,coffee and other grocery products.Occidental is an international energy company,whose activities include oil and natural gas exploration,development and production and chemicals manufacturing businesses.Occidentals financial information is not available in time for concurrent reporting in our Consolidated Financial Statements.Therefore,we report the equity method effects for Occidental on a one-quarter lag.Kraft Heinz and Occidental common stocks are publicly traded.The fair values and our carrying values of these investments are included in the following table(in millions).Carrying ValueFair ValueMarch 31,2024December 31,2023March 31,2024December 31,2023Kraft Heinz$13,274$13,230$12,009$12,035Occidental15,87315,41016,11914,552Other438426$29,585$29,066As of March 31,2024,the excess of our carrying value over the fair value of our investment in Kraft Heinz was 9.5%of the carrying value.We evaluated this investment for other-than-temporary impairment as of March 31,2024,and based on the prevailing facts and circumstances,concluded the recognition of an impairment charge in earnings was not required.We also own a 50%interest in Berkadia Commercial Mortgage LLC(“Berkadia”),which is accounted for under the equity method and is included in other in the preceding table.Jefferies Financial Group Inc.(“Jefferies”)owns the other 50%interest.Berkadia engages in mortgage banking,investment sales and servicing of commercial/multi-family real estate loans.Berkadias commercial paper borrowing capacity(currently limited to$1.5 billion)is supported by a surety policy issued by a Berkshire insurance subsidiary.Jefferies is obligated to indemnify us for one-half of any losses incurred under the policy.As of March 31,2024,the carrying values of our investments in Kraft Heinz and Berkadia approximated our share of shareowners equity of each of these entities.The carrying value of our investment in Occidental common stock exceeded our share of its shareholders equity as of December 31,2023 by approximately$9.7 billion.Based upon the limited information available to us,we concluded the excess represents goodwill.Our earnings and distributions received from equity method investments are summarized in the following table(in millions).As previously described,on February 1,2023,we ceased accounting for Pilot under the equity method.Equity method earnings attributable to Pilot were$105 million for the month ending January 31,2023.The earnings we recorded in the first quarter of 2024 and 2023 for Occidental represented our share of its earnings for the fourth quarter of 2023 and 2022,respectively.Equity in EarningsDistributions ReceivedFirst QuarterFirst Quarter2024202320242023Kraft Heinz$215$222$130$130Occidental2633704125Other15964$493$688$175$15511Notes to Consolidated Financial Statements Note 6.Equity method investments Summarized consolidated financial information of Kraft Heinz follows(in millions).March 30,2024December 30,2023Assets$90,309$90,339Liabilities40,62140,617First Quarter20242023Sales$6,411$6,489Net earnings attributable to Kraft Heinz common shareholders801836Summarized consolidated financial information of Occidental follows(in millions).December 31,2023September 30,2023Assets$74,008$71,287Liabilities43,65942,515Quarter ending December 31,2023Quarter ending December 31,2022Total revenues and other income$7,529$8,326Net earnings attributable to Occidental common shareholders1,0291,727Note 7.Investment gains(losses)Investment gains(losses)in the first quarter of 2024 and 2023 are summarized as follows(in millions).First Quarter20242023Investment gains(losses):Equity securities:Change in unrealized investment gains(losses)during the period on securities held at the end of the period$3,982$31,317Investment gains(losses)on securities sold during the period(2,104)370 1,87831,687Fixed maturity securities:Gross realized gains13124Gross realized losses(12)(52)Other(3)2,999$1,876$34,758Equity securities gains and losses include unrealized gains and losses from changes in fair values during the period on equity securities we still own,as well as gains and losses on securities we sold during the period.Our proceeds from sales of equity securities were approximately$20.0 billion in the first quarter of 2024 and$13.3 billion in 2023.In the preceding table,investment gains and losses on equity securities sold during the period represent the difference between the sales proceeds and the fair value of the equity securities sold at the beginning of the applicable period or,if later,the acquisition date.Taxable gains and losses on equity securities sold are generally the difference between the proceeds from sales and cost.Our sales of equity securities produced taxable gains in the first quarter of$14.2 billion in 2024 and$2.2 billion in 2023.Other investment gains in the first quarter of 2023 included a non-cash gain of approximately$3.0 billion from the remeasurement of our pre-existing 38.6%interest in Pilot through the application of acquisition accounting under GAAP.12Notes to Consolidated Financial Statements Note 8.Loans and finance receivables Loans and finance receivables are summarized as follows(in millions).March 31,2024December 31,2023Loans and finance receivables before allowances and discounts$27,082$26,289Allowances for credit losses(973)(950)Unamortized acquisition discounts and points(674)(658)$25,435$24,681Loans and finance receivables are principally manufactured home loans,and to a lesser extent,commercial loans and site-built home loans.Reconciliations of the allowance for credit losses on loans and finance receivables for the first quarter of 2024 and 2023 follow(in millions).First Quarter20242023Balance at the beginning of the year$950$856Provision for credit losses3937Charge-offs,net of recoveries(16)(17)Balance at March 31$973$876As of March 31,2024,substantially all manufactured and site-built home loans were evaluated collectively for impairment,and we considered approximately 97%of these loans to be current as to payment status.A summary of performing and non-performing home loans before discounts and allowances by year of loan origination as of March 31,2024 follows(in millions).Origination Year 20242023202220212020PriorTotalPerforming$1,971$5,432$3,892$3,258$2,523$8,980$26,056Non-performing21013161260113$1,973$5,442$3,905$3,274$2,535$9,040$26,169We are also a lender under commercial loan agreements.These loans had an aggregate carrying value of approximately$810 million at March 31,2024 and$850 million at December 31,2023.These loans are generally secured by real estate properties or by other assets and are individually evaluated for expected credit losses.Note 9.Other receivables Other receivables are comprised of the following(in millions).March 31,2024December 31,2023Insurance and other:Insurance premiums receivable$19,695$19,052Reinsurance recoverables5,4217,060Trade receivables15,26314,449Other7,0484,269Allowances for credit losses(655)(656)$46,772$44,174Railroad,utilities and energy:Trade receivables$5,378$6,034Other8511,228Allowances for credit losses(166)(176)$6,063$7,086Aggregate provisions for credit losses in the first quarter with respect to receivables in the preceding table were$107 million in 2024 and$151 million in 2023.Charge-offs,net of recoveries,in the first quarter were$116 million in 2024 and$149 million in 2023.13Notes to Consolidated Financial Statements Note 10.InventoriesInventories of our insurance and other businesses are comprised of the following(in millions).March 31,2024December 31,2023Raw materials$5,831$6,026Work in process and other3,3273,345Finished manufactured goods5,0624,969Goods acquired for resale9,4509,819$23,670$24,159Inventories,materials and supplies of our railroad,utilities and energy businesses are included in other assets and were approximately$4.1 billion at March 31,2024 and$4.2 billion as of December 31,2023.Note 11.Property,plant and equipment A summary of property,plant and equipment of our insurance and other businesses follows(in millions).March 31,2024December 31,2023Land,buildings and improvements$15,157$15,058Machinery and equipment28,24728,010Furniture,fixtures and other5,5735,566 48,97748,634Accumulated depreciation(26,919)(26,604)$22,058$22,030A summary of property,plant and equipment of our railroad and utilities and energy businesses follows(in millions).The utility generation,transmission and distribution systems and interstate natural gas pipeline assets are owned by regulated public utility and natural gas pipeline subsidiaries.March 31,2024December 31,2023Railroad:Land,track structure and other roadway$72,194$71,692Locomotives,freight cars and other equipment16,38316,256Construction in progress1,6521,715 90,22989,663Accumulated depreciation(19,963)(19,464)70,26670,199Utilities and energy:Utility generation,transmission and distribution systems96,67596,195Interstate natural gas pipeline assets19,35719,226Independent power plants and other14,83014,781Land,buildings and improvements4,6024,540Machinery,equipment and other3,9283,855Construction in progress10,1939,551 149,585148,148Accumulated depreciation(41,563)(40,731)108,022107,417$178,288$177,616Depreciation expense for the first three months of 2024 and 2023 is summarized below(in millions).First Quarter20242023Insurance and other$614$575Railroad,utilities and energy1,7781,739$2,392$2,31414Notes to Consolidated Financial Statements Note 12.Equipment held for lease Equipment held for lease includes railcars,aircraft and other equipment,including over-the-road trailers,intermodal tank containers,cranes,storage units and furniture.Equipment held for lease is summarized below(in millions).March 31,2024December 31,2023Railcars$10,073$10,031Aircraft12,93912,537Other5,6125,576 28,62428,144Accumulated depreciation(11,470)(11,197)$17,154$16,947Depreciation expense for equipment held for lease in the first quarter was$341 million in 2024 and$308 million in 2023.Fixed and variable operating lease revenues for the first quarter of 2024 and 2023 are summarized below(in millions).First Quarter20242023Fixed lease revenue$1,552$1,417Variable lease revenue670627$2,222$2,044Note 13.Goodwill and other intangible assets Reconciliations of the changes in the carrying value of goodwill for the first three months of 2024 and for the year ended December 31,2023 follow(in millions).March 31,2024December 31,2023Balance at the beginning of the year$84,626$78,119Business acquisitions17,347Other,including acquisition period remeasurements and foreign currency translation(78)(840)Balance at the end of the period*$84,549$84,626*Net of accumulated goodwill impairments of$11.1 billion as of March 31,2024 and December 31,2023.Other intangible assets are summarized below(in millions).March 31,2024December 31,2023GrosscarryingamountAccumulatedamortizationNetcarryingvalueGrosscarryingamountAccumulatedamortizationNetcarryingvalueInsurance and other:Customer relationships$28,287$8,051$20,236$28,305$7,901$20,404Trademarks and trade names5,6248504,7745,6198464,773Patents and technology5,2794,1961,0835,2384,1091,129Other4,8031,8512,9524,8261,8053,021$43,993$14,948$29,045$43,988$14,661$29,327Railroad,utilities and energy:Customer relationships and contracts$4,092$855$3,237$4,092$791$3,301Trademarks and trade names3,5921263,4663,592983,494Other1,1821811,0011,1741561,018$8,866$1,162$7,704$8,858$1,045$7,813Other intangible assets of the railroad,utilities and energy businesses are included in other assets.Intangible asset amortization expense in the first quarter was$435 million in 2024 and$429 million in 2023.Intangible assets with indefinite lives were$18.9 billion as of March 31,2024 and December 31,2023 and primarily related to certain customer relationships and trademarks and trade names.15Notes to Consolidated Financial Statements Note 14.Unpaid losses and loss adjustment expenses Reconciliations of the changes in unpaid losses and loss adjustment expenses(“claim liabilities”),excluding liabilities under retroactive reinsurance contracts(see Note 15),for each of the three-month periods ended March 31,2024 and 2023 follow(in millions).20242023Balance at the beginning of the year:Gross liabilities$111,082$107,472Reinsurance recoverable on unpaid losses(4,893)(5,025)Net liabilities106,189102,447Incurred losses and loss adjustment expenses:Current accident year13,85414,776Prior accident years(634)(740)Total13,22014,036Paid losses and loss adjustment expenses:Current accident year(3,663)(3,841)Prior accident years(8,979)(9,747)Total(12,642)(13,588)Foreign currency effect(76)93Balance at March 31:Net liabilities106,691102,988Reinsurance recoverable on unpaid losses4,7914,969Gross liabilities$111,482$107,957Our claim liabilities under property and casualty insurance and reinsurance contracts are based upon estimates of the ultimate claim costs associated with claim occurrences as of the balance sheet date and include estimates for incurred-but-not-reported(“IBNR”)claims.Incurred losses and loss adjustment expenses related to insured events occurring in the current year(“current accident year”)and events occurring in all prior years(“prior accident years”).Incurred and paid losses and loss adjustment expenses are net of reinsurance recoveries.We recorded net reductions of estimated ultimate liabilities for prior accident years of$634 million in the first quarter of 2024 and$740 million in 2023,which produced corresponding reductions in incurred losses and loss adjustment expenses in those periods.These reductions,as percentages of the net liabilities at the beginning of each year,were 0.6%in 2024 and 0.7%in 2023.We reduced estimated ultimate liabilities for prior accident years of primary insurance businesses in the first quarter by$248 million in 2024 and$379 million in 2023,which primarily related to private passenger auto and medical professional liability claims.In the first quarter,estimated ultimate liabilities for prior accident years of property and casualty reinsurance businesses were reduced$386 million in 2024 and$361 million in 2023.The reduction in 2024 derived from both property and casualty claims.16Notes to Consolidated Financial Statements Note 15.Retroactive reinsurance contracts Retroactive reinsurance policies provide indemnification of losses and loss adjustment expenses of short-duration insurance contracts with respect to underlying loss events that occurred prior to the contract inception date,which may include significant levels of asbestos,environmental and other mass tort claims.Retroactive reinsurance contracts are generally subject to aggregate policy limits and thus,our exposure to such claims under these contracts is likewise limited.Reconciliations of the changes in estimated liabilities for retroactive reinsurance unpaid losses and loss adjustment expenses for each of the three-month periods ended March 31,2024 and 2023 follow(in millions).20242023Balance at the beginning of the year$34,647$35,415Incurred losses and loss adjustment expensesCurrent contract year51Prior contract years14Total5114Paid losses and loss adjustment expenses(408)(372)Foreign currency effect(45)6Balance at March 31$34,245$35,063 Incurred losses and loss adjustment expenses$51$14Deferred charge amortization and adjustments177171Incurred losses and loss adjustment expenses included in the Consolidated Statements of Earnings$228$185In the preceding table,the classification of incurred losses and loss adjustment expenses is based on the inception dates of the contracts,which reflect when our exposure to losses began.Incurred losses and loss adjustment expenses in the Consolidated Statements of Earnings include changes in estimated liabilities and related deferred charge asset amortization and adjustments arising from the changes in estimated timing and amount of future loss payments.Unamortized deferred charges on retroactive reinsurance contracts were$9.3 billion at March 31,2024 and$9.5 billion at December 31,2023.Note 16.Long-duration insurance contractsA summary of our long-duration life,annuity and health insurance benefits liabilities as of March 31,2024 and 2023,disaggregated for our two primary product categories,periodic payment annuities and life and health insurance,follows.Other liabilities include incurred-but-not reported claims and claims in the course of settlement.Amounts are in millions.March 31,20242023Periodic payment annuity$10,749$11,174Life and health4,2595,633Other2,9793,130$17,987$19,93717Notes to Consolidated Financial Statements Note 16.Long-duration insurance contractsReconciliations of periodic payment annuity and life and health insurance benefits liabilities for the first quarter of 2024 and 2023 follow(in millions).The information reflects the changes in discounted present values of expected future policy benefits and expected future net premiums before reinsurance ceded.Net premiums represent the portion of expected gross premiums that are required to provide for future policy benefits and variable expenses.Periodic payment annuityLife and health2024202320242023Expected future policy benefits:Balance at the beginning of the year$11,212$10,640$52,665$52,008Balance at the beginning of the year-original discount rates11,68111,54965,87163,584Effect of cash flow assumption changes(34)(1)Effect of actual versus expected experience21(12,870)(519)Change in benefits,net(115)(116)(449)(747)Interest accrual136133284425Foreign currency effect219(389)47Balance at March 31-original discount rates11,70611,58652,41362,789Effect of changes in discount rate assumptions(957)(412)(11,627)(12,169)Balance at March 31$10,749$11,174$40,786$50,620Expected future net premiums:Balance at the beginning of the year$46,916$46,129Balance at the beginning of the year-original discount rates58,73156,535Effect of cash flow assumption changes(25)2Effect of actual versus expected experience(11,278)(413)Change in premiums,net(407)(660)Interest accrual251371Foreign currency effect(358)47Balance at March 31-original discount rates46,91455,882Effect of changes in discount rate assumptions(10,387)(10,895)Balance at March 31$36,527$44,987Liabilities for future policy benefits:Balance at March 31$10,749$11,174$4,259$5,633Reinsurance recoverables(50)(1,565)Balance at March 31,net of reinsurance recoverables$10,749$11,174$4,209$4,068Liabilities for future life and health policy benefits and reinsurance recoverables declined in the first quarter of 2024,primarily attributable to the commutations of certain life reinsurance contracts.The impacts of contract commutations on expected future policy benefits and future net premiums were reflected in effects of actual versus expected experience.18Notes to Consolidated Financial Statements Note 16.Long-duration insurance contracts Other information relating to our long-duration insurance liabilities as of March 31,2024 and 2023 follows(dollars in millions).Periodic payment annuityLife and health2024202320242023Undiscounted expected future gross premiums$95,514$107,831Discounted expected future gross premiums56,58564,421Undiscounted expected future benefits30,95331,24486,800102,881Weighted average discount rate5.4%5.0%4.9%4.9%Weighted average accretion rate4.8%4.8%2.7%3.2%Weighted average duration17 years18 years13 years14 yearsGross premiums earned and interest expense before reinsurance ceded for the first quarter of 2024 and 2023 were as follows(in millions).Gross premiumsInterest expense2024202320242023Periodic payment annuity$136$133Life and health9441,0043354Note 17.Notes payable and other borrowings Notes payable and other borrowings of our insurance and other businesses are summarized below(dollars in millions).The weighted average interest rates and maturity date ranges are based on borrowings as of March 31,2024.WeightedAverageInterest RateMarch 31,2024December 31,2023Insurance and other:Berkshire Hathaway Inc.(“Berkshire”):U.S.Dollar denominated due 2025-20473.6%$3,742$3,740Euro denominated due 2025-20411.1%4,9296,145Japanese Yen denominated due 2024-20600.8%8,2918,896Berkshire Hathaway Finance Corporation(“BHFC”):U.S.Dollar denominated due 2027-20523.6,46514,463Great Britain Pound denominated due 2039-20592.5%2,1732,191Euro denominated due 2030-20341.8%1,3441,374Other subsidiary borrowings due 2024-20514.5%4,6494,696Subsidiary short-term borrowings7.2%1,1301,187$40,723$42,69219Notes to Consolidated Financial Statements Note 17.Notes payable and other borrowings Berkshire parent company borrowings consist of senior unsecured debt.In the first quarter of 2024,Berkshire repaid approximately$1.1 billion of maturing senior notes.In April 2024,Berkshire issued 263.3 billion(approximately$1.7 billion)of senior notes with interest rates ranging from 0.974%to 2.498%and maturity dates ranging from 2027 to 2054.Borrowings of BHFC,a wholly owned finance subsidiary of Berkshire,consist of senior unsecured notes used to fund manufactured housing loans originated or acquired and equipment held for lease of certain subsidiaries.BHFC borrowings are fully and unconditionally guaranteed by Berkshire.Berkshire also guarantees certain debt of other subsidiaries,aggregating approximately$2.7 billion at March 31,2024.Generally,Berkshires guarantee of a subsidiarys debt obligation is an absolute,unconditional and irrevocable guarantee for the full and prompt payment when due of all payment obligations.The carrying values of Berkshire and BHFC non-U.S.Dollar denominated senior notes(5.85 billion,1.75 billion and 1,259 billion par at March 31,2024)reflect the applicable exchange rates as of each balance sheet date.The effects of changes in foreign currency exchange rates during the period are recorded in earnings as a component of selling,general and administrative expenses.Changes in the exchange rates produced pre-tax gains of$781 million in the first quarter of 2024 and pre-tax losses of$26 million in the first quarter of 2023.Notes payable and other borrowings of our railroad,utilities and energy businesses are summarized below(dollars in millions).The weighted average interest rates and maturity date ranges are based on borrowings as of March 31,2024.WeightedAverageInterest RateMarch 31,2024December 31,2023Railroad,utilities and energy:Berkshire Hathaway Energy Company(“BHE”)and subsidiaries:BHE senior unsecured debt due 2025-20534.4%$13,103$13,101Subsidiary and other debt due 2024-20644.6C,92439,072Short-term borrowings5.9%1,5284,148Pilot Travel Centers(“Pilot”)and subsidiaries5,776Burlington Northern Santa Fe(“BNSF”)and subsidiaries due 2024-20974.6#,47623,482$82,031$85,579BHE subsidiary debt represents amounts issued pursuant to separate financing agreements.Substantially all of the assets of certain BHE subsidiaries are,or may be,pledged or encumbered to support or otherwise secure such debt.These borrowing arrangements generally contain various covenants,including covenants which pertain to leverage ratios,interest coverage ratios and/or debt service coverage ratios.In the first quarter of 2024,BHE subsidiaries issued$5.1 billion of term debt with a weighted average interest rate of 5.4%and maturity dates ranging from 2029 to 2055.During the first quarter of 2024,BHE and its subsidiaries repaid short-term borrowings of approximately$2.6 billion.As of December 31,2023,Pilots borrowings primarily represented secured syndicated loans.In March,2024,certain Berkshire insurance subsidiaries loaned$5.7 billion to Pilot,which Pilot used to prepay its then outstanding third-party borrowings.BNSFs borrowings are primarily senior unsecured debentures.As of March 31,2024,BHE,BNSF and their subsidiaries were in compliance with all applicable debt covenants.Berkshire does not guarantee any debt,borrowings or lines of credit of BHE,BNSF or their subsidiaries.Unused lines of credit and commercial paper capacity to support operations and provide additional liquidity for our subsidiaries were approximately$9.9 billion at March 31,2024,of which approximately$8.7 billion related to BHE and its subsidiaries.20Notes to Consolidated Financial Statements Note 18.Fair value measurements Our financial assets and liabilities are summarized below,with fair values shown according to the fair value hierarchy(in millions).The carrying values of cash and cash equivalents,U.S.Treasury Bills,other receivables and accounts payable,accruals and other liabilities are considered to be reasonable estimates of or otherwise approximate the fair values.CarryingValueFair ValueLevel 1Level 2Level 3March 31,2024Investments in fixed maturity securities:U.S.Treasury,U.S.government corporations and agencies$4,503$4,503$4,469$34$Foreign governments10,99710,99710,748249Corporate bonds1,4291,429851578Other238238238Investments in equity securities335,864335,864325,1821010,672Investments in Kraft Heinz&Occidental common stock29,14728,12828,128Loans and finance receivables25,43524,98189824,083Derivative contract assets(1)2382383818317Derivative contract liabilities(1)2952954150141Notes payable and other borrowings:Insurance and other40,72336,69336,66825Railroad,utilities and energy82,03175,92175,921December 31,2023Investments in fixed maturity securities:U.S.Treasury,U.S.government corporations and agencies$10,269$10,269$10,234$35$Foreign governments11,80511,80511,559246Corporate bonds1,4491,449860589Other235235235Investments in equity securities353,842353,842343,3581010,474Investments in Kraft Heinz&Occidental common stock28,64026,58726,587Loans and finance receivables24,68124,19089223,298Derivative contract assets(1)3343343928213Derivative contract liabilities(1)213213711195Notes payable and other borrowings:Insurance and other42,69239,18439,15331Railroad,utilities and energy85,57981,03681,036(1)Assets are included in other assets and liabilities are included in accounts payable,accruals and other liabilities.The fair values of substantially all of our financial instruments were measured using market or income approaches.The hierarchy for measuring fair value consists of Levels 1 through 3,which are described below.Level 1 Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets.Level 2 Inputs include directly or indirectly observable inputs(other than Level 1 inputs)such as quoted prices for similar assets or liabilities exchanged in active or inactive markets;quoted prices for identical assets or liabilities exchanged in inactive markets;other inputs that may be considered in fair value determinations of the assets or liabilities,such as interest rates and yield curves,volatilities,prepayment speeds,loss severities,credit risks and default rates;and inputs that are derived principally from or corroborated by observable market data by correlation or other means.Pricing evaluations generally reflect discounted expected future cash flows,which incorporate yield curves for instruments with similar characteristics,such as credit ratings,estimated durations and yields for other instruments of the issuer or entities in the same industry sector.21Notes to Consolidated Financial Statements Note 18.Fair value measurements Level 3 Inputs include unobservable inputs used in the measurement of assets and liabilities.Management is required to use its own assumptions regarding unobservable inputs because there is little,if any,market activity in the assets or liabilities and it may be unable to corroborate the related observable inputs.Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in valuing assets or liabilities.Reconciliations of significant assets and liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs(Level 3)for the three months ended March 31,2024 and 2023 follow(in millions).Balance atJanuary 1Gains(losses)in earningsAcquisitions(dispositions)Transfers out of Level 3Balance at March 31Investments in equity securities:2024$10,468$199$10,667202312,169(54)(521)11,594Quantitative information as of March 31,2024 for the significant assets and liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs(Level 3)follows(dollars in millions).FairValuePrincipal ValuationTechniquesUnobservableInputsWeightedAverageInvestments in equity securities:Preferred stock$8,609Discounted cash flowExpected duration6 years Discounts for liquidity and subordination372 bpsCommon stock warrants2,058Warrant pricing modelExpected duration6 years Volatility41%Investments in equity securities in the preceding table include our investments in certain preferred stock and common stock warrants that do not have readily determinable market values as defined under GAAP.These investments are private placements with contractual terms that restrict transfers and currently prevent us from economically hedging our investments.We applied discounted cash flow techniques in valuing the preferred stock and we made assumptions regarding the expected duration of the investment and the effects of subordination in liquidation.In valuing the common stock warrants,we used a warrant valuation model.While most of the inputs to the warrant model are observable,we made assumptions regarding the expected duration and volatility.Note 19.Common stock Changes in Berkshires issued,treasury and outstanding common stock during the first quarter of 2024 are shown in the table below.In addition to our common stock,1,000,000 shares of preferred stock are authorized,but none are issued.Class A,$5 Par Value(1,650,000 shares authorized)Class B,$0.0033 Par Value(3,225,000,000 shares authorized)IssuedTreasuryOutstandingIssuedTreasuryOutstandingBalance at December 31,2023639,328(71,553)567,7751,528,152,352(217,590,844)1,310,561,508Conversions of Class A to Class B common stock(400)(400)600,000600,000Treasury stock acquired(4,232)(4,232)Balance at March 31,2024638,928(75,785)563,1431,528,752,352(217,590,844)1,311,161,508Each Class A common share is entitled to one vote per share.Class B common stock possesses dividend and distribution rights equal to one-fifteen-hundredth(1/1,500)of such rights of Class A common stock.Each Class B common share possesses voting rights equal to one-ten-thousandth(1/10,000)of the voting rights of a Class A share.Unless otherwise required under Delaware General Corporation Law,Class A and Class B common shares vote as a single class.Each share of Class A common stock is convertible,at the option of the holder,into 1,500 shares of Class B common stock.Class B common stock is not convertible into Class A common stock.On an equivalent Class A common stock basis,there were 1,437,251 shares outstanding as of March 31,2024 and 1,441,483 shares outstanding as of December 31,2023.22Notes to Consolidated Financial Statements Note 19.Common stock Since we have two classes of common stock,we provide earnings per share data on the Consolidated Statements of Earnings for average equivalent Class A shares outstanding and average equivalent Class B shares outstanding.Class B shares are economically equivalent to one-fifteen-hundredth(1/1,500)of a Class A share.Average equivalent Class A shares outstanding represents average Class A shares outstanding plus one-fifteen-hundredth(1/1,500)of the average Class B shares outstanding.Average equivalent Class B shares outstanding represents average Class B shares outstanding plus 1,500 times the average Class A shares outstanding.Berkshires common stock repurchase program permits Berkshire to repurchase its shares any time that Warren Buffett,Berkshires Chairman of the Board and Chief Executive Officer,believes that the repurchase price is below Berkshires intrinsic value,conservatively determined.The program continues to allow share repurchases in the open market or through privately negotiated transactions and does not specify a maximum number of shares to be repurchased.However,repurchases will not be made if they would reduce the value of Berkshires consolidated cash,cash equivalents and U.S.Treasury Bill holdings below$30 billion.The repurchase program does not obligate Berkshire to repurchase any specific dollar amount or number of Class A or Class B shares and there is no expiration date to the program.Note 20.Income taxes Our consolidated effective income tax rates were 18.3%in the first quarter of 2024 compared to 20.1%in the first quarter of 2023.Our effective income tax rate normally reflects recurring benefits from dividends-received deductions applicable to investments in certain equity securities and production tax credits related to wind-powered electricity generation placed in service in the U.S.Our periodic effective income tax rate will also vary due to the changes in mix of pre-tax earnings,including realized and unrealized investment gains or losses with respect to our investments in equity securities,the amount of non-deductible goodwill impairment charges and other expenses and the underlying income tax rates applicable in the various taxing jurisdictions,and enacted changes thereto.On August 16,2022,the Inflation Reduction Act of 2022(“the 2022 Act”)was signed into law.The 2022 Act contains numerous provisions,including a 15%corporate alternative minimum income tax(“CAMT”)on“adjusted financial statement income”,expanded tax credits for clean energy incentives and a 1%excise tax on corporate stock repurchases.The provisions of the 2022 Act are effective for tax years beginning after December 31,2022.The extent to which the Company incurs CAMT will depend on the facts and circumstances of the given tax year.We do not expect to incur a CAMT liability in 2024.The Internal Revenue Service and the U.S.Department of Treasury may release additional guidance in the future.We will continue to evaluate the impact of the 2022 Act as more guidance becomes available.The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15%intended to be effective on January 1,2024.While the U.S.has not yet adopted the Pillar Two rules,various other governments around the world are enacting legislation.As currently designed,Pillar Two will ultimately apply to our worldwide operations.Considering we do not have material operations in jurisdictions with income tax rates lower than the Pillar Two minimum,these rules are not expected to materially increase our global tax costs.There remains uncertainty as to the final Pillar Two model rules.We will continue to monitor U.S.and global legislative action related to Pillar Two for potential impacts.Note 21.Accumulated other comprehensive income A summary of the net changes in after-tax accumulated other comprehensive income attributable to Berkshire Hathaway shareholders for the three months ending March 31,2024 and 2023 follows(in millions).Unrealizedgains(losses)on investmentsForeign currency translationLong-duration insurance contractsDefined benefit pension plansOtherTotalFirst quarter of 2024Balance at the beginning of the year$190$(5,393)$1,353$(97)$184$(3,763)Other comprehensive income(29)(523)2843(22)(287)Balance at the end of the period$161$(5,916)$1,637$(94)$162$(4,050)First quarter of 2023 Balance at the beginning of the year$(187)$(6,142)$1,541$(552)$288$(5,052)Other comprehensive income194244(291)44(115)76Balance at the end of the period$7$(5,898)$1,250$(508)$173$(4,976)23Notes to Consolidated Financial Statements Note 22.Supplemental cash flow information A summary of supplemental cash flow information follows(in millions).First Quarter20242023Cash paid during the period for:Income taxes$339$312Interest:Insurance and other434491Railroad,utilities and energy926799Non-cash investing and financing activities:Liabilities assumed in connection with business acquisitions610,747Note 23.Contingencies and commitments We are parties in a variety of legal actions that routinely arise out of the normal course of business,including legal actions seeking to establish liability directly through insurance contracts or indirectly through reinsurance contracts issued by Berkshire subsidiaries.Plaintiffs occasionally seek punitive or exemplary damages.We do not believe that such normal and routine litigation will have a material effect on our financial condition or results of operations.PacifiCorp,a wholly owned subsidiary of Berkshires 92%owned subsidiary,Berkshire Hathaway Energy Company(“BHE”),operates as a regulated electric utility in Oregon and other Western states.In September 2020,a severe weather event resulting in high winds,low humidity and warm temperatures,contributed to several major wildfires(the“2020 Wildfires”),which resulted in real and personal property and natural resource damage,personal injuries and loss of life and widespread power outages in Oregon and Northern California.These wildfires spread across certain parts of PacifiCorps service territory and surrounding areas across multiple counties in Oregon and California,including Siskiyou County,California;Jackson County,Oregon;Douglas County,Oregon;Marion County,Oregon;Lincoln County,Oregon;and Klamath County,Oregon,burning over 500,000 acres in aggregate.Third-party reports for these wildfires indicate over 2,000 structures destroyed,including residences;several structures damaged;multiple individuals injured;and several fatalities.On July 29,2022,a wildfire began in the Oak Knoll Ranger District of the Klamath National Forest in Siskiyou County,California located in PacifiCorps service territory(the“2022 Wildfire”).Third-party reports indicate that the 2022 Wildfire resulted in 11 structures damaged,185 structures destroyed,12 injuries and four fatalities and consumed 60,000 acres in aggregate.The 2020 Wildfires and 2022 Wildfire,together,are referred to as the“Wildfires”.Investigations into the cause and origin of each of the Wildfires are complex and ongoing and have been or are being conducted by various entities,including the U.S.Forest Service,the California Public Utilities Commission,the Oregon Department of Forestry,the Oregon Department of Justice,PacifiCorp and various experts engaged by PacifiCorp.As of the date of this filing,a significant number of complaints and demands alleging similar claims related to the 2020 Wildfires have been filed in Oregon and California,including a class action complaint in Oregon for which certain jury verdicts were issued as described below.The plaintiffs seek damages for economic losses,noneconomic losses,including mental suffering,emotional distress,personal injury and loss of life,punitive damages,other damages and attorneys fees.Several insurance carriers have filed subrogation complaints in Oregon and California with allegations similar to those made in the aforementioned complaints.Additionally,the U.S.and Oregon Departments of Justice have informed PacifiCorp that they are contemplating filing actions against PacifiCorp in connection with certain of the Oregon 2020 Wildfires.PacifiCorp is actively cooperating with the U.S.and Oregon Departments of Justice on resolving these alleged claims through alternative dispute resolution.As of March 31,2024,amounts sought in the complaints and demands filed in Oregon and in certain demands in California approximated$7 billion,excluding any doubling or trebling of damages included in the complaints and those settled.Generally,the complaints filed in California do not specify damages sought and are not included in this amount.Multiple complaints have also been filed in California on behalf of plaintiffs related to the 2022 Wildfire.The plaintiffs seek damages for economic losses,noneconomic losses,including mental suffering,emotional distress,personal injury and loss of life,punitive damages,other damages and attorneys fees,but the amount of damages sought is not specified.Final determinations of liability will only be made following the completion of comprehensive investigations,litigation and similar processes.In April 2024,a complaint in the James case described below was filed by 1,000 individual class members seeking$5 billion in economic and$25 billion in noneconomic damages before doubling of economic damages and punitive damages included in the complaint.24Notes to Consolidated Financial Statements Note 23.Contingencies and commitmentsIn September 2020,a class action complaint against PacifiCorp was filed captioned Jeanyne James et al.v.PacifiCorp et al.,in Multnomah County Circuit Court,Oregon(the“James case”).In June 2023,a jury issued its verdict for the 17 named plaintiffs in the James case finding PacifiCorp liable to the 17 individual plaintiffs and to the class with respect to the four 2020 Wildfires named in the complaint.The jury awarded the 17 named plaintiffs$90 million of damages,including$4 million of economic and property damages,$68 million of noneconomic damages and$18 million of punitive damages based on a 0.25 multiplier of the economic and noneconomic damages.In April 2024,a complaint against PacifiCorp naming 1,000 individual class members was filed in Multnomah County Circuit Court,Oregon,referencing James as the lead case.The April 2024 James complaint makes damages only allegations seeking economic,noneconomic and punitive damages,as well as doubling of economic damages.PacifiCorp believes the magnitude of damages sought by the class members in the April 2024 James complaint to be of remote likelihood of being awarded based on the amounts awarded in the jury verdicts described below that are being appealed.In September 2023,the Multnomah County Circuit Court ordered trial dates for three damages phase trials described below wherein plaintiffs in each of the three damages phase trials would present evidence regarding their damages.In January 2024,the Multnomah County Circuit Court entered a limited judgment and money award for the June 2023 James case verdict.The limited judgment awards$92 million of damages based on the amounts awarded by the jury,as well as doubling of the economic damages and offsetting of any insurance proceeds received by plaintiffs.The limited judgment created a lien against PacifiCorp,attaching a debt for the money awards.PacifiCorp posted a supersedeas bond,which stays any effort to seek payment of the judgment pending final resolution of any appeals.Under ORS 82.010,interest at a rate of 9%per annum will accrue on the judgment commencing at the date the judgment was entered until the entire money award is paid,amended or reversed by an appellate court.In January 2024,PacifiCorp filed a notice of appeal associated with the June 2023 verdict in the James case,including whether the case can proceed as a class action,and filed a motion to stay further damages phase trials.On February 14,2024,the Oregon Court of Appeals denied PacifiCorps request to stay the damages phase trials.On February 13,2024,the 17 named plaintiffs filed a notice of cross-appeal as to the January 2024 limited judgment and money award.The appeals process and further actions could take several years.In January 2024,the jury for the first James case damages phase trial awarded nine plaintiffs$62 million of damages,including$6 million of economic damages and$56 million of noneconomic damages.After the January 2024 jury verdict,the Multnomah County Circuit Court doubled the economic damages to$12 million and added$16 million of punitive damages using the 0.25 multiplier determined by the jury for the June 2023 James case verdict bringing the total damages awarded to$84 million.PacifiCorp requested that the Multnomah County Circuit Court judge offset the damage awards by deducting insurance proceeds received by any of the nine plaintiffs,and on March 25,2024,the Multnomah County Circuit Court granted in large part the offset request.In April 2024,the Multnomah County Circuit Court entered a limited judgment and money award for the January 2024 James verdict.The limited judgment awards$80 million of damages based on the amounts awarded by the jury and offsetting insurance proceeds received by plaintiffs.The limited judgment created a lien against PacifiCorp,attaching a debt for the money awards.In April 2024,PacifiCorp posted a supersedeas bond,which stays any effort to seek payment of the judgment pending final resolution of any appeals.PacifiCorp amended its January 2024 appeal of the June 2023 James verdict to include the January 2024 jury verdict.In March 2024,the jury for the second James case damages phase trial awarded ten plaintiffs$42 million of damages,including$12 million of doubled economic damages,$23 million of noneconomic damages and$7 million of punitive damages using the 0.25 multiplier determined by the jury for the June 2023 James case verdict.PacifiCorp has requested that the Multnomah County Circuit Court judge offset the damage awards by deducting insurance proceeds received by any of the ten plaintiffs.PacifiCorp intends to appeal the jurys damage awards associated with the March 2024 jury verdict once judgment is entered.In March 2024,settlement was reached with five commercial timber plaintiffs in the James case,and the jury trial scheduled for April 2024 was cancelled.A provision for a loss contingency is recorded when it is probable a liability has been incurred and the amount of loss can be reasonably estimated.PacifiCorp evaluates the related range of reasonably estimated losses and records a loss based on its best estimate within that range or the lower end of the range if there is no better estimate.Estimated probable losses associated with the Wildfires were based on the information available to the date of this filing,including(i)ongoing cause and origin investigations;(ii)ongoing settlement and mediation discussions;(iii)other litigation matters and upcoming legal proceedings;and(iv)the status of the James case.Wildfire estimated losses include estimates for fire suppression costs,real and personal property damages,natural resource damages and noneconomic damages such as personal injury damages and loss of life damages that are considered probable of being incurred and that it is able to reasonably estimate at this time,and which is subject to change as additional relevant information becomes available.25Notes to Consolidated Financial Statements Note 23.Contingencies and commitments Through March 31,2024,PacifiCorp recorded cumulative estimated pre-tax probable Wildfire losses,before expected related insurance recoveries,of approximately$2.4 billion,of which approximately$700 million was paid in settlements,leaving an unpaid estimated liability of approximately$1.7 billion as of March 31,2024.These losses were accrued prior to 2024 and included$400 million accrued in the first quarter of 2023,which were included in energy operating expenses in the Consolidated Statements of Earnings.PacifiCorp paid an additional$52 million after March 31,2024 and has reached additional settlement agreements associated with the 2020 Wildfires totaling$23 million that have not yet been paid.As a result of these settlements,various trials have been cancelled.It is reasonably possible PacifiCorp will incur significant additional Wildfire losses beyond the amounts currently accrued;however,it is currently unable to reasonably estimate the range of possible additional losses that could be incurred due to the number of properties and parties involved,including claimants in the class to the James case,the variation in those types of properties and the ultimate outcome of legal actions.HomeServices of America,Inc.(“HomeServices”),a wholly owned subsidiary of BHE,is currently defending against several antitrust cases,all in federal district courts.In each case,plaintiffs claim HomeServices and certain of its subsidiaries conspired with co-defendants to artificially inflate real estate commissions by following and enforcing multiple listing service(“MLS”)rules that require listing agents to offer a commission split to cooperating agents in order for the property to appear on the MLS(“Cooperative Compensation Rule”).None of the complaints specify damages sought.However,two cases also allege Texas state law deceptive trade practices claims,for which plaintiffs have provided written notice of the damages sought totaling approximately$9 billion by separate notice as required by Texas law.In one of these cases,Burnett(formerly Sitzer)et al.v.HomeServices of America,Inc.et al.(the“Burnett case”),a jury trial commenced on October 16,2023,and the jury returned a verdict for the plaintiffs on October 31,2023,finding that the named defendants participated in a conspiracy to follow and enforce the Cooperative Compensation Rule,which conspiracy had the purpose or effect of raising,inflating,or stabilizing broker commission rates paid by home sellers.The jury further found that the class plaintiffs had proved damages in the amount of$1.8 billion.Joint and several liability applies for the co-defendants.Federal law authorizes trebling of damages and the award of pre-judgment interest and attorney fees.To date,all co-defendants have reached settlements with the plaintiffs,with several co-defendants having hearing dates for final approval of their settlement agreements by the court.In April 2024,HomeServices agreed to terms with the plaintiffs to settle all claims asserted against HomeServices in the Burnett case as part of a proposed nationwide class settlement.The final settlement agreement,which includes scheduled payments over the next four years aggregating$250 million,has yet to be filed with the court and is ultimately subject to court approval.If the settlement is not approved by the court,HomeServices intends to vigorously appeal on multiple grounds the jurys findings and damage award in the Burnett case,including whether the case can proceed as a class action.The appeals process and further actions could take several years.Berkshire and certain of its subsidiaries are also involved in other kinds of legal actions,some of which assert or may assert claims or seek to impose fines and penalties.We currently believe that liabilities that may arise as a result of such other pending legal actions will not have a material effect on our consolidated financial condition or results of operations.26Notes to Consolidated Financial Statements Note 24.Revenues from contracts with customers The following table summarizes customer contract revenues disaggregated by reportable segment and the source of the revenue for the first quarter of 2024 and 2023(in millions).Revenues from Pilot in 2023 are for the two months ending March 31,2023.Other revenues,which are not considered to be revenues from contracts with customers under GAAP,are primarily insurance premiums earned,interest,dividend and other investment income and leasing revenues.ManufacturingMcLaneServiceandRetailingBNSFBerkshireHathawayEnergyPilotInsurance,Corporateand otherTotalThree months ending March 31,2024Manufactured products:Industrial and commercial$7,210$52$7,262Building4,6744,674Consumer4,1934,193Grocery and convenience store distribution7,6027,602Food and beverage distribution4,4364,436Auto sales2,5522,552Other retail and wholesale distribution8193,7686145,201Service3772211,3775,618806648,463Electricity,natural gas and fuel5,12911,77916,908Total17,27312,2597,7495,6185,93512,45761,291Other revenues1,238411,923193303724,99028,578$18,511$12,300$9,672$5,637$6,265$12,494$24,990$89,869Three months ending March 31,2023Manufactured products:Industrial and commercial$7,229$65$7,294Building4,7584,758Consumer4,0354,035Grocery and convenience store distribution7,7937,793Food and beverage distribution4,7624,762Auto sales2,5652,565Other retail and wholesale distribution7994,2304225,451Service3542841,3265,985811218,781Electricity,natural gas and fuel5,2919,01514,306Total17,17512,8398,1865,9856,1029,45859,745Other revenues1,090421,716163373822,40925,648$18,265$12,881$9,902$6,001$6,439$9,496$22,409$85,393A summary of the transaction price allocated to the significant unsatisfied remaining performance obligations related to contracts with expected durations exceeding one year as of March 31,2024 and the timing of when the performance obligations are expected to be satisfied follows(in millions).Less than12 monthsGreater than12 monthsTotalElectricity,natural gas and fuel$3,017$19,752$22,769Other sales and service contracts3,2055,2238,42827Notes to Consolidated Financial Statements Note 25.Business segment data Our operating businesses include a large and diverse group of insurance,freight rail transportation,utilities and energy,manufacturing,service and retailing businesses.We organize our reportable business segments in a manner that reflects how management views those business activities.Certain businesses are grouped together for segment reporting based upon similar products or product lines and marketing,selling and distribution characteristics,even though those business units are operated under separate local management.We acquired control of Pilot on January 31,2023.In this presentation,revenues and pre-tax earnings of the Pilot segment in 2023 are for the two months ending March 31.Prior to January 31,2023,our earnings from Pilot were determined under the equity method and were included in earnings from non-controlled businesses.Revenues and earnings before income taxes by segment for the first quarter of 2024 and 2023 were as follows(in millions).First Quarter20242023Revenues of Operating BusinessesInsurance:Underwriting:GEICO$10,234$9,626Berkshire Hathaway Primary Group4,5413,961Berkshire Hathaway Reinsurance Group6,6996,209Investment income3,1642,392Total insurance24,63822,188BNSF5,6606,019BHE6,2776,451Pilot12,5039,508Manufacturing18,52918,289McLane12,47513,059Service and retailing9,7039,931 89,78585,445Reconciliation to consolidated amountCorporate,eliminations and other84(52)$89,869$85,393First Quarter20242023Earnings Before Income Taxes of Operating BusinessesInsurance:Underwriting:GEICO$1,928$703Berkshire Hathaway Primary Group486268Berkshire Hathaway Reinsurance Group912231Investment income3,1522,385Total insurance6,4783,587BNSF1,5191,649BHE432223Pilot70136Manufacturing2,9142,611McLane165113Service and retailing9081,221 12,4869,540Reconciliation to consolidated amountInvestment gains(losses)1,87634,758Interest expense,not allocated to segments(96)(114)Non-controlled businesses493688Corporate,eliminations and other947(120)$15,706$44,75228Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Net earnings attributable to Berkshire Hathaway shareholders for each of the three-month periods ended March 31,2024 and 2023 are disaggregated in the table that follows.Amounts are after deducting income taxes and exclude earnings attributable to noncontrolling interests(in millions).First Quarter20242023Insurance underwriting$2,598$911Insurance investment income2,5981,969BNSF1,1431,247Berkshire Hathaway Energy(“BHE”)717416Pilot Travel Centers(“Pilot”)6783Manufacturing,service and retailing3,0212,982Non-controlled businesses*405568Investment gains1,48027,439Other673(111)Net earnings attributable to Berkshire Hathaway shareholders$12,702$35,504*Includes certain businesses in which Berkshire had between a 20%and 50%ownership interest.Through our subsidiaries,we engage in numerous diverse business activities.We manage our operating businesses on an unusually decentralized basis.There are few centralized or integrated business functions.Our senior corporate management team participates in and is ultimately responsible for significant capital allocation decisions,investment activities and the selection of the Chief Executive to head each of the operating businesses.The business segment data(Note 25 to the accompanying Consolidated Financial Statements and Note 26 to the Consolidated Financial Statements included in Form 10-K for the year ended December 31,2023)should be read in conjunction with this discussion.Our periodic operating results may be affected in future periods due to ongoing macroeconomic and geopolitical events,as well as changes in industry or company-specific factors or events.We cannot reliably predict the future economic effects of these factors or events on our businesses.Insurance underwriting after-tax earnings increased$1.7 billion in the first quarter of 2024 compared to 2023.Earnings in 2024 benefited from improved operating results at GEICO.We incurred no losses from significant catastrophe events in the first quarter of 2024 compared to$350 million in the comparable 2023 period.After-tax earnings from insurance investment income in the first quarter increased$629 million in 2024 compared to 2023,primarily attributable to higher interest income from our short-term investments.After-tax earnings of BNSF declined 8.3%in the first quarter of 2024 compared to 2023.The decrease was primarily attributable to unfavorable changes in business mix and lower fuel surcharge revenues,partially offset by lower fuel costs.After-tax earnings of our utilities and energy business increased$301 million in the first quarter of 2024 compared to 2023.The earnings increase reflected higher earnings from the U.S.regulated utilities,natural gas pipeline and other energy businesses,partly offset by lower earnings from the real estate brokerage businesses.As disclosed in Note 3 to the accompanying Consolidated Financial Statements,we increased our ownership in Pilot from 38.6%to 80%on January 31,2023,and further increased our ownership in Pilot to 100%on January 16,2024.We began consolidating Pilots results of operations on February 1,2023.For the month ended January 31,2023,earnings from Pilot on our 38.6%interest were determined under the equity method and were included in earnings from non-controlled businesses in the preceding table.After-tax earnings from our manufacturing,service and retailing businesses increased 1.3%in the first quarter of 2024 compared to 2023.Earnings in 2024 reflected increases at several of our manufacturing businesses,which were substantially offset by lower earnings from our service and retailing businesses.Investment gains predominantly derive from our investments in equity securities and include significant net unrealized gains and losses from market price changes.We believe that investment gains and losses on investments in equity securities,whether realized from dispositions or unrealized from changes in market prices,are generally meaningless in understanding our reported periodic results or evaluating the economic performance of our operating businesses.These gains and losses have caused and will continue to cause significant volatility in our periodic earnings.Investment gains in the first quarter of 2023 also included an after-tax non-cash remeasurement gain of approximately$2.4 billion related to our previously held 38.6%interest in Pilot through the application of the acquisition accounting method.29Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Other earnings included after-tax foreign currency exchange rate gains of$597 million in the first quarter of 2024 and after-tax losses of$17 million in the first quarter of 2023 related to the non-U.S.Dollar denominated debt issued by Berkshire and Berkshire Hathaway Finance Corporation(“BHFC”).InsuranceUnderwriting Our management views our insurance business as possessing two distinct activities underwriting and investing.Underwriting decisions are the responsibility of the unit managers,while investing decisions are the responsibility of Berkshires Chairman and CEO,Warren E.Buffett and Berkshires corporate investment managers.Accordingly,we evaluate performance of underwriting operations without any allocation of investment income or investment gains and losses.We consider investment income as an integral component of our aggregate insurance operating results.However,we consider investment gains and losses,whether realized or unrealized,as non-operating.We believe that such gains and losses are not meaningful in understanding the periodic operating results of our insurance businesses.The timing and magnitude of catastrophe losses can produce significant volatility in our periodic underwriting results,particularly with respect to our reinsurance businesses.We currently consider pre-tax incurred losses exceeding$150 million from a current year catastrophic event to be significant.There were no significant catastrophe events in the first quarter of 2024,and in the first quarter of 2023,significant catastrophe events were a cyclone and floods in New Zealand.Changes in estimates for unpaid losses and loss adjustment expenses,including amounts established for occurrences in prior years,can also significantly affect our periodic underwriting results.Our periodic underwriting results may also include foreign currency transaction gains and losses arising from the changes in the valuation of non-U.S.Dollar denominated liabilities of our U.S.-based subsidiaries due to foreign currency exchange rate fluctuations.We provide primary insurance and reinsurance products covering property and casualty risks,as well as life and health risks.Our insurance and reinsurance businesses are GEICO,Berkshire Hathaway Primary Group(“BH Primary”)and Berkshire Hathaway Reinsurance Group(“BHRG”).We strive to produce pre-tax underwriting earnings(defined as premiums earned less insurance losses/benefits incurred and underwriting expenses)over the long term in all business categories,except in BHRGs retroactive reinsurance and periodic payment annuity businesses.Time-value-of-money is an important element in establishing prices for retroactive reinsurance and periodic payment annuity policies.We normally receive premiums at the contract inception date,which are then available for investment.Ultimate claim payments can extend for decades and are expected to exceed premiums,producing underwriting losses over the claim settlement periods,primarily through deferred charge asset amortization and liability discount accretion charges.Underwriting results of our insurance businesses are summarized below(dollars in millions).First Quarter20242023Pre-tax underwriting earnings:GEICO$1,928$703Berkshire Hathaway Primary Group486268Berkshire Hathaway Reinsurance Group912231Pre-tax underwriting earnings3,3261,202Income taxes and noncontrolling interests728291Net underwriting earnings$2,598$911Effective income tax rate21.9$.30Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations InsuranceUnderwriting GEICO GEICO writes property and casualty policies,primarily private passenger automobile insurance,in all 50 states and the District of Columbia.GEICO markets its policies mainly by direct response methods where most customers apply for coverage directly to the company via the Internet or over the telephone.GEICO also operates an insurance agency that offers primarily homeowners and renters insurance to its auto policyholders.A summary of GEICOs underwriting results follows(dollars in millions).First Quarter20242023Amount%Amount%Premiums written$10,796$10,060Premiums earned$10,234100.0$9,626100.0Losses and loss adjustment expenses7,41472.57,99283.0Underwriting expenses8928.79319.7Total losses and expenses8,30681.28,92392.7Pre-tax underwriting earnings$1,928$703 GEICOs pre-tax underwriting earnings in the first quarter of 2024 reflected higher average premiums per auto policy,lower claims frequencies and improved operating efficiencies compared to 2023,partially offset by a rise in average claims severities in the first quarter of 2024.Premiums written increased$736 million(7.3%)in the first quarter of 2024 compared to 2023,reflecting higher average premiums per auto policy(9.8%)due to rate increases,partially offset by a 6.6crease in policies-in-force over the past year.However,the rate of decline in policies-in-force slowed in the first quarter of 2024,driven by increased new business and higher retention rates.Premiums earned increased$608 million(6.3%)in the first quarter of 2024 compared to 2023.Losses and loss adjustment expenses declined$578 million(7.2%)in the first quarter of 2024 compared to 2023.GEICOs loss ratio(losses and loss adjustment expenses to premiums earned)was 72.5%in the first quarter of 2024,a decrease of 10.5 percentage points compared to 2023.The loss ratio decline reflected the impact of higher average premiums per auto policy and lower claims frequencies,partially offset by increases in average claims severities and less favorable development of prior accident years claims estimates.Claims frequencies in the first quarter of 2024 declined for property damage(two to three percent range)and collision coverages(four to five percent range)versus 2023,with bodily injury coverage down slightly.Average claims severities in the first quarter of 2024 increased for property damage(nine to eleven percent range),collision(four to six percent range)and bodily injury(seven to nine percent range)coverages compared to 2023.Losses and loss adjustment expenses in the first three months included reductions in the ultimate loss estimates for prior accident years claims of$155 million in 2024 and$338 million in 2023.Underwriting expenses declined$39 million(4.2%)in the first quarter of 2024 compared to 2023.GEICOs expense ratio(underwriting expense to premiums earned)was 8.7%in the first quarter of 2024,a decrease of 1.0 percentage point compared to 2023,attributable to improved operating efficiencies and increased operating leverage,partially offset by increased advertising expenses.The earnings from GEICOs insurance agency(third-party commissions,net of operating expenses)are included as a reduction of underwriting expenses.Berkshire Hathaway Primary Group The Berkshire Hathaway Primary Group consists of several independently managed businesses that provide a variety of primarily commercial insurance solutions,including healthcare professional liability,workers compensation,automobile,general liability,property and specialty coverages for small,medium and large clients.BH Primarys insurers include Berkshire Hathaway Specialty Insurance(“BHSI”),RSUI Group Inc.and CapSpecialty,Inc.(“RSUI and CapSpecialty”),Berkshire Hathaway Homestate Companies(“BHHC”),MedPro Group,Berkshire Hathaway GUARD Insurance Companies(“GUARD”),National Indemnity Company(“NICO Primary”),Berkshire Hathaway Direct Insurance Company(“BH Direct”)and U.S.Liability Insurance Company(“USLI”).31Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations InsuranceUnderwriting Berkshire Hathaway Primary Group A summary of BH Primarys underwriting results follows(dollars in millions).First Quarter20242023Amount%Amount%Premiums written$4,493$4,158Premiums earned$4,541100.0$3,961100.0Losses and loss adjustment expenses2,81261.92,65667.1Underwriting expenses1,24327.41,03726.1Total losses and expenses4,05589.33,69393.2Pre-tax underwriting earnings$486$268Premiums written increased$335 million(8.1%)in the first quarter of 2024 compared to 2023.Increases in premiums written in the first quarter of 2024 were generated by nearly all primary insurance businesses.Premiums earned increased 14.6%in the first quarter of 2024 versus 2023.Losses and loss adjustment expenses increased$156 million(5.9%)in the first quarter of 2024 compared to 2023.The loss ratio decreased 5.2 percentage points in the first quarter of 2024 compared to 2023,reflecting lower incurred losses from significant catastrophes and changes in business mix.Incurred losses from significant catastrophes were approximately$40 million in the first quarter of 2023 versus none in 2024.Incurred losses and loss adjustment expenses also reflected net reductions in estimated ultimate liabilities for prior years loss events in the first quarter of$93 million in 2024 and$41 million in 2023,primarily due to reductions in ultimate medical professional liability and property losses.BH Primary insurers write significant levels of workers compensation,commercial and professional liability insurance and the related claim costs may be subject to high severity and long claim-tails.Ultimate claim liabilities could be greater than anticipated due to a variety of factors,including adverse legal and judicial rulings.Underwriting expenses increased$206 million(19.9%)in the first quarter of 2024 compared to 2023.The increase was primarily attributable to the increase in premiums earned and changes in business mix.Berkshire Hathaway Reinsurance Group The Berkshire Hathaway Reinsurance Group(“BHRG”)offers excess-of-loss and quota-share reinsurance coverages on property and casualty risks to insurers and reinsurers worldwide through several subsidiaries,led by National Indemnity Company(“NICO”),General Reinsurance Corporation,General Reinsurance AG and Transatlantic Reinsurance Company(“TransRe Group”).We also write life and health reinsurance coverages through General Re Life Corporation,General Reinsurance AG and Berkshire Hathaway Life Insurance Company of Nebraska(“BHLN”).We assume property and casualty risks under retroactive reinsurance contracts written through NICO and we write periodic payment annuity contracts through BHLN.A summary of BHRGs premiums and pre-tax underwriting results follows(in millions).First QuarterPremiums earnedPre-tax underwritingearnings(loss)2024202320242023Property/casualty$5,435$5,149$1,008$390Life/health1,2291,060108137Retroactive reinsurance35(147)(195)Periodic payment annuity(151)(164)Variable annuity9463$6,699$6,209$912$23132Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations InsuranceUnderwriting Berkshire Hathaway Reinsurance Group Property/casualty A summary of property/casualty reinsurance underwriting results follows(dollars in millions).First Quarter20242023Amount%Amount%Premiums written$6,455$6,268Premiums earned$5,435100.0$5,149100.0Losses and loss adjustment expenses2,99355.13,38765.8Underwriting expenses1,43426.41,37226.6Total losses and expenses4,42781.54,75992.4Pre-tax underwriting earnings$1,008$390Premiums written in the first quarter of 2024 increased 3.0%over 2023.The increase reflected net increases in new business and increased participations and retention of business.We write meaningful levels of property business and we generally do not retrocede the risks we assume.Our periodic underwriting earnings are subject to considerable volatility from significant catastrophe loss events.Premiums earned in the first quarter of 2024 increased 5.6%compared to 2023.Losses and loss adjustment expenses decreased$394 million(11.6%)in the first quarter of 2024 versus 2023.The loss ratio declined 10.7 percentage points in the first quarter of 2024 compared to 2023.Losses incurred from significant catastrophes in the first quarter were approximately$400 million in 2023 compared to none in 2024.The reductions in estimated ultimate liabilities for losses occurring in prior accident years in the first quarter were$386 million in 2024 and$361 million in 2023.Underwriting expenses increased$62 million(4.5%)in the first quarter of 2024 compared to 2023.The expense ratio was relatively unchanged in the first quarter of 2024 compared to 2023,reflecting increased foreign currency exchange rate gains related to the remeasurement of certain non-U.S.Dollar denominated liabilities offset by changes in business mix.Underwriting expenses in the first quarter included pre-tax foreign currency exchange gains of$26 million in 2024 and losses of$74 million in 2023.Life/health A summary of our life/health reinsurance underwriting results follows(dollars in millions).First Quarter20242023Amount%Amount%Premiums written$1,231$1,061Premiums earned$1,229100.0$1,060100.0Life and health benefits83367.867864.0Underwriting expenses28823.424523.1Total benefits and expenses1,12191.292387.1Pre-tax underwriting earnings$108$137 Premiums earned in the first quarter of 2024 increased$169 million(15.9%),primarily due to the commutation of several U.S.life contracts in the first quarter of 2023,which reduced premiums earned by$161 million and life benefits and underwriting expenses by$302 million in the 2023 period.Pre-tax underwriting earnings in the first quarter of 2024 declined$29 million.Earnings in the first quarter included gains from life contract commutations of$51 million in 2024 and$141 million in 2023.Earnings in 2024 also reflected lower benefits expense on other U.S.life business.33Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations InsuranceUnderwriting Berkshire Hathaway Reinsurance Group Retroactive reinsurance Pre-tax underwriting losses from retroactive reinsurance in each period derived from deferred charge amortization,the effects of changes in the estimated timing and amounts of future claim payments and foreign currency exchange gains and losses attributable to non-U.S.Dollar denominated contracts.Before foreign currency exchange effects,pre-tax underwriting losses in the first quarter were$192 million in 2024 and$189 million in 2023.Unpaid losses assumed under retroactive reinsurance contracts were$34.2 billion at March 31,2024,a decline of$402 million since December 31,2023,primarily due to claim payments.Unamortized deferred charges on retroactive reinsurance contracts were$9.3 billion at March 31,2024,a decline of$177 million since December 31,2023.Deferred charge amortization is included in underwriting earnings ove

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  • AMD公司2024年第一季度财报(英文版)(27页).pdf

    AMDFINANCIALRESULTSFirst Quarter 2024April 30,2024Q1 2024 FINANCIAL RESULTS APRIL 30,202422CAUTIONARY STATEMENTThis presentation contains forward-looking statements concerning Advanced Micro Devices,Inc.(AMD),such as the features,functionality,performance,availability,timing and expected benefits of AMD products;AMDs expected second quarter 2024 financial outlook,including revenue,non-GAAP gross margin,non-GAAP operating expenses,non-GAAP tax rate and diluted share count;AMDs large and compelling TAM;AMDs ability to expand Data Center and AI leadership;and AMDs ability to drive long-term shareholder returns,which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of1995.Forward-looking statements are commonly identified by words such as would,may,expects,believes,plans,intends,projects and other terms with similar meaning.Investors are cautioned that theforward-looking statements in this presentation are based on current beliefs,assumptions and expectations,speak only as of the date of this presentation and involve risks and uncertainties that could cause actualresults to differ materially from current expectations.Such statements are subject to certain known and unknown risks and uncertainties,many of which are difficult to predict and generally beyond AMDs control,thatcould cause actual results and other future events to differ materially from those expressed in,or implied or projected by,the forward-looking information and statements.Material factors that could cause actual resultsto differ materially from current expectations include,without limitation,the following:Intel Corporations dominance of the microprocessor market and its aggressive business practices;economic and market uncertainty;cyclical nature of the semiconductor industry;market conditions of the industries in which AMD products are sold;loss of a significant customer;public health crises,such as pandemics and epidemics;competitivemarkets in which AMDs products are sold;quarterly and seasonal sales patterns;AMDs ability to adequately protect its technology or other intellectual property;unfavorable currency exchange rate fluctuations;abilityof third party manufacturers to manufacture AMDs products on a timely basis in sufficient quantities and using competitive technologies;availability of essential equipment,materials,substrates or manufacturingprocesses;ability to achieve expected manufacturing yields for AMDs products;AMDs ability to introduce products on a timely basis with expected features and performance levels;AMDs ability to generate revenuefrom its semi-custom SoC products;potential security vulnerabilities;potential security incidents including IT outages,data loss,data breaches and cyberattacks;potential difficulties in operating AMDs newly upgradedenterprise resource planning system;uncertainties involving the ordering and shipment of AMDs products;AMDs reliance on third-party intellectual property to design and introduce new products in a timely manner;AMDs reliance on third-party companies for design,manufacture and supply of motherboards,software,memory and other computer platform components;AMDs reliance on Microsoft and other software vendorssupport to design and develop software to run on AMDs products;AMDs reliance on third-party distributors and add-in-board partners;impact of modification or interruption of AMDs internal business processes andinformation systems;compatibility of AMDs products with some or all industry-standard software and hardware;costs related to defective products;efficiency of AMDs supply chain;AMDs ability to rely on third partysupply-chain logistics functions;AMDs ability to effectively control sales of its products on the gray market;long-term impact of climate change on AMDs business;impact of government actions and regulations such asexport regulations,tariffs and trade protection measures;AMDs ability to realize its deferred tax assets;potential tax liabilities;current and future claims and litigation;impact of environmental laws,conflict minerals-related provisions and other laws or regulations;evolving expectations from governments,investors,customers and other stakeholders regarding corporate responsibility matters;issues related to the responsible use ofAI;impact of acquisitions,joint ventures and/or investments on AMDs business and AMDs ability to integrate acquired businesses;impact of any impairment of the combined companys assets;restrictions imposed byagreements governing AMDs notes,the guarantees of Xilinxs notes and the revolving credit facility;AMDs indebtedness;AMDs ability to generate sufficient cash to meet its working capital requirements or generatesufficient revenue and operating cash flow to make all of its planned R&D or strategic investments;political,legal and economic risks and natural disasters;future impairments of technology license purchases;AMDsability to attract and retain qualified personnel;and AMDs stock price volatility.Investors are urged to review in detail the risks and uncertainties in AMDs Securities and Exchange Commission filings,including but notlimited to AMDs most recent reports on Forms 10-K and 10-Q.NON-GAAP FINANCIAL MEASUREIn this presentation,in addition to GAAP financial results,AMD has provided non-GAAP financial measures including non-GAAP gross profit and margin,non-GAAP operating expenses,non-GAAP operating income,non-GAAP net income and non-GAAP diluted earnings per share.AMD uses a normalized tax rate in its computation of the non-GAAP income tax provision to provide better consistency across the reporting periods.For fiscal 2024,AMD uses a projected non-GAAP tax rate of 13%,which excludes the tax impact of pre-tax non-GAAP adjustments.AMD is providing these financial measures because it believes this non-GAAPpresentation makes it easier for investors to compare its operating results for current and historical periods and also because AMD believes it assists investors in comparing AMDs performance across reporting periodson a consistent basis by excluding items that it does not believe are indicative of its core operating performance.The non-GAAP financial measures disclosed in this presentation should be viewed in addition to and notas a substitute for or superior to AMDs reported results prepared in accordance with GAAP and should be read only in conjunction with AMDs Consolidated Financial Statements prepared in accordance with GAAP.These non-GAAP financial measures referenced are reconciled to their most directly comparable GAAP financial measures in the Appendices at the end of this presentation.This presentation also contains forward-looking non-GAAP measures concerning AMDs financial outlook such as gross margin,operating expenses and tax rate.These forward-looking non-GAAP measures are based on current expectations as of April 30,2024,and assumptions and beliefs that involve numerous risks and uncertainties.AMD undertakes no intent or obligation to publicly update or revise its forward-looking statements made in this presentation except asmay be required by law.Q1 2024 FINANCIAL RESULTS APRIL 30,202433Expanding Customer&Partner EcosystemData Center and AI GrowthStrong Financial FoundationLeadershipProduct PortfolioOUR JOURNEYQ1 2024 FINANCIAL RESULTS APRIL 30,202444OUR LEADERSHIP TECHNOLOGYSoftware EnablementOpen-source software optimized for performance across heterogenous solutionsData Center LeadershipDelivering innovation in AI,cloud,enterprise and accelerated computingAdvanced TechnologyDriving leadership process technology and 3D chiplet packagingBroad IP PortfolioExecuting leadership CPU,GPU,DPU,FPGA,Adaptive SoC and AI productsQ1 2024 FINANCIAL RESULTS APRIL 30,202455OUR LEADERSHIP PRODUCTSEmbeddedLeadership FPGAs,Adaptive SoCs and SoMs,and embedded CPUs and GPUs for a broad set of marketsGamingTop-to-bottom desktop and notebook GPUs,game console and semi-custom SoCsClientPowerful and efficient CPUs and APUs for notebook and desktop PCs and commercial workstationsData CenterBroad portfolio of data center and AI solutions with server CPUs,GPUs,FPGAs,DPUs and Adaptive SoCs AMD IS UNIQUELY POSITIONED IN AIADVANCING END-TO-END AI INFRASTRUCTURE6 AMD InstinctTM MI300X AcceleratorsLeadership accelerator for generative AI,LLMs and inferencingAMD Instinct MI300 Accelerators4th Gen AMD EPYCTM ProcessorsBroad ecosystem of OEM and solution partnersCloudEnterpriseAMD VersalTMAI Edge Adaptive SoCsSingle Chip Intelligence at the Edge for all Embedded MarketsEmbeddedAMD Instinct MI300A AcceleratorsWorlds first data center APU for HPC and AIHPCAMD RyzenTM 8040 Mobile Processors with Ryzen AITechnology leadership with upgraded on-die AI neural processing unit(NPU)PCQ1 2024 FINANCIAL RESULTS APRIL 30,2024Q1 2024 FINANCIAL RESULTS APRIL 30,20247REVENUE Q1 2024 Revenue of$5.5 billion increased 2%y/y Revenue growth in Data Center and Client segments was partially offset by lower revenue in Gaming and Embedded segments$5.4B$5.5BQ1 2023Q1 2024Q1 2024 FINANCIAL RESULTS APRIL 30,20248GROSS MARGIN Q1 20241.See Appendices for GAAP to Non-GAAP reconciliation Increase driven by higher revenue contribution from Data Center and Client segments,partially offset by lower Embedded and Gaming segments revenue Non-GAAP144G%Q1 2023Q1 2024GAAPIncrease driven by higher revenue contribution from Data Center and Client segments,lower amortization of acquisition-related intangible assets,partially offset by lower Embedded and Gaming segments revenue50R%Q1 2023Q1 2024Q1 2024 FINANCIAL RESULTS APRIL 30,20249Q1 2023Q1 2024$(0.14)B$0.04BOPERATING INCOME(LOSS)Q1 20241.See Appendices for GAAP to Non-GAAP reconciliation GAAPNon-GAAP1$1.10B$1.13BQ1 2023Q1 2024Increase driven by higher gross margin and lower amortization of acquisition-related intangible assets,partially offset by increased operating expensesIncrease driven by higher gross margin,partially offset by increased operating expensesQ1 2024 FINANCIAL RESULTS APRIL 30,202410$0.60$0.62Q1 2023Q1 2024EARNINGS(LOSS)PER SHARE Q1 20241.See Appendices for GAAP to Non-GAAP reconciliation GAAPNon-GAAP1GAAP net income of$123 millionGAAP EPS of$0.07 primarily driven by higher gross margin and lower amortization of acquisition-related intangible assets,partially offset by increased operating expenses$(0.09)$0.07Q1 2023Q1 2024Non-GAAP net income of$1.0 billionNon-GAAP EPS of$0.62,up 3%,primarily driven by higher gross margin,partially offset by increased operating expensesQ1 2024 FINANCIAL RESULTS APRIL 30,202411$in millions,except per share data and%Q124Q123Y/YQ423Q/QRevenue$5,473$5,353Up 2%$6,168Down 11%Gross Profit$2,560$2,359Up 9%$2,911 Down 12%Gross Margin 47D%Up 3 ppts47%FlatOperating Expenses$2,537$2,514Flat$2,575FlatOperating Expense/RevenueFG%Down 1 ppt42%Up 4 pptsOperating Income(Loss)$36$(145)Up 125%$342Down 89%Operating Margin1%(3)%Up 4 ppts6%Down 5 ppts Net Income(Loss)$123$(139)Up 188%$667Down 82rnings(Loss)Per Share$0.07$(0.09)Up 178%$0.41 Down 83%Q1 2024 SUMMARY P&L|GAAPQ1 2024 FINANCIAL RESULTS APRIL 30,202412$in millions,except per share data and%Q124Q123Y/YQ423Q/QRevenue$5,473$5,353Up 2%$6,168 Down 11%Gross Profit$2,861$2,675Up 7%$3,133 Down 9%Gross Margin52P%Up 2 ppts51%Up 1 pptOperating Expenses$1,741$1,587Up 10%$1,727 FlatOperating Expense/Revenue20%Up 2 ppts28%Up 4 pptsOperating Income$1,133$1,098Up 3%$1,412Down 20%Operating Margin21!%Flat23%Down 2 pptsNet Income$1,013$970Up 4%$1,249Down 19rnings Per Share$0.62$0.60Up 3%$0.77Down 19%Q1 2024 SUMMARY P&L|NON-GAAP11.See Appendices for GAAP to Non-GAAP reconciliation Q1 2024 FINANCIAL RESULTS APRIL 30,202413Q1 2024 SUMMARY BALANCE SHEET ITEMS($in millions)Q124Q423Q/QCash,Cash Equivalents andShort-term Investments$6,035$5,773Up 5counts Receivable,Net$5,038$5,376 Down 6%Inventories$4,652$4,351 Up 7%Total Debt$2,468$2,468FlatQ1 2024 FINANCIAL RESULTS APRIL 30,202414Q1 2024 SEGMENT RESULTS($in millions)Q124Q123Y/YQ423Q/QData CenterNet Revenue$2,337$1,295Up 80%$2,282Up 2%Operating Income$541$148Up 266%$666Down 19%ClientNet Revenue$1,368$739Up 85%$1,461Down 6%Operating Income(Loss)$86$(172)Up 150%$55Up 56%GamingNet Revenue$922$1,757Down 48%$1,368Down 33%Operating Income$151$314Down 52%$224Down 33%EmbeddedNet Revenue$846$1,562Down 46%$1,057Down 20%Operating Income$342$798Down 57%$461Down 26%Q1 2024 FINANCIAL RESULTS APRIL 30,202415DATA CENTER SEGMENT Q1 2024 Record data center GPU sales with MI300 surpassing$1B in cumulative sales since Q423 launch Nearly 900 public cloud instances powered by AMD EPYC processors now available from AWS,Google,Oracle Cloud,Microsoft Azure and others Enterprise adoption of EPYC CPUs accelerating with key deployments at American Airlines,DBS,Emirates Bank,Shell and ST Micro Released ROCm 6.1 with expanded open-source libraries and frameworks and significantly increasing generative AI performance Next-gen“Turin”EPYC processors,based on“Zen 5”core,on track to launch later this yearStrategic Highlights$1.3B$2.3BQ1 2023Q1 202411#%Q1 2023Q1 2024RevenueOperating MarginRevenue$2.3 BillionUp 80%y/yOperating Income$541 Millionvs.$148 Million a year agoPrimarily due to operating leverage driven by higher revenueStrong growth in both AMD Instinct GPUs and 4th Gen AMD EPYC CPU salesQ1 2024 FINANCIAL RESULTS APRIL 30,202416CLIENT SEGMENT Q1 2024 HP and Lenovo announced new high-performance laptops powered by the latest Ryzen PRO 8040 Series CPUs Launched Ryzen PRO 8000 Series desktop CPUs,the first processors with dedicated,on-chip AI accelerators for commercial desktop PCs 150 ISVs on track to be developing for AMD AI PCs by the end of 2024 Next-gen“Strix Point”processors on track to launch second half 2024Strategic Highlights$0.7B$1.4BQ1 2023Q1 2024(23)%6%Q1 2023Q1 2024RevenueOperating MarginRevenue$1.4 BillionUp 85%y/yPrimarily driven by AMD Ryzen 8000 Series processor salesOperating Income$86 Millionvs.$172 Million Loss a year agoPrimarily driven by higher revenueQ1 2024 FINANCIAL RESULTS APRIL 30,20241718%Q1 2023Q1 2024GAMING SEGMENT Q1 2024 Global availability of the RadeonTM RX 7900 GRE graphics card providing 1440p/4K performance Released FidelityFX Super Resolution 3.1 offering significant image quality improvements for gamers Launched AMD Fluid Motion Frames enabling frame generation and increased performance on Radeon RX 6000 and Radeon RX 7000 Series graphics cards Strategic Highlights$1.8B$0.9BQ1 2023Q1 2024RevenueOperating MarginRevenue$922 MillionDown 48%y/yOperating Income$151 Millionvs.$314 Million a year agoPrimarily due to lower revenueDue to lower semi-custom and Radeon GPU salesQ1 2024 FINANCIAL RESULTS APRIL 30,202418EMBEDDED SEGMENT Q1 2024 Launched Versal AI Edge Series Gen 2 SoCs that combine multiple compute engines on a single chip for AI-driven embedded systems Subaru adopted Versal AI Edge Series Gen 2 devices to power their next-gen EyeSight ADAS vision system Sony Semiconductor Solutions selected Artix-7 FPGA and ZynqTM UltraScale TM MPSoC for its LiDAR automotive reference designsStrategic Highlights$0.8BQ1 2023Q1 202451A%Q1 2023Q1 2024RevenueOperating MarginRevenue$846 MillionDown 46%y/yPrimarily due to customers continuing to manage their inventory levelsOperating Income$342 Millionvs.$798 Million a year ago$1.6BPrimarily due to lower revenueQ1 2024 FINANCIAL RESULTS APRIL 30,202419($in millions)Q224Revenue$5.7 Billion, /-$300 Million Gross Margin53%Operating Expenses$1.8 BillionEffective Tax Rate13%of pre-tax incomeDiluted Share Count1.64 Billion sharesFINANCIAL OUTLOOK NON-GAAP11.1.See Cautionary Statement on Slide 2.These forward-looking outlook statements and non-GAAP measures are based on current expectations as of April 30,2024,and assumptions and beliefs that involve numerous risks and uncertainties.AMD undertakes no intent or obligation to publicly update or revise its outlook statements as a result of new information,future events or otherwise,except as may be required by law.All items,except revenue,are on a non-GAAP basis.Adjustments to arrive at the GAAP financial outlook typically include stock-based compensation,amortization of acquired intangible assets,income tax provision,and other non-recurring items such as impairment charges and acquisition-related costs.The timing and impact of such adjustments are dependent on future events that are typically uncertain or outside of AMDs control,therefore,a reconciliation to equivalent GAAP measures is not practicable at this time.2.2.Refer to Diluted Share Count overview in the Appendices Q1 2024 FINANCIAL RESULTS APRIL 30,20242020Data Center Segment Revenue$2.3B Up 80%y/y Gross Margin 47%Non-GAAP Gross Margin 52%EPS$0.07Non-GAAP EPS$0.62Revenue$5.5BUp 2%y/yQ1 2024 SUMMARY1RECORD DATA CENTER SEGMENT REVENUE DRIVEN BY STRONG AMD INSTINCT GPU RAMP1.See Appendices for GAAP to Non-GAAP reconciliationQ1 2024 FINANCIAL RESULTS APRIL 30,20242121CORPORATE RESPONSIBILITY AT AMDGovernanceIntegrating corporate responsibility and governance across product design,supply chain,operations and external engagementSocialFostering a culture of diversity,belonging and inclusion,partnering with suppliers and positively impacting our communitiesEnvironmentalAdvancing environmental solutions in our products,supply chain and operations,while accelerating energy efficiency for IT usersQ1 2024 FINANCIAL RESULTS APRIL 30,20242222Large and CompellingTAMWorld-ClassExecution and FocusTechnologyLeadershipExpandingData Center and AI LeadershipStrong Balance SheetOUR MOMENTUMDRIVING LONG-TERM SHAREHOLDER RETURNSQ1 2024 FINANCIAL RESULTS APRIL 30,202423RECONCILIATION OF GAAP TO NON-GAAP GROSS PROFIT AND GROSS MARGIN($in millions,except%)(Unaudited)Q124Q123Q423GAAP gross profit$2,560$2,359$2,911GAAP gross margin47DG%Stock-based compensation686Amortization of acquisition-related intangibles230305215Acquisition-related and other costs(1)-31Inventory loss at contract manufacturer(2)65-Non-GAAP gross profit$2,861$2,675$3,133Non-GAAP gross margin52PQ%RECONCILIATION OF GAAP TO NON-GAAP OPERATING EXPENSES($in millions,except%)(Unaudited)Q124Q123Q423GAAP operating expenses$2,537$2,514$2,575 GAAP operating expenses/revenueFGB%Stock-based compensation365297 368 Amortization of acquisition-related intangibles392518420 Acquisition-related and other costs(1)3911260 Non-GAAP operating expenses$1,741$1,587$1,727 Non-GAAP operating expenses/revenue20(%APPENDICES(1)Acquisition-related and other costs primarily comprised of transaction costs,purchase price adjustments for inventory,certain compensation charges,contract termination and workforce rebalancing charges.(2)Inventory loss at contract manufacturer is related to an incident at a third-party contract manufacturing facility.Q1 2024 FINANCIAL RESULTS APRIL 30,202424APPENDICESRECONCILIATION OF GAAP OPERATING INCOME(LOSS)TO NON-GAAP OPERATING INCOME($in millions,except%)(Unaudited)Q124Q123Q423GAAP operating income(loss)$36$(145)$342GAAP operating margin1%(3%)6%Stock-based compensation371 305 374 Amortization of acquisition-related intangibles622823635Acquisition-related and other costs(1)3911561 Inventory loss at contract manufacturer(2)65-Non-GAAP operating income$1,133$1,098$1,412 Non-GAAP operating margin21!#%(1)Acquisition-related and other costs primarily comprised of transaction costs,purchase price adjustments for inventory,certain compensation charges,contract termination and workforce rebalancing charges.(2)Inventory loss at contract manufacturer is related to an incident at a third-party contract manufacturing facility.Q1 2024 FINANCIAL RESULTS APRIL 30,202425RECONCILIATION OF GAAP TO NON-GAAP NET INCOME(LOSS)/EARNINGS(LOSS)PER SHARE(1)Acquisition-related and other costs primarily comprised of transaction costs,purchase price adjustments for inventory,certain compensation charges,contract termination and workforce rebalancing charges.(2)Inventory loss at contract manufacturer is related to an incident at a third-party contract manufacturing facility.APPENDICES(Millions,except per share data)(Unaudited)Q124Q123Q423GAAP net income(loss)/earnings(loss)per share$123$0.07$(139)$(0.09)$667$0.41(Gains)losses on equity investments,net3 (1)1 Stock-based compensation3710.23 3050.19 3740.23 Equity income in investee(7)(1)(6)Amortization of acquisition-related intangibles6220.388230.516350.39Acquisition-related and other costs(1)390.021150.07610.04Inventory loss at contract manufacturer(2)650.04 Income tax provision(203)(0.12)(132)(0.08)(483)(0.30)Non-GAAP net income/earnings per share$1,013$0.62$970$0.60$1,249$0.77Shares used in earnings per share calculationShares used in per share calculation(GAAP)1,6391,6111,628Shares used in per share calculation(Non-GAAP)1,6391,6181,628Q1 2024 FINANCIAL RESULTS APRIL 30,202426Shares(millions)(1)Q124Q224ActualEstimateBasic shares1,6171,619Dilutive impact from employee equity grants(2)2222Diluted shares1,6391,641APPENDICESSHARE COUNT OVERVIEWThe table above provides actual share count for Q124 and an estimate of share count to use when calculating GAAP and non-GAAP diluted earnings per share for Q224.(1)Share counts are weighted average shares.(2)The dilutive impact of employee equity grants is based on the Treasury Stock method and is dependent upon the average stock price during the period.The Q124 average stock price was$174.81.The Q124 average stock price of$174.81 was assumed for Q224 average stock price estimates.

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  • 希尔顿集团(Hilton)2024年第一季度财报(英文版)(184页).pdf

    UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549Form 10-Q(Mark One)QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 31,2024orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from toCommission File Number 001-36243Hilton Worldwide Holdings Inc.(Exact name of registrant as specified in its charter)Delaware27-4384691(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)7930 Jones Branch Drive,Suite 1100,McLean,VA22102(Address of Principal Executive Offices)(Zip Code)Registrants telephone number,including area code:(703)883-1000N/A(Former name,former address and former fiscal year,if changed since last report)Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading symbol(s)Name of each exchange on which registeredCommon Stock,$0.01 par value per shareHLTNew York Stock ExchangeIndicate 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 thepreceding 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 thepast 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of RegulationS-T during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an emerginggrowth company.See the definitions of large accelerated filer,accelerated filer,smaller reporting company and emerging growth company in Rule 12b-2 ofthe Exchange Act:Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth companyIf an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a)of the ExchangeAct.Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No The number of shares outstanding of the registrants common stock,par value$0.01 per share,as of April 19,2024 was 250,046,052.HILTON WORLDWIDE HOLDINGS INC.FORM 10-Q TABLE OF CONTENTSPage No.PART IFINANCIAL INFORMATIONItem 1.Financial Statements2Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations15Item 3.Quantitative and Qualitative Disclosures About Market Risk25Item 4.Controls and Procedures25PART IIOTHER INFORMATIONItem 1.Legal Proceedings27Item 1A.Risk Factors27Item 2.Unregistered Sales of Equity Securities and Use of Proceeds27Item 3.Defaults Upon Senior Securities27Item 4.Mine Safety Disclosures27Item 5.Other Information28Item 6.Exhibits28Signatures291PART I.FINANCIAL INFORMATIONItem 1.Financial StatementsHILTON WORLDWIDE HOLDINGS INC.CONDENSED CONSOLIDATED BALANCE SHEETS(in millions,except share data)March 31,December 31,20242023(unaudited)ASSETSCurrent Assets:Cash and cash equivalents$1,346$800 Restricted cash and cash equivalents74 75 Accounts receivable,net of allowance for credit losses of$137 and$1311,467 1,487 Prepaid expenses193 131 Other103 121 Total current assets(variable interest entities$66 and$65)3,183 2,614 Intangibles and Other Assets:Goodwill5,044 5,052 Brands4,831 4,846 Management and franchise contracts,net1,087 1,064 Other intangible assets,net173 173 Operating lease right-of-use assets594 618 Property and equipment,net377 382 Deferred income tax assets140 140 Other503 512 Total intangibles and other assets(variable interest entities$102 and$112)12,749 12,787 TOTAL ASSETS$15,932$15,401 LIABILITIES AND EQUITY(DEFICIT)Current Liabilities:Accounts payable,accrued expenses and other$1,935$1,979 Current maturities of long-term debt38 39 Current portion of deferred revenues513 502 Current portion of liability for guest loyalty program1,288 1,202 Total current liabilities(variable interest entities$46 and$50)3,774 3,722 Long-term debt10,135 9,157 Operating lease liabilities775 808 Deferred revenues1,152 1,132 Deferred income tax liabilities373 401 Liability for guest loyalty program1,553 1,530 Other987 998 Total liabilities(variable interest entities$122 and$137)18,749 17,748 Commitments and contingencies see Note 13Equity(Deficit):Common stock,$0.01 par value;10,000,000,000 authorized shares,251,032,237 outstanding as of March 31,2024 and253,488,288 outstanding as of December 31,20233 3 Treasury stock,at cost;84,184,078 shares as of March 31,2024 and 80,807,049 shares as of December 31,2023(9,060)(8,393)Additional paid-in capital10,954 10,968 Accumulated deficit(3,981)(4,207)Accumulated other comprehensive loss(749)(731)Total Hilton stockholders deficit(2,833)(2,360)Noncontrolling interests16 13 Total deficit(2,817)(2,347)TOTAL LIABILITIES AND EQUITY(DEFICIT)$15,932$15,401 See notes to condensed consolidated financial statements.2HILTON WORLDWIDE HOLDINGS INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in millions,except per share data)(unaudited)Three Months EndedMarch 31,20242023RevenuesFranchise and licensing fees$571$508 Base and other management fees106 80 Incentive management fees70 65 Owned and leased hotels255 248 Other revenues50 35 1,052 936 Other revenues from managed and franchised properties1,521 1,357 Total revenues2,573 2,293 ExpensesOwned and leased hotels247 251 Depreciation and amortization36 37 General and administrative104 91 Other expenses30 21 417 400 Other expenses from managed and franchised properties1,630 1,395 Total expenses2,047 1,795 Gain on sales of assets,net7 Operating income533 498 Interest expense(131)(116)Loss on foreign currency transactions(1)Loss on investments in unconsolidated affiliate(92)Other non-operating income(loss),net(36)12 Income before income taxes365 302 Income tax expense(97)(93)Net income268 209 Net income attributable to noncontrolling interests(3)(3)Net income attributable to Hilton stockholders$265$206 Earnings per share:Basic$1.05$0.77 Diluted$1.04$0.77 Cash dividends declared per share$0.15$0.15 See notes to condensed consolidated financial statements.3HILTON WORLDWIDE HOLDINGS INC.CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(in millions)(unaudited)Three Months EndedMarch 31,20242023Net income$268$209 Other comprehensive income(loss),net of tax benefit(expense):Currency translation adjustment,net of tax of$4 and$(3)(27)(6)Pension liability adjustment,net of tax of$(1)and$(1)2 2 Cash flow hedge adjustment,net of tax of$(2)and$47(14)Total other comprehensive loss(18)(18)Comprehensive income250 191 Comprehensive income attributable to noncontrolling interests(3)(3)Comprehensive income attributable to Hilton stockholders$247$188 See notes to condensed consolidated financial statements.4HILTON WORLDWIDE HOLDINGS INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in millions)(unaudited)Three Months EndedMarch 31,20242023Operating Activities:Net income$268$209 Adjustments to reconcile net income to net cash provided by operating activities:Amortization of contract acquisition costs12 10 Depreciation and amortization expenses36 37 Gain on sales of assets,net(7)Loss on foreign currency transactions1 Loss on investments in unconsolidated affiliate 92 Share-based compensation expense41 33 Deferred income taxes(30)(20)Contract acquisition costs,net of refunds(37)(105)Working capital changes and other62 74 Net cash provided by operating activities346 330 Investing Activities:Capital expenditures for property and equipment(16)(44)Issuance of financing receivables(8)Proceeds from asset dispositions8 Settlements of undesignated derivative financial instruments(12)Capitalized software costs(18)(19)Investments in unconsolidated affiliates(1)(2)Net cash used in investing activities(27)(85)Financing Activities:Borrowings1,200 Repayment of debt(209)(12)Debt issuance costs(13)(9)Dividends paid(39)(41)Repurchases of common stock(666)(450)Share-based compensation tax withholdings(69)(51)Proceeds from share-based compensation20 5 Settlements of interest rate swap with financing component14 11 Net cash provided by(used in)financing activities238(547)Effect of exchange rate changes on cash,restricted cash and cash equivalents(12)(6)Net increase(decrease)in cash,restricted cash and cash equivalents545(308)Cash,restricted cash and cash equivalents,beginning of period875 1,286 Cash,restricted cash and cash equivalents,end of period$1,420$978 See notes to condensed consolidated financial statements.For supplemental disclosures,see Note 14:Supplemental Disclosures of Cash Flow Information.5HILTON WORLDWIDE HOLDINGS INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(unaudited)Note 1:Organization and Basis of PresentationOrganizationHilton Worldwide Holdings Inc.(the Parent,or together with its subsidiaries,Hilton,we,us,our or the Company),a Delaware corporation,is oneof the largest global hospitality companies and is engaged in managing,franchising,owning and leasing hotels and resorts,and licensing its intellectual property(IP),including brand names,trademarks and service marks.Basis of PresentationThe accompanying condensed consolidated financial statements for the three months ended March 31,2024 and 2023 have been prepared in accordance withUnited States(U.S.)generally accepted accounting principles(GAAP)and are unaudited.We have condensed or omitted certain disclosures normally includedin annual financial statements presented in accordance with GAAP;however,we believe the disclosures made are adequate to prevent the information presentedfrom being misleading.These financial statements should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Reporton Form 10-K for the fiscal year ended December 31,2023.The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reportedand,accordingly,ultimate results could differ from those estimates.Additionally,interim results are not necessarily indicative of full year performance.In ouropinion,the accompanying condensed consolidated financial statements reflect all adjustments,including normal recurring items,considered necessary for a fairpresentation of the interim periods.All material intercompany transactions have been eliminated in consolidation.Note 2:AcquisitionsIn March 2024,we signed a purchase agreement to acquire the Graduate Hotels brand and enter into franchise contracts for approximately 35 existing andpipeline Graduate Hotels for$210 million in cash,which is expected to close in the second quarter of 2024.In April 2024,we agreed to and completed an all-cash acquisition of a controlling financial interest in Sydell Hotels&Resorts,LLC and Sydell HoldingCompany UK Ltd(collectively,the Sydell Group),which owns the NoMad brand.Note 3:Revenues from Contracts with CustomersContract LiabilitiesThe following table summarizes the activity of our contract liabilities,which are classified as components of current and long-term deferred revenues,duringthe three months ended March 31,2024:(in millions)Balance as of December 31,2023$1,521 Cash received in advance and not recognized as revenue185 Revenue recognized(66)Other(78)Balance as of March 31,2024$1,562 _Primarily related to Hilton Honors,our guest loyalty program,including co-branded credit card arrangements.Represents the changes in estimated transaction prices for our performance obligations related to the issuance of Hilton Honors points,which had no effect on revenues.(1)(2)(1)(2)6Performance ObligationsAs of March 31,2024,deferred revenues for unsatisfied performance obligations consisted of:(i)$800 million related to Hilton Honors that will be recognizedas revenue over approximately the next two years;(ii)$744 million related to advance consideration received from hotel owners for application,initiation and otherfees and system implementation fees;and(iii)$18 million related to other obligations.These performance obligations are recognized as revenue as discussed inNote 2:Basis of Presentation and Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the fiscal year ended December 31,2023.Note 4:Consolidated Variable Interest EntitiesAs of March 31,2024 and December 31,2023,we consolidated two variable interest entities(VIEs)that each lease one hotel property,both of which arelocated in Japan.We consolidated these VIEs since we are the primary beneficiary,having the power to direct the activities that most significantly affect theireconomic performance.Additionally,we have the obligation to absorb losses and the right to receive benefits that could be significant to each of the VIEsindividually.The assets of our consolidated VIEs are only available to settle the obligations of the respective entities,and the liabilities of the consolidated VIEs arenon-recourse to us.Our condensed consolidated balance sheets include the assets and liabilities of these entities,including the effect of foreign currency translation,whichprimarily comprised the following:March 31,December 31,20242023(in millions)Cash and cash equivalents$48$46 Accounts receivable,net15 17 Property and equipment,net33 37 Deferred income tax assets28 32 Other non-current assets40 43 Accounts payable,accrued expenses and other26 29 Long-term debt86 95 _Includes finance lease liabilities of$78 million and$86 million as of March 31,2024 and December 31,2023,respectively.Includes current maturities of$18 million and$19 million as of March 31,2024 and December 31,2023,respectively.Note 5:Loss on Investments in Unconsolidated AffiliateWe provide equity and debt financing to certain unconsolidated affiliates with an objective of supporting the growth of our network.The assets relating to theseinvestments are classified as other current assets or other non-current assets in our condensed consolidated balance sheets based on the expected maturity of therespective investment,if applicable.In March 2023,as a result of the rise in market-based interest rates,one of our third-party unconsolidated affiliates(the Fund),which has underlyinginvestments in certain hotels that we manage or franchise,failed to comply with certain requirements of its debt agreements.As a result,we determined that:(i)ourinvestment in the Fund was fully impaired and(ii)short-term subordinated financing receivables due to us from the Fund were uncollectible.As such,werecognized an other-than-temporary impairment loss on our investment of$44 million and credit losses of$48 million to fully reserve the financing receivables,such that their net carrying values were zero.These losses were recognized in loss on investments in unconsolidated affiliate in our condensed consolidatedstatement of operations for the three months ended March 31,2023.(1)(2)(1)(2)7Note 6:DebtLong-term debt balances,including obligations for finance leases,and associated interest rates and maturities as of March 31,2024,were as follows:March 31,December 31,20242023(in millions)Senior secured term loan facility with a rate of 7.18%,due 2028$1,000$1,000 Senior secured term loan facility with a rate of 7.43%,due 20302,119 2,119 Senior notes with a rate of 5.375%,due 2025500 500 Senior notes with a rate of 4.875%,due 2027600 600 Senior notes with a rate of 5.750%,due 2028500 500 Senior notes with a rate of 5.875%,due 2029550 Senior notes with a rate of 3.750%,due 2029800 800 Senior notes with a rate of 4.875%,due 20301,000 1,000 Senior notes with a rate of 4.000%,due 20311,100 1,100 Senior notes with a rate of 3.625%,due 20321,500 1,500 Senior notes with a rate of 6.125%,due 2032450 Finance lease liabilities with a weighted average rate of 6.01%,due 2024 to 2030129 139 Other debt of consolidated VIEs with a weighted average rate of 1.32%,due 2024 to 20268 9 10,256 9,267 Less:unamortized deferred financing costs and discounts(83)(71)Less:current maturities of long-term debt(38)(39)$10,135$9,157 _These notes are collectively referred to as the Senior Notes and are jointly and severally guaranteed on a senior unsecured basis by the Parent and substantially all of its direct and indirect whollyowned domestic restricted subsidiaries,other than Hilton Domestic Operating Company Inc.(HOC),an indirect wholly owned subsidiary of the Parent and the issuer of all of the series of SeniorNotes.Long-term debt of our consolidated VIEs is included in finance lease liabilities and other debt of consolidated VIEs,as applicable.Refer to Note 4:Consolidated Variable Interest Entities foradditional information.Represents current maturities of finance lease liabilities and borrowings of consolidated VIEs.Our senior secured credit facilities consist of a senior secured revolving credit facility(the Revolving Credit Facility)and senior secured term loan facilities(the Term Loans).The obligations under our senior secured credit facilities are unconditionally and irrevocably guaranteed by the Parent and substantially all ofits direct and indirect wholly owned domestic restricted subsidiaries,other than HOC,the named borrower of the senior secured credit facilities.During the three months ended March 31,2024,we borrowed and subsequently repaid$200 million under the Revolving Credit Facility.No debt amountswere outstanding under the Revolving Credit Facility as of March 31,2024,which had an available borrowing capacity of$1,913 million after considering$87million of outstanding letters of credit.In March 2024,we issued$550 million aggregate principal amount of 5.875%Senior Notes due 2029(the 5.875 29 Senior Notes)and$450 millionaggregate principal amount of 6.125%Senior Notes due 2032(the 6.125 32 Senior Notes)and incurred an aggregate$15 million of debt issuance costswhich were recognized as a reduction to the outstanding debt balance in our condensed consolidated balance sheet and will be amortized to interest expensethrough the respective maturity dates of the 5.875 29 Senior Notes and the 6.125 32 Senior Notes.Interest on the 5.875 29 Senior Notes and the6.125 32 Senior Notes is payable semi-annually in arrears on April 1 and October 1 of each year,beginning October 1,2024.We used a portion of the netproceeds from the issuances to repay$200 million borrowed under our Revolving Credit Facility earlier in the period.The remaining proceeds will be used forgeneral corporate purposes,which may include investments and acquisitions.(1)(1)(1)(1)(1)(1)(1)(1)(1)(2)(2)(3)(1)(2)(3)8Note 7:Fair Value MeasurementsThe fair values of certain financial instruments and the hierarchy level we used to estimate the fair values are shown below:March 31,2024Hierarchy LevelCarrying ValueLevel 1Level 2Level 3(in millions)Assets:Interest rate swap$83$83$Liabilities:Long-term debt10,119 6,568 3,127 December 31,2023Hierarchy LevelCarrying ValueLevel 1Level 2Level 3(in millions)Assets:Interest rate swap$75$75$Liabilities:Long-term debt9,119 5,631 3,129 _The fair values of cash equivalents and restricted cash equivalents approximate their carrying values due to their short-term maturities.The fair values of all other financial instruments not included inthese tables are estimated to be equal to their carrying values.The carrying values and fair values exclude the deduction for unamortized deferred financing costs and any applicable discounts,as well as all finance lease liabilities and other debt of consolidatedVIEs;refer to Note 6:Debt for additional information.We measured our interest rate swap at fair value,which was determined using a discounted cash flow analysis that reflects the contractual terms of the interestrate swap,including the period to maturity,and uses observable market-based inputs of similar instruments,including interest rate curves,as applicable.Note 8:Income TaxesAt the end of each quarter,we estimate the effective income tax rate expected to be applied for the full year.The effective income tax rate is determined by thelevel and composition of income(loss)before income taxes,which is subject to federal,state,local and foreign income taxes.Note 9:Share-Based CompensationOur share-based compensation primarily consists of awards that we grant to eligible employees under the Hilton 2017 Omnibus Incentive Plan(the 2017Plan)and includes time-vesting restricted stock units(RSUs),nonqualified stock options(options)and performance-vesting RSUs(performance shares).Werecognized share-based compensation expense of$41 million and$33 million during the three months ended March 31,2024 and 2023,respectively,whichincluded amounts reimbursed by hotel owners.RSUsDuring the three months ended March 31,2024,we granted 466,000 RSUs with a weighted average grant date fair value per share of$203.96,which vest inequal annual installments over two or three years from the date of grant.OptionsDuring the three months ended March 31,2024,we granted 262,000 options with an exercise price per share of$203.96,which vest in equal annualinstallments over three years from the date of grant and terminate 10 years from the date of grant or earlier if the individuals service terminates under certaincircumstances.(1)(2)(1)(2)(1)(2)9The grant date fair value per share of the options granted during the three months ended March 31,2024 was$71.25,which was determined using the Black-Scholes-Merton option-pricing model with the following assumptions:Expected volatility27.95%Dividend yield0.33%Risk-free rate4.17%Expected term(in years)6.0_Estimated using a blended approach of historical and implied volatility.Historical volatility is based on the historical movement of Hiltons stock price for a period that corresponds to the expectedterm of the options.Estimated based on our quarterly dividend and the three-month average stock price at the date of grant.Based on the yields of U.S.Department of Treasury instruments with a similar expected term of the options at the date of grant.Estimated using the midpoint of the vesting period and the contractual term of the options as we do not have sufficient historical share option exercise data to estimate the term of our option grant.Performance SharesDuring the three months ended March 31,2024,we granted 183,000 performance shares with a grant date fair value per share of$203.96,which vest threeyears from the date of grant based on the projected achievement of various performance measures.As of March 31,2024,we determined that all of the performance measures for all outstanding performance shares granted in 2022,2023 and 2024 wereprobable of achievement,with the average of the applicable achievement factors estimated to be between the target and maximum achievement percentages for theperformance shares granted in 2022 and 2023 and at the target achievement percentage for the performance shares granted in 2024.Note 10:Earnings Per ShareThe following table presents the calculation of basic and diluted earnings per share(EPS):Three Months EndedMarch 31,20242023(in millions,except per share amounts)Basic EPS:Numerator:Net income attributable to Hilton stockholders$265$206 Denominator:Weighted average shares outstanding252 266 Basic EPS$1.05$0.77 Diluted EPS:Numerator:Net income attributable to Hilton stockholders$265$206 Denominator:Weighted average shares outstanding255 269 Diluted EPS$1.04$0.77 _Certain shares related to share-based compensation were excluded from the calculations of diluted EPS because their effect would have been anti-dilutive under the treasury stock method,includingless than 1 million shares for each of the three months ended March 31,2024 and 2023.(1)(2)(3)(4)(1)(2)(3)(4)(1)(1)10Note 11:Stockholders Equity(Deficit)and Accumulated Other Comprehensive LossThe following tables present the changes in the components of stockholders equity(deficit):Three Months Ended March 31,2024Equity(Deficit)Attributable to Hilton StockholdersTreasuryStockAdditionalPaid-inCapitalAccumulatedDeficitAccumulatedOtherComprehensiveLossCommon StockNoncontrollingInterestsSharesAmountTotal(in millions)Balance as of December 31,2023253.5$3$(8,393)$10,968$(4,207)$(731)$13$(2,347)Net income 265 3 268 Other comprehensive loss (18)(18)Dividends (39)(39)Repurchases of common stock(3.4)(667)(667)Share-based compensation0.9 (14)(14)Balance as of March 31,2024251.0$3$(9,060)$10,954$(3,981)$(749)$16$(2,817)Three Months Ended March 31,2023Equity(Deficit)Attributable to Hilton StockholdersTreasuryStockAdditionalPaid-inCapitalAccumulatedDeficitAccumulatedOtherComprehensiveLossCommon StockNoncontrollingInterestsSharesAmountTotal(in millions)Balance as of December 31,2022267.9$3$(6,040)$10,831$(5,190)$(706)$4$(1,098)Net income 206 3 209 Other comprehensive loss (18)(18)Dividends (41)(41)Repurchases of common stock(3.2)(449)(449)Share-based compensation0.7 (16)(16)Balance as of March 31,2023265.4$3$(6,489)$10,815$(5,025)$(724)$7$(1,413)The changes in the components of accumulated other comprehensive loss,net of taxes,were as follows:CurrencyTranslationAdjustmentPension LiabilityAdjustmentCash Flow HedgeAdjustmentTotal(in millions)Balance as of December 31,2023$(539)$(262)$70$(731)Other comprehensive income(loss)before reclassifications(27)20(7)Amounts reclassified from accumulated other comprehensive loss 2(13)(11)Net other comprehensive income(loss)(27)2 7(18)Balance as of March 31,2024$(566)$(260)$77$(749)(1)(2)(3)11CurrencyTranslationAdjustmentPension LiabilityAdjustmentCash Flow HedgeAdjustmentTotal(in millions)Balance as of December 31,2022$(548)$(259)$101$(706)Other comprehensive loss before reclassifications(6)(11)(17)Amounts reclassified from accumulated other comprehensive loss 2(3)(1)Net other comprehensive income(loss)(6)2(14)(18)Balance as of March 31,2023$(554)$(257)$87$(724)_Includes net investment hedge gains and intra-entity foreign currency transactions that are of a long-term investment nature.Amounts reclassified relate to the amortization of prior service cost and amortization of net loss and were recognized in other non-operating income(loss),net in our condensed consolidatedstatements of operations.Amounts reclassified were the result of hedging instruments,including:(a)interest rate swaps,inclusive of interest rate swaps that were dedesignated in prior periods,with related amounts recognizedin interest expense in our condensed consolidated statements of operations and(b)forward contracts that hedge our foreign currency denominated fees,with related amounts recognized in variousrevenue line items,as applicable,in our condensed consolidated statements of operations.Note 12:Business SegmentsWe are a hospitality company with operations organized in two distinct operating segments:(i)management and franchise and(ii)ownership,each of which isreported as a segment based on(a)delivering a similar set of products and services and(b)being managed separately given its distinct economic characteristics.The management and franchise segment includes all of the hotels we manage for third-party owners,as well as all franchised hotels that license our IP andwhere we provide other contracted services,but the day-to-day services of the hotels are operated or managed by someone other than us.Revenues from thissegment include:(i)management and franchise fees charged to third-party hotel owners;(ii)licensing fees from our strategic partners,including co-branded creditcard providers,and Hilton Grand Vacations Inc.(HGV);and(iii)fees for managing the hotels in our ownership segment.The ownership segment primarilyderives revenues from nightly hotel room sales,food and beverage sales and other services at our consolidated owned and leased hotels.The performance of our operating segments is evaluated primarily on operating income(loss),without allocating amortization of contract acquisition costs,other revenues and other expenses,other revenues and other expenses from managed and franchised properties,depreciation and amortization expenses or generaland administrative expenses,and does not include equity in earnings(losses)from unconsolidated affiliates.Our chief operating decision maker does not use assetsby operating segment when assessing performance or making operating segment resource allocations.(1)(2)(3)(1)(2)(3)12The following table presents revenues for our reportable segments,reconciled to consolidated amounts:Three Months EndedMarch 31,20242023(in millions)Franchise and licensing fees$576$513 Base and other management fees119 89 Incentive management fees70 65 Management and franchise765 667 Ownership255 248 Segment revenues1,020 915 Amortization of contract acquisition costs(12)(10)Other revenues50 35 Other revenues from managed and franchised properties1,521 1,357 Intersegment fees elimination(6)(4)Total revenues$2,573$2,293 _Includes management,royalty and IP fees charged to consolidated hotels in our ownership segment by our management and franchise segment,which were eliminated in our condensed consolidatedstatements of operations.The following table presents operating income(loss)for each of our reportable segments,reconciled to consolidated income before income taxes:Three Months EndedMarch 31,20242023(in millions)Management and franchise$765$667 Ownership2(7)Segment operating income767 660 Amortization of contract acquisition costs(12)(10)Other revenues,less other expenses20 14 Net other expenses from managed and franchised properties(109)(38)Depreciation and amortization expenses(36)(37)General and administrative expenses(104)(91)Gain on sales of assets,net7 Operating income533 498 Interest expense(131)(116)Loss on foreign currency transactions(1)Loss on investments in unconsolidated affiliate(92)Other non-operating income(loss),net(36)12 Income before income taxes$365$302 _Includes management,royalty and IP fees charged to consolidated hotels in our ownership segment by our management and franchise segment,which were eliminated in our condensed consolidatedstatements of operations.Note 13:Commitments and ContingenciesWe include performance clauses in certain of our management contracts,however,most of these clauses do not require us to fund shortfalls,but instead allowfor termination of the contract if specified operating performance levels are not achieved.In limited cases,we are obligated to fund performance shortfalls and ourobligations under these guarantees in future periods are dependent on the operating performance level of the related hotel over the remaining term of theperformance guarantee for that particular hotel.As of March 31,2024,we had performance guarantees with expirations ranging from 2025 to 2043 and possiblecash outlays totaling$9 million.We also have extended debt guarantees and provided letters of credit to owners of certain hotels that we currently or in the future will manage or franchise.During the three months ended March 31,2024,we recognized$47 million of losses in other(1)(1)(1)(1)(1)(1)13non-operating loss,net in our condensed consolidated statement of operations for debt guarantees extended to certain hotels we manage that have failed or areexpected to fail to comply with the requirements of their respective debt agreements.We paid$62 million during the three months ended March 31,2024 related todebt guarantees.Our debt guarantees and letters of credit as of March 31,2024 had expirations ranging from 2025 to 2033 and remaining possible cash outlaystotaling$78 million.The performance and debt guarantees create variable interests in the ownership entities of the related hotels,of which we are not the primary beneficiary.We receive Hilton Honors and program fees from managed and franchised properties that we are contractually required to use to operate our Hilton Honorsprogram,marketing,sales and brands programs and shared services on behalf of hotel owners.If we collect amounts in excess of amounts expended,we have acommitment to spend these amounts on the related programs.We are involved in various claims and lawsuits arising in the ordinary course of business,some of which include claims for substantial sums.While theultimate results of claims and litigation cannot be predicted with certainty,we expect that the ultimate resolution of all pending or threatened claims and litigationas of March 31,2024 will not have a material adverse effect on our consolidated financial position,results of operations or cash flows.Note 14:Supplemental Disclosures of Cash Flow InformationCash interest paid included within operating activities in our condensed consolidated statements of cash flows was$120 million and$101 million during thethree months ended March 31,2024 and 2023,respectively.For the three months ended March 31,2024 and 2023,these amounts excluded$14 million and$11million of cash receipts,respectively,related to settlements of our interest rate swap with a financing component,which are separately disclosed within financingactivities in our condensed consolidated statements of cash flows.Income tax payments,net of refunds received,and income tax refunds,net of payments,were$18 million and$25 million,respectively,for the three monthsended March 31,2024 and 2023,respectively.14Item 2.Managements Discussion and Analysis of Financial Condition and Results of OperationsThe following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensedconsolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for thefiscal year ended December 31,2023.Forward-Looking StatementsThis Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,as amended,andSection 21E of the Securities Exchange Act of 1934,as amended(the Exchange Act).These statements include,but are not limited to,statements related to ourexpectations regarding the performance of our business,future financial results,liquidity and capital resources and other non-historical statements.In some cases,you can identify these forward-looking statements by the use of words such as outlook,believes,expects,forecasts,potential,continues,may,will,should,could,seeks,projects,predicts,intends,plans,estimates,anticipates or the negative version of these words or other comparable words.Such forward-looking statements are subject to various risks and uncertainties including,among others,risks inherent to the hospitality industry;macroeconomicfactors beyond our control,such as inflation,changes in interest rates,challenges due to labor shortages or disputes and supply chain disruptions;competition forhotel guests and management and franchise contracts;risks related to doing business with third-party hotel owners;performance of our information technologysystems;growth of reservation channels outside of our system;risks of doing business outside of the U.S.;risks associated with conflicts in Eastern Europe and theMiddle East and other geopolitical events;and our indebtedness.Accordingly,there are or will be important factors that could cause actual outcomes or results todiffer materially from those indicated in these statements.We believe these factors include,but are not limited to,those described under Part IItem 1A.RiskFactors of our Annual Report on Form 10-K for the fiscal year ended December 31,2023.These factors should not be construed as exhaustive and should be readin conjunction with the other cautionary statements that are included in this Quarterly Report on Form 10-Q.We undertake no obligation to publicly update orreview any forward-looking statement,whether as a result of new information,future developments or otherwise,except as required by law.OverviewOur BusinessHilton is one of the largest global hospitality companies,with 7,626 properties comprising 1,197,329 rooms in 126 countries and territories as of March 31,2024.Our premier brand portfolio includes luxury,lifestyle,full service,focused service and all-suites hotel brands,as well as timeshare brands.As of March 31,2024,we had 188 million members in our award-winning guest loyalty program,Hilton Honors,an increase of 18 percent from March 31,2023.Segments and RegionsWe analyze our operations and business by both operating segments and geographic regions.Our operations consist of two reportable segments that are basedon similar products and services:(i)management and franchise and(ii)ownership.The management and franchise segment provides services,including hotelmanagement and licensing of our IP.Revenues from this segment include:(i)management and franchise fees charged to third-party hotel owners;(ii)licensing feesfrom our strategic partners,including co-branded credit card providers,and HGV;and(iii)fees for managing the hotels in our ownership segment.As a manager ofhotels,we typically are responsible for supervising or operating the hotel in exchange for management fees.As a franchisor of hotels,we charge franchise fees inexchange for the use of one of our brand names and/or related commercial services,such as our reservations system,marketing and information technologyservices,while a third party manages or operates such franchised hotels.The ownership segment primarily derives revenues from nightly hotel room sales,foodand beverage sales and other services at our consolidated owned and leased hotels.We conduct business in three distinct geographic regions:(i)the Americas;(ii)Europe,Middle East and Africa(EMEA);and(iii)Asia Pacific.The Americasregion includes North America,South America and Central America,including all Caribbean nations.Although the U.S.,which represented 67 percent of oursystem-wide hotel rooms as of March 31,2024,is included in the Americas region,it is often analyzed separately and apart from the Americas region and,as such,it is presented separately within our hotel operating statistics in Results of Operations.The EMEA region includes Europe,which represents the western-mostpeninsula of Eurasia stretching from Iceland in the west to Russia in the east,and the Middle East and Africa(MEA),which represents the Middle East regionand all African nations,including the Indian Ocean island nations.Europe and MEA are often analyzed separately and,as such,are presented separately within ourhotel operating15statistics in Results of Operations.The Asia Pacific region includes the eastern and southeastern nations of Asia,as well as India,Australia,New Zealand andthe Pacific Island nations.System Growth and Development PipelineOur strategic objectives include the continued expansion of our global hotel network,in particular our fee-based business.As we enter into new managementand franchise contracts and enter into strategic agreements to complement our hotel portfolio,we expand our business with limited or no capital investment by usas the manager,franchisor or licensor,since the capital required to build,renovate and maintain hotels is typically provided by the third-party owners with whomwe contract to provide management services or license our IP.Prior to approving the addition of new hotels to our management and franchise developmentpipeline,we evaluate the economic viability of the hotel based on its geographic location,the credit quality of the third-party owner and other factors.Byincreasing the number of management and franchise contracts with third-party owners,over time we expect to increase revenues,overall return on invested capitaland cash available to support our business needs.See further discussion on our cash management policy in Liquidity and Capital Resources.The currenteconomic environment,including elevated levels of inflation and interest rates,has posed certain challenges to the execution of our growth strategy,which haveincluded and may continue to include delays in openings and new development.In addition to our current hotel portfolio,we are focused on the growth of our business by expanding our global hotel network through our developmentpipeline,which represents hotels that we expect to add to our system in the future.The following table summarizes our development activity:As of or for theThree Months EndedMarch 31,2024HotelsRoomsHotel systemOpenings106 16,800 Net additions94 14,200 Development pipelineAdditions234 29,800 Count as of period end3,375 472,300 _Rounded to the nearest hundred.Represents room additions,net of rooms removed from our system.Net unit growth from March 31,2023 to March 31,2024 was 5.6 percent.The hotels in our development pipeline were under development throughout 119 countries and territories,including 31 countries and territories where we had no existing hotels.Of the total rooms in the development pipeline,229,700 were under construction and 267,900 were located outside of the U.S.Nearly all of the rooms in our development pipeline will be in ourmanagement and franchise segment upon opening.We do not consider any individual development project to be material to us.Key Business and Financial Metrics Used by ManagementComparable HotelsWe define our comparable hotels as those that:(i)were active and operating in our system for at least one full calendar year as of the end of the current period,and open January 1st of the previous year;(ii)have not undergone a change in brand or ownership type during the current or comparable periods reported;and(iii)have not undergone large-scale capital projects,sustained substantial property damage,encountered business interruption or for which comparable results were notavailable.Of the 7,532 hotels in our system as of March 31,2024,6,347 hotels were classified as comparable hotels.Our 1,185 non-comparable hotels as ofMarch 31,2024 included 421 hotels,or less than six percent of the total hotels in our system,that were removed from the comparable group during the last twelvemonths because they underwent large-scale capital projects,sustained substantial property damage,encountered business interruption or comparable results wereotherwise not available.OccupancyOccupancy represents the total number of room nights sold divided by the total number of room nights available at a hotel or group of hotels for a givenperiod.Occupancy measures the utilization of available capacity at a hotel or group of hotels.Management uses occupancy to gauge demand at a specific hotel orgroup of hotels in a given period.Occupancy levels also(1)(2)(3)(4)(1)(2)(3)(4)16help management determine achievable Average Daily Rate(ADR)pricing levels as demand for hotel rooms increases or decreases.ADRADR represents hotel room revenue divided by the total number of room nights sold for a given period.ADR measures the average room price attained by ahotel,and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels.ADR is acommonly used performance measure in the industry,and we use ADR to assess pricing levels that we are able to generate by type of customer,as changes in ratescharged to customers have different effects on overall revenues and incremental profitability than changes in occupancy,as described above.Revenue per Available Room(RevPAR)RevPAR is calculated by dividing hotel room revenue by the total number of room nights available to guests for a given period.We consider RevPAR to be ameaningful indicator of our performance as it provides a metric correlated to two primary and key drivers of operations at a hotel or group of hotels,as previouslydescribed:occupancy and ADR.RevPAR is also a useful indicator in measuring performance over comparable periods for comparable hotels.References to occupancy,ADR and RevPAR are presented on a comparable basis,based on the comparable hotels as of March 31,2024,and references toADR and RevPAR are presented on a currency neutral basis,unless otherwise noted.As such,comparisons of these hotel operating statistics for the three monthsended March 31,2024 and 2023 use the foreign currency exchange rates used to translate the results of the Companys foreign operations within its unauditedcondensed consolidated financial statements for the three months ended March 31,2024.EBITDA and Adjusted EBITDAEBITDA reflects net income(loss),excluding interest expense,a provision for income tax benefit(expense)and depreciation and amortization expenses.Adjusted EBITDA is calculated as EBITDA,as previously defined,further adjusted to exclude certain items,including gains,losses,revenues and expenses inconnection with:(i)asset dispositions for both consolidated and unconsolidated investments;(ii)foreign currency transactions;(iii)debt restructurings andretirements;(iv)furniture,fixtures and equipment(FF&E)replacement reserves required under certain lease agreements;(v)share-based compensation;(vi)reorganization,severance,relocation and other expenses;(vii)non-cash impairment;(viii)amortization of contract acquisition costs;(ix)the net effect of ourcost reimbursement revenues and expenses included in other revenues and other expenses from managed and franchised properties;and(x)other items.We believe that EBITDA and Adjusted EBITDA provide useful information to investors about us and our financial condition and results of operations for thefollowing reasons:(i)these measures are among the measures used by our management team to evaluate our operating performance and make day-to-day operatingdecisions and(ii)these measures are frequently used by securities analysts,investors and other interested parties as a common performance measure to compareresults or estimate valuations across companies in our industry.Additionally,these measures exclude certain items that can vary widely across different industriesand among competitors within our industry.For instance,interest expense and income taxes are dependent on company specifics,including,among other things,capital structure and operating jurisdictions,respectively,and,therefore,could vary significantly across companies.Depreciation and amortization expenses,aswell as amortization of contract acquisition costs,are dependent upon company policies,including the method of acquiring and depreciating assets and the usefullives that are assigned to those depreciating or amortizing assets for accounting purposes.For Adjusted EBITDA,we also exclude items such as:(i)FF&Ereplacement reserves for leased hotels to be consistent with the treatment of capital expenditures for property and equipment,where depreciation of suchcapitalized assets is reported within depreciation and amortization expenses;(ii)share-based compensation,as this could vary widely among companies due to thedifferent plans in place and the usage of them;and(iii)other items that are not reflective of our operating performance,such as amounts related to debtrestructurings and debt retirements and reorganization and related severance costs,to enhance period-over-period comparisons of our ongoing operations.Further,Adjusted EBITDA excludes the net effect of our cost reimbursement revenues and expenses,as we contractually do not operate the related programs to generate aprofit over the terms of the respective contracts.The direct reimbursements from hotel owners are typically reimbursed as the costs are incurred and have no neteffect on net income(loss).The fees we recognize related to the indirect reimbursements may be recognized before or after the related expenses are incurred,causing timing differences between the costs incurred and the related reimbursement from hotel owners,with the net effect impacting net income(loss)in thereporting period.However,the expenses incurred related to the indirect reimbursements are expected to equal the revenues earned from the indirectreimbursements over time,and,therefore,the net17effect of our cost reimbursement revenues and expenses is not used by our management team to evaluate our operating performance or make day-to-day operatingdecisions.EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be considered as alternatives,either in isolation or as a substitute,fornet income(loss)or other measures of financial performance or liquidity,including cash flows,derived in accordance with GAAP.Further,EBITDA and AdjustedEBITDA have limitations as analytical tools,including:EBITDA and Adjusted EBITDA do not reflect changes in,or cash requirements for,our working capital needs;EBITDA and Adjusted EBITDA do not reflect our interest expense,or the cash requirements necessary to service interest or principal payments,on ourindebtedness;EBITDA and Adjusted EBITDA do not reflect income tax expenses or the cash requirements to pay our taxes;EBITDA and Adjusted EBITDA do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;EBITDA and Adjusted EBITDA do not reflect the effect on earnings or changes resulting from matters that we consider not to be indicative of our futureoperations;although depreciation and amortization are non-cash charges,the assets being depreciated and amortized will often have to be replaced in the future,andEBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;andother companies in our industry may calculate EBITDA and Adjusted EBITDA differently,limiting their usefulness as comparative measures.Because of these limitations,EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to us to reinvest in the growth of ourbusiness,return to our stockholders through share repurchases and dividends or as measures of cash that will be available to us to meet our obligations.18Results of OperationsThe hotel operating statistics by region for our system-wide comparable hotels were as follows:Three Months EndedChangeMarch 31,20242024 vs.2023System-wideOccupancy67.2%0.2%pts.ADR$154.91 1.7%RevPAR$104.16 2.0%U.S.Occupancy67.7%(0.6)%pts.ADR$161.67 0.5%RevPAR$109.53(0.4)%Americas(excluding U.S.)Occupancy65.8%1.4%pts.ADR$157.60 5.0%RevPAR$103.67 7.3%EuropeOccupancy64.9%3.1%pts.ADR$141.99 4.5%RevPAR$92.14 9.7%MEAOccupancy73.6%2.4%pts.ADR$193.22 11.0%RevPAR$142.23 14.8%Asia PacificOccupancy65.2%1.3%pts.ADR$114.90 5.7%RevPAR$74.95 7.9%System-wide RevPAR increased during the three months ended March 31,2024,primarily due to an increase in ADR in all regions,which included the impactof inflation,and increases in occupancy across international regions.The decrease in RevPAR in the U.S.was driven by challenging comparisons due to weatherand timing of holidays.The Americas region,excluding the U.S.,saw improvement resulting from an increase in inbound leisure travel in Mexico and theCaribbean and Latin America.The RevPAR increase in Europe was driven by continued growth in international travel.Both MEA and Asia Pacific benefited fromincreased holiday travel,conferences and special events in the regions.19The table below provides a reconciliation of net income to EBITDA and Adjusted EBITDA:Three Months EndedMarch 31,20242023(in millions)Net income$268$209 Interest expense131 116 Income tax expense97 93 Depreciation and amortization expenses36 37 EBITDA532 455 Gain on sales of assets,net(7)Loss on foreign currency transactions1 Loss on investments in unconsolidated affiliate 92 Loss on debt guarantees47 FF&E replacement reserves11 8 Share-based compensation expense41 33 Amortization of contract acquisition costs12 10 Net other expenses from managed and franchised properties109 38 Other adjustments4 5 Adjusted EBITDA$750$641 _Amount includes losses recognized related to equity and debt financing that we had previously provided to an unconsolidated affiliate with underlying investments in certain hotels that we manage orfranchise;refer to Note 5:Loss on Investments in Unconsolidated Affiliate in our unaudited condensed consolidated financial statements for additional information.Amount includes losses on debt guarantees for certain hotels that we manage;refer to Note 13:Commitments and Contingencies in our unaudited condensed consolidated financial statements foradditional information.Amount for the three months ended March 31,2024 primarily relates to transaction costs incurred for acquisitions.Amounts for both periods include net losses(gains)related to certain of Hiltonsinvestments in unconsolidated affiliates,other than the loss included separately in loss on investments in unconsolidated affiliate,severance and other items.RevenuesThree Months EndedPercentMarch 31,Change202420232024 vs.2023(in millions)Franchise and licensing fees$571$508 12.4Base and other management fees$106$80 32.5Incentive management fees70 65 7.7Total management fees$176$145 21.4Franchise and licensing fees increased due to an increase in license fees from our strategic partnerships,primarily attributable to new cardholder acquisitionsand increased cardholder spend under our co-branded credit card arrangements.Licensing fees from HGV also increased as a result of increased timesharerevenues,inclusive of the impact of adding new timeshare properties to our system between the periods,including those acquired by HGV from third-partycompanies.During the three months ended March 31,2024,RevPAR at our comparable franchised hotels decreased 0.2 percent due to a decrease in occupancy of 0.7percentage points,which was partially offset by an increase in ADR of 0.8 percent.However,franchise fees increased during the period due to the addition of 417franchised hotels on a net basis,resulting in an additional 58,100 rooms from new development and ownership type transfers between January 1,2023 to March 31,2024.The increase in management fees was primarily the result of an increase in RevPAR at our comparable managed hotels as well as termination fees receivedfrom hotels that exited our system.During the three months ended March 31,2024,RevPAR at our comparable managed hotels increased 8.2 percent,due toincreased occupancy of 3.1 percentage points,and increased ADR of 3.3 percent.The increase in managed hotels in our system between the periods alsocontributed to the increase in management fees.Including new development and ownership type transfers,from January 1,2023 to March 31,2024,we added 31managed hotels on a net basis,providing an additional 9,300 rooms to our management hotel portfolio.(1)(2)(3)(1)(2)(3)20Incentive management fees increased as they are based on hotels operating profits,which generally have improved from the prior period as increasedconsumer demand drove higher revenues,elevated margins and,ultimately,higher managed hotel profits.Three Months EndedPercentMarch 31,Change202420232024 vs.2023(in millions)Owned and leased hotels revenues$255$248 2.8The$7 million increase in owned and leased hotels revenues included a$9 million currency neutral increase,partially offset by a$2 million decrease resultingfrom unfavorable fluctuations in foreign currency exchange rates.Revenues from our comparable owned and leased hotels increased$20 million,on a currency neutral basis,due to the increase in RevPAR at our comparableowned and leased hotels of 12.4 percent.The increase in RevPAR was due to increases in occupancy of 3.9 percentage points and ADR of 6.0 percent.The$11million currency neutral decrease in revenues from our non-comparable owned and leased hotels included decreases related to hotels undergoing renovationsduring the period and the business interruption that occurred at our leased hotel in Israel due to the ongoing military conflict.Three Months EndedPercentMarch 31,Change202420232024 vs.2023(in millions)Other revenues$50$35 42.9The increase in other revenues was primarily due to increased procurement volume and vendor rebates for purchases made by properties that participate in ourpurchasing programs,including properties outside of our system.Operating ExpensesThree Months EndedPercentMarch 31,Change202420232024 vs.2023(in millions)Owned and leased hotels expenses$247$251(1.6)Expenses from our comparable owned and leased hotels increased$5 million,on a currency neutral basis,as a result of increased occupancy and cost inflationboth driving higher labor costs and other operating expenses,partially offset by decreases in utilities and property taxes.The$9 million net decrease in owned andleased hotels expenses,on a currency neutral basis,from our non-comparable owned and leased hotels is primarily driven by the business interruption that occurredat our leased hotel in Israel.Three Months EndedPercentMarch 31,Change202420232024 vs.2023(in millions)Depreciation and amortization expenses$36$37(2.7)General and administrative expenses104 91 14.3Other expenses30 21 42.9The decrease in depreciation and amortization expenses during three months ended March 31,2024 was primarily due to a decrease in amortization expense,driven by certain intangible assets that became fully amortized during the three months ended December 31,2023.This decrease in amortization expense wasmostly offset by an increase related to software and corporate and hotel assets placed in service between the periods.21The increase in general and administrative expenses was primarily due to increases in costs related to payroll and other compensation costs,as well astransaction costs incurred for acquisitions.The increase in other expenses was primarily due to costs associated with higher procurement volume from our purchasing operations,including for propertiesoutside of our system that participate in our purchasing programs.Non-operating Income and ExpensesThree Months EndedPercentMarch 31,Change202420232024 vs.2023(in millions)Interest expense$(131)$(116)12.9Loss on foreign currency transactions(1)NMLoss on investments in unconsolidated affiliate(92)NMOther non-operating income(loss),net(36)12 NMIncome tax expense(97)(93)4.3_Fluctuation in terms of percentage change is not meaningful.In November 2023,we amended the credit agreement governing the Term Loans to convert$1.0 billion of the outstanding Term Loans to a new tranche withan interest rate of the Secured Overnight Financing Rate(SOFR)plus 185 basis points and$1.6 billion of the outstanding Term Loans,along with$500 millionof new aggregate principal amount,into a new tranche with an interest rate of SOFR plus 210 basis points.The increase in interest expense was primarily driven byboth the increase to the weighted average fixed spread on the overall variable rate on the Term Loans and the increase in the outstanding balance by$500 million.The increase in interest expense also resulted from an increase in one-month SOFR,the benchmark for the Term Loans interest rate,as well as an increase invariable rent for our finance leases,which is generally based on a percentage of hotel revenues or profits,which increased as discussed in Revenues.Theseincreases were partially offset by a decrease in interest expense due to interest rate swaps used to mitigate floating interest rate risk,including an increase in theamortization of net gains from accumulated other comprehensive loss from a designated interest rate swap and a decrease in the release of net losses fromaccumulated other comprehensive loss related to a previous interest rate swap that was dedesignated in a prior period.The net gains and losses on foreign currency transactions are the result of changes in foreign currency exchange rates,including on certain intercompanyfinancing arrangements,such as short-term cross-currency intercompany loans,as well as transactions denominated in foreign currencies.The loss on investments in unconsolidated affiliate for the three months ended March 31,2023 included:(i)a$44 million other-than-temporary impairmentloss on our investment in the Fund and(ii)$48 million of credit losses on financing receivables provided to the Fund.See Note 5:Loss on Investments inUnconsolidated Affiliate in our unaudited condensed consolidated financial statements for additional information.Other non-operating income(loss),net consists of interest income,equity in earnings(losses)from unconsolidated affiliates,certain components of netperiodic pension cost or credit related to our employee defined benefit pension plans and other non-operating gains and losses.The net change during the periodwas primarily driven by an increase in losses on debt guarantees for hotels that Hilton manages.See Note 13:Commitments and Contingencies in our unauditedcondensed consolidated financial statements for additional information.The increase in income tax expense was primarily attributable to the increase in income before income taxes,partially offset by a valuation allowance providedon a deferred tax asset during the three months ended March 31,2023.Segment ResultsAs of March 31,2024,our management and franchise segment included 809 managed and 6,766 franchised properties consisting of 1,179,837 total rooms,andour ownership segment included 51 hotels consisting of 17,492 total rooms.Refer to Note 12:Business Segments in our unaudited condensed consolidatedfinancial statements for reconciliations of revenues for our reportable segments to consolidated total revenues and of segment operating income to consolidatedincome before income taxes.(1)(1)(1)(1)22For the three months ended March 31,2024,refer to Revenues for further discussion of the increases in our franchise and licensing fees and totalmanagement fees,which reflect our management and franchise segment revenues and segment operating income,as well as for further discussion of the increase inrevenues from our owned and leased hotels,which reflect our ownership segment revenues.In addition,refer to Operating Expenses for further discussion ofthe decrease in operating expenses at our owned and leased hotels,which,when netted with ownership segment revenues and management fees charged by ourmanagement and franchise segment,results in our ownership segment operating income(loss).Liquidity and Capital ResourcesOverviewAs of March 31,2024,we had total cash and cash equivalents of$1,420 million,including$74 million of restricted cash and cash equivalents.The majority ofour restricted cash and cash equivalents is related to cash collateral and cash held for FF&E reserves.Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating and other expenditures,including:(i)costs associatedwith the management and franchising of hotels;(ii)corporate expenses;(iii)payroll and compensation costs;(iv)taxes and compliance costs;(v)scheduled debtmaturities and interest payments on our outstanding indebtedness;(vi)lease payments under our finance and operating leases;(vii)costs,other than compensationand lease payments that are noted separately,associated with the operations of owned and leased hotels,including,but not limited to,utilities and operatingsupplies;(viii)committed contract acquisition costs;(ix)capital and maintenance expenditures for required renovations and maintenance at the hotels within ourownership segment;(x)dividends as declared;(xi)share repurchases;and(xii)costs related to the acquisition of the Graduate Hotels brand and the associatedcontracts and the acquisition of a controlling financial interest in the Sydell Group.Our known long-term liquidity requirements primarily consist of funds necessary to pay for:(i)scheduled debt maturities and interest payments on ouroutstanding indebtedness;(ii)lease payments under our finance and operating leases;(iii)committed contract acquisition costs;(iv)capital improvements to thehotels within our ownership segment;(v)corporate capital and information technology expenditures;(vi)dividends as declared;(vii)share repurchases;and(viii)commitments to owners in our management and franchise segment made in the normal course of business for which we are reimbursed by these owners throughHilton Honors and program fees to operate our Hilton Honors program,marketing,sales and brands programs and shared services.In March 2024,we issued a totalof$1.0 billion of 5.875 29 Senior Notes and 6.125 32 Senior Notes and used$200 million of the net proceeds to repay the outstanding balance under theRevolving Credit Facility.We intend to use the remaining net proceeds for general corporate purposes,which may include investments and acquisitions.Refer toNote 6:Debt in our unaudited condensed consolidated financial statements for additional information.We expect that interest payments on our outstandingindebtedness will increase compared to the prior year as a result of the amendment and increase to the amount outstanding under the Term Loans in November2023 and the issuance of the 5.875 29 Senior Notes and the 6.125 32 Senior Notes in March 2024.Except for the issuance of the 5.875 29 SeniorNotes and the 6.125 32 Senior Notes,there were no material changes to our contractual obligations from what we previously disclosed in our Annual Reporton Form 10-K for the fiscal year ended December 31,2023.During the three months ended March 31,2024,we repurchased approximately 3.4 million shares of our common stock for$662 million.As of March 31,2024,approximately$3.1 billion remained available for share repurchases under our stock repurchase program.In circumstances where we have the opportunity to support our strategic objectives,we may provide guarantees or other commitments,as necessary,to ownersof hotels that we currently or in the future will manage or franchise or other third parties.See Note 13:Commitments and Contingencies in our unauditedcondensed consolidated financial statements for additional information on our commitments that were outstanding as of March 31,2024.We have a long-term investment policy that is focused on the preservation of capital and maximizing the return on new and existing investments and returningavailable capital to stockholders through dividends and share repurchases.Within the framework of our investment policy,we intend to finance our businessactivities primarily with cash on our balance sheet as of March 31,2024,cash generated from our operations and,as needed,the use of the available capacity of ourRevolving Credit Facility.Additionally,we have continued access to debt markets and expect to be able to obtain financing as a source of liquidity as required andto extend maturities of existing borrowings,if necessary.23After considering our approach to liquidity and our available sources of cash,we believe that our cash position and sources of liquidity will meet anticipatedrequirements for operating and other expenditures,including corporate expenses,payroll and other compensation costs,taxes and compliance costs and othercommitments for the foreseeable future based on current conditions.The objectives of our cash management policy are maintaining the availability of liquidity andminimizing operational costs.We may from time to time issue or incur or increase our capacity to incur new debt and/or purchase our outstanding debt through underwritten offerings,openmarket transactions,privately negotiated transactions or otherwise.Issuances or incurrence of new debt(or an increase in our capacity to incur new debt)and/orpurchases or retirements of outstanding debt,if any,will depend on prevailing market conditions,liquidity requirements,contractual restrictions and otherfactors.The amounts involved may be material.Sources and Uses of Our Cash and Cash EquivalentsThe following table summarizes our net cash flows:Three Months EndedPercentMarch 31,Change202420232024 vs.2023(in millions)Net cash provided by operating activities$346$330 4.8Net cash used in investing activities(27)(85)(68.2)Net cash provided by(used in)financing activities238(547)NM_Fluctuation in terms of percentage change is not meaningful.Operating ActivitiesCash flows from operating activities were primarily generated from management,franchise and licensing fee revenue and operating income from our ownedand leased hotels.The increase during the period was primarily due to the increase in cash inflows generated from our management and franchise segment,largelyas a result of a net increase in the number of hotels in our system between the periods and an increase in RevPAR at our comparable managed hotels,and a$68million decrease in payments of contract acquisition costs due to the timing of certain strategic hotel developments supporting our growth.The increase in cashprovided by operating activities were partially offset by a$43 million increase in the net cash outflows related to income tax payments,due to income tax refundsreceived during the three months ended March 31,2023,and an outflow of$62 million for debt guarantee payments during the three months ended March 31,2024.Investing ActivitiesNet cash used in investing activities primarily included cash flows related to:(i)capitalized software costs that were related to various systems initiatives forthe benefit of both our hotel owners and our overall corporate operations and(ii)capital expenditures for property and equipment related to corporate property andthe renovation of certain hotels in our ownership segment,which decreased between the periods due to the timing of certain corporate and hotel capital expenditureprojects.Additionally,our investing activities include the net cash inflows and outflows related to our undesignated derivative financial instruments that we have inplace to hedge against the impact of fluctuations in foreign currency exchange rates on certain of our intercompany loan and cash balances,which were primarilythe result of changes in the exchange rates for the Pound Sterling to the U.S.dollar during the three months ended March 31,2023.Financing ActivitiesThe increase in cash provided by financing activities was primarily attributable to a$1.0 billion increase in cash inflows from the issuances of the 5.875 29 Senior Notes and the 6.125 32 Senior Notes.These increases were partially offset by a$214 million increase in cash outflows for the return of capital toshareholders,which includes dividends and share repurchases.(1)(1)24Debt and Borrowing CapacityAs of March 31,2024,our total indebtedness,excluding the deduction for unamortized deferred financing costs and discounts,was approximately$10.3billion.No debt amounts were outstanding under the Revolving Credit Facility as of March 31,2024,which had an available borrowing capacity of$1,913 millionafter considering$87 million of outstanding letters of credit.For additional information on our total indebtedness and guarantees on our debt,refer to Note 6:Debt in our unaudited condensed consolidated financial statements.If we are unable to generate sufficient cash flow from operations in the future to service our debt,we may be required to reduce capital expenditures or issueadditional equity securities.We do not have any material indebtedness outstanding that matures prior to May 2025,and we believe that we have sufficient sourcesof liquidity and access to debt financing to address the debt maturing in May 2025 prior to its maturity date.Our ability to make scheduled principal payments andto pay interest on our debt depends on our future operating performance,which is subject to general conditions in or affecting the hospitality industry that may bebeyond our control.Critical Accounting EstimatesThe preparation of our unaudited condensed consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions thataffect reported amounts and related disclosures.We have discussed the estimates and assumptions that we believe are critical because they involve a higher degreeof judgment in their application and are based on information that is inherently uncertain in our Annual Report on Form 10-K for the fiscal year endedDecember 31,2023,and,during the three months ended March 31,2024,there were no material changes to those critical accounting estimates that were previouslydisclosed.Item 3.Quantitative and Qualitative Disclosures About Market RiskWe are exposed to market risk primarily from changes in one-month SOFR,the benchmark rate for which the interest rate of the majority of our variable-rateindebtedness is based on,and foreign currency exchange rates.These rate changes may affect future income,cash flows and the fair value of the Company,itsassets and its liabilities.In certain situations,we may seek to reduce volatility associated with changes in interest rates and foreign currency exchange rates byentering into derivative financial instruments intended to provide a hedge against a portion of the risks associated with such volatility.We continue to haveexposure to such risks to the extent they are not hedged.We enter into derivative financial instruments to the extent they meet our objectives to reduce volatility inour results of operations and cash flows,and we do not use derivatives for speculative purposes.Our exposure to market risk has not materially changed from whatwas previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31,2023.Item 4.Controls and ProceduresDisclosure Controls and ProceduresThe Company maintains a set of disclosure controls and procedures(as such term is defined in Rules 13a-15(e)and 15d-15(e)under the Exchange Act)that aredesigned to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act,is recorded,processed,summarized and reported within the time periods specified in Securities and Exchange Commission(SEC)rules and forms,and that such information isaccumulated and communicated to the Companys management,including its Chief Executive Officer and Chief Financial Officer,as appropriate,to allow timelydecisions regarding required disclosures.The design of any disclosure controls and procedures is based in part upon certain assumptions about the likelihood offuture events,and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.Any controls andprocedures,no matter how well designed and operated,can provide only reasonable,not absolute,assurance of achieving the desired control objectives.Inaccordance with Rule 13a-15(b)of the Exchange Act,as of the end of the period covered by this Quarterly Report on Form 10-Q,an evaluation was carried outunder the supervision and with the participation of the Companys management,including its Chief Executive Officer and Chief Financial Officer,of theeffectiveness of its disclosure controls and procedures.Based on that evaluation,the Companys Chief Executive Officer and Chief Financial Officer concludedthat the Companys disclosure controls and procedures,as of the end of the period covered by this Quarterly Report on Form 10-Q,were effective to providereasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded,processed,summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to the Companys management,including the Chief Executive Officer and Chief Financial Officer,as appropriate to allow timely decisions regarding required disclosure.25Changes in Internal Control Over Financial ReportingThere has been no change in the Companys internal control over financial reporting during the Companys most recent fiscal quarter that has materiallyaffected,or is reasonably likely to materially affect,the Companys internal control over financial reporting.26PART II.OTHER INFORMATIONItem 1.Legal ProceedingsWe are involved in various claims and lawsuits arising in the ordinary course of business,some of which include claims for substantial sums,includingproceedings involving tort and other general liability claims,employee claims,consumer protection claims and claims related to our management of certain hotels.We recognize a liability when we believe the loss is probable and can be reasonably estimated.Most occurrences involving liability,claims of negligence andemployees are covered by indemnification from third-party hotel owners and/or policies that we hold with solvent insurance carriers.The ultimate results of claimsand litigation cannot be predicted with certainty.We believe we have adequate reserves against such matters.We currently believe that the ultimate outcome ofsuch lawsuits and proceedings will not,individually or in the aggregate,have a material adverse effect on our consolidated financial position,results of operationsor cash flows.However,depending on the amount and timing,an unfavorable resolution of some or all of these matters could materially affect our future results ofoperations in a particular period.Item 1A.Risk FactorsAs of March 31,2024,there have been no material changes from the risk factors previously disclosed under Part IItem 1A.Risk Factors of our AnnualReport on Form 10-K for the fiscal year ended December 31,2023.Item 2.Unregistered Sales of Equity Securities and Use of Proceeds(a)Unregistered Sales of SecuritiesNone.(b)Use of ProceedsNone.(c)Issuer Purchases of Equity SecuritiesThe following table sets forth information regarding our purchases of shares of our common stock during the three months ended March 31,2024:Total Number ofShares PurchasedAverage Price Paidper ShareTotal Number of SharesPurchased as Part ofPublicly AnnouncedProgramMaximum Approximate DollarValue of Shares that May YetBe Purchased Under theProgram(in millions)January 1,2024 to January 31,20241,281,038$185.26 1,281,038$3,545 February 1,2024 to February 29,2024988,846 197.32 988,846 3,350 March 1,2024 to March 31,20241,107,145 207.76 1,107,145 3,120 Total3,377,029 196.17 3,377,029 _Includes commissions paid.Our stock repurchase program,which was initially announced in February 2017 and subsequently increased in November 2017,February 2019,March 2020,November 2022 and November 2023,allows for the repurchase of up to a total of$11 billion of our common stock.Under this publicly announced program,we are authorized to repurchase shares through open market purchases,privately-negotiated transactions or otherwise in accordance with applicable federal securities laws,including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act.Therepurchase program does not have an expiration date and may be suspended or discontinued at any time.Item 3.Defaults Upon Senior SecuritiesNone.Item 4.Mine Safety DisclosuresNot applicable.(1)(2)(2)(1)(2)27Item 5.Other InformationDuring the three months ended March 31,2024,no director or officer(as defined in Rule 16a-1(f)of the Exchange Act)of the Company adopted,modified orterminated a“Rule 10b5-1 trading arrangement”or“non-Rule 10b5-1 trading arrangement,”as each term is defined in Item 408 of Regulation S-K.Item 6.ExhibitsExhibit NumberExhibit Description3.1Certificate of Incorporation of Hilton Worldwide Holdings Inc.(incorporated by reference to Exhibit 3.1 to the Companys CurrentReport on Form 8-K filed on December 17,2013).3.2Certificate of Amendment to Certificate of Incorporation of Hilton Worldwide Holdings Inc.effective as of January 3,2017(incorporated by reference to Exhibit 3.1 to the Companys Current Report on Form 8-K filed on January 4,2017).3.3Amended and Restated By-Laws of Hilton Worldwide Holdings Inc.(incorporated by reference to Exhibit 3.1 to the Companys CurrentReport on Form 8-K filed on August 2,2019).4.1Indenture,with respect to the 5.875%Senior Notes and 6.125%Senior Notes,dated as of March 26,2024,by and among HiltonDomestic Operating Company Inc.,the guarantors from time to time party thereto and Wilmington Trust,National Association,astrustee(incorporated by reference to Exhibit 4.1 to the Companys Current Report on Form 8-K filed on March 27,2024).4.2Form of 5.875%Senior Note due 2029(included in Exhibit 4.1).4.3Form of 6.125%Senior Note due 2032(included in Exhibit 4.1).10.1Form of 2024 Performance Award Agreement.*10.2Form of 2024 Restricted Stock Unit Agreement.*10.3Form of 2024 Nonqualified Stock Option Agreement.*31.1Certificate of Christopher J.Nassetta,President and Chief Executive Officer,pursuant to Section 302 of the Sarbanes-Oxley Act of2002.31.2Certificate of Kevin J.Jacobs,Chief Financial Officer and President,Global Development,pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1Certificate of Christopher J.Nassetta,President and Chief Executive Officer,pursuant to Section 18 U.S.C.Section 1350,as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of 2002(furnished herewith).32.2Certificate of Kevin J.Jacobs,Chief Financial Officer and President,Global Development,pursuant to Section 18 U.S.C.Section 1350,as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(furnished herewith).101.INSInline XBRL Instance Document-this instance document does not appear in the Interactive Data File because its XBRL tags areembedded within the Inline XBRL document.101.SCHInline XBRL Taxonomy Extension Schema Document.101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.101.LABInline XBRL Taxonomy Extension Label Linkbase Document.101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.104Cover Page Interactive Data File(embedded within the Inline XBRL document)._*This document has been identified as a management contract or compensatory plan or arrangement.The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respectto the terms of the agreements or other documents themselves,and you should not rely on them for that purpose.In particular,any representations and warrantiesmade by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe theactual state of affairs as of the date they were made or at any other time.28SignaturesPursuant to the requirements of the Securities Exchange Act of 1934,the registrant has duly caused this report to be signed on its behalf by the undersignedthereunto duly authorized.HILTON WORLDWIDE HOLDINGS INC.By:/s/Christopher J.NassettaName:Christopher J.NassettaTitle:President and Chief Executive OfficerBy:/s/Kevin J.JacobsName:Kevin J.JacobsTitle:Chief Financial Officer and President,Global DevelopmentDate:April 24,202429Exhibit 10.1AWARD NOTICEANDPERFORMANCE SHARE UNIT AGREEMENTHILTON 2017 OMNIBUS INCENTIVE PLANThe Participant has been granted Performance Shares with the terms set forth in this Award Notice,and subject to the terms andconditions of the Plan and the Performance Share Unit Agreement(including the terms and conditions set forth in the appendices andexhibits attached thereto,the“Agreement”)to which this Award Notice is attached.Capitalized terms used and not defined in this AwardNotice will have the meanings set forth in the Performance Share Unit Agreement and the Plan.Participant Name:#ParticipantName#Date of Grant:#GrantDate#Number of Performance Shares Granted:#QuantityGranted#Performance SharesFinal Date of Performance Periods:December 31,2026PerformanceComponent(eachweighted at 25%)Threshold(AchievementPercentage of 50%)Target(AchievementPercentage of100%)Maximum(AchievementPercentage of200%)PerformancePeriod2026 AdjustedEBITDA$January 1,2026to December 31,20262026FCF/Share$January 1,2026to December 31,20262024 2026NUG CAGR%January 1,2024to December 31,20262026 RevPARIndex(Growth overPrior Year)ptsptsptsJanuary 1,2026to December 31,2026 1.Performance Components:(a)The extent to which each Performance Component is satisfied and the number of Performance Shares whichbecome vested shall be calculated with respect to each Performance Component in accordance with the table set forth above;providedthat if the number of Performance Shares is not evenly divisible by four(4),then no fractional Shares will vest and the Sharesattributable to each Performance Component will be as equal as possible with the residual Shares allocated to the Adjusted EBITDAPerformance Component.All determinations with respect to the Performance Components shall be made by the Committee in its solediscretion and the Performance Components shall not be achieved and the Performance Shares shall not be delivered until theCommittee certifies the extent to which such Performance Components have been met.The total number of Performance Shares whichbecome vested based on the achievement of the Performance Components shall be equal to(x)the total number of Performance Sharesspecified above for each applicable Performance Component multiplied by(y)the Achievement Percentage determined pursuant to thetable set forth above for the applicable Performance Component and the applicable weighting multiplier,and rounded down to thenearest whole Share.(b)Any Performance Component measures may at any time be adjusted to exclude the impact of the followingevents:(i)asset write-downs;(ii)litigation,claims,judgments or settlements;(iii)the effect of changes in tax laws,accountingprinciples,or other laws or regulatory rules affecting reported results;(iv)any reorganization and restructuring programs;(v)acquisitions or divestitures;(vi)any other specific,unusual or nonrecurring events,or objectively determinable category thereof;(vii)foreign exchange gains and losses or fluctuation in currency exchange rates;(viii)discontinued operations and nonrecurring charges;(ix)a change in the Companys fiscal year;and(x)any other event described in Section 13 of the Plan.2.Definitions.For the purposes of this Award Notice:(a)“Achievement Percentage”shall be determined pursuant to the table set forth above with respect to the threshold,target,and maximum levels for each Performance Component,or a percentage determined using linear interpolation if actualperformance falls between threshold and target,or between target and maximum levels(and rounded to the nearest whole percentagepoint and,if equally between two percentage points,rounded up).Performance at below threshold level will result in an AchievementPercentage of 0%for that performance component,and performance at or above maximum level will result in an AchievementPercentage of 200%for that performance component.(b)“Adjusted EBITDA”means the Companys earnings before interest expense,taxes and depreciation andamortization and further adjusted to exclude gains,losses,revenues and expenses in connection with:(i)asset dispositions for bothconsolidated and unconsolidated investments;(ii)foreign currency transactions;(iii)debt restructurings and retirements;(iv)furniture,fixtures and equipment replacement reserves required under certain lease agreements;(v)share-based compensation;(vi)reorganization,severance,relocation and other expenses;(vii)non-cash impairment;(viii)amortization of contract acquisition costs;(ix)the net effect of reimbursable costs included in other revenues and other expenses from managed and franchised properties;and(x)other items.(c)“FCF/Share”is calculated as(i)net cash provided by(used in)operating activities reported in accordance withU.S.GAAP,less(ii)capital expenditures as disclosed by the Company in reports filed with or furnished to the SEC,less(iii)the netimpact on annual adjusted free cash flow resulting from any loyalty program advanced points sale,plus(iv)costs and expenses,including tax payments,relating to asset purchases and disposals,less(v)the impact of other non-recurring cash items;with the sum of(i)-(v)divided by(vi)the Companys reported diluted weighted average shares of Common Stock(as defined in the Plan)outstandingfor the last calendar year being measured.(d)“NUG”means the Companys managed and franchised(“M&F”)hotel net unit growth,which is calculated as(i)the M&F hotel room count at the end of a period,less(ii)the M&F hotel room count at the beginning of the period,less(iii)the impactof any business or portfolio acquisition or disposition upon close of the transaction(i.e.,open hotels on day 1 for an acquisition).(e)“NUG CAGR”means compound annual growth rate at which the M&F hotel portfolio grew by at the end of thePerformance Period(2026)relative to the portfolio at the end of 2023,excluding the impact of any business or portfolio acquisition ordisposition upon close of the transaction,assuming a steady growth rate,as calculated at the end of the Performance Period using thefollowing formula:(i)(Year End 2026 M&F Hotel Room Count/Year End 2023 M&F Hotel Room Count)(Time Period)1.(ii)where“Time Period”means a fraction,with a numerator of 4 and a denominator equal to the number offull fiscal quarters completed during the Performance Period(i.e.,4/12 or 1/3).(f)“Performance Component”means the performance criteria applicable to an Award,as set forth on the AwardNotice.(g)“RevPAR”means revenue per available room and is calculated by dividing hotel room revenue by the totalnumber of room nights available to guests for a given period.(h)“RevPAR Index”is calculated as the weighted average of the Companys relative share of RevPAR compared toeach hotels competitive set,as defined by STR,Inc.and related institutions,for the Companys comparable hotels,as defined in theCompanys reports filed with or furnished to the SEC,as of the period end.(i)“RevPAR Index Growth”is calculated as RevPAR Index for the final year of the Performance Period(2026)lessthe RevPAR Index for the year prior(2025),using the2Companys comparable hotels,as defined in the Companys reports filed with or furnished to the SEC,as of the end of the PerformancePeriod(2026).3PERFORMANCE SHARE UNIT AGREEMENTHILTON 2017 OMNIBUS INCENTIVE PLANThis Performance Share Unit Agreement,effective as of the Date of Grant(as defined below),is between HiltonWorldwide Holdings Inc.,a Delaware corporation(the“Company”),and the individual listed in the Award Notice as the“Participant.”Capitalized terms have the meaning set forth in Section 25,or,if not otherwise defined herein,in the Hilton 2017 Omnibus IncentivePlan(as it may be amended,the“Plan”).1.Grant and Vesting of Performance Shares.(a)The Company grants the Participant on the Date of Grant the number of Performance Shares as provided in theAward Notice,subject to and in accordance with the terms,conditions and restrictions in the Plan,the Award Notice,and thisAgreement.(b)As promptly as practicable(and,in no event more than 2.5 months)following the last day of the PerformancePeriod,the Committee will determine whether the Performance Components have been satisfied(the date of such determination,the“Determination Date”),and,except as provided in Section 3,and to the extent not previously vested or forfeited as provided in thisAgreement,any Performance Shares with respect to which the Performance Components have been satisfied will become vestedeffective as of the last day of the Performance Period(December 31,2026).Following the Determination Date(and,in no event morethan 2.5 months following the last day of the Performance Period),the Company will deliver to the Participant one Share for eachvested Performance Share(as adjusted under the Plan),pursuant to this Section 1,and such vested Performance Share will be cancelledupon delivery of the Share.Any Performance Share which does not become vested effective as of the last day of the Performance Periodwill be cancelled and forfeited without consideration or any further action by the Participant or the Company.In the event of an equityrestructuring,the Committee will adjust any Performance Component to the extent it is affected by such restructuring in order topreserve(without enlarging)the likelihood that such Performance Component will be satisfied.The manner of such adjustment will bedetermined by the Committee in its sole discretion.For this purpose,“equity restructuring”means an“equity restructuring”as definedin Financial Accounting Standards Board Accounting Standards Codification 718-10(formerly Statement of Financial AccountingStandards 123R).(c)The Company will,as soon as reasonably practicable following the applicable vesting date(and in any eventwithin 2.5 months of the vesting date),issue the Share underlying such vested Performance Share to the Participant,free and clear of allrestrictions.The Company will pay any costs incurred in connection with issuing the Shares.Notwithstanding anything in thisAgreement to the contrary,the Company will have no obligation to issue or transfer the Shares as contemplated by this Agreementunless and until such issuance or transfer complies with all relevant provisions of law and the requirements of any stock exchange onwhich the Companys shares are listed for trading.For the avoidance of doubt,unless otherwise provided in Section 2 below,theParticipant is not entitled to pro-rata4vesting of any Shares if the Participant is employed for only a portion of the vesting period,but no longer employed on the respectivevesting date.2.Termination of Employment.(a)Subject to Section 2(b),Section 2(c),or Section 2(d)below,in the event that the Participants employment withthe Company Group terminates for any reason,any unvested Performance Shares will be forfeited and all of the Participants rightsunder this Agreement will cease as of the effective date of Termination(the“Termination Date”)(unless otherwise provided for by theCommittee in accordance with the Plan).(b)In the event the Participants employment with the Company Group is terminated by the Company Group due toor during the Participants Disability or due to the Participants death,the full number of Performance Shares granted hereunder willbecome immediately vested(irrespective of performance)as of the Termination Date,and will thereafter be settled and the respectiveShares issued to the Participant in accordance with Section 1(c).(c)In the event the Participants employment with the Company Group is terminated as a result of the ParticipantsRetirement after the date that is six(6)months after the Date of Grant,a pro-rated number of the Performance Shares will remainoutstanding and eligible to vest,notwithstanding such termination of employment,based on(and to the extent)the Committeesdetermination that the Performance Components have been satisfied on the Determination Date,in accordance with the schedule setforth in the Award Notice,so long as no Restrictive Covenant Violation occurs(as determined by the Committee,or its designee,in itssole discretion)prior to the Determination Date,with such pro-ration based on the number of days between January 1,2024 and theTermination Date(inclusive)relative to the number of calendar days in the period(i.e.1,095 or 1,096).As a pre-condition to theParticipants right to continued vesting following Retirement,the Committee or its designee,may require the Participant to certify inwriting prior to the applicable vesting date that no Restrictive Covenant Violation has occurred.(d)If the Participants employment with the Company Group terminates for any reason after the last day of thePerformance Period and before the Determination Date(other than a termination by the Company Group for Cause or by the Participantwhile grounds for Cause exist),and no Restrictive Covenant Violation occurs prior to the Determination Date,then all PerformanceShares will remain outstanding and eligible to vest based on(and to the extent)the Committee determines that the PerformanceComponents have been satisfied on the Determination Date.(e)The Participants rights with respect to the Performance Shares will not be affected by any change in the nature ofthe Participants employment so long as the Participant continues to be employed by the Company Group.Whether(and thecircumstances under which)employment has terminated and the determination of the Termination Date for the purposes of thisAgreement will be determined by the Committee(or,with respect to any Participant who is not a director or Officer,its designee,whosegood faith determination will be final,binding and5conclusive;provided,that such designee may not make any such determination with respect to the designees own employment forpurposes of the Performance Shares).3.Effect of a Change in Control.(a)Adjustment to Number and Vesting Terms of Performance Shares.Subject to Section 13 of the Plan,in the eventof a Change in Control during the Participants employment or while any Performance Shares remain outstanding and eligible to vest,and prior to the completion of the Performance Period,the number of Performance Shares eligible to vest under this Agreement will bedetermined as of the date of the Change in Control(such resulting award,the“Adjusted Award”),with the number of PerformanceShares either(x)determined based on actual performance through the most recently completed fiscal quarter,measured againstperformance levels using only the number of fiscal quarters completed prior to the date of such Change in Control,or(y)determined bythe Committee in its good faith discretion.The Performance Shares outstanding under the Adjusted Award will remain outstanding andeligible to vest on the last day of the Performance Period,subject to the Participants continued employment through such date(or if theParticipants Retirement in accordance with Section 2(c)occurred prior to the Change in Control,subject to the Participants continuedsatisfaction of Section 2(c),and will thereafter be settled and the respective Shares issued to the Participant in accordance with Section1.(b)Certain Terminations Following a Change in Control.Notwithstanding anything herein to the contrary,if theParticipants employment with the Company Group is terminated by the Company Group without Cause,due to or during theParticipants Disability,or due to the Participants death during the 12-month period immediately following a Change in Control,thePerformance Shares subject to the Adjusted Award will become immediately vested as of the Termination Date,and will thereafter besettled and the respective Shares issued to the Participant in accordance with Section 1.4.Tax Withholding.In connection with the settlement of any Performance Shares under Section 1,the Company willwithhold a number of Shares in the amount necessary to satisfy applicable U.S.and non-U.S.Federal,state,or local tax or otherwithholding requirements,if any(“Withholding Taxes”)in accordance with Section 15(d)of the Plan(or,if the Participant is subject toSection 16 of the Exchange Act at such time,such amount which would not result in adverse consequences under GAAP),unlessotherwise agreed to in writing by the Participant and the Company.If any Withholding Taxes become due prior to the settlement of anyPerformance Shares,the Committee may accelerate the vesting of a number of Performance Shares equal in value to the WithholdingTaxes,the Shares to be issued in settlement of such accelerated Performance Shares will be withheld by the Company,and the numberof Performance Shares so accelerated will reduce the number of Performance Shares which would otherwise become vested on theapplicable vesting date.The number of Performance Shares or Shares equal to the Withholding Taxes will be determined using theclosing price per Share on the New York Stock Exchange(or other principal exchange on which the Shares then trade)on the date ofdetermination,and will be rounded up to the nearest whole Performance Share or Share.65.Dividend Equivalents.With respect to the Performance Shares,the Participant shall be credited with dividendequivalents as and when dividends are paid to the Companys other shareholders.Dividend equivalents shall accumulate and be paid tothe Participant in cash(without inter

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  • 埃克森美孚(EXXON MOBIL)2024年第一季度财报(英文版)(42页).pdf

    UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OFTHE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 31,2024or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OFTHE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _to_ Commission File Number 1-2256Exxon Mobil Corporation(Exact name of registrant as specified in its charter)New Jersey 13-5409005(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification Number)22777 Springwoods Village Parkway,Spring,Texas 77389-1425(Address of principal executive offices)(Zip Code)(972)940-6000(Registrants telephone number,including area code)_Securities registered pursuant to Section 12(b)of the Act:Title of Each Class Trading Symbol Name of Each Exchange on Which RegisteredCommon Stock,without par value XOM New York Stock Exchange0.142%Notes due 2024XOM24BNew York Stock Exchange0.524%Notes due 2028XOM28New York Stock Exchange0.835%Notes due 2032XOM32New York Stock Exchange1.408%Notes due 2039XOM39ANew York Stock Exchange Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or forsuch 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 No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(232.405 ofthis chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit and post such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,smaller reporting company,or an emerging growth company.See thedefinitions of large accelerated filer,accelerated filer,smaller reporting company,and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting company Emerging growth companyIf an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standardsprovided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No Indicate the number of shares outstanding of each of the issuers classes of common stock,as of the latest practicable date.Class Outstanding as of March 31,2024Common stock,without par value 3,943,006,866EXXON MOBIL CORPORATIONFORM 10-QFOR THE QUARTERLY PERIOD ENDED MARCH 31,2024 TABLE OF CONTENTSPART I.FINANCIAL INFORMATION Item 1.Financial Statements Condensed Consolidated Statement of Income-Three months ended March 31,2024 and 20233 Condensed Consolidated Statement of Comprehensive Income-Three months ended March 31,2024 and 20234 Condensed Consolidated Balance Sheet-As of March 31,2024 and December 31,20235 Condensed Consolidated Statement of Cash Flows-Three months ended March 31,2024 and 20236 Condensed Consolidated Statement of Changes in Equity-Three months ended March 31,2024 and 20237 Notes to Condensed Consolidated Financial Statements8 Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations17 Item 3.Quantitative and Qualitative Disclosures About Market Risk33 Item 4.Controls and Procedures33 PART II.OTHER INFORMATIONItem 1.Legal Proceedings34 Item 2.Unregistered Sales of Equity Securities and Use of Proceeds34 Item 5.Other Information34Item 6.Exhibits34 Index to Exhibits35 Signature36 2PART I.FINANCIAL INFORMATIONITEM 1.FINANCIAL STATEMENTSCONDENSED CONSOLIDATED STATEMENT OF INCOME(millions of dollars,unless noted)Three Months EndedMarch 31,20242023Revenues and other income Sales and other operating revenue80,411 83,644 Income from equity affiliates1,842 2,381 Other income830 539 Total revenues and other income83,083 86,564 Costs and other deductionsCrude oil and product purchases47,601 46,003 Production and manufacturing expenses9,091 9,436 Selling,general and administrative expenses2,495 2,390 Depreciation and depletion(includes impairments)4,812 4,244 Exploration expenses,including dry holes148 141 Non-service pension and postretirement benefit expense23 167 Interest expense221 159 Other taxes and duties6,323 7,221 Total costs and other deductions70,714 69,761 Income(loss)before income taxes12,369 16,803 Income tax expense(benefit)3,803 4,960 Net income(loss)including noncontrolling interests8,566 11,843 Net income(loss)attributable to noncontrolling interests346 413 Net income(loss)attributable to ExxonMobil8,220 11,430 Earnings(loss)per common share(dollars)2.06 2.79 Earnings(loss)per common share-assuming dilution(dollars)2.06 2.79 The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.3CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME(millions of dollars)Three Months EndedMarch 31,20242023Net income(loss)including noncontrolling interests8,566 11,843 Other comprehensive income(net of income taxes)Foreign exchange translation adjustment(1,267)173 Postretirement benefits reserves adjustment(excluding amortization)(42)19 Amortization and settlement of postretirement benefits reservesadjustment included in net periodic benefit costs9 6 Total other comprehensive income(loss)(1,300)198 Comprehensive income(loss)including noncontrolling interests7,266 12,041 Comprehensive income(loss)attributable to noncontrolling interests226 436 Comprehensive income(loss)attributable to ExxonMobil7,040 11,605 The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.4CONDENSED CONSOLIDATED BALANCE SHEET(millions of dollars,unless noted)March 31,2024December 31,2023ASSETS Current assets Cash and cash equivalents33,320 31,539 Cash and cash equivalents restricted29 29 Notes and accounts receivable net40,366 38,015 InventoriesCrude oil,products and merchandise18,891 20,528 Materials and supplies4,600 4,592 Other current assets2,171 1,906 Total current assets99,377 96,609 Investments,advances and long-term receivables47,608 47,630 Property,plant and equipment net213,723 214,940 Other assets,including intangibles net17,210 17,138 Total Assets377,918 376,317 LIABILITIESCurrent liabilitiesNotes and loans payable8,227 4,090 Accounts payable and accrued liabilities59,531 58,037 Income taxes payable4,163 3,189 Total current liabilities71,921 65,316 Long-term debt32,213 37,483 Postretirement benefits reserves10,475 10,496 Deferred income tax liabilities24,106 24,452 Long-term obligations to equity companies1,909 1,804 Other long-term obligations24,242 24,228 Total Liabilities164,866 163,779 Commitments and contingencies(Note 3)EQUITYCommon stock without par value(9,000 million shares authorized,8,019 million shares issued)17,971 17,781 Earnings reinvested458,339 453,927 Accumulated other comprehensive income(13,169)(11,989)Common stock held in treasury(4,076 million shares at March 31,2024 and4,048 million shares at December 31,2023)(257,891)(254,917)ExxonMobil share of equity205,250 204,802 Noncontrolling interests7,802 7,736 Total Equity213,052 212,538 Total Liabilities and Equity377,918 376,317 The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.5CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS(millions of dollars)Three Months EndedMarch 31,20242023CASH FLOWS FROM OPERATING ACTIVITIES Net income(loss)including noncontrolling interests8,566 11,843 Depreciation and depletion(includes impairments)4,812 4,244 Changes in operational working capital,excluding cash and debt2,008(302)All other items net(722)556 Net cash provided by operating activities14,664 16,341 CASH FLOWS FROM INVESTING ACTIVITIESAdditions to property,plant and equipment(5,074)(5,412)Proceeds from asset sales and returns of investments703 854 Additional investments and advances(421)(445)Other investing activities including collection of advances215 78 Net cash used in investing activities(4,577)(4,925)CASH FLOWS FROM FINANCING ACTIVITIESAdditions to long-term debt108 20 Reductions in short-term debt(1,106)(126)Additions/(reductions)in debt with three months or less maturity(5)(192)Cash dividends to ExxonMobil shareholders(3,808)(3,738)Cash dividends to noncontrolling interests(166)(115)Changes in noncontrolling interests6(16)Common stock acquired(3,011)(4,340)Net cash used in financing activities(7,982)(8,507)Effects of exchange rate changes on cash(324)102 Increase/(decrease)in cash and cash equivalents1,781 3,011 Cash and cash equivalents at beginning of period31,568 29,665 Cash and cash equivalents at end of period33,349 32,676 SUPPLEMENTAL DISCLOSURESIncome taxes paid2,718 4,404 Cash interest paidIncluded in cash flows from operating activities301 256 Capitalized,included in cash flows from investing activities297 291 Total cash interest paid598 547 Noncash right of use assets recorded in exchange for lease liabilitiesOperating leases351 393 Finance leases 438 The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.6CONDENSED CONSOLIDATED STATEMENT OF CHANGE IN EQUITY ExxonMobil Share of Equity (millions of dollars,unless noted)CommonStockEarningsReinvestedAccumulatedOtherComprehensiveIncomeCommonStock Heldin TreasuryExxonMobilShare ofEquityNon-controllingInterestsTotalEquityBalance as of December 31,202215,752 432,860(13,270)(240,293)195,049 7,424 202,473 Amortization of stock-based awards158 158 158 Other(6)(6)(16)(22)Net income(loss)for the period 11,430 11,430 413 11,843 Dividends-common shares(3,738)(3,738)(115)(3,853)Other comprehensive income(loss)175 175 23 198 Share repurchases,at cost (4,385)(4,385)(4,385)Dispositions 2 2 2 Balance as of March 31,202315,904 440,552(13,095)(244,676)198,685 7,729 206,414 Balance as of December 31,202317,781 453,927(11,989)(254,917)204,802 7,736 212,538 Amortization of stock-based awards197 197 197 Other(7)(7)6(1)Net income(loss)for the period 8,220 8,220 346 8,566 Dividends-common shares(3,808)(3,808)(166)(3,974)Other comprehensive income(loss)(1,180)(1,180)(120)(1,300)Share repurchases,at cost (2,978)(2,978)(2,978)Dispositions 4 4 4 Balance as of March 31,202417,971 458,339(13,169)(257,891)205,250 7,802 213,052 Three Months Ended March 31,2024 Three Months Ended March 31,2023Common Stock Share Activity(millions of shares)IssuedHeld inTreasuryOutstanding IssuedHeld inTreasuryOutstandingBalance as of December 318,019(4,048)3,971 8,019(3,937)4,082 Share repurchases,at cost(28)(28)(39)(39)Dispositions Balance as of March 318,019(4,076)3,943 8,019(3,976)4,043 The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.7NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSNote 1.Basis of Financial Statement PreparationThese unaudited condensed consolidated financial statements should be read in the context of the consolidated financial statements and notes thereto filed with the Securitiesand Exchange Commission in the Corporations 2023 Annual Report on Form 10-K.In the opinion of the Corporation,the information furnished herein reflects all knownaccruals and adjustments necessary for a fair statement of the results for the periods reported herein.All such adjustments are of a normal recurring nature.The Corporations exploration and production activities are accounted for under the successful efforts method.Note 2.Pioneer Natural Resources MergerOn October 11,2023,the Corporation entered into a merger agreement with Pioneer Natural Resources Company(Pioneer),an independent oil and gas exploration andproduction company,in exchange for ExxonMobil common stock.Based on the October 5 closing price for ExxonMobil shares,the fixed exchange rate of 2.3234 per Pioneershare,and Pioneers outstanding net debt,the implied enterprise value of the transaction was approximately$65 billion.We expect that the number of shares issuable inconnection with the transaction to be approximately 545 million.The transaction is expected to close in the second quarter of 2024,subject to regulatory approvals.Pioneer holds over 850,000 net acres in the Midland Basin of West Texas,which consist of proved reserves totaling over 2.4 billion barrels of oil equivalent(as of December31,2023)and over 700 thousand oil-equivalent barrels per day of production for the three months ended December 31,2023.8Note 3.Litigation and Other ContingenciesLitigationA variety of claims have been made against ExxonMobil and certain of its consolidated subsidiaries in a number of pending lawsuits.Management has regular litigationreviews,including updates from corporate and outside counsel,to assess the need for accounting recognition or disclosure of these contingencies.The Corporation accrues anundiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated.If a range of amounts can be reasonablyestimated and no amount within the range is a better estimate than any other amount,then the minimum of the range is accrued.The Corporation does not record liabilitieswhen the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonablypossible or remote.For contingencies where an unfavorable outcome is reasonably possible and which are significant,the Corporation discloses the nature of the contingencyand,where feasible,an estimate of the possible loss.For purposes of our contingency disclosures,“significant”includes material matters,as well as other matters whichmanagement believes should be disclosed.State and local governments and other entities in various jurisdictions across the United States and its territories have filed a number of legal proceedings against several oil andgas companies,including ExxonMobil,requesting unprecedented legal and equitable relief for various alleged injuries purportedly connected to climate change.These lawsuitsassert a variety of novel,untested claims under statutory and common law.Additional such lawsuits may be filed.We believe the legal and factual theories set forth in theseproceedings are meritless and represent an inappropriate attempt to use the court system to usurp the proper role of policymakers in addressing the societal challenges ofclimate change.Local governments in Louisiana have filed unprecedented legal proceedings against a number of oil and gas companies,including ExxonMobil,requesting compensation forthe restoration of coastal marsh erosion in the state.We believe the factual and legal theories set forth in these proceedings are meritless.While the outcome of any litigation can be unpredictable,we believe the likelihood is remote that the ultimate outcomes of these lawsuits will have a material adverse effect onthe Corporations operations,financial condition,or financial statements taken as a whole.We will continue to defend vigorously against these claims.Other ContingenciesThe Corporation and certain of its consolidated subsidiaries were contingently liable at March 31,2024,for guarantees relating to notes,loans and performance under contracts.Where guarantees for environmental remediation and other similar matters do not include a stated cap,the amounts reflect managements estimate of the maximum potentialexposure.Where it is not possible to make a reasonable estimation of the maximum potential amount of future payments,future performance is expected to be either immaterialor have only a remote chance of occurrence.March 31,2024(millions of dollars)Equity CompanyObligations Other Third-PartyObligationsTotalGuarantees Debt-related1,130 146 1,276 Other681 5,820 6,501 Total1,811 5,966 7,777 ExxonMobil shareAdditionally,the Corporation and its affiliates have numerous long-term sales and purchase commitments in their various business activities,all of which are expected to befulfilled with no adverse consequences material to the Corporations operations or financial condition.(1)(1)9Note 4.Other Comprehensive Income InformationExxonMobil Share of Accumulated OtherComprehensive Income(millions of dollars)Cumulative ForeignExchangeTranslationAdjustmentPostretirementBenefits ReservesAdjustmentTotalBalance as of December 31,2022(14,591)1,321(13,270)Current period change excluding amounts reclassified from accumulatedother comprehensive income 157 14 171 Amounts reclassified from accumulated other comprehensive income 4 4 Total change in accumulated other comprehensive income157 18 175 Balance as of March 31,2023(14,434)1,339(13,095)Balance as of December 31,2023(13,056)1,067(11,989)Current period change excluding amounts reclassified from accumulatedother comprehensive income(1,138)(48)(1,186)Amounts reclassified from accumulated other comprehensive income 6 6 Total change in accumulated other comprehensive income(1,138)(42)(1,180)Balance as of March 31,2024(14,194)1,025(13,169)Cumulative Foreign Exchange Translation Adjustment includes net investment hedge gain/(loss)net of taxes of$84 million and$(74)million in 2024 and 2023,respectively.Amounts Reclassified Out of Accumulated OtherComprehensive Income-Before-tax Income/(Expense)(millions of dollars)Three Months EndedMarch 31,20242023Amortization and settlement of postretirement benefits reservesadjustment included in net periodic benefit costs(Statement of Income line:Non-service pension and postretirementbenefit expense)(12)(8)Income Tax(Expense)/Credit ForComponents of Other Comprehensive Income(millions of dollars)Three Months EndedMarch 31,20242023Foreign exchange translation adjustment(75)48 Postretirement benefits reserves adjustment(excluding amortization)4 11 Amortization and settlement of postretirement benefits reservesadjustment included in net periodic benefit costs(3)(2)Total(74)57(1)(1)(1)10Note 5.Earnings Per Share Earnings per common shareThree Months EndedMarch 31,20242023Net income(loss)attributable to ExxonMobil(millions of dollars)8,220 11,430 Weighted-average number of common shares outstanding(millions of shares)3,998 4,102 Earnings(loss)per common share(dollars)2.06 2.79 Dividends paid per common share(dollars)0.95 0.91 Includes restricted shares not vested.Earnings(loss)per common share and earnings(loss)per common share assuming dilution are the same in each period shown.Note 6.Pension and Other Postretirement Benefits (millions of dollars)Three Months EndedMarch 31,20242023Components of net benefit cost Pension Benefits-U.S.Service cost113 120 Interest cost168 166 Expected return on plan assets(181)(133)Amortization of actuarial loss/(gain)21 21 Amortization of prior service cost(8)(7)Net pension enhancement and curtailment/settlement cost3 8 Net benefit cost116 175 Pension Benefits-Non-U.S.Service cost83 82 Interest cost227 234 Expected return on plan assets(261)(174)Amortization of actuarial loss/(gain)25 14 Amortization of prior service cost13 12 Net benefit cost87 168 Other Postretirement BenefitsService cost18 20 Interest cost63 70 Expected return on plan assets(5)(4)Amortization of actuarial loss/(gain)(26)(30)Amortization of prior service cost(16)(10)Net benefit cost34 46 (1)(2)(1)(2)11Note 7.Financial Instruments and DerivativesThe estimated fair value of financial instruments and derivatives at March 31,2024 and December 31,2023,and the related hierarchy level for the fair value measurement wasas follows:March 31,2024 Fair Value (millions of dollars)Level 1Level 2Level 3Total GrossAssets&LiabilitiesEffect ofCounterpartyNettingEffect ofCollateralNettingDifference inCarrying Valueand Fair ValueNetCarryingValueAssets Derivative assets 5,813 1,304 7,117(6,492)(88)537 Advances to/receivables from equitycompanies 2,458 4,657 7,115 498 7,613 Other long-term financial assets 1,372 1,042 2,414 174 2,588 LiabilitiesDerivative liabilities 5,944 1,376 7,320(6,492)(218)610 Long-term debt 25,558 1,378 26,936 3,494 30,430 Long-term obligations to equitycompanies 2,039 2,039 (130)1,909 Other long-term financial liabilities 694 694 48 742 December 31,2023 Fair Value (millions of dollars)Level 1Level 2Level 3Total GrossAssets&LiabilitiesEffect ofCounterpartyNettingEffect ofCollateralNettingDifference inCarrying Valueand Fair ValueNetCarryingValueAssets Derivative assets 4,544 1,731 6,275(5,177)(528)570 Advances to/receivables from equitycompanies 2,517 4,491 7,008 519 7,527 Other long-term financial assets 1,389 944 2,333 202 2,535 LiabilitiesDerivative liabilities 4,056 1,608 5,664(5,177)(40)447 Long-term debt 30,556 2,004 32,560 3,102 35,662 Long-term obligations to equitycompanies 1,896 1,896 (92)1,804 Other long-term financial liabilities 697 697 45 742 Included in the Balance Sheet lines:Notes and accounts receivable-net and Other assets,including intangibles-net.Included in the Balance Sheet line:Investments,advances and long-term receivables.Included in the Balance Sheet lines:Investments,advances and long-term receivables and Other assets,including intangibles-net.Included in the Balance Sheet lines:Accounts payable and accrued liabilities and Other long-term obligations.Excluding finance lease obligations.Advances to/receivables from equity companies and long-term obligations to equity companies are mainly designated as hierarchy level 3inputs.The fair value is calculated by discounting the remaining obligations by a rate consistent with the credit quality and industry of thecompany.Included in the Balance Sheet line:Other long-term obligations.Includes contingent consideration related to a prior year acquisitionwhere fair value is based on expected drilling activities and discount rates.At March 31,2024 and December 31,2023,respectively,the Corporation had$736 million and$800 million of collateral under master netting arrangements not offset againstthe derivatives on the Condensed Consolidated Balance Sheet,primarily related to initial margin requirements.(1)(2)(6)(3)(4)(5)(6)(7)(1)(2)(6)(3)(4)(5)(6)(7)(1)(2)(3)(4)(5)(6)(7)12The Corporation may use non-derivative financial instruments,such as its foreign currency-denominated debt,as hedges of its net investments in certain foreign subsidiaries.Under this method,the change in the carrying value of the financial instruments due to foreign exchange fluctuations is reported in accumulated other comprehensive income.As of March 31,2024,the Corporation has designated$4.9 billion of its Euro-denominated debt and related accrued interest as a net investment hedge of its European business.The net investment hedge is deemed to be perfectly effective.The Corporation had undrawn short-term committed lines of credit of$323 million and undrawn long-term committed lines of credit of$1,914 million as of first quarter 2024.Derivative InstrumentsThe Corporations size,strong capital structure,geographic diversity,and the complementary nature of its business segments reduce the Corporations enterprise-wide risk fromchanges in commodity prices,currency rates and interest rates.In addition,the Corporation uses commodity-based contracts,including derivatives,to manage commodity pricerisk and to generate returns from trading.Commodity contracts held for trading purposes are presented in the Condensed Consolidated Statement of Income on a net basis in theline“Sales and other operating revenue and in the Consolidated Statement of Cash Flows in“Cash Flows from Operating Activities”.The Corporations commodityderivatives are not accounted for under hedge accounting.At times,the Corporation also enters into currency and interest rate derivatives,none of which are material to theCorporations financial position as of March 31,2024 and December 31,2023,or results of operations for the periods ended March 31,2024 and 2023.Credit risk associated with the Corporations derivative position is mitigated by several factors,including the use of derivative clearing exchanges and the quality of andfinancial limits placed on derivative counterparties.The Corporation maintains a system of controls that includes the authorization,reporting,and monitoring of derivativeactivity.The net notional long/(short)position of derivative instruments at March 31,2024 and December 31,2023,was as follows:(millions)March 31,2024December 31,2023Crude oil(barrels)15(7)Petroleum products(barrels)(39)(43)Natural gas(MMBTUs)(577)(560)Realized and unrealized gains/(losses)on derivative instruments that were recognized in the Condensed Consolidated Statement of Income are included in the following lineson a before-tax basis:(millions of dollars)Three Months EndedMarch 31,20242023Sales and other operating revenue(792)651 Crude oil and product purchases3(25)Total(789)626 13Note 8.Disclosures about Segments and Related Information(millions of dollars)Three Months EndedMarch 31,20242023Earnings(Loss)After Income TaxUpstream United States1,054 1,632 Non-U.S.4,606 4,825 Energy ProductsUnited States836 1,910 Non-U.S.540 2,273 Chemical ProductsUnited States504 324 Non-U.S.281 47 Specialty ProductsUnited States404 451 Non-U.S.357 323 Corporate and Financing(362)(355)Corporate total8,220 11,430 Sales and Other Operating RevenueUpstreamUnited States2,190 2,770 Non-U.S.3,526 5,387 Energy ProductsUnited States24,803 24,924 Non-U.S.39,409 39,976 Chemical ProductsUnited States2,194 2,029 Non-U.S.3,646 3,692 Specialty ProductsUnited States1,469 1,568 Non-U.S.3,150 3,289 Corporate and Financing24 9 Corporate total80,411 83,644 Intersegment RevenueUpstreamUnited States5,988 4,956 Non-U.S.9,980 9,399 Energy ProductsUnited States6,558 5,451 Non-U.S.6,752 6,969 Chemical ProductsUnited States1,865 1,788 Non-U.S.1,025 777 Specialty ProductsUnited States655 680 Non-U.S.164 99 Corporate and Financing79 64 14Geographic Sales and Other Operating Revenue (millions of dollars)Three Months EndedMarch 31,20242023United States30,656 31,291 Non-U.S.49,755 52,353 Total80,411 83,644 Significant Non-U.S.revenue sources include:Canada7,055 6,721 United Kingdom5,160 7,011 Singapore4,018 3,731 France3,473 3,484 Australia2,425 2,428 Belgium2,407 2,649 Germany2,347 2,293 Revenue is determined by primary country of operations.Excludes certain sales and other operating revenues in non-U.S.operationswhere attribution to a specific country is not practicable.Revenue from Contracts with CustomersSales and other operating revenue include both revenue within the scope of ASC 606 and outside the scope of ASC 606.Trade receivables in Notes and accounts receivable net reported on the Balance Sheet also includes both receivables within the scope of ASC 606 and those outside the scope of ASC 606.Revenue and receivables outside thescope of ASC 606 primarily relate to physically settled commodity contracts accounted for as derivatives.Contractual terms,credit quality,and type of customer are generallysimilar between those revenues and receivables within the scope of ASC 606 and those outside it.Sales and other operating revenue(millions of dollars)Three Months EndedMarch 31,20242023Revenue from contracts with customers58,419 64,304 Revenue outside the scope of ASC 60621,992 19,340 Total80,411 83,644(1)(1)15Note 9.Divestment ActivitiesThrough March 31,2024,the Corporation realized proceeds of approximately$0.7 billion from its divestment activities with negligible impact on net after-tax earnings.Thisincluded the sale of the Santa Ynez Unit and associated facilities in California,as well as other smaller divestments.In 2023,the Corporation realized proceeds of approximately$4.1 billion and recognized net after-tax earnings of approximately$0.6 billion from its divestment activities.Thisincluded the sale of the Aera Energy joint venture,Esso Thailand Ltd.,the Billings Refinery,certain unconventional assets in the United States,as well as other smallerdivestments.In February 2022,the Corporation signed an agreement with Seplat Energy Offshore Limited for the sale of Mobil Producing Nigeria Unlimited.The agreement is subject tocertain conditions precedent and government approvals.In mid-2022,a Nigerian court issued an order to halt transition activities and enter into arbitration with the NigerianNational Petroleum Company.The closing date and any loss on sale will depend on resolution of these matters.16ITEM 2.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSOverviewIn the first quarter of 2024 the price of crude oil remained flat relative to fourth quarter 2023 and near the middle of the pre-COVID 10-year range(2010-2019),as marketsremained balanced.More recently,the market for crude has tightened driven by ongoing concerns over conflict in the Middle East.Natural gas prices decreased,moving backtoward the middle of the 10-year range,on high inventory levels and lower demand.Refining margins in the quarter rose to the top of the 10-year range,as demand grew whileturnarounds and global disruptions weighed on supply.Chemical margins remained relatively flat at bottom-of-cycle conditions,as new capacity additions offset demandgrowth.Recent Mergers and AcquisitionsIn October 2023,ExxonMobil announced that it had entered into a definitive merger agreement with Pioneer Natural Resources.The transaction represents an opportunity todeliver leading capital efficiency and cost performance as well as increase production by combining Pioneers large scale,contiguous,high-quality undeveloped Midlandacreage with ExxonMobils Permian resource development approach.In addition to increasing production,we plan to pull forward Pioneers Net Zero ambition by 15 years,from 2050 to 2035.See Note 2.Pioneer Natural Resources Merger of the Condensed Consolidated Financial Statements for additional information.Selected Earnings Factor DefinitionsThe earnings factors have been updated to provide additional visibility into drivers of our business results starting this first quarter of 2024.The company evaluates thesefactors periodically to determine if any enhancements may provide helpful insights to the market.Listed below are descriptions of the earnings factors:Advantaged Volume Growth.Earnings impacts from change in volume/mix from advantaged assets,strategic projects,and high-value products.Advantaged Assets(Advantaged growth projects).Includes Permian,Guyana,Brazil,and LNG.Strategic Projects.Includes(i)the following completed projects:Rotterdam Hydrocracker,Corpus Christi Chemical Complex,Baton Rouge Polypropylene,BeaumontCrude Expansion,Baytown Chemical Expansion,Permian Crude Venture,and the 2022 Baytown advanced recycling facility;and(ii)the following projects still to becompleted:Fawley Hydrofiner,China Chemical Complex,Singapore Resid Upgrade,Strathcona Renewable Diesel,Proxxima Venture,USGC Reconfiguration,additional advanced recycling projects under evaluation worldwide,and additional projects in plan yet to be publicly announced.High-Value Products.Includes performance products and lower-emission fuels.Performance products(performance chemicals,performance lubricants)refers toproducts that provide differentiated performance for multiple applications through enhanced properties versus commodity alternatives and bring significant additionalvalue to customers and end-users.Lower-emission fuels refers to fuels with lower life cycle emissions than conventional transportation fuels for gasoline,diesel andjet transport.Base Volume.Includes all volume/mix factors not included in Advantaged Volume Growth defined above.Structural Cost Savings.After-tax earnings effect of Structural Cost Savings as defined on page 19,including cash operating expenses related to divestments that werepreviously in the volume/mix factor.Expenses.Includes all expenses otherwise not included in other earnings factors.Timing Effects.Timing effects are primarily related to unsettled derivatives(mark-to-market)and other earnings impacts driven by timing differences between the settlement ofderivatives and their offsetting physical commodity realizations(due to LIFO inventory accounting).TM17Earnings(loss)excluding Identified ItemsEarnings(loss)excluding Identified Items(non-GAAP)are earnings(loss)excluding individually significant non-operational events with,typically,an absolute corporate totalearnings impact of at least$250 million in a given quarter.The earnings(loss)impact of an Identified Item for an individual segment in a given quarter may be less than$250million when the item impacts several periods or several segments.Earnings(loss)excluding identified items does include non-operational earnings events or impacts that aregenerally below the$250 million threshold utilized for Identified Items.Management uses these figures to improve comparability of the underlying business across multipleperiods by isolating and removing significant non-operational events from business results.The Corporation believes this view provides investors increased transparency intobusiness results and trends and provides investors with a view of the business as seen through the eyes of management.Earnings(loss)excluding Identified Items is not meantto be viewed in isolation or as a substitute for net income(loss)attributable to ExxonMobil as prepared in accordance with U.S.GAAP.Three Months EndedMarch 31,2024UpstreamEnergy ProductsChemical ProductsSpecialty ProductsCorporateandFinancingTotal(millions of dollars)U.S.Non-U.S.U.S.Non-U.S.U.S.Non-U.S.U.S.Non-U.S.Earnings(loss)(U.S.GAAP)1,054 4,606 836 540 504 281 404 357(362)8,220 Total Identified Items Earnings(loss)excludingIdentified Items(Non-GAAP)1,054 4,606 836 540 504 281 404 357(362)8,220 Three Months EndedMarch 31,2023UpstreamEnergy ProductsChemical ProductsSpecialty ProductsCorporateandFinancingTotal(millions of dollars)U.S.Non-U.S.U.S.Non-U.S.U.S.Non-U.S.U.S.Non-U.S.Earnings(loss)(U.S.GAAP)1,632 4,825 1,910 2,273 324 47 451 323(355)11,430 Identified ItemsTax-related items(158)(30)(188)Earnings(loss)excludingIdentified Items(Non-GAAP)1,632 4,983 1,910 2,303 324 47 451 323(355)11,618 References in this discussion to Corporate earnings(loss)mean net income(loss)attributable to ExxonMobil(U.S.GAAP)from the Condensed Consolidated Statement ofIncome.Unless otherwise indicated,references to earnings(loss);Upstream,Energy Products,Chemical Products,Specialty Products,and Corporate and Financing earnings(loss);and earnings(loss)per share are ExxonMobils share after excluding amounts attributable to noncontrolling interests.Due to rounding,numbers presented may not add up precisely to the totals indicated.18Structural Cost SavingsStructural Cost Savings describes decreases in cash opex excluding energy and production taxes as a result of operational efficiencies,workforce reductions,divestment-relatedreductions,and other cost-savings measures that are expected to be sustainable compared to 2019 levels.Relative to 2019,estimated cumulative Structural Cost Savings totaled$10.1 billion,which included an additional$0.4 billion in the first three months of 2024.The total change between periods in expenses below will reflect both Structural CostSavings and other changes in spend,including market factors,such as inflation and foreign exchange impacts,as well as changes in activity levels and costs associated withnew operations.Estimates of cumulative annual structural savings may be revised depending on whether cost reductions realized in prior periods are determined to besustainable compared to 2019 levels.Structural Cost Savings are stewarded internally to support managements oversight of spending over time.This measure is useful forinvestors to understand the Corporations efforts to optimize spending through disciplined expense management.Dollars in billions(unless otherwise noted)Twelve MonthsEnded December 31,Three MonthsEnded March 31,2019202320232024Components of Operating CostsFrom ExxonMobils Consolidated Statement of Income(U.S.GAAP)Production and manufacturing expenses36.8 36.9 9.4 9.1 Selling,general and administrative expenses11.4 9.9 2.4 2.5 Depreciation and depletion(includes impairments)19.0 20.6 4.2 4.8 Exploration expenses,including dry holes1.3 0.8 0.1 0.1 Non-service pension and postretirement benefit expense1.2 0.7 0.2 Subtotal69.7 68.9 16.4 16.5 ExxonMobils share of equity company expenses(non-GAAP)9.1 10.5 2.7 2.4 Total Adjusted Operating Costs(non-GAAP)78.8 79.4 19.1 18.9 Total Adjusted Operating Costs(non-GAAP)78.8 79.4 19.1 18.9 Less:Depreciation and depletion(includes impairments)19.0 20.6 4.2 4.8 Non-service pension and postretirement benefit expense1.2 0.7 0.2 Other adjustments(includes equity company depreciationand depletion)3.6 3.7 0.8 0.9 Total Cash Operating Expenses(Cash Opex)(non-GAAP)55.0 54.4 13.9 13.2 Energy and production taxes(non-GAAP)11.0 14.9 4.3 3.4 Total Cash Operating Expenses(Cash Opex)excludingEnergy and Production Taxes(non-GAAP)44.0 39.5 9.6 9.8 Change vs2019Changevs2023EstimatedCumulative vs2019Total Cash Operating Expenses(Cash Opex)excludingEnergy and Production Taxes(non-GAAP)-4.5 0.2Market 3.6 0.1Activity/Other 1.6 0.5Structural Cost Savings-9.7-0.4-10.1Due to rounding,numbers presented may not add up precisely to the totals indicated.19REVIEW OF FIRST QUARTER 2024 RESULTSExxonMobils first-quarter 2024 earnings were$8.2 billion,or$2.06 per share assuming dilution,compared with earnings of$11.4 billion a year earlier.The decrease inearnings was mainly driven by declining industry refining margins and lower natural gas prices.Capital and exploration expenditures were$5.8 billion,down$0.5 billion fromfirst quarter 2023.UPSTREAMUpstream Financial Results(millions of dollars)Three Months EndedMarch 31,20242023Earnings(loss)(U.S.GAAP)United States1,054 1,632 Non-U.S.4,606 4,825 Total5,660 6,457 Identified Items United States Non-U.S.(158)Total(158)Earnings(loss)excluding Identified Items (Non-GAAP)United States1,054 1,632 Non-U.S.4,606 4,983 Total5,660 6,615 Refer to page 18 for definition of Identified Items and earnings(loss)excluding Identified Items.(1)(1)(1)20Upstream First Quarter Earnings Factor Analysis(millions of dollars)Price Price impacts decreased earnings by$820 million,driven by a 32crease in natural gas realizations,partially offset by a 4%increase in liquids realizations.Advantaged Volume Growth Higher volumes from advantaged assets increased earnings by$430 million,mainly driven by Guyana liquids growth.Base Volume Lower base volumes decreased earnings by$400 million,mainly driven by divestments,government-mandated curtailments,and unfavorable entitlementeffects.Structural Cost Savings Increased earnings by$90 million.Expenses Higher expenses,primarily from depreciation,decreased earnings by$160 million.Other Other items decreased earnings by$470 million,reflecting other primarily non-cash impacts from tax and inventory adjustments as well as divestments.Timing Effects Less unfavorable timing effects from derivatives mark-to-market impacts increased earnings by$370 million.Identified Items 1Q 2023$(158)million loss driven by additional European taxes.Refer to page 18 for definition of Identified Items and earnings(loss)excluding Identified Items.(1)(1)21Upstream Operational ResultsThree Months EndedMarch 31,20242023Net production of crude oil,natural gas liquids,bitumen and synthetic oil(thousands of barrels daily)United States816 820 Canada/Other Americas772 670 Europe4 4 Africa224 220 Asia711 749 Australia/Oceania30 32 Worldwide2,557 2,495 Net natural gas production available for sale(millions of cubic feet daily)United States2,241 2,367 Canada/Other Americas94 94 Europe377 548 Africa150 134 Asia3,274 3,597 Australia/Oceania1,226 1,276 Worldwide7,362 8,016 Oil-equivalent production(thousands of oil-equivalent barrels daily)3,784 3,831 Natural gas is converted to an oil-equivalent basis at six million cubic feet per one thousand barrels.(1)(1)22Upstream Additional Information(thousands of barrels daily)Three Months EndedMarch 31Volumes reconciliation(Oil-equivalent production)20233,831Entitlements-Net InterestEntitlements-Price/Spend/Other(41)Government Mandates(17)Divestments(66)Growth/Other7720243,784Natural gas is converted to an oil-equivalent basis at six million cubic feet per one thousand barrels.1Q 2024versus1Q 20231Q 2024 production of 3.8 million oil-equivalent barrels per day decreased 47 thousand oil-equivalent barrels per day from 1Q 2023.Excluding the impacts from entitlements,divestments,and higher government-mandated curtailments,net production grew by 77 thousand oil-equivalentbarrels per day,mainly driven by Guyana.Listed below are descriptions of ExxonMobils volumes reconciliation factors which are provided to facilitate understanding of the terms.Entitlements-Net Interest are changes to ExxonMobils share of production volumes caused by non-operational changes to volume-determining factors.These factors consistof net interest changes specified in Production Sharing Contracts(PSCs),which typically occur when cumulative investment returns or production volumes achieve definedthresholds,changes in equity upon achieving pay-out in partner investment carry situations,equity redeterminations as specified in venture agreements,or as a result of thetermination or expiry of a concession.Once a net interest change has occurred,it typically will not be reversed by subsequent events,such as lower crude oil prices.Entitlements-Price,Spend and Other are changes to ExxonMobils share of production volumes resulting from temporary changes to non-operational volume-determiningfactors.These factors include changes in oil and gas prices or spending levels from one period to another.According to the terms of contractual arrangements or governmentroyalty regimes,price or spending variability can increase or decrease royalty burdens and/or volumes attributable to ExxonMobil.For example,at higher prices,fewer barrelsare required for ExxonMobil to recover its costs.These effects generally vary from period to period with field spending patterns or market prices for oil and natural gas.Suchfactors can also include other temporary changes in net interest as dictated by specific provisions in production agreements.Government Mandates are changes to ExxonMobils sustainable production levels as a result of production limits or sanctions imposed by governments.Divestments are reductions in ExxonMobils production arising from commercial arrangements to fully or partially reduce equity in a field or asset in exchange for financial orother economic consideration.Growth and Other comprise all other operational and non-operational factors not covered by the above definitions that may affect volumes attributable to ExxonMobil.Suchfactors include,but are not limited to,production enhancements from project and work program activities,acquisitions including additions from asset exchanges,downtime,market demand,natural field decline,and any fiscal or commercial terms that do not affect entitlements.(1)(1)23ENERGY PRODUCTSEnergy Products Financial Results(millions of dollars)Three Months EndedMarch 31,20242023Earnings(loss)(U.S.GAAP)United States836 1,910 Non-U.S.540 2,273 Total1,376 4,183 Identified Items United States Non-U.S.(30)Total(30)Earnings(loss)excluding Identified Items (Non-GAAP)United States836 1,910 Non-U.S.540 2,303 Total1,376 4,213 Due to rounding,numbers presented may not add up precisely to the totals indicated.Energy Products First Quarter Earnings Factor Analysis(millions of dollars)Margin Margins decreased earnings by$2,000 million driven by weaker industry refining margins.Advantaged Volume Growth Higher volumes from advantaged assets increased earnings by$140 million,primarily driven by the Beaumont refinery expansion.Base Volume Lower base volumes decreased earnings by$210 million,on divestment of three refining assets(Billings,Sriracha,and Trecate).Structural Cost Savings Increased earnings by$140 million.Expenses Higher expenses decreased earnings by$290 million,on higher scheduled maintenance and turnaround activity.Other All other items increased earnings by$40 million.Timing Effects Unfavorable timing effects from derivatives mark-to-market impacts decreased earnings by$660 million.Identified Items 1Q 2023$(30)million loss related to additional European taxes.Refer to page 18 for definition of Identified Items and earnings(loss)excluding Identified Items.(1)(1)(1)(1)24Energy Products Operational Results(thousands of barrels daily)Three Months EndedMarch 31,20242023Refinery throughputUnited States1,900 1,643 Canada407 417 Europe954 1,189 Asia Pacific402 565 Other180 184 Worldwide3,843 3,998 Energy Products salesUnited States2,576 2,459 Non-U.S.2,656 2,818 Worldwide5,232 5,277 Gasoline,naphthas2,178 2,177 Heating oils,kerosene,diesel1,742 1,770 Aviation fuels339 312 Heavy fuels214 215 Other energy products759 803 Data reported net of purchases/sales contracts with the same counterparty.(1)(1)25CHEMICAL PRODUCTSChemical Products Financial Results(millions of dollars)Three Months EndedMarch 31,20242023Earnings(loss)(U.S.GAAP)United States504 324 Non-U.S.281 47 Total785 371 Earnings(loss)excluding Identified Items (Non-GAAP)United States504 324 Non-U.S.281 47 Total785 371 Refer to page 18 for definition of Identified Items and earnings(loss)excluding Identified Items.Chemical Products First Quarter Earnings Factor Analysis(millions of dollars)Margin Increased North America feed advantage from lower natural gas prices and higher margins from performance chemicals realizations,more than offset industry margindecline,increasing earnings by$200 million.Advantaged Volume Growth Additional high-value product volumes increased earnings by$40 million.Base Volume Higher base volumes increased earnings by$160 million,primarily driven by strong reliability and absence of turnarounds.Structural Cost Savings Increased earnings by$20 million.Expenses Lower turnaround expenses increased earnings by$10 million.Other All other items decreased earnings by$20 million.Chemical Products Operational Results(thousands of metric tons)Three Months EndedMarch 31,20242023Chemical Products sales United States1,847 1,561 Non-U.S.3,207 3,088 Worldwide5,054 4,649 Data reported net of purchases/sales contracts with the same counterparty.(1)(1)(2)(2)26SPECIALTY PRODUCTSSpecialty Products Financial Results(millions of dollars)Three Months EndedMarch 31,20242023Earnings(loss)(U.S.GAAP)United States404 451 Non-U.S.357 323 Total761 774 Earnings(loss)excluding Identified Items (Non-GAAP)United States404 451 Non-U.S.357 323 Total761 774 Refer to page 18 for definition of Identified Items and earnings(loss)excluding Identified Items.Specialty Products First Quarter Earnings Factor Analysis(millions of dollars)Margin Stronger finished lubes margins due to lower feed costs more than offset weaker basestock margins,increasing earnings by$30 million.Base Volume Unfavorable volume/mix effects decreased earnings by$20 million.Structural Cost Savings Increased earnings by$20 million.Expenses Higher expenses decreased earnings by$40 million.Specialty Products Operational Results(thousands of metric tons)Three Months EndedMarch 31,20242023Specialty Products sales United States495 476 Non-U.S.1,464 1,464 Worldwide1,959 1,940 Data reported net of purchases/sales contracts with the same counterparty.(1)(1)(2)(2)27CORPORATE AND FINANCINGCorporate and Financing Financial Results(millions of dollars)Three Months EndedMarch 31,20242023Earnings(loss)(U.S.GAAP)(362)(355)Earnings(loss)excluding Identified Items (Non-GAAP)(362)(355)Refer to page 18 for definition of Identified Items and earnings(loss)excluding Identified Items.Corporate and Financing expenses were$362 million for the first quarter of 2024,$7 million higher than the first quarter of 2023.(1)(1)28LIQUIDITY AND CAPITAL RESOURCES(millions of dollars)Three Months EndedMarch 31,20242023Net cash provided by/(used in)Operating activities14,664 16,341 Investing activities(4,577)(4,925)Financing activities(7,982)(8,507)Effect of exchange rate changes(324)102 Increase/(decrease)in cash and cash equivalents1,781 3,011 Cash and cash equivalents(at end of period)33,349 32,676 Cash flow from operations and asset salesNet cash provided by operating activities(U.S.GAAP)14,664 16,341 Proceeds associated with sales of subsidiaries,property,plant&equipment,and sales and returns of investments703 854 Cash flow from operations and asset sales(Non-GAAP)15,367 17,195 Because of the ongoing nature of our asset management and divestment program,we believe it is useful for investors to consider proceedsassociated with asset sales together with cash provided by operating activities when evaluating cash available for investment in the businessand financing activities,including shareholder distributions.Cash flow from operations and asset sales in the first quarter of 2024 was$15.4 billion,a decrease of$1.8 billion from the comparable 2023 period primarily reflecting lowerearnings.Cash provided by operating activities totaled$14.7 billion for the first three months of 2024,$1.7 billion lower than 2023.Net income including noncontrolling interests was$8.6 billion,a decrease of$3.3 billion from the prior year period.The adjustment for the noncash provision of$4.8 billion for depreciation and depletion was up$0.6 billionfrom 2023.Changes in operational working capital were a contribution of$2.0 billion during the period.All other items net decreased cash flows by$0.7 billion in 2024 versusa contribution of$0.6 billion in 2023.See the Condensed Consolidated Statement of Cash Flows for additional details.Investing activities for the first three months of 2024 used net cash of$4.6 billion,a decrease of$0.3 billion compared to the prior year.Spending for additions to property,plant and equipment of$5.1 billion was$0.3 billion lower than 2023.Proceeds from asset sales were$0.7 billion,a decrease of$0.2 billion compared to the prior year.Netinvestments and advances decreased$0.2 billion from$0.4 billion in 2023.Net cash used in financing activities was$8.0 billion in the first three months of 2024,including$3.0 billion for the purchase of 27.5 million shares of ExxonMobil stock,aspart of the previously announced buyback program.This compares to net cash used in financing activities of$8.5 billion in the prior year.Total debt at the end of the firstquarter of 2024 was$40.4 billion compared to$41.6 billion at year-end 2023.The Corporations debt to total capital ratio was 16.0 percent at the end of the first quarter of 2024compared to 16.4 percent at year-end 2023.The net debt to capital ratio was 3.2 percent at the end of the first quarter,a decrease of 1.3 percentage points from year-end 2023.The Corporations capital allocation priorities are investing in competitively advantaged,high-return projects;maintaining a strong balance sheet;and sharing our success withour shareholders through more consistent share repurchases and a growing dividend.The Corporation distributed a total of$3.8 billion to shareholders in the first three monthsof 2024 through dividends.The Corporation has access to significant capacity of long-term and short-term liquidity.Internally generated funds are expected to cover the majority of financial requirements,supplemented by long-term and short-term debt.The Corporation had undrawn short-term committed lines of credit of$0.3 billion and undrawn long-term committed lines ofcredit of$1.9 billion as of first quarter 2024.The Corporation,as part of its ongoing asset management program,continues to evaluate its mix of assets for potential upgrade.Because of the ongoing nature of this program,dispositions will continue to be made from time to time which will result in either gains or losses.Additionally,the Corporation continues to evaluate opportunities to enhanceits business portfolio through acquisitions of assets or companies,and enters into such transactions from time to time.Key criteria for evaluating acquisitions include strategicfit,cost synergies,potential for future growth,low cost of supply,and attractive valuations.Acquisitions may be made with cash,shares of the Corporations common stock,orboth.Litigation and other contingencies are discussed in Note 3 to the unaudited condensed consolidated financial statements.29Contractual ObligationsThe Corporation and its affiliates have numerous long-term sales and purchase commitments in their various business activities,all of which are expected to be fulfilled with noadverse consequences material to the Corporations operations or financial condition.Through the first quarter of 2024,the Corporation entered into two long-term purchaseagreements with an estimated total obligation of approximately$3.0 billion.TAXES(millions of dollars)Three Months EndedMarch 31,20242023Income taxes3,803 4,960 Effective income tax rate364%Total other taxes and duties 7,160 8,095 Total10,963 13,055 Includes“Other taxes and duties”plus taxes that are included in“Production and manufacturing expenses”and“Selling,general andadministrative expenses”.Total taxes were$11.0 billion for the first quarter of 2024,a decrease of$2.1 billion from 2023.Income tax expense was$3.8 billion compared to$5.0 billion in the prior year.The effective income tax rate,which is calculated based on consolidated company income taxes and Exxonmobils share of equity company income taxes,was 36 percent.Thisincreased from the 34 percent rate in the prior year period due primarily to a change in mix of results in jurisdictions with varying tax rates.Total other taxes and dutiesdecreased by$0.9 billion to$7.2 billion.CAPITAL AND EXPLORATION EXPENDITURES(millions of dollars)Three Months EndedMarch 31,20242023Upstream(including exploration expenses)4,582 4,581 Energy Products527 685 Chemical Products433 831 Specialty Products76 91 Other221 192 Total5,839 6,380 Capital and exploration expenditures in the first quarter of 2024 were$5.8 billion,down 8%from the first quarter of 2023.The Corporation plans to invest in the range of$23billion to$25 billion in 2024.Actual spending could vary depending on the progress of individual projects and property acquisitions.(1)(1)30FORWARD-LOOKING STATEMENTSStatements related to future events;projections;descriptions of strategic,operating,and financial plans and objectives;statements of future ambitions and plans;and otherstatements of future events or conditions,are forward-looking statements.Similarly,discussion of roadmaps or future plans related to carbon capture,transportation andstorage,biofuel,hydrogen,direct air capture,and other future plans to reduce emissions and emission intensity of ExxonMobil,its affiliates,companies it is seeking to acquireand third parties are dependent on future market factors,such as continued technological progress,policy support and timely rule-making and permitting,and representforward-looking statements.Actual future results,including financial and operating performance;potential earnings,cash flow,dividends or shareholder returns,including the timing and amounts of sharerepurchases;total capital expenditures and mix,including allocations of capital to low carbon investments;realization and maintenance of structural cost reductions andefficiency gains,including the ability to offset inflationary pressure;plans to reduce future emissions and emissions intensity,including ambitions to reach Scope 1 and Scope 2net zero from operated assets by 2050,to reach Scope 1 and 2 net zero in Upstream Permian Basin unconventional operated assets by 2030 and in Pioneer assets by 2035,toeliminate routine flaring in-line with World Bank Zero Routine Flaring,and to reach near-zero methane emissions from operated assets and other methane initiatives;meetingExxonMobils divestment and start-up plans,and associated project plans as well as technology advances,including the timing and outcome of projects to capture,transportand store CO2,produce hydrogen,produce biofuels,produce lithium,create new advanced carbon materials,and use plastic waste as a feedstock for advanced recycling;timelygranting of governmental permits and certifications;future debt levels and credit ratings;business and project plans,timing,costs,capacities and profitability;resourcerecoveries and production rates;and planned Denbury and Pioneer integrated benefits could differ materially due to a number of factors.These include global or regional changes in the supply and demand for oil,natural gas,petrochemicals,and feedstocks and other market factors,economic conditions,andseasonal fluctuations that impact prices and differentials for our products;changes in law,regulations,taxes,trade sanctions,or policies,such as government policies supportinglower carbon and new market investment opportunities such as the U.S.Inflation Reduction Act and the ability for projects to qualify for the financial incentives availablethereunder,the punitive European taxes on the oil and gas sector and unequal support for different technological methods of emissions reduction or evolving,ambiguous andunharmonized standards imposed by various jurisdictions related to sustainability and GHG reporting;variable impacts of trading activities on our margins and results eachquarter;actions of competitors and commercial counterparties;the outcome of commercial negotiations,including final agreed terms and conditions;the ability to access debtmarkets on favorable terms or at all;the occurrence,pace,rate of recovery and effects of public health crises,including the response from governments;reservoir performance,including variability and timing factors applicable to unconventional resources;the level and outcome of exploration projects and decisions to invest in future reserves;timelycompletion of development and other construction projects;final management approval of future projects and any changes in the scope,terms,costs or assumptions of suchprojects as approved;the actions of government or other actors against our core business activities and acquisitions,divestitures or financing opportunities;war,civil unrest,attacks against the company or industry,and other geopolitical or security disturbances,including disruption of land or sea transportation routes;expropriations,seizure,orcapacity,insurance,shipping or export limitations imposed by governments or laws;opportunities for potential acquisitions,investments or divestments and satisfaction ofapplicable conditions to closing,including timely regulatory approvals;the capture of efficiencies within and between business lines and the ability to maintain near-term costreductions as ongoing efficiencies;unforeseen technical or operating difficulties and unplanned maintenance;the development and competitiveness of alternative energy andemission reduction technologies;the results of research programs and the ability to bring new technologies to commercial scale on a cost-competitive basis;and other factorsdiscussed under Item 1A.Risk Factors of ExxonMobils 2023 Form 10-K.Forward-looking and other statements regarding environmental and other sustainability efforts and aspirations are not an indication that these statements are material toinvestors or require disclosure in our filing with the SEC.In addition,historical,current,and forward-looking environmental and other sustainability-related statements may bebased on standards for measuring progress that are still developing,internal controls and processes that continue to evolve,and assumptions that are subject to change in thefuture,including future rule-making.Energy demand models are forward-looking by nature and aim to replicate system dynamics of the global energy system,requiring simplifications.The reference to anyscenario in this report,including any potential net-zero scenarios,does not imply ExxonMobil views any particular scenario as likely to occur.In addition,energy demandscenarios require assumptions on a variety of parameters.As such,the outcome of any given scenario using an energy demand model comes with a high degree of uncertainty.Third-party scenarios discussed in this report reflect the modeling assumptions and outputs of their respective authors,not ExxonMobil,and their use by ExxonMobil is not anendorsement by ExxonMobil of their underlying assumptions,likelihood or probability.Investment decisions are made on the basis of ExxonMobils separate planning process.Any use of the modeling of a third-party organization within this report does not constitute or imply an endorsement by ExxonMobil of any or all of the positions or activitiesof such organization.31Actions needed to advance ExxonMobils 2030 greenhouse gas emission-reductions plans are incorporated into its medium-term business plans,which are updated annually.The reference case for planning beyond 2030 is based on ExxonMobils Global Outlook(Outlook)research and publication.The Outlook is reflective of the existing globalpolicy environment and an assumption of increasing policy stringency and technology improvement to 2050.However,the Outlook does not attempt to project the degree ofrequired future policy and technology advancement and deployment for the world,or ExxonMobil,to meet net zero by 2050.As future policies and technology advancementsemerge,they will be incorporated into the Outlook,and ExxonMobils business plans will be updated accordingly.References to projects or opportunities may not reflectinvestment decisions made by ExxonMobil or its affiliates.Individual projects or opportunities may advance based on a number of factors,including availability of supportivepolicy,permitting,technological advancement for cost-effective abatement,insights from the company planning process,and alignment with our partners and otherstakeholders.Capital investment guidance in lower-emission investments is based on our corporate plan;however,actual investment levels will be subject to the availability ofthe opportunity set,public policy support,and focused on returns.The term“project”as used in this report can refer to a variety of different activities and does not necessarily have the same meaning as in any government paymenttransparency reports.32ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKInformation about market risks for the three months ended March 31,2024,does not differ materially from that discussed under Item 7A of the registrants Annual Report onForm 10-K for 2023.ITEM 4.CONTROLS AND PROCEDURESAs indicated in the certifications in Exhibit 31 of this report,the Corporations Chief Executive Officer,Chief Financial Officer and Principal Accounting Officer haveevaluated the Corporations disclosure controls and procedures as of March 31,2024.Based on that evaluation,these officers have concluded that the Corporations disclosurecontrols and procedures are effective in ensuring that information required to be disclosed by the Corporation in the reports that it files or submits under the SecuritiesExchange Act of 1934,as amended,is accumulated and communicated to them in a manner that allows for timely decisions regarding required disclosures and are effective inensuring that such information is recorded,processed,summarized and reported within the time periods specified in the Securities and Exchange Commissions rules andforms.There were no changes during the Corporations last fiscal quarter that materially affected,or are reasonably likely to materially affect,the Corporations internal controlover financial reporting.33PART II.OTHER INFORMATIONITEM 1.LEGAL PROCEEDINGSExxonMobil has elected to use a$1 million threshold for disclosing environmental proceedings.Refer to the relevant portions of Note 3 of this Quarterly Report on Form 10-Q for further information on legal proceedings.As reported in the Corporations Annual Report on Form 10-K for the year ended December 31,2022,on August 4,2022,XTO Energy,Inc.(“XTO”)received a letter from theDepartment of Justice(“DOJ”)notifying XTO of the United States Environmental Protection Agencys(“EPA”)request to initiate a potential civil action against XTOregarding the Schnegg well in Powhatan Point,Ohio.The EPA alleged XTO breached its duty under the General Duty Clause of the Clean Air Act for the Schnegg well,andsuch breaches resulted in the 2018 well blowout.Neither a civil action has been filed nor a draft consent decree has been provided by the DOJ.In January 2024,the DOJdemanded$25 million to settle the alleged violations.XTO strongly disagrees with the DOJs position.As reported in the Corporations Annual Report on Form 10-K for the year ended December 31,2022,the State of Texas,acting by and through its Attorney General(“State”),filed a complaint against the Corporation(captioned State of Texas v.Exxon Mobil Corporation)in Travis County District Court,TX,Cause No.D-1-GN-22-006534,foralleged violations of the Texas Clean Air Act at the Baytown Olefins Plant located in Baytown,Texas seeking civil penalties in excess of$1 million,injunctive relief,andrecovery of its fees and costs of litigation.In March 2024,the State of Texas and the Corporation agreed to settle the alleged violations upon payment of$2.2 million to theState of Texas(the“Proposed Settlement”).Once the Proposed Settlement is published in the Federal Register,it will be open to public comment for 30 days before the DistrictCourt may approve it.ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSIssuer Purchases of Equity Securities for Quarter Ended March 31,2024Total Numberof SharesPurchased AveragePrice Paidper Share Total Number of SharesPurchased as Part ofPublicly Announced Plansor Programs Approximate Dollar Value ofShares that May Yet BePurchased Under theProgram(Billions of dollars)January 20242,729,980$102.692,704,895$17.2February 202411,040,594$103.5511,040,594$16.1March 202413,797,147$110.4813,797,137$14.6Total27,567,721$106.9427,542,626Includes shares withheld from participants in the companys incentive program for personal income taxes.Excludes 1%U.S.excise tax on stock repurchases.Purchases were made under terms intended to qualify for exemption under Rules 10b-18 and 10b5-1.As required by securities lawrestrictions,no repurchases take place during proxy solicitation and voting periods for transactions involving the issuance of ExxonMobilshares.For the Pioneer transaction,this period occurred during the first quarter of 2024.In its 2022 Corporate Plan Update released December 8,2022,the Corporation stated that the company expanded its share repurchaseprogram to up to$50 billion through 2024,including$15 billion of repurchases in 2022 and$17.5 billion in 2023.In its 2023 CorporatePlan Update released December 6,2023,the Corporation stated that after the Pioneer transaction closes,the go-forward share repurchaseprogram pace is expected to increase to$20 billion annually through 2025,assuming reasonable market conditions.During the first quarter,the Corporation did not issue or sell any unregistered equity securities.ITEM 5.OTHER INFORMATIONDuring the three months ended March 31,2024,none of the Companys directors or officers adopted or terminated a“Rule 10b5-1 trading arrangement”or“non-Rule 10b5-1trading arrangement,”as each term is defined in Item 408(a)of Regulation S-K.ITEM 6.EXHIBITSSee Index to Exhibits of this report.(1)(2)(3)(4)(1)(2)(3)(4)34INDEX TO EXHIBITS Exhibit Description 31.1 Certification(pursuant to Securities Exchange Act Rule 13a-14(a)by Chief Executive Officer.31.2 Certification(pursuant to Securities Exchange Act Rule 13a-14(a)by Chief Financial Officer.31.3 Certification(pursuant to Securities Exchange Act Rule 13a-14(a)by Principal Accounting Officer.32.1 Section 1350 Certification(pursuant to Sarbanes-Oxley Section 906)by Chief Executive Officer.32.2 Section 1350 Certification(pursuant to Sarbanes-Oxley Section 906)by Chief Financial Officer.32.3 Section 1350 Certification(pursuant to Sarbanes-Oxley Section 906)by Principal Accounting Officer.101 Interactive Data Files(formatted as Inline XBRL).104 Cover Page Interactive Data File(formatted as Inline XBRL and contained in Exhibit 101).35SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934,the Registrant has duly caused this report to be signed on its behalf by the undersigned,thereunto dulyauthorized.EXXON MOBIL CORPORATION Date:April 29,2024By:/s/LEN M.FOX Len M.Fox Vice President,Controller and Principal Accounting Officer 36EXHIBIT 31.1Certification by Darren W.WoodsPursuant to Securities Exchange Act Rule 13a-14(a)I,Darren W.Woods,certify that:1.I have reviewed this quarterly report on Form 10-Q of Exxon Mobil Corporation;2.Based on my knowledge,this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,in lightof the circumstances under which such statements were made,not misleading with respect to the period covered by this report;3.Based on my knowledge,the financial statements,and other financial information included in this report,fairly present in all material respects the financial condition,results of operations and cash flows of the registrant as of,and for,the periods presented in this report;4.The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e)and 15d-15(e)and internal control over financial reporting(as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)for the registrant and have:(a)Designed such disclosure controls and procedures,or caused such disclosure controls and procedures to be designed under our supervision,to ensure that materialinformation relating to the registrant,including its consolidated subsidiaries,is made known to us by others within those entities,particularly during the period inwhich this report is being prepared;(b)Designed such internal control over financial reporting,or caused such internal control over financial reporting to be designed under our supervision,to providereasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles;(c)Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosurecontrols and procedures,as of the end of the period covered by this report based on such evaluation;and(d)Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter(theregistrants fourth fiscal quarter in the case of an annual report)that has materially affected,or is reasonably likely to materially affect,the registrants internal controlover financial reporting;and5.The registrants other certifying officers and I have disclosed,based on our most recent evaluation of internal control over financial reporting,to the registrants auditorsand the audit committee of the registrants board of directors(or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adverselyaffect the registrants ability to record,process,summarize and report financial information;and(b)Any fraud,whether or not material,that involves management or other employees who have a significant role in the registrants internal control over financialreporting.Date:April 29,2024/s/DARREN W.WOODSDarren W.WoodsChief Executive OfficerEXHIBIT 31.2Certification by Kathryn A.MikellsPursuant to Securities Exchange Act Rule 13a-14(a)I,Kathryn A.Mikells,certify that:1.I have reviewed this quarterly report on Form 10-Q of Exxon Mobil Corporation;2.Based on my knowledge,this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,in lightof the circumstances under which such statements were made,not misleading with respect to the period covered by this report;3.Based on my knowledge,the financial statements,and other financial information included in this report,fairly present in all material respects the financial condition,results of operations and cash flows of the registrant as of,and for,the periods presented in this report;4.The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e)and 15d-15(e)and internal control over financial reporting(as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)for the registrant and have:(a)Designed such disclosure controls and procedures,or caused such disclosure controls and procedures to be designed under our supervision,to ensure that materialinformation relating to the registrant,including its consolidated subsidiaries,is made known to us by others within those entities,particularly during the period inwhich this report is being prepared;(b)Designed such internal control over financial reporting,or caused such internal control over financial reporting to be designed under our supervision,to providereasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles;(c)Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosurecontrols and procedures,as of the end of the period covered by this report based on such evaluation;and(d)Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter(theregistrants fourth fiscal quarter in the case of an annual report)that has materially affected,or is reasonably likely to materially affect,the registrants internal controlover financial reporting;and5.The registrants other certifying officers and I have disclosed,based on our most recent evaluation of internal control over financial reporting,to the registrants auditorsand the audit committee of the registrants board of directors(or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adverselyaffect the registrants ability to record,process,summarize and report financial information;and(b)Any fraud,whether or not material,that involves management or other employees who have a significant role in the registrants internal control over financialreporting.Date:April 29,2024/s/KATHRYN A.MIKELLSKathryn A.MikellsSenior Vice President and Chief Financial OfficerEXHIBIT 31.3Certification by Len M.FoxPursuant to Securities Exchange Act Rule 13a-14(a)I,Len M.Fox,certify that:1.I have reviewed this quarterly report on Form 10-Q of Exxon Mobil Corporation;2.Based on my knowledge,this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,in lightof the circumstances under which such statements were made,not misleading with respect to the period covered by this report;3.Based on my knowledge,the financial statements,and other financial information included in this report,fairly present in all material respects the financial condition,results of operations and cash flows of the registrant as of,and for,the periods presented in this report;4.The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e)and 15d-15(e)and internal control over financial reporting(as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)for the registrant and have:(a)Designed such disclosure controls and procedures,or caused such disclosure controls and procedures to be designed under our supervision,to ensure that materialinformation relating to the registrant,including its consolidated subsidiaries,is made known to us by others within those entities,particularly during the period inwhich this report is being prepared;(b)Designed such internal control over financial reporting,or caused such internal control over financial reporting to be designed under our supervision,to providereasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles;(c)Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosurecontrols and procedures,as of the end of the period covered by this report based on such evaluation;and(d)Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter(theregistrants fourth fiscal quarter in the case of an annual report)that has materially affected,or is reasonably likely to materially affect,the registrants internal controlover financial reporting;and5.The registrants other certifying officers and I have disclosed,based on our most recent evaluation of internal control over financial reporting,to the registrants auditorsand the audit committee of the registrants board of directors(or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adverselyaffect the registrants ability to record,process,summarize and report financial information;and(b)Any fraud,whether or not material,that involves management or other employees who have a significant role in the registrants internal control over financialreporting.Date:April 29,2024/s/LEN M.FOXLen M.FoxVice President and Controller(Principal Accounting Officer)EXHIBIT 32.1Certification of Periodic Financial ReportPursuant to 18 U.S.C.Section 1350For purposes of 18 U.S.C.Section 1350,as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,the undersigned,Darren W.Woods,the chief executive officerof Exxon Mobil Corporation(the“Company”),hereby certifies that,to his knowledge:(i)the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31,2024,as filed with the Securities and Exchange Commission on the date hereof(the“Report”)fully complies with the requirements of section 13(a)or 15(d)of the Securities Exchange Act of 1934;and(ii)the information contained in the Report fairly presents,in all material respects,the financial condition and results of operations of the Company.Date:April 29,2024/s/DARREN W.WOODSDarren W.WoodsChief Executive OfficerA signed original of this written statement required by Section 906 has been provided to Exxon Mobil Corporation and will be retained by Exxon Mobil Corporation andfurnished to the Securities and Exchange Commission or its staff upon request.EXHIBIT 32.2Certification of Periodic Financial ReportPursuant to 18 U.S.C.Section 1350For purposes of 18 U.S.C.Section 1350,as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,the undersigned,Kathryn A.Mikells,the chief financial officerof Exxon Mobil Corporation(the“Company”),hereby certifies that,to her knowledge:(i)the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31,2024,as filed with the Securities and Exchange Commission on the date hereof(the“Report”)fully complies with the requirements of section 13(a)or 15(d)of the Securities Exchange Act of 1934;and(ii)the information contained in the Report fairly presents,in all material respects,the financial condition and results of operations of the Company.Date:April 29,2024/s/KATHRYN A.MIKELLSKathryn A.MikellsSenior Vice President and Chief Financial OfficerA signed original of this written statement required by Section 906 has been provided to Exxon Mobil Corporation and will be retained by Exxon Mobil Corporation andfurnished to the Securities and Exchange Commission or its staff upon request.EXHIBIT 32.3Certification of Periodic Financial ReportPursuant to 18 U.S.C.Section 1350For purposes of 18 U.S.C.Section 1350,as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,the undersigned,Len M.Fox,the principal accounting officerof Exxon Mobil Corporation(the“Company”),hereby certifies that,to his knowledge:(i)the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31,2024,as filed with the Securities and Exchange Commission on the date hereof(the“Report”)fully complies with the requirements of section 13(a)or 15(d)of the Securities Exchange Act of 1934;and(ii)the information contained in the Report fairly presents,in all material respects,the financial condition and results of operations of the Company.Date:April 29,2024/s/LEN M.FOXLen M.FoxVice President and Controller(Principal Accounting Officer)A signed original of this written statement required by Section 906 has been provided to Exxon Mobil Corporation and will be retained by Exxon Mobil Corporation andfurnished to the Securities and Exchange Commission or its staff upon request.

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  • 名创优品(MNSO.US)2024财年第一季度财报(英文版)(22页).pdf

    Investor PresentationNov 2023Quarterly Updates3HighlightsMINISOStores6,115MINISO Storesin China3,802YoY819QoQ324YoY533QoQ198YoY286QoQ126Our overall performanceonce again reached new heightsMINISO store numbersurpassed 6,000 for the first timeRevenue3,791YoY 36.7%QoQ 16.6%Gross margin41.8 22Q3 35.7 23Q2 39.8%in RMB millionMINISO Storesin overseas2,313Adj net profit642.0YoY 53.8%QoQ 12.4%in RMB millionHistorical HighGross profit1,584YoY 60.2%QoQ 22.2%in RMB millionHistorical High4MINISO China:High Quality GrowthGMV per store of the first 10 months of CY2023 in line with expectation at the year beginningCompared with 2019 85%Compared with 2021 100%GMVper storeYoY 22%GMVper storeYoY 11%Average ordernumberYoY 17%Average transaction valueYoY 3%Sep Quarter of 2023Offline store GMVYoY41%Oct of 2023Offline store GMVYoY40%5MINISO China:Daily Sales per Store Trend on a Weekly Basis QTD6.25-7.017.02-7.087.09-7.157.16-7.227.23-7.297.30-8.058.06-8.128.13-8.198.20-8.268.27-9.029.03-9.099.10-9.169.17-9.239.24-9.3010.01-10.0710.08-10.1410.15-10.2110.22-10.2810.29-11.04 11.05-11.11202320196MINISO Overseas Continued to Grow at a High Speedin RMB millionSep Quarter2022Jun Quarter2023Sep Quarter2023YoYQoQRevenue9201,1151,29541%-Distributor markets606(66%)609(55%)703(54%)16%-Directly operated markets314(34%)506(45%)592(46%)89%GMV by Markets1,9482,4032,87948 %-Distributor markets1,5241,7472,11439!%-Directly operated markets42465676580ily GMV per Storein RMB thousand12.0313.5715.3027%Average Store Number2,0002,1592,25013%4%7MINISO Overseas:Store&GMVSep Quarter 2023StoreGMV(in RMB million)Revenue(in RMB million)NumberPercent(%)YoYVolumePercent(%)YoYVolumePercent(%)YoYOverseas Stores2,3132862,87948%1,29541%-Directly operated markets678291765 27Y2 46%-Distributor markets1,6357152,114 739p3 54%By Region-North America1406$346 12910 244%-Latin America51422t1,079 37W14 24!%-Asian excluding China12645561,063 37%T6 42%-Europe2189I248 9 70%-Middle East and North Africa5327 2# 1%-Others1245%-1776 3%-14 2%-12%8Top 20 Markets Accounted for 80%GMV and Recovered BetterRankMarketShare of GMVGMV per Storegrowth rate(vs 2022Q3)GMV per Storerecovery rate(vs 2019Q3)Comparable salesgrowth rate(vs 2022Q3)Comparable salesrecovery rate(vs 2019Q3)StorenumbersStorenet addition(YTD)1Mexico23I8I31102U.S.A9350 2213Indonesia7iQu#7204Colombia64tAy245Philippines5s$216India5%-3Uv$1187Chile31%-21%-28-18Saudi Arabia3%-16d%-12U(69Canada37180F210UAE25!(811Italy2%-0%-37212Peru2%-21%-26613Thailand2Gpftt1214Morocco2!e$g3115Spain1$p$1Q-116UK1%8%-30%-22117Kazakstan1&8&16618Singapore1D5I219Vietnam1Yy8X920France1%-31%-232TOP 20804A1%1,53611491Overseas10034%2,3131981.TOP 20 total numbers9MINISO Overseas:Store AdditionSep Quarter2023Net Addition(YTD)Forecast(Q4)Overseas Stores2,313198 100-200By RegionAsian excluding China1,26498 Latin America51443 North America14022 Europe 21833 Others1772-Directly Operated Markets67878 India24018 Indonesia24021 U.S.A9020 Vietnam609-Distributor Markets1,635120 Mexico22010 Philippines15024 Colombia801 Thailand758 Spain506 10Disney Train&MINISO Wink联合迪士尼联合迪士尼100周年打造“笑绒专列”周年打造“笑绒专列”,融合名创优品的超级符号融合名创优品的超级符号-“Wink”11“Fancy Fragrance,Good Things Happen“花式上香“花式上香 好事花生好事花生”花艺香薰快闪活动花艺香薰快闪活动12Best-selling Products in September Quarter13Initial Success of MINISOs First Blind Box Store14Celebrated Grand Opening of Our First Theme Store with Sanrio in Indonesia15TOP TOYSep Quarter2022Jun Quarter2023Sep Quarter2023YoYQoQRevenue(in RMB million)124 173181 46%5%Percentage of Revenue By Product Type-Exclusive products2652%-Third-party products74eh%TOP TOY Offline Stores109 118122 13 4By Type-Directly operated stores8 99 1 0-Third-party stores101 109113 12 4By Region-Tier 133 3236 3 4-Tier 262 6968 6-1-Tier 3 and below14 1718 4 116“Innovation and Mutual Benefit of Pop Toys Ecology”TOP TOY store in Shanghai DisneyTOP TOY17New Products18Revenue BreakdownGrowth Driversin RMB millionSep Quarter2022Jun Quarter2023Sep Quarter2023YoYQoQGrowth in average store countGrowth in per-store salesRevenue2,772 3,2523,791 37%Domestic Operations 1,852 2,1372,496 35%-MINISO Brand1,700 1,9522,307 36%-MINISO China offline1,519 1,7912,144 41 %Mid-teens Mid-twenties-MINISO eCommerce181 161163-11%1%-TOP TOY Brand124 173 181 46%4%Mid-teens Mid-twenties-Others28 128-71%-34%Overseas Operations 920 1,1151,295 41%Low-teens Mid-twenties-Distributor markets606(66%)609(55%)703(54%)16%-Directly operated markets314(34%)506(45%)592(46%)89Demonstrated Resilience and Profitability1.Including revenues from MINISO China,TOP TOY and other business.2.Excluding share-based compensation expensesin RMB millionSep Quarter2022Jun Quarter2023Sep Quarter2023YoYQoQRevenue2,7723,2523,79137%-China11,8522,1372,49635%-Overseas9201,1151,29541%Gross profit9891,2961,58460%Gross margin35.79.8A.8%6%2%S&D expense2373458621676%S&D%3%2%G&A expense21631611672%4%G&A%6%5%4%-2%-1j net profit41757164254j net margin15.1.6.9%2%-1j net profit(Excluding the impact of foreign exchange gains)36550564978)j net margin(Excluding the impact of foreign exchange gains)13.2.5.1%4%2 Expenses by Nature1.The proportion of current revenuein RMB millionSep QuarterYOY2022Percentage(%)12023Percentage(%)1Payroll and employee benefits194 72 7%Rental and related expense12 0.44 13preciation and amortization103 46 3%Licensing expenses48 2 2%Promotion and advertising expense61 21 3%Logistics expenses38 1X 2S%Travelling expenses19 1 1%Other expenses74 3 22%Total expenses549 201 21H!Capital Allocation Balance Shareholder Return in RMB millionFY 2020FY 2021FY 2022FY 2023Cash position,end of period2,861 6,878 5,828 7,303Net cash generated from operating activities826 916 1,406 1,666 Capital expenditures57 180 1,234 174 Free cash flow769 746 172 1,492 Cash dividends paid330306 361 934Share repurchases-91 3222MINISO Group is a global value retailer offering a variety of trendy lifestyle products featuring IP design.The Company serves consumers primarily through its large network of MINISO stores,and promotes a relaxing,treasure-hunting and engaging shopping experience full of delightful surprises that appeals to all demographics.Aesthetically pleasing design,quality and affordability are at the core of every product in MINISOs wide product portfolio,and the Company continually and frequently rolls out products with these qualities.Since the opening of its first store in China in 2013,the Company has built its flagship brand“MINISO”as a globally recognized retail brand and established a massive store network worldwide.For more information,please visit https:/ Relations Contact:Raine Hu MINISO Group Holding LimitedEmail: Phone: 86(20)36228788 Ext.8039About MINISO

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  • Snapchat2024年第一季度财报(英文版)(146页).pdf

    Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549_FORM 10-Q_(Mark One)QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 31,2024orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from _to_Commission File Number:001-38017_SNAP INC.(Exact name of registrant as specified in its charter)_Delaware45-5452795(State or other jurisdiction ofincorporation or organizations)(I.R.S.EmployerIdentification Number)3000 31st StreetSanta Monica,California 90405(Address of principal executive offices,including zip code)(310)399-3339(Registrants telephone,including area code)_Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredClass A Common Stock,par value$0.00001 per shareSNAPNew York Stock ExchangeIndicate 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(Exchange Act)duringthe 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 No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T duringthe preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an emerging growthcompany.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth companyIf an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No Indicate the number of shares outstanding of each of the issuers classes of common stock,as of the latest practicable date.ClassNumber of Shares OutstandingClass A common stock,$0.00001 par value1,386,883,641 shares outstanding as of April 23,2024Class B common stock,$0.00001 par value22,528,406 shares outstanding as of April 23,2024Class C common stock,$0.00001 par value231,626,943 shares outstanding as of April 23,2024Table of ContentsTABLE OF CONTENTSPageNote Regarding Forward-Looking Statements3Note Regarding User Metrics and Other Data5PART I-FINANCIAL INFORMATIONItem 1.Financial Statements6Consolidated Statements of Cash Flows6Consolidated Statements of Operations7Consolidated Statements of Comprehensive Income(Loss)8Consolidated Balance Sheets9Consolidated Statements of Stockholders Equity10Notes to Consolidated Financial Statements11Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations25Item 3.Quantitative and Qualitative Disclosures About Market Risk40Item 4.Controls and Procedures41PART II-OTHER INFORMATIONItem 1.Legal Proceedings42Item 1A.Risk Factors43Item 2.Unregistered Sales of Equity Securities and Use of Proceeds84Item 3.Defaults Upon Senior Securities84Item 4.Mine Safety Disclosures84Item 5.Other Information84Item 6.Exhibits85Signatures86Snap Inc.,“Snapchat,”and our other registered and common-law trade names,trademarks,and service marks appearing in this Quarterly Report onForm 10-Q are the property of Snap Inc.or our subsidiaries.2Table of ContentsNOTE REGARDING FORWARD-LOOKING STATEMENTSThis Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,asamended,or the Securities Act,and Section 21E of the Securities Exchange Act of 1934,as amended,or the Exchange Act,about us and our industry thatinvolve substantial risks and uncertainties.All statements other than statements of historical facts contained in this report,including statements regardingguidance,our future results of operations or financial condition,our future stock repurchase programs or stock dividends,business strategy and plans,usergrowth and engagement,product initiatives,objectives of management for future operations,and advertiser and partner offerings,are forward-lookingstatements.In some cases,you can identify forward-looking statements because they contain words such as“anticipate,”“believe,”“contemplate,”“continue,”“could,”“estimate,”“expect,”“going to,”“intend,”“may,”“plan,”“potential,”“predict,”“project,”“should,”“target,”“will,”or“would”or the negative ofthese words or other similar terms or expressions.We caution you that the foregoing may not include all of the forward-looking statements made in this report.You should not rely on forward-looking statements as predictions of future events.We have based the forward-looking statements contained in thisQuarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends,including our financial outlook,macroeconomic uncertainty,and geo-political conflicts,that we believe may continue to affect our business,financial condition,results of operations,andprospects.These forward-looking statements are subject to risks,uncertainties,and other factors described in“Risk Factors”and elsewhere in this QuarterlyReport on Form 10-Q,including among other things:our financial performance,including our revenues,cost of revenues,operating expenses,and our ability to attain and sustain profitability;our ability to generate and sustain positive cash flow;our ability to attract and retain users and partners;our ability to attract and retain advertisers;our ability to compete effectively with existing competitors and new market entrants;our ability to effectively manage our growth and future expenses;our ability to comply with modified or new laws,regulations,and executive actions applying to our business;our ability to maintain,protect,and enhance our intellectual property;our ability to successfully expand in our existing market segments and penetrate new market segments;our ability to attract and retain qualified team members and key personnel;our ability to repay or refinance outstanding debt,or to access additional financing;future acquisitions of or investments in complementary companies,products,services,or technologies;andthe potential adverse impact of climate change,natural disasters,health epidemics,macroeconomic conditions,and war or other armedconflict on our business,operations,and the markets and communities in which we and our partners,advertisers,and users operate.Moreover,we operate in a very competitive and rapidly changing environment.New risks and uncertainties emerge from time to time,and it is notpossible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form10-Q.The results,events,and circumstances reflected in the forward-looking statements may not be achieved or occur,and actual results,events,orcircumstances could differ materially from those described in the forward-looking statements.In addition,statements that“we believe”and similar statements reflect our beliefs and opinions on the relevant subject.These statements are based oninformation available to us as of the date of this Quarterly Report on Form 10-Q.And while we believe that information provides a reasonable basis for thesestatements,that information may be limited or incomplete.Our statements should not be read to indicate that we have conducted an exhaustive inquiry into,orreview of,all relevant information.These statements are inherently uncertain,and investors are cautioned not to unduly rely on these statements.The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made.We undertake no obligation to update any forward-looking statements made in this3Table of Contentsreport to reflect events or circumstances after the date of this report or to reflect new information or the occurrence of unanticipated events,including futuredevelopments related to geo-political conflicts and macroeconomic conditions,except as required by law.We may not actually achieve the plans,intentions,orexpectations disclosed in our forward-looking statements,and you should not place undue reliance on our forward-looking statements.Our forward-lookingstatements do not reflect the potential impact of any future acquisitions,dispositions,joint ventures,restructurings,legal settlements,or investments.Investors and others should note that we may announce material business and financial information to our investors using our websites(),filings with the U.S.Securities and Exchange Commission,or SEC,webcasts,press releases,investor letters,and conference calls.We usethese mediums,including Snapchat and our website,to communicate with our members and the public about our company,our products,and other issues.It ispossible that the information that we make available may be deemed to be material information.We therefore encourage investors and others interested in ourcompany to review the information that we make available on our websites.4Table of ContentsNOTE REGARDING USER METRICS AND OTHER DATAWe define a Daily Active User,or DAU,as a registered and logged-in Snapchat user who visits Snapchat through our applications or websites atleast once during a defined 24-hour period.We calculate average DAUs for a particular quarter by adding the number of DAUs on each day of that quarter anddividing that sum by the number of days in that quarter.DAUs are broken out by geography because markets have different characteristics.We define averagerevenue per user,or ARPU,as quarterly revenue divided by the average DAUs.For purposes of calculating ARPU,revenue by user geography is apportionedto each region based on our determination of the geographic location in which advertising impressions are delivered,as this approximates revenue based onuser activity.This allocation differs from our components of revenue disclosure in the notes to our consolidated financial statements,where revenue is based onthe billing address of the advertising customer.For information concerning these metrics as measured by us,see“Managements Discussion and Analysis ofFinancial Condition and Results of Operations.”Unless otherwise stated,statistical information regarding our users and their activities is determined by calculating the daily average of the selectedactivity for the most recently completed quarter included in this report.While these metrics are determined based on what we believe to be reasonable estimates of our user base for the applicable period of measurement,there are inherent challenges in measuring how our products are used across large populations globally.For example,there may be individuals who attempt tocreate accounts for malicious purposes,including at scale,even though we forbid that in our Terms of Service and Community Guidelines.We implementmeasures in our user registration process and through other technical measures to prevent,detect,and suppress that behavior,although we have not determinedthe number of such accounts.Changes in our products,infrastructure,mobile operating systems,or metric tracking system,or the introduction of new products,may impact ourability to accurately determine active users or other metrics and we may not determine such inaccuracies promptly.We also believe that we dont capture alldata regarding each of our active users.Technical issues may result in data not being recorded from every users application.For example,because someSnapchat features can be used without internet connectivity,we may not count a DAU because we dont receive timely notice that a user has opened theSnapchat application.This undercounting may increase as we grow in Rest of World markets where users may have poor connectivity.We do not adjust ourreported metrics to reflect this underreporting.We believe that we have adequate controls to collect user metrics,however,there is no uniform industrystandard.We continually seek to identify these technical issues and improve both our accuracy and precision,including ensuring that our investors and otherscan understand the factors impacting our business,but these technical issues and new issues may continue in the future,including if there continues to be nouniform industry standard.Some of our demographic data may be incomplete or inaccurate.For example,because users self-report their dates of birth,our age-demographicdata may differ from our users actual ages.And because users who signed up for Snapchat before June 2013 were not asked to supply their date of birth,wemay exclude those users from our age demographics or estimate their ages based on a sample of the self-reported ages that we do have.If our active usersprovide us with incorrect or incomplete information regarding their age or other attributes,then our estimates may prove inaccurate and fail to meet investorexpectations.We count a DAU only when a user visits Snapchat through our applications or websites and only once per user per day.We believe thismethodology more accurately measures our user engagement.We have multiple pipelines of user data that we use to determine whether a user has visitedSnapchat through our applications or websites during a particular day,and becoming a DAU.This provides redundancy in the event one pipeline of data wereto become unavailable for technical reasons,and also gives us redundant data to help measure how users interact with our application.If we fail to maintain an effective analytics platform,our metrics calculations may be inaccurate.We regularly review,have adjusted in the past,andare likely in the future to adjust our processes for calculating our internal metrics to improve their accuracy.As a result of such adjustments,our DAUs or othermetrics may not be comparable to those in prior periods.Our measures of DAUs may differ from estimates published by third parties or from similarly titledmetrics of our competitors due to differences in methodology or data used.5Table of ContentsPART I-FINANCIAL INFORMATIONItem 1.Financial StatementsSnap Inc.Consolidated Statements of Cash Flows(in thousands)(unaudited)Three Months Ended March 31,20242023Cash flows from operating activitiesNet loss$(305,090)$(328,674)Adjustments to reconcile net loss to net cash provided by(used in)operating activities:Depreciation and amortization41,713 35,220 Stock-based compensation263,752 314,931 Amortization of debt issuance costs1,742 1,836 Losses(gains)on debt and equity securities,net8,968(10,833)Other(16,612)(10,396)Change in operating assets and liabilities,net of effect of acquisitions:Accounts receivable,net of allowance162,207 288,373 Prepaid expenses and other current assets(13,629)(13,204)Operating lease right-of-use assets13,575 17,658 Other assets(5,142)850 Accounts payable(34,089)(36,972)Accrued expenses and other current liabilities(18,381)(90,191)Operating lease liabilities(13,930)(18,550)Other liabilities3,268 1,054 Net cash provided by(used in)operating activities88,352 151,102 Cash flows from investing activitiesPurchases of property and equipment(50,448)(47,630)Purchases of strategic investments(4,480)Purchases of marketable securities(465,672)(874,053)Sales of marketable securities 5,351 Maturities of marketable securities384,928 924,323 Other9 2,327 Net cash provided by(used in)investing activities(131,183)5,838 Cash flows from financing activitiesProceeds from the exercise of stock options69 29 Repurchases of Class A non-voting common stock(235,114)Deferred payments for acquisitions(2,028)Repurchases of convertible notes(440,706)Net cash provided by(used in)financing activities(675,751)(1,999)Change in cash,cash equivalents,and restricted cash(718,582)154,941 Cash,cash equivalents,and restricted cash,beginning of period1,782,462 1,423,776 Cash,cash equivalents,and restricted cash,end of period$1,063,880$1,578,717 See Notes to Consolidated Financial Statements.6Table of ContentsSnap Inc.Consolidated Statements of Operations(in thousands,except per share amounts)(unaudited)Three Months Ended March 31,20242023Revenue$1,194,773$988,608 Costs and expenses:Cost of revenue574,749 439,986 Research and development449,759 455,112 Sales and marketing276,034 268,433 General and administrative227,463 190,341 Total costs and expenses1,528,005 1,353,872 Operating loss(333,232)(365,264)Interest income39,898 37,948 Interest expense(4,743)(5,885)Other income(expense),net(81)11,372 Loss before income taxes(298,158)(321,829)Income tax benefit(expense)(6,932)(6,845)Net loss$(305,090)$(328,674)Net loss per share attributable to Class A,Class B,and Class C common stockholders(Note 3):Basic$(0.19)$(0.21)Diluted$(0.19)$(0.21)Weighted average shares used in computation of net loss per share:Basic1,647,3871,581,370Diluted1,647,3871,581,370See Notes to Consolidated Financial Statements.7Table of ContentsSnap Inc.Consolidated Statements of Comprehensive Income(Loss)(in thousands)(unaudited)Three Months Ended March 31,20242023Net loss$(305,090)$(328,674)Other comprehensive income(loss),net of taxUnrealized gain(loss)on marketable securities,net of tax(3,604)9,395 Foreign currency translation(2,777)2,915 Total other comprehensive income(loss),net of tax(6,381)12,310 Total comprehensive loss$(311,471)$(316,364)See Notes to Consolidated Financial Statements.8Table of ContentsSnap Inc.Consolidated Balance Sheets(in thousands,except par value)March 31,2024December 31,2023(unaudited)AssetsCurrent assetsCash and cash equivalents$1,060,393$1,780,400 Marketable securities1,850,622 1,763,680 Accounts receivable,net of allowance1,108,357 1,278,176 Prepaid expenses and other current assets167,385 153,587 Total current assets4,186,757 4,975,843 Property and equipment,net426,363 410,326 Operating lease right-of-use assets511,117 516,862 Intangible assets,net127,658 146,303 Goodwill1,691,524 1,691,827 Other assets223,982 226,597 Total assets$7,167,401$7,967,758 Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable$246,217$278,961 Operating lease liabilities36,649 49,321 Accrued expenses and other current liabilities829,579 805,836 Total current liabilities1,112,445 1,134,118 Convertible senior notes,net3,301,466 3,749,400 Operating lease liabilities,noncurrent553,741 546,279 Other liabilities68,401 123,849 Total liabilities5,036,053 5,553,646 Commitments and contingencies(Note 8)Stockholders equityClass A non-voting common stock,$0.00001 par value.3,000,000 shares authorized,1,437,758 shares issued,1,388,965 shares outstanding at March 31,2024,and 3,000,000 shares authorized,1,440,541 shares issued,1,391,341 shares outstanding at December 31,2023.14 14 Class B voting common stock,$0.00001 par value.700,000 shares authorized,22,528 shares issued andoutstanding at March 31,2024 and December 31,2023.Class C voting common stock,$0.00001 par value.260,888 shares authorized,231,627 shares issued andoutstanding at March 31,2024 and December 31,2023.2 2 Treasury stock,at cost.48,793 and 49,200 shares of Class A non-voting common stock at March 31,2024 andDecember 31,2023,respectively.(475,939)(479,903)Additional paid-in capital14,873,261 14,613,404 Accumulated deficit(12,266,740)(11,726,536)Accumulated other comprehensive income(loss)750 7,131 Total stockholders equity2,131,348 2,414,112 Total liabilities and stockholders equity$7,167,401$7,967,758 See Notes to Consolidated Financial Statements.9Table of ContentsSnap Inc.Consolidated Statements of Stockholders Equity(in thousands)(unaudited)Three Months Ended March 31,20242023SharesAmountSharesAmountClass A non-voting common stockBalance,beginning of period1,391,341$14 1,319,930$13 Shares issued in connection with exercise of stock options under stock-based compensation plans5 3 Issuance of Class A non-voting common stock for vesting of restricted stock units and restricted stock awards,net18,232 20,745 Conversion of Class B voting common stock to Class A non-voting common stock 8 Repurchases of Class A non-voting common stock(21,020)Reissuances of Class A non-voting common stock for vesting of restricted stock units407 370 Balance,end of period1,388,96514 1,341,05613 Class B voting common stockBalance,beginning of period22,528 22,529 Shares issued in connection with exercise of stock options under stock-based compensation plans 1 Conversion of Class B voting common stock to Class A non-voting common stock(8)Balance,end of period22,528 22,522 Class C voting common stockBalance,beginning of period231,6272 231,6272 Issuance of Class C voting common stock for settlement of restricted stock units,net Balance,end of period231,6272 231,6272 Treasury stockBalance,beginning of period49,200(479,903)51,312(500,514)Repurchases of Class A non-voting common stock21,020(235,114)Retirement of Class A non-voting common stock(21,020)235,114 Reissuances of Class A non-voting common stock for vesting of restricted stock units(407)3,964(370)3,608 Balance,end of period48,793(475,939)50,942(496,906)Additional paid-in capitalBalance,beginning of period14,613,404 13,309,828 Stock-based compensation expense263,752 314,077 Shares issued in connection with exercise of stock options under stock-based compensation plans68 29 Reissuances of Class A non-voting common stock for vesting of restricted stock units(3,963)(3,608)Balance,end of period14,873,261 13,620,326 Accumulated deficitBalance,beginning of period(11,726,536)(10,214,657)Net loss(305,090)(328,674)Retirement of Class A non-voting common stock(235,114)Balance,end of period(12,266,740)(10,543,331)Accumulated other comprehensive income(loss)Balance,beginning of period7,131(13,974)Other comprehensive income(loss),net of tax(6,381)12,310 Balance,end of period750(1,664)Total stockholders equity1,691,913$2,131,348 1,646,147$2,578,440 See Notes to Consolidated Financial Statements.10Table of ContentsSnap Inc.Notes to Consolidated Financial Statements1.Description of Business and Summary of Significant Accounting PoliciesSnap Inc.is a technology company.Snap Inc.(“we,”“our,”or“us”),a Delaware corporation,is headquartered in Santa Monica,California.Our flagship product,Snapchat,is a visualmessaging application that was created to help people communicate through short videos and images called“Snaps.”Basis of PresentationThe accompanying unaudited consolidated financial statements are prepared in accordance with U.S.generally accepted accounting principles(“GAAP”)for interim financial information.Our consolidated financial statements include the accounts of Snap Inc.and our wholly owned subsidiaries.Allintercompany transactions and balances have been eliminated in consolidation.Our fiscal year ends on December 31.These unaudited interim consolidatedfinancial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K forthe fiscal year ended December 31,2023,as filed with the Securities and Exchange Commission(the“SEC”)in February 2024(the“Annual Report”).In our opinion,the unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary for the fairpresentation of our financial position,results of operations,and cash flows.The results of operations for the three months ended March 31,2024 are notnecessarily indicative of the results to be expected for the year ending December 31,2024.There have been no changes to our significant accounting policies described in our Annual Report that have had a material impact on our consolidatedfinancial statements and related notes.Use of EstimatesThe preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions thataffect the reported amounts in the consolidated financial statements.Managements estimates are based on historical information available as of the date of theconsolidated financial statements and various other assumptions that we believe are reasonable under the circumstances.Actual results could differ from thoseestimates.Key estimates relate primarily to determining the fair value of assets and liabilities assumed in business combinations,evaluation of contingencies,uncertain tax positions,and the fair value of strategic investments.On an ongoing basis,management evaluates our estimates compared to historical experienceand trends,which form the basis for making judgments about the carrying value of assets and liabilities.Future Stock Split to be Effected in the Form of a Stock DividendIn July 2022,our board of directors determined that it was advisable and in our best interest to approve a stock split to be effected in the form of aspecial dividend of one share of Class A common stock on each outstanding share of our common stock at a future date(the“Future Stock Split”).Inconnection with the Future Stock Split,we entered into certain agreements(the“Co-Founder Agreements”)with Evan Spiegel and Robert Murphy,our co-founders,and certain of their respective affiliates requiring them,among other things,to convert shares of Class B common stock and Class C common stockinto Class A common stock under certain circumstances.The Future Stock Split will not be declared and paid until the first business day following the date onwhich the average of the volume weighted average price(the“VWAP”)per share of Class A common stock equals or exceeds$40 per share for 65 consecutivetrading days.If this does not occur by July 21,2032,the Future Stock Split will not be declared and paid,and the Co-Founder Agreements will terminate.In June 2023,in connection with a proposed settlement of a class-action lawsuit,and as amended in December 2023,we agreed to modify theconditions for the Future Stock Split,subject to various conditions,including judicial approval of the settlement.In February 2024,the settlement wasapproved by the court and the class-action lawsuit was resolved.The Future Stock Split will not be declared and paid until the first business day following thedate on which(i)11Table of Contentsthe VWAP per share of Class A common stock equals or exceeds$40 per share for 90 consecutive trading days(the“90-Day VWAP”)and(ii)the ratio of the90-Day VWAP to$8.70 equals or exceeds the ratio of the average closing price of the S&P 500 Total Return index for the same 90 trading days for which the90-Day VWAP was calculated to 8,862.85.If this does not occur by July 21,2032,the Future Stock Split will not be declared and paid,and the Co-FounderAgreements will terminate.No adjustments have been made to share or per share amounts for Class A common stock in the accompanying consolidated financial statements forthe effects of the Future Stock Split as these triggering conditions have not been met.2.RevenueWe determine revenue recognition by first identifying the contract or contracts with a customer,identifying the performance obligations in thecontract,determining the transaction price,allocating the transaction price to the performance obligations in the contract,and recognizing revenue when,or as,we satisfy a performance obligation.Revenue is recognized when control of the promised goods or services is transferred to our customers,in an amount that reflects the consideration weexpect to receive in exchange for those goods or services.We determine collectability by performing ongoing credit evaluations and monitoring customeraccounts receivable balances.Sales tax,including value added tax,is excluded from reported revenue.We generate substantially all of our revenues by offering various advertising products on Snapchat,which include Snap Ads and AR Ads,referred toas advertising revenue.AR Ads include Sponsored Lenses,which allow users to interact with an advertisers brand by enabling branded augmented realityexperiences.The substantial majority of advertising revenue is generated from the display of advertisements on Snapchat through contractual agreements that areeither based on the number of advertising impressions delivered or on a fixed fee basis over a period of time.Revenue related to agreements based on thenumber of impressions delivered is recognized when the advertisement is served.Revenue related to fixed fee arrangements is recognized ratably over theservice period,typically less than 30 days in duration,and such arrangements do not contain minimum impression guarantees.In arrangements where another party is involved in providing specified services to a customer,we evaluate whether we are the principal or agent.Inthis evaluation,we consider if we obtain control of the specified goods or services before they are transferred to the customer,as well as other indicators suchas the party primarily responsible for fulfillment,inventory risk,and discretion in establishing price.For advertising revenue arrangements where we are notthe principal,we recognize revenue on a net basis.For the periods presented,revenue for arrangements where we are the agent was not material.We also generate revenue from subscriptions and sales of hardware products.Sales of hardware products are reported net of allowances for returns.For the periods presented,all such revenue was not material.The following table represents our revenue disaggregated by geography based on the billing address of the customer:Three Months Ended March 31,20242023(in thousands)North America$733,388$632,560 Europe 200,092 155,615 Rest of world261,293 200,433 Total revenue$1,194,773$988,608(1)North America includes Mexico,the Caribbean,and Central America.(2)United States revenue was$710.8 million and$612.4 million for the three months ended March 31,2024 and 2023,respectively.(3)Europe includes Russia and Turkey.Effective March 2022,we halted advertising sales to Russian and Belarusian entities.(1)(2)(3)12Table of ContentsDeferred revenue related to advertising and subscriptions,included in accrued expenses and other current liabilities on our consolidated balancesheets,was$98.4 million and$93.7 million as of March 31,2024 and December 31,2023,respectively.We expect a substantial majority of our deferredrevenue to be realized in less than one year.3.Net Loss per ShareWe compute net loss per share using the two-class method required for multiple classes of common stock.We have three classes of authorizedcommon stock for which voting rights differ by class.Basic net loss per share is computed by dividing net loss attributable to each class of stockholders by the weighted-average number of shares of stockoutstanding during the period,adjusted for restricted stock awards(“RSAs”)for which the risk of forfeiture has not yet lapsed.For the calculation of diluted net loss per share,net loss per share attributable to common stockholders for basic net loss per share is adjusted by theeffect of dilutive securities,including awards under our equity compensation plans.Diluted net loss per share attributable to common stockholders is computedby dividing the resulting net loss attributable to common stockholders by the weighted-average number of fully diluted common shares outstanding.We use theifconverted method for calculating any potential dilutive effect of the convertible senior notes due in 2025,2026,2027,and 2028(collectively,the“Convertible Notes”)on diluted net loss per share.The Convertible Notes would have a dilutive impact on net income per share when the average market priceof Class A common stock for a given period exceeds the respective conversion price of the Convertible Notes.For the periods presented,our potentiallydilutive shares relating to stock options,restricted stock units(“RSUs”),RSAs,and Convertible Notes were not included in the computation of diluted net lossper share as the effect of including these shares in the calculation would have been anti-dilutive.The numerators and denominators of the basic and diluted net loss per share computations for our common stock are calculated as follows:Three Months Ended March 31,20242023(in thousands,except per share data)Class AClass BClass CClass AClass BClass CNumerator:Net loss$(258,022)$(4,172)$(42,896)$(275,851)$(4,681)$(48,142)Net loss attributable to common stockholders$(258,022)$(4,172)$(42,896)$(275,851)$(4,681)$(48,142)Denominator:Basic shares:Weighted-average common shares-Basic1,393,23222,528231,6271,327,22122,522231,627Diluted shares:Weighted-average common shares-Diluted1,393,23222,528231,6271,327,22122,522231,627Net loss per share attributable to common stockholders:Basic$(0.19)$(0.19)$(0.19)$(0.21)$(0.21)$(0.21)Diluted$(0.19)$(0.19)$(0.19)$(0.21)$(0.21)$(0.21)The following potentially dilutive shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented:Three Months Ended March 31,20242023(in thousands)Stock options1,5803,155Unvested RSUs and RSAs145,364128,086Convertible Notes(if-converted)69,36889,37913Table of Contents4.Stockholders EquityWe maintain three share-based employee compensation plans:the 2017 Equity Incentive Plan(the“2017 Plan”),the 2014 Equity Incentive Plan(the“2014 Plan”),and the 2012 Equity Incentive Plan(the“2012 Plan,”and collectively with the 2017 Plan and the 2014 Plan,the“Stock Plans”).The 2017 Planserves as the successor to the 2014 Plan and 2012 Plan and provides for the grant of incentive stock options to employees,including employees of any parent orsubsidiary,and for the grant of nonstatutory stock options,stock appreciation rights,RSAs,RSUs,performance stock awards,performance cash awards,andother forms of stock awards to employees,directors,and consultants,including employees and consultants of our affiliates.Restricted Stock Units and Restricted Stock AwardsThe following table summarizes the RSU and RSA activity for the three months ended March 31,2024:Number of Class ASharesWeighted-AverageGrant DateFair Value(in thousands,except per share data)Unvested at December 31,2023157,130$12.82 Granted23,248$13.16 Vested(18,781)$15.55 Forfeited(16,233)$12.06 Unvested at March 31,2024145,364$12.61 All RSUs and RSAs vest on the satisfaction of a service-based condition.Total unrecognized compensation cost related to outstanding RSUs andRSAs was$1.5 billion as of March 31,2024 and is expected to be recognized over a weighted-average period of 2.0 years.The service condition for RSUs andRSAs is generally satisfied in equal monthly or quarterly installments over three to four years.Stock OptionsThe following table summarizes the stock option award activity under the Stock Plans for the three months ended March 31,2024:Number ofClass A SharesNumber ofClass B SharesWeighted-AverageExercisePriceWeighted-AverageRemainingContractualTerm(in years)AggregateIntrinsicValue(in thousands,except per share data)Outstanding at December 31,20231,6925$14.90 4.41$5,225 Granted$Exercised(5)$13.33$Forfeited(112)$12.47$Outstanding at March 31,20241,5755$15.08 4.18$301(1)The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the closing marketprice of our Class A common stock as of March 31,2024 and December 31,2023.As of March 31,2024,there was no unrecognized compensation cost related to stock options granted under the Stock Plans.(1)14Table of ContentsStock-Based Compensation ExpenseTotal stock-based compensation expense by function was as follows:Three Months Ended March 31,20242023(in thousands)Cost of revenue$1,815$1,885 Research and development174,519 219,850 Sales and marketing54,656 54,939 General and administrative32,762 38,257 Total$263,752$314,931 Stock RepurchasesIn October 2023,our board of directors authorized a stock repurchase program of up to$500.0 million of our Class A common stock.During thefirst quarter of 2024,we repurchased and retired 21.0 million shares of our Class A common stock for an aggregate of$235.1 million,including costsassociated with the repurchases.As of March 31,2024,the remaining availability under the stock repurchase authorization was$75.9 million.This programwas completed in April 2024.5.Business Acquisitions2023 AcquisitionsFor the year ended December 31,2023,aggregate purchase consideration for business acquisitions was$73.1 million,which primarily consisted of$56.3 million in cash and$12.6 million recorded in other liabilities on our consolidated balance sheet.Of the aggregate purchase consideration,$42.8 millionwas allocated to goodwill and the remainder primarily to identifiable intangible assets.The acquired assets are expected to enhance our existing platform,technology,and workforce.The goodwill amount represents synergies related to our existing platform expected to be realized from the business acquisitionsand assembled workforce.The associated goodwill and intangible assets are not deductible for tax purposes.6.Goodwill and Intangible AssetsThe changes in the carrying amount of goodwill for the three months ended March 31,2024 were as follows:Goodwill(in thousands)Balance as of December 31,2023$1,691,827 Goodwill acquired Foreign currency translation(303)Balance as of March 31,2024$1,691,524 15Table of ContentsIntangible assets consisted of the following:As of March 31,2024Weighted-AverageRemainingUseful Life(Years)GrossCarryingAmountAccumulatedAmortizationNet(in thousands,except years)Domain names2.8$745$(563)$182 Technology2.7315,233(206,984)108,249 Patents8.739,373(20,146)19,227 Other6,000(6,000)Total intangible assets$361,351$(233,693)$127,658 As of December 31,2023Weighted-AverageRemainingUseful Life(Years)GrossCarryingAmountAccumulatedAmortizationNet(in thousands,except years)Domain names3.0$745$(546)$199 Technology2.8323,313(197,608)125,705 Patents8.839,373(19,099)20,274 Other6,000(5,875)125 Total intangible assets$369,431$(223,128)$146,303 Amortization of intangible assets was$18.6 million and$17.8 million for the three months ended March 31,2024 and 2023,respectively.As of March 31,2024,the estimated intangible asset amortization expense for the next five years and thereafter is as follows:EstimatedAmortization(in thousands)Remainder of 2024$41,404 202541,493 202620,279 202712,104 20284,323 Thereafter8,055 Total$127,658 7.Long-Term DebtConvertible Notes2028 NotesIn February 2022,we entered into a purchase agreement for the sale of an aggregate of$1.50 billion principal amount of convertible senior notes duein 2028(the“2028 Notes”)in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933,as amended(the“Securities Act”).The net proceeds from the issuance of the 2028 Notes were$1.31 billion,net of debt issuance costs and cash used to purchase the capped call16Table of Contentstransactions(the“2028 Capped Call Transactions”)discussed below.The debt issuance costs are amortized to interest expense using the effective interest ratemethod.The 2028 Notes are unsecured and unsubordinated obligations.Interest is payable in cash semi-annually in arrears beginning on September 1,2022 ata rate of 0.125%per year.The 2028 Notes mature on March 1,2028 unless repurchased,redeemed,or converted in accordance with their terms prior to suchdate.The 2028 Notes are convertible into cash,shares of our Class A common stock,or a combination of cash and shares of our Class A common stock,atour election,at an initial conversion rate of 17.7494 shares of Class A common stock per$1,000 principal amount of 2028 Notes,which is equivalent to aninitial conversion price of approximately$56.34 per share of our Class A common stock.We may redeem for cash all or any portion of the 2028 Notes,at ouroption,on or after March 5,2025 based on certain circumstances.2027 NotesIn April 2021,we entered into a purchase agreement for the sale of an aggregate of$1.15 billion principal amount of convertible senior notes due in2027(the“2027 Notes”)in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act.The net proceeds from theissuance of the 2027 Notes were$1.05 billion,net of debt issuance costs and cash used to purchase the capped call transactions(the“2027 Capped CallTransactions”)discussed below.The debt issuance costs are amortized to interest expense using the effective interest rate method.The 2027 Notes are unsecured and unsubordinated obligations which do not bear regular interest and for which the principal balance will not accrete.The 2027 Notes will mature on May 1,2027 unless repurchased,redeemed,or converted in accordance with their terms prior to such date.The 2027 Notes are convertible into cash,shares of our Class A common stock,or a combination of cash and shares of our Class A common stock,atour election,at an initial conversion rate of 11.2042 shares of Class A common stock per$1,000 principal amount of 2027 Notes,which is equivalent to aninitial conversion price of approximately$89.25 per share of our Class A common stock.We may redeem for cash all or portions of the 2027 Notes,at ouroption,on or after May 5,2024 based on certain circumstances.2025 NotesIn April 2020,we entered into a purchase agreement for the sale of an aggregate of$1.0 billion principal amount of convertible senior notes due in2025(the“2025 Notes”)in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act.The net proceeds from theissuance of the 2025 Notes were$888.6 million,net of debt issuance costs and cash used to purchase the capped call transactions(the“2025 Capped CallTransactions”)discussed below.The debt issuance costs are amortized to interest expense using the effective interest rate method.The 2025 Notes are unsecured and unsubordinated obligations.Interest is payable in cash semi-annually in arrears beginning on November 1,2020 ata rate of 0.25%per year.The 2025 Notes mature on May 1,2025 unless repurchased,redeemed,or converted in accordance with their terms prior to such date.The 2025 Notes are convertible into cash,shares of our Class A common stock,or a combination of cash and shares of our Class A common stock,atour election,at an initial conversion rate of 46.1233 shares of Class A common stock per$1,000 principal amount of 2025 Notes,which is equivalent to aninitial conversion price of approximately$21.68 per share of our Class A common stock.We may redeem for cash all or portions of the 2025 Notes,at ouroption,on or after May 6,2023 based on certain circumstances.2026 NotesIn August 2019,we entered into a purchase agreement for the sale of an aggregate of$1.265 billion principal amount of convertible senior notes duein 2026(the“2026 Notes”)in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act.The net proceeds from theissuance of the 2026 Notes were$1.15 billion,net of debt issuance costs and cash used to purchase the capped call transactions(the“2026 Capped CallTransactions”)discussed below.The debt issuance costs are amortized to interest expense using the effective interest rate method.17Table of ContentsThe 2026 Notes are unsecured and unsubordinated obligations.Interest is payable in cash semi-annually in arrears beginning on February 1,2020 at arate of 0.75%per year.The 2026 Notes mature on August 1,2026 unless repurchased,redeemed,or converted in accordance with the terms prior to such date.The 2026 Notes are convertible into cash,shares of our Class A common stock,or a combination of cash and shares of our Class A common stock,atour election,at an initial conversion rate of 43.8481 shares of Class A common stock per$1,000 principal amount of 2026 Notes,which is equivalent to aninitial conversion price of approximately$22.81 per share of our Class A common stock.We may redeem for cash all or portions of the 2026 Notes,at ouroption,on or after August 6,2023 based on certain circumstances.Note RepurchasesIn February 2024,we entered into various privately negotiated repurchase transactions(collectively,the“Note Repurchases”)with certain holders ofthe 2025 Notes and 2026 Notes,pursuant to which we agreed to repurchase$100.0 million in aggregate principal of the 2025 Notes and$351.2 million inaggregate principal of the 2026 Notes for a cash repurchase price of$440.7 million,including costs associated with the Note Repurchases.The NoteRepurchases resulted in a$8.8 million gain on extinguishment included within other income(expense),net on our consolidated statements of operations.The Convertible Notes consisted of the following:As of March 31,2024As of December 31,2023PrincipalUnamortized DebtIssuance CostsNet Carrying AmountPrincipalUnamortized DebtIssuance CostsNet Carrying Amount(in thousands)2025 Notes$184,105$(459)$183,646$284,105$(871)$283,234 2026 Notes487,286(1,788)485,498 838,482(3,402)835,080 2027 Notes1,150,000(6,582)1,143,418 1,150,000(7,114)1,142,886 2028 Notes1,500,000(11,096)1,488,904 1,500,000(11,800)1,488,200 Total$3,321,391$(19,925)$3,301,466$3,772,587$(23,187)$3,749,400 As of March 31,2024,the debt issuance costs on the 2025 Notes,2026 Notes,2027 Notes,and 2028 Notes will be amortized over the remainingperiod of approximately 1.1 years,2.3 years,3.1 years,and 3.9 years,respectively.Interest expense related to the amortization of debt issuance costs was$1.6 million and$1.7 million for the three months ended March 31,2024 and2023,respectively.Contractual interest expense was$1.8 million and$2.2 million for the three months ended March 31,2024 and 2023,respectively.As of March 31,2024,the if-converted value of the Convertible Notes did not exceed the principal amount.The sale price for conversion was notsatisfied as of March 31,2024 for the Convertible Notes,and as a result,the Convertible Notes will not be eligible for optional conversion during the secondquarter of 2024.No sinking fund is provided for the Convertible Notes,which means that we are not required to redeem or retire them periodically.Refer to Note 7 in our consolidated financial statements in the Annual Report for additional details.Capped Call TransactionsIn connection with the pricing of the 2025 Notes,the 2026 Notes,the 2027 Notes,and the 2028 Notes,we entered into the 2025 Capped CallTransactions,the 2026 Capped Call Transactions,the 2027 Capped Call Transactions,and the 2028 Capped Call Transactions(collectively,the“Capped CallTransactions”),respectively,with certain counterparties at a net cost of$100.0 million,$102.1 million,$86.8 million,and$177.0 million,respectively.The capprice of the 2025 Capped Call Transactions,the 2026 Capped Call Transactions,the 2027 Capped Call Transactions,and the 2028 Capped Call Transactions isinitially$32.12,$32.58,$121.02,and$93.90 per share of our Class A common stock,respectively.All are subject to certain adjustments under the terms of theCapped Call Transactions.Conditions that cause adjustments to the initial strike price of the Capped Call Transactions mirror conditions that result incorresponding adjustments for the Convertible Notes.18Table of ContentsThe Capped Call Transactions are intended to reduce potential dilution to holders of our Class A common stock beyond the conversion prices up to thecap prices on any conversion of the Convertible Notes or offset any cash payments we are required to make in excess of the principal amount,as the case maybe,with such reduction or offset subject to a cap.The cost of the Capped Call Transactions was recorded as a reduction of our additional paid-in capital in ourconsolidated balance sheets.The Capped Call Transactions will not be remeasured as long as they continue to meet the conditions for equity classification.Asof March 31,2024,the Capped Call Transactions were out-of-the-money.Credit FacilityIn May 2022,we entered into a five-year senior unsecured revolving credit facility(the“Credit Facility”)with certain lenders that allows us to borrowup to$1.05 billion to fund working capital and general corporate-purpose expenditures.Loans bear interest,at our option,at a rate equal to(i)a term securedovernight financing rate(“SOFR”)plus 0.75%or the base rate,if selected by us,for loans made in U.S.dollars,(ii)the Sterling overnight index average plus0.7826%for loans made in Sterling,or(iii)foreign indices as stated in the credit agreement plus 0.75%for loans made in other permitted foreign currencies.The base rate is defined as the greatest of(i)the Wall Street Journal prime rate,(ii)the greater of the(a)federal funds rate and(b)the overnight bank fundingrate,plus 0.50%,and(iii)the applicable SOFR for a period of one month(but not less than zero)plus 1.00.The Credit Facility also contains an annualcommitment fee of 0.10%on the daily undrawn balance of the facility.As of March 31,2024,we had$60.8 million in the form of outstanding standby lettersof credit,with no amounts outstanding under the Credit Facility.8.Commitments and ContingenciesCommitmentsWe have non-cancelable contractual agreements primarily related to the hosting of our data processing,storage,and other computing services,as wellas lease,content and developer partner,and other commitments.We had$2.6 billion in commitments as of March 31,2024,primarily due within three years.For additional discussion on leases,see Note 9 to our consolidated financial statements.ContingenciesWe record a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.We alsodisclose material contingencies when we believe a loss is not probable but reasonably possible.Accounting for contingencies requires us to use judgmentrelated to both the likelihood of a loss and the estimate of the amount or range of loss.Many legal and tax contingencies can take years to be resolved.Pending MattersIn November 2021,we and certain of our officers and directors were named as defendants in a securities class action lawsuit purportedly brought onbehalf of purchasers of our Class A common stock,alleging that we and certain of our officers made false or misleading statements and omissions concerningthe impact that Apples App Tracking Transparency framework would have on our business.We believe we have meritorious defenses to this lawsuit andcontinue to defend the lawsuit vigorously.Based on the preliminary nature of the proceedings in this case,the outcome of this matter remains uncertain.The outcomes of our legal proceedings are inherently unpredictable,subject to significant uncertainties,and could be material to our financialcondition,results of operations,and cash flows for a particular period.For the pending matter described above,it is not possible to estimate the reasonablypossible loss or range of loss.We are subject to various other legal proceedings and claims in the ordinary course of business,including certain patent,trademark,privacy,regulatory,and employment matters.Although occasional adverse decisions or settlements may occur,we do not believe that the final disposition of any of ourother pending matters will seriously harm our business,financial condition,results of operations,and cash flows.IndemnificationsIn the ordinary course of business,we may provide indemnifications of varying scope and terms to customers,vendors,lessors,investors,directors,officers,employees,and other parties with respect to certain matters.Indemnification may include losses from our breach of such agreements,services weprovide,or third-party intellectual property19Table of Contentsinfringement claims.These indemnifications may survive termination of the underlying agreement and the maximum potential amount of futureindemnification payments may not be subject to a cap.We have not incurred material costs to defend lawsuits or settle claims related to these indemnificationsas of March 31,2024.We believe the fair value of these liabilities is immaterial and accordingly have no liabilities recorded for these agreements at March 31,2024.9.LeasesWe have non-cancelable lease agreements for certain of our offices with original lease terms expiring between 2024 and 2042.Total operating leasecosts were$25.4 million and$25.0 million for the three months ended March 31,2024 and 2023,respectively.The weighted-average remaining lease term(in years)and discount rate related to our operating leases were as follows:As of March 31,20242023Weighted-average remaining lease term9.86.3Weighted-average discount rate6.1%4.8%The maturities of our operating lease liabilities as of March 31,2024 were as follows:Operating Leases(in thousands)Remainder of 2024$57,484 202579,769 202686,676 202778,026 202876,753 Thereafter431,887 Total lease payments$810,595 Less:Imputed interest(220,205)Present value of lease liabilities$590,390 As of March 31,2024,we had additional operating leases that have not yet commenced for facilities with lease obligations of$63.0 million.Theseoperating leases will commence between 2024 and 2026 with lease terms of approximately 6 years to 11 years.Cash payments included in the measurement of our operating lease liabilities were$28.2 million and$24.2 million for the three months endedMarch 31,2024 and 2023,respectively.Lease liabilities arising from obtaining operating lease right-of-use assets were$10.8 million and$1.7 million for the three months ended March 31,2024 and 2023,respectively.10.Strategic InvestmentsWe hold strategic investments primarily in privately held companies,which consist of equity securities,and to a lesser extent,debt securities.Thesestrategic investments are primarily recorded at fair value on a non-recurring basis.The estimation of fair value for these privately held strategic investmentsrequires the use of significant unobservable inputs,such as the issuance of new equity by the company,and as a result,we deem these assets as Level 3financial instruments within the fair value measurement framework.20Table of ContentsThe following table summarizes our strategic investments as of March 31,2024 and December 31,2023:As ofMarch 31,2024As ofDecember 31,2023(in thousands)Initial cost$106,218$106,368 Cumulative upward adjustments147,499 147,317 Cumulative downward adjustments,including impairments(64,656)(58,357)Carrying value$189,061$195,328 Gains and losses recognized during the periods presented were as follows:Three Months Ended March 31,20242023(in thousands)Gains(losses)recognized on strategic investments sold during the period,net$Unrealized gains on strategic investments still held at the reporting date182 1,079 Unrealized losses,including impairments,on strategic investments still held at the reporting date(6,449)(975)Gains(losses)on strategic investments,net$(6,267)$104 Gains and losses on all strategic investments are included within other income(expense),net on our consolidated statements of operations andincluded as an adjustment to reconcile net loss to net cash provided by(used in)operating activities in our consolidated statements of cash flows.Strategicinvestments are included within other assets on our consolidated balance sheets.11.Fair Value MeasurementsAssets and liabilities measured at fair value are classified into the following categories:Level 1:Quoted market prices in active markets for identical assets or liabilities.Level 2:Observable market-based inputs or unobservable inputs that are corroborated by market data.Level 3:Unobservable inputs reflecting the reporting entitys own assumptions or external inputs from inactive markets.We classify our cash equivalents and marketable securities within Level 1 or Level 2 because we use quoted market prices or alternative pricingsources and models utilizing observable market-based inputs to determine their fair value.The following tables set forth our financial assets that are measured at fair value on a recurring basis,excluding publicly traded equity securities,as ofMarch 31,2024 and December 31,2023:March 31,2024Cost orAmortized CostGrossUnrealizedGainsGrossUnrealizedLossesTotal EstimatedFair Value(in thousands)Cash$1,023,276$(7)$1,023,269 Level 1 securities:U.S.government securities1,438,436 71(6,179)1,432,328 U.S.government agency securities63,612 (124)63,488 Level 2 securities:Corporate debt securities196,494 93(164)196,423 Commercial paper184,625 184,625 Total$2,906,443$164$(6,474)$2,900,133 21Table of ContentsDecember 31,2023Cost orAmortized CostGrossUnrealizedGainsGrossUnrealizedLossesTotal EstimatedFair Value(in thousands)Cash$1,780,402$1,780,402 Level 1 securities:U.S.government securities1,295,918 894(3,919)1,292,893 U.S.government agency securities138,420 31(188)138,263 Level 2 securities:Corporate debt securities234,336 577(99)234,814 Commercial paper65,380 65,380 Certificates of deposit18,725 18,725 Total$3,533,181$1,502$(4,206)$3,530,477 Gross unrealized losses on marketable debt securities were not material for the three months ended March 31,2024 and 2023.As of March 31,2024,we considered any decreases in fair value on our marketable debt securities to be driven by factors other than credit risk,including market risk.As of March 31,2024,$479.7 million of our total$1.8 billion in marketable debt securities have contractual maturities between one and five years.All other marketable debtsecurities have contractual maturities less than one year.We hold investments in publicly traded companies with an aggregate carrying value of$10.9 million and$13.6 million as of March 31,2024 andDecember 31,2023,respectively,recorded as marketable securities.We classify these publicly traded equity securities within Level 1 because we use quotedmarket prices to determine their fair value.Gains and losses recognized during the periods presented,which are included within other income(expense),net onour consolidated statements of operations,were as follows:Three Months Ended March 31,20242023(in thousands)Gains(losses)recognized on publicly traded equity securities sold during the period,net$137 Unrealized gains(losses)on publicly traded equity securities still held at the reporting date,net(2,721)10,594 Gains(losses)on publicly traded equity securities,net$(2,721)$10,731 We carry the Convertible Notes at face value less the unamortized debt issuance costs on our consolidated balance sheets and present the fair value fordisclosure purposes only.As of March 31,2024,the fair value of the 2025 Notes,the 2026 Notes,the 2027 Notes,and the 2028 Notes was$179.2 million,$467.6 million,$927.9 million,and$1,139.7 million,respectively.As of December 31,2023,the fair value of the 2025 Notes,the 2026 Notes,the 2027 Notes,and the 2028 Notes was$300.9 million,$893.2 million,$921.5 million,and$1,181.7 million,respectively.The estimated fair value of the Convertible Notes,which are classified as Level 2 financial instruments,was determined based on the estimated or actual bid prices of the Convertible Notes in an over-the-counter market on the last business day of the period.12.Income TaxesOur tax provision for interim periods is determined using an estimate of our annual effective tax rate,adjusted for discrete items arising in that quarter.Our effective tax rate differs from the U.S.statutory tax rate primarily due to valuation allowances on our deferred tax assets as it is more likely than not thatsome or all of our deferred tax assets will not be realized.Income tax expense was$6.9 million and$6.8 million for the three months ended March 31,2024and 2023,respectively.22Table of Contents13.Accumulated Other Comprehensive Income(Loss)The table below presents the changes in accumulated other comprehensive income(loss)(“AOCI”)by component and the reclassifications out ofAOCI:Changes in Accumulated Other Comprehensive Income(Loss)byComponentMarketableSecuritiesForeign CurrencyTranslationTotal(in thousands)Balance at December 31,2023$(2,860)$9,991$7,131 Other comprehensive income(loss)before reclassifications(3,592)(2,777)(6,369)Amounts reclassified from AOCI(12)(12)Net current period other comprehensive income(loss)(3,604)(2,777)(6,381)Balance at March 31,2024$(6,464)$7,214$750(1)Realized gains and losses on marketable securities are reclassified from AOCI into other income(expense),net in our consolidated statements ofoperations.14.Long-lived AssetsThe following table lists long-lived assets by geographic area,which includes property and equipment,net and operating lease right-of-use assets:As ofMarch 31,2024As ofDecember 31,2023(in thousands)United States$633,569$646,546 United Kingdom235,535 218,326 Rest of world 68,376 62,316 Total long-lived assets,net$937,480$927,188(1)No individual country other than the United States and the United Kingdom exceeded 10%of our total long-lived assets for any period presented.15.Restructuring2024 RestructuringIn the first quarter of 2024,we announced a plan to reduce hierarchy and concentrate our team members in major hub locations to support in-personcollaboration,resulting in the reduction of our global headcount by approximately 10%.The following table summarizes the 2024 restructuring charges included in our consolidated statement of operations for the three months endedMarch 31,2024:(1)(1)23Table of ContentsSeverance and RelatedCharges Stock-BasedCompensation Expense(Benefit)Other Total(in thousands)Cost of revenue$837$207$1,044 Research and development31,269 4,517 3,201 38,987 Sales and marketing15,256 4,218 19,474 General and administrative6,265 95 2,351 8,711 Total$53,627$9,037$5,552$68,216(1)Severance and related charges include cash severance expenses and other termination benefits.The majority of cash paid for restructuring in the firstquarter of 2024 was related to severance and benefits.(2)Other primarily includes intangible asset amortization and depreciation expense.The remaining charges related to the 2024 restructuring are expected to be immaterial.The liabilities related to the 2024 restructuring were immaterialas of March 31,2024.(1)(2)24Table of ContentsItem 2.Managements Discussion and Analysis of Financial Condition and Results of OperationsThe following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidatedfinancial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statementsincluded in our Annual Report.In addition to historical consolidated financial information,the following discussion contains forward-looking statements thatreflect our plans,estimates,and beliefs that involve significant risks and uncertainties.Our actual results could differ materially from those discussed in theforward-looking statements.Factors that could cause or contribute to those differences include those discussed below and elsewhere in this Quarterly Reporton Form 10-Q,particularly in“Risk Factors,”“Note Regarding Forward-Looking Statements,”and“Note Regarding User Metrics and Other Data.”Overview of First Quarter 2024 ResultsOur key user metrics and financial results for the first quarter of 2024 were as follows:User MetricsDaily Active Users,or DAUs,increased 10%year-over-year to 422 million in Q1 2024.Average revenue per user,or ARPU,was$2.83 in Q1 2024,compared to$2.58 in Q1 2023.Financial ResultsRevenue was$1,194.8 million in Q1 2024,compared to$988.6 million in Q1 2023,an increase of 21%year-over-year.Total costs and expenses were$1,528.0 million in Q1 2024,compared to$1,353.9 million in Q1 2023.Net loss was$305.1 million in Q1 2024,compared to$328.7 million in Q1 2023.Diluted net loss per share was$(0.19)in Q1 2024,compared to$(0.21)in Q1 2023.Adjusted EBITDA was$45.7 million in Q1 2024,compared to$0.8 million in Q1 2023.Cash provided by operating activities was$88.4 million in Q1 2024,compared to$151.1 million in Q1 2023.Free Cash Flow was$37.9 million in Q1 2024,compared to$103.5 million in Q1 2023.Cash,cash equivalents,and marketable securities were$2.9 billion as of March 31,2024.Business and Macroeconomic ConditionsWe periodically make changes to our business and priorities.Recently,we conducted a strategic reprioritization to realign our focus on three strategicpriorities:growing our community and deepening their engagement with our products,accelerating and diversifying our revenue growth,and investing in thefuture of augmented reality.We believe that we can be successful in our current operating environment,with various macroeconomic factors impacting ourbusiness,by rigorously prioritizing our investments and continuing to engage our community with our products while driving success for our advertisingpartners.However,the impact of our strategic reprioritization and recent restructurings is difficult to predict.Macroeconomic factors such as labor shortages and disruptions,supply chain disruptions,inflation,changes in interest and foreign currency exchangerates,banking instability,and other risks and uncertainties continue to cause logistical challenges,increased input costs,and inventory constraints for ouradvertisers,which in turn may cause our advertisers to halt or decrease advertising spending on our platform.Such macroeconomic factors may also negativelyimpact,in the short-term or long-term,the global economy,advertising ecosystem,our customers and their budgets with us,user engagement,other usermetrics,and our business,financial condition,and results of operations.In addition,competition for advertising dollars has increased and demand growth on our advertising platform has slowed.We expect to continue toexperience increased competition,which may result in reduced advertising demand,and could adversely affect our revenue growth,pricing,business,financialcondition,and results of operations.Demand has also been disrupted by recent changes we made to our advertising platform,and,in the future,we maycontinue to experience adverse impacts to our revenue growth as a result of these changes.25Table of ContentsOur revenue,particularly in North America,has further been impacted by platform policy changes and restrictions that affected our targeting,measurement,and optimization capabilities,and in turn our ability to measure the effectiveness of advertisements on our services.This has resulted in,and inthe future is likely to continue to result in,reduced advertising revenue,especially if we are unable to mitigate these developments.We compete with other companies in every aspect of our business.We must compete effectively for users and advertisers to grow our business andincrease our revenue.These and other risks and uncertainties are further described in the section titled“Risk Factors”in Part II,Item 1A of this QuarterlyReport on Form 10-Q.Trends in User MetricsWe define a DAU as a registered and logged-in Snapchat user who visits Snapchat through our applications or websites at least once during a defined24-hour period.We define ARPU as quarterly revenue divided by the average DAUs.We assess the health of our business by measuring DAUs and ARPUbecause we believe that these metrics are important ways for both management and investors to understand engagement and monitor the performance of ourplatform.We also measure ARPU because we believe that this metric helps our management and investors to assess the extent to which we are monetizing ourservice.User EngagementWe calculate average DAUs for a particular quarter by adding the number of DAUs on each day of that quarter and dividing that sum by the numberof days in that quarter.DAUs are broken out by geography because markets have different characteristics.We had 422 million DAUs on average in the firstquarter of 2024,an increase of 39 million,or 10%,from the first quarter of 2023.Quarterly Average Daily Active Users(in millions)GlobalYoYgrowth:18%(1)Numbers may not foot due to rounding.(1)26Table of ContentsNorth America Europe YoYgrowth:5%4%4%3%3%2%1%(1)%9%7%4%4%(2)North America includes Mexico,the Caribbean,and Central America.(3)Europe includes Russia and Turkey.Rest of WorldYoYgrowth:36541%!%MonetizationWe recorded revenue of$1,194.8 million for the three months ended March 31,2024,compared to revenue of$988.6 million for the same period in2023,an increase of 21%year-over-year.We monetize our business primarily through advertising.Our advertising products include Snap Ads and AR Ads.We measure our business using ARPU because it helps us understand the rate at which we are monetizing our daily user base.ARPU was$2.83 in thefirst quarter of 2024,compared to$2.58 in the first quarter of 2023.For purposes of calculating ARPU,revenue by user geography is apportioned to eachregion based on a determination of the geographic location in which advertising impressions are delivered,as this approximates revenue based on user activity.This differs from the presentation of our revenue by geography in the notes to our consolidated financial statements,where revenue is based on the billingaddress of the advertising customer.(2)(3)27Table of ContentsQuarterly Average Revenue per UserGlobalNorth America Europe(1)North America includes Mexico,the Caribbean,and Central America.(2)Europe includes Russia and Turkey.Effective March 2022,we halted advertising sales to Russian and Belarusian entities.(1)(2)28Table of ContentsRest of WorldResults of OperationsThe following table summarizes certain selected historical financial results:Three Months Ended March 31,20242023(in thousands)Revenue$1,194,773$988,608 Operating loss$(333,232)$(365,264)Net loss$(305,090)$(328,674)Adjusted EBITDA$45,659$813(1)For information on how we define and calculate Adjusted EBITDA,and a reconciliation of net loss to Adjusted EBITDA,see“Non-GAAP FinancialMeasures.”Components of Results of OperationsRevenueWe generate substantially all of our revenue through the sale of our advertising products,which primarily include Snap Ads and AR Ads,referred to asadvertising revenue.Snap Ads may be subject to revenue sharing arrangements between us and the content partner.We also generate revenue fromsubscriptions and sales of hardware products.Sales of hardware products are reported net of allowances for returns.Cost of RevenueCost of revenue consists of payments to third-party infrastructure partners for hosting our products,which include expenses related to storage,computing,and bandwidth costs,and payments for content,developer,and advertiser partner costs.In addition,cost of revenue includes third-party sellingcosts and personnel-related costs,including salaries,benefits,and stock-based compensation expenses.Cost of revenue also includes facilities and othersupporting overhead costs,including depreciation and amortization,and inventory costs.Research and Development ExpensesResearch and development expenses consist primarily of personnel-related costs,including salaries,benefits,and stock-based compensation expensefor our engineers,designers,and other employees engaged in the research and development of our products.In addition,research and development expensesinclude facilities and other supporting overhead costs,including depreciation and amortization.Research and development costs are expensed as incurred.(1)29Table of ContentsSales and Marketing ExpensesSales and marketing expenses consist primarily of personnel-related costs,including salaries,benefits,commissions,and stock-based compensationexpense for our employees engaged in sales and sales support,business development,media,marketing,corporate partnerships,and customer servicefunctions.Sales and marketing expenses also include costs incurred for advertising,market research,tradeshows,branding,marketing,promotional expense,and public relations,as well as facilities and other supporting overhead costs,including depreciation and amortization.General and Administrative ExpensesGeneral and administrative expenses consist primarily of personnel-related costs,including salaries,benefits,and stock-based compensation expensefor our finance,legal,information technology,human resources,and other administrative teams.General and administrative expenses also include facilities andsupporting overhead costs,including depreciation and amortization,and external professional services.Interest IncomeInterest income consists primarily of interest earned on our cash,cash equivalents,and marketable securities.Interest ExpenseInterest expense consists primarily of interest expense associated with convertible notes and commitment fees related to our revolving credit facility.Other Income(Expense),NetOther income(expense),net primarily consists of gains and losses on strategic investments,marketable securities,and foreign currency transactions.Income Tax Benefit(Expense)We are subject to income taxes in the United States and numerous foreign jurisdictions.These foreign jurisdictions have different statutory tax ratesthan the United States.Additionally,certain of our foreign earnings may also be taxable in the United States.Accordingly,our effective tax rates will varydepending on the relative proportion of foreign to domestic income,use of tax credits,changes in the valuation of our deferred tax assets and liabilities,andchanges in tax laws.Adjusted EBITDAWe define Adjusted EBITDA as net income(loss),excluding interest income;interest expense;other income(expense),net;income tax benefit(expense);depreciation and amortization;stock-based compensation expense;payroll and other tax expense related to stock-based compensation;and certainother items impacting net income(loss)from time to time.We consider the exclusion of these items in calculating Adjusted EBITDA to provide a usefulmeasure for period-to-period comparisons of our business and for investors and others to evaluate our operating results in the same manner as does ourmanagement.See“Non-GAAP Financial Measures”for additional information and a reconciliation of net loss to Adjusted EBITDA.30Table of ContentsDiscussion of Results of OperationsThe following table sets forth our consolidated statements of operations data:Three Months Ended March 31,20242023(in thousands)Consolidated Statements of Operations Data:Revenue$1,194,773$988,608 Costs and expenses:Cost of revenue574,749 439,986 Research and development449,759 455,112 Sales and marketing276,034 268,433 General and administrative227,463 190,341 Total costs and expenses1,528,005 1,353,872 Operating loss(333,232)(365,264)Interest income39,898 37,948 Interest expense(4,743)(5,885)Other income(expense),net(81)11,372 Loss before income taxes(298,158)(321,829)Income tax benefit(expense)(6,932)(6,845)Net loss$(305,090)$(328,674)Adjusted EBITDA$45,659$813(1)Stock-based compensation expense included in the above line items:Three Months Ended March 31,20242023(in thousands)Stock-based compensation expense:Cost of revenue$1,815$1,885 Research and development174,519 219,850 Sales and marketing54,656 54,939 General and administrative32,762 38,257 Total$263,752$314,931(2)Depreciation and amortization expense included in the above line items:Three Months Ended March 31,20242023(in thousands)Depreciation and amortization expense:Cost of revenue$2,150$3,226 Research and development27,598 24,139 Sales and marketing4,577 5,073 General and administrative7,388 2,782 Total$41,713$35,220(3)See“Non-GAAP Financial Measures”for more information and for a reconciliation of Adjusted EBITDA to net loss,the most directly comparablefinancial measure calculated and presented in accordance with GAAP.(1)(2)(3)31Table of ContentsThe following table sets forth the components of our consolidated statements of operations data for each of the periods presented as a percentage ofrevenue:Three Months Ended March 31,20242023Consolidated Statements of Operations Data:Revenue1000%Costs and expenses:Cost of revenue48 45 Research and development38 46 Sales and marketing23 27 General and administrative19 19 Total costs and expenses128 137 Operating loss(28)(37)Interest income3 4 Interest expense Other income(expense),net 1 Loss before income taxes(25)(32)Income tax benefit(expense)(1)(1)Net loss(26)%(33)%Three Months Ended March 31,2024 and 2023RevenueThree Months Ended March 31,20242023(dollars in thousands)Revenue$1,194,773$988,608 Revenue as a dollar change$206,165 Revenue as a percentage change21%Revenue for the three months ended March 31,2024 increased$206.2 million compared to the same period in 2023.The increase was primarily due toa combination of growth in advertisers,optimization efficiencies,and improvement in auction-based advertising demand.The increase was also driven byhigher subscription revenue due to growth in the number of subscribers.Cost of RevenueThree Months Ended March 31,20242023(dollars in thousands)Cost of Revenue$574,749$439,986 Cost of Revenue as a dollar change$134,763 Cost of Revenue as a percentage change31%Cost of revenue for the three months ended March 31,2024 increased$134.8 million compared to the same period in 2023.The increase wasprimarily driven by increased infrastructure costs attributable to DAU growth and investments in machine learning and AI.32Table of ContentsResearch and Development ExpensesThree Months Ended March 31,20242023(dollars in thousands)Research and Development Expenses$449,759$455,112 Research and Development Expenses as a dollar change$(5,353)Research and Development Expenses as a percentage change(1)%Research and development expenses for the three months ended March 31,2024 decreased$5.4 million compared to the same period in 2023.Thedecrease was primarily driven by lower stock-based compensation expenses due to lower headcount compared to the prior period,partially offset by$39.0million relating to restructuring charges in the current period.Sales and Marketing ExpensesThree Months Ended March 31,20242023(dollars in thousands)Sales and Marketing Expenses$276,034$268,433 Sales and Marketing Expenses as a dollar change$7,601 Sales and Marketing Expenses as a percentage change3%Sales and marketing expenses for the three months ended March 31,2024 increased$7.6 million compared to the same period in 2023.The increasewas primarily driven by$19.5 million relating to restructuring charges in the current period,partially offset by lower stock-based compensation expenses dueto lower headcount compared to the prior period.General and Administrative ExpensesThree Months Ended March 31,20242023(dollars in thousands)General and Administrative Expenses$227,463$190,341 General and Administrative Expenses as a dollar change$37,122 General and Administrative Expenses as a percentage change20%General and administrative expenses for the three months ended March 31,2024 increased$37.1 million compared to the same period in 2023.Theincrease was primarily driven by$8.7 million relating to restructuring charges in the current period,higher spend on external professional services,andincreased facilities costs associated with return to office initiatives,partially offset by lower stock-based compensation expenses.33Table of ContentsInterest IncomeThree Months Ended March 31,20242023(dollars in thousands)Interest Income$39,898$37,948 Interest Income as a dollar change$1,950 Interest Income as a percentage change5%Interest income for the three months ended March 31,2024 increased$2.0 million compared to the same period in 2023.The increase was primarily aresult of higher interest rates on U.S.government-backed securities,offset by a lower overall invested cash balance.Interest ExpenseThree Months Ended March 31,20242023(dollars in thousands)Interest Expense$(4,743)$(5,885)Interest Expense as a dollar change$1,142 Interest Expense as a percentage change(19)%Interest expense for the three months ended March 31,2024 decreased$1.1 million compared to the same period in 2023.Interest expense for allperiods consists primarily of amortization of debt issuance costs and contractual interest expense.Other Income(Expense),NetThree Months Ended March 31,20242023(dollars in thousands)Other Income(Expense),Net$(81)$11,372 Other Income(Expense),Net as a dollar change$(11,453)Other Income(Expense),Net as a percentage change(101)%Other expense,net for the three months ended March 31,2024 was$0.1 million,compared to other income,net of$11.4 million in the same period in2023.Other expense,net for the three months ended March 31,2024 was primarily a result of$6.3 million in net losses on strategic investments and$2.7 million in unrealized losses on publicly traded securities classified as marketable securities,partially offset by a$8.8 million gain on extinguishmentassociated with the Note Repurchases.Other income,net for the three months ended March 31,2023 was primarily a result of$10.7 million in total gains onpublicly traded securities classified as marketable securities and$1.1 million in unrealized gains on strategic investments.34Table of ContentsIncome Tax Benefit(Expense)Three Months Ended March 31,20242023(dollars in thousands)Income Tax Benefit(Expense)$(6,932)$(6,845)Income Tax Benefit(Expense)as a dollar change$(87)Income Tax Benefit(Expense)as a percentage change(1)fective Tax Rate(2.3)%(2.1)%Income tax expense for the three months ended March 31,2024 was$6.9 million,compared to an income tax expense of$6.8 million for the sameperiod in 2023.Our effective tax rate differs from the U.S.statutory tax rate primarily due to valuation allowances on our deferred tax assets as it is more likelythan not that some or all of our deferred tax assets will not be realized.Net Loss and Adjusted EBITDAThree Months Ended March 31,20242023(dollars in thousands)(NM=Not Meaningful)Net Loss$(305,090)$(328,674)Net Loss as a dollar change$23,584 Net Loss as a percentage change7justed EBITDA$45,659$813 Adjusted EBITDA as a dollar change$44,846 Adjusted EBITDA as a percentage changeNMNet loss for the three months ended March 31,2024 was$305.1 million,compared to$328.7 million for the same period in 2023.The decrease in netloss was primarily the result of the changes in revenues and expenses discussed above.Adjusted EBITDA for the three months ended March 31,2024 was$45.7 million,compared to$0.8 million for the same period in 2023.The increasewas primarily attributable to increased revenue,partially offset by higher cost of revenue,sales and marketing,and general and administrative expenses.For a discussion of the limitations associated with using Adjusted EBITDA rather than GAAP measures and a reconciliation of this measure to netloss,see“Non-GAAP Financial Measures.”Liquidity and Capital ResourcesCash,cash equivalents,and marketable securities were$2.9 billion as of March 31,2024,primarily consisting of cash on deposit with banks andhighly liquid investments in U.S.government and agency securities,publicly traded equity securities,corporate debt securities,certificates of deposit,andcommercial paper.Our primary source of liquidity is cash generated through financing activities.Our primary uses of cash include operating costs such aspersonnel-related costs and the infrastructure costs of the Snapchat application,facility-related capital spending,and acquisitions and investments.There are noknown material subsequent events that could have a material impact on our cash or liquidity.We may contemplate and engage in merger and acquisitionactivity that could materially impact our liquidity and capital resource position.In October 2023,our board of directors authorized a stock repurchase program of up to$500.0 million of our Class A common stock.During thefirst quarter of 2024,we repurchased and retired 21.0 million shares of our Class A common stock for an aggregate of$235.1 million,including costsassociated with the repurchases.As of March 31,2024,35Table of Contentsthe remaining availability under the stock repurchase authorization was$75.9 million.This program was completed in April 2024.In February 2024,we entered into various privately negotiated repurchase transactions(collectively,the“Note Repurchases”)with certain holders ofthe 2025 Notes and 2026 Notes,pursuant to which we agreed to repurchase$100.0 million in aggregate principal of the 2025 Notes and$351.2 million inaggregate principal of the 2026 Notes for a cash repurchase price of$440.7 million,including costs associated with the Note Repurchases.In May 2022,we entered into a five-year senior unsecured revolving credit facility,or Credit Facility,with certain lenders that allows us to borrow upto$1.05 billion to fund working capital and general corporate-purpose expenditures.Loans bear interest,at our option,at a rate equal to(i)a term securedovernight financing rate,or SOFR,plus 0.75%or the base rate,if selected by us,for loans made in U.S.dollars,(ii)the Sterling overnight index average plus0.7826%for loans made in Sterling,or(iii)foreign indices as stated in the credit agreement plus 0.75%for loans made in other permitted foreign currencies.The base rate is defined as the greatest of(i)the Wall Street Journal prime rate,(ii)the greater of the(a)federal funds rate and(b)the overnight bank fundingrate,plus 0.50%,and(iii)the applicable SOFR for a period of one month(but not less than zero)plus 1.00.The Credit Facility also contains an annualcommitment fee of 0.10%on the daily undrawn balance of the facility.As of March 31,2024,we had$60.8 million in the form of outstanding standby lettersof credit,with no amounts outstanding under the Credit Facility.In February 2022,we entered into a purchase agreement for the sale of an aggregate of$1.50 billion principal amount of convertible senior notes duein 2028.The net proceeds from the issuance of the 2028 Notes were$1.31 billion,net of debt issuance costs and the 2028 Capped Call Transactions discussedfurther in Note 7 in our consolidated financial statements.The 2028 Notes mature on March 1,2028 unless repurchased,redeemed,or converted in accordancewith their terms prior to such date.The sale price requirement for conversion was not satisfied as of March 31,2024 and as a result,the 2028 Notes will not beeligible for optional conversion during the second quarter of 2024.As of March 31,2024,the outstanding principal of the 2028 Notes was$1.50 billion.In April 2021,we entered into a purchase agreement for the sale of an aggregate of$1.15 billion principal amount of convertible senior notes due in2027.The net proceeds from the issuance of the 2027 Notes were$1.05 billion,net of debt issuance costs and the 2027 Capped Call Transactions discussedfurther in Note 7 in our consolidated financial statements.The 2027 Notes mature on May 1,2027 unless repurchased,redeemed,or converted in accordancewith their terms prior to such date.The sale price requirement for conversion was not satisfied as of March 31,2024 and as a result,the 2027 Notes will not beeligible for optional conversion during the second quarter of 2024.As of March 31,2024,the outstanding principal of the 2027 Notes was$1.15 billion.In April 2020,we entered into a purchase agreement for the sale of an aggregate of$1.0 billion principal amount of convertible senior notes due in2025.The net proceeds from the issuance of the 2025 Notes were$888.6 million,net of debt issuance costs and the 2025 Capped Call Transactions discussedfurther in Note 7 in our consolidated financial statements.The 2025 Notes mature on May 1,2025 unless repurchased,redeemed,or converted in accordancewith their terms prior to such date.The sale price requirement for conversion was not satisfied as of March 31,2024 and as a result,the 2025 Notes will not beeligible for optional conversion during the second quarter of 2024.As of March 31,2024,the outstanding principal of the 2025 Notes was$184.1 million.In August 2019,we entered into a purchase agreement for the sale of an aggregate of$1.265 billion principal amount of convertible senior notes duein 2026.The net proceeds from the issuance of the 2026 Notes were$1.15 billion,net of debt issuance costs and the 2026 Capped Call Transactions discussedfurther in Note 7 in our consolidated financial statements.The 2026 Notes mature on August 1,2026 unless repurchased,redeemed,or converted in accordancewith their terms prior to such date.The sale price requirement for conversion was not satisfied as of March 31,2024 and as a result,the 2026 Notes will not beeligible for optional conversion during the second quarter of 2024.As of March 31,2024,the outstanding principal of the 2026 Notes was$487.3 million.We believe our existing cash balance is sufficient to fund our ongoing working capital,investing,and financing requirements for at least the next 12months.Our future capital requirements will depend on many factors including our growth rate,headcount,sales and marketing activities,research anddevelopment efforts,the introduction of new features,products,and acquisitions,and continued user engagement.We continually evaluate opportunities toissue or repurchase equity or debt securities,obtain,retire,or restructure credit facilities or financing arrangements,or declare dividends for strategic reasons orto further strengthen our financial position.36Table of ContentsAs of March 31,2024,approximately 4.0%of our cash,cash equivalents,and marketable securities was held outside the United States.These amountswere primarily held in the United Kingdom and are utilized to fund our foreign operations.Cash held outside the United States may be repatriated,subject tocertain limitations,and would be available to be used to fund our domestic operations.However,repatriation of funds may result in additional tax liabilities.We believe our existing cash balance in the United States is sufficient to fund our working capital needs.The following table sets forth the major components of our consolidated statements of cash flows for the periods presented:Three Months Ended March 31,20242023(in thousands)Net cash provided by(used in)operating activities$88,352$151,102 Net cash provided by(used in)investing activities(131,183)5,838 Net cash provided by(used in)financing activities(675,751)(1,999)Change in cash,cash equivalents,and restricted cash$(718,582)$154,941 Free Cash Flow$37,904$103,472(1)For information on how we define and calculate Free Cash Flow and a reconciliation to net cash provided by(used in)operating activities to FreeCash Flow,see“Non-GAAP Financial Measures.”Three Months Ended March 31,2024 and 2023Net Cash Provided by(Used in)Operating ActivitiesNet cash provided by operating activities was$88.4 million for the three months ended March 31,2024,compared to net cash provided by operatingactivities of$151.1 million for the same period in 2023,resulting primarily from our net loss,adjusted for non-cash items,including stock-based compensationexpense of$263.8 million and depreciation and amortization expense of$41.7 million.Net cash provided by operating activities for the three months endedMarch 31,2024 was also driven by a$162.2 million decrease in accounts receivable due to higher collections and a reduction in billings in the period,partiallyoffset by a$34.1 million decrease in accounts payable and a$18.4 million decrease in accrued expenses and other current liabilities,primarily due to thetiming of payments.Net Cash Provided by(Used in)Investing ActivitiesNet cash used in investing activities was$131.2 million for the three months ended March 31,2024,compared to net cash provided by investingactivities of$5.8 million for the same period in 2023.Our investing activities for the three months ended March 31,2024 primarily consisted of purchases ofmarketable securities of$465.7 million and purchases of property and equipment of$50.4 million,partially offset by maturities of marketable securities of$384.9 million.Net cash provided by investing activities for the three months ended March 31,2023 primarily consisted of maturities of marketable securitiesof$924.3 million,partially offset by purchases of marketable securities of$874.1 million.Net Cash Provided by(Used in)Financing ActivitiesNet cash used in financing activities was$675.8 million for the three months ended March 31,2024,compared to net cash used in financing activitiesof$2.0 million for the same period in 2023.Our financing activities for the three months ended March 31,2024 primarily consisted of repurchases of ourConvertible Notes for$440.7 million and repurchases of our Class A common stock for an aggregate of$235.1 million.Our financing activities for the threemonths ended March 31,2023 were not material.Free Cash FlowFree Cash Flow was$37.9 million for the three months ended March 31,2024,compared to$103.5 million for the same period in 2023.Free CashFlow in all periods was composed of net cash provided by(used in)operating activities,resulting primarily from net loss,adjusted for non-cash items andchanges in working capital.Free Cash Flow also included purchases of property and equipment of$50.4 million and$47.6 million for the three months endedMarch 31,2024 and 2023,respectively.See“Non-GAAP Financial Measures.”(1)37Table of ContentsNon-GAAP Financial MeasuresTo supplement our consolidated financial statements,which are prepared and presented in accordance with GAAP,we use certain non-GAAP financialmeasures,as described below,to understand and evaluate our core operating performance.These non-GAAP financial measures,which may be different thansimilarly titled measures used by other companies,are presented to enhance investors overall understanding of our financial performance and should not beconsidered a substitute for,or superior to,the financial information prepared and presented in accordance with GAAP.We use the non-GAAP financial measure of Free Cash Flow,which is defined as net cash provided by(used in)operating activities,reduced bypurchases of property and equipment.We believe Free Cash Flow is an important liquidity measure of the cash that is available,after capital expenditures,foroperational expenses and investment in our business and is a key financial indicator used by management.Additionally,we believe that Free Cash Flow is animportant measure since we use third-party infrastructure partners to host our services and therefore we do not incur significant capital expenditures to supportrevenue generating activities.Free Cash Flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash.Once ourbusiness needs and obligations are met,cash can be used to maintain a strong balance sheet and invest in future growth.We use the non-GAAP financial measure of Adjusted EBITDA,which is defined as net income(loss),excluding interest income;interest expense;other income(expense),net;income tax benefit(expense);depreciation and amortization;stock-based compensation expense;payroll and other tax expenserelated to stock-based compensation;and certain other items impacting net income(loss)from time to time.We believe that Adjusted EBITDA helps identifyunderlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in Adjusted EBITDA.We believe that both Free Cash Flow and Adjusted EBITDA provide useful information about our financial performance,enhance the overallunderstanding of our past performance and future prospects,and allow for greater transparency with respect to key metrics used by our management forfinancial and operational decision-making.We are presenting the non-GAAP measures of Free Cash Flow and Adjusted EBITDA to assist investors in seeingour financial performance through the eyes of management,and because we believe that these measures provide an additional tool for investors to use incomparing our core financial performance over multiple periods with other companies in our industry.These non-GAAP financial measures should not be considered in isolation from,or as substitutes for,financial information prepared in accordancewith GAAP.There are a number of limitations related to the use of these non-GAAP financial measures compared to the closest comparable GAAP measure.Some of these limitations are that:Free Cash Flow does not reflect our future contractual commitments;Adjusted EBITDA excludes certain recurring,non-cash charges such as depreciation of fixed assets and amortization of acquired intangible assets and,although these are non-cash charges,the assets being depreciated and amortized may have to be replaced in the future;Adjusted EBITDA excludes stock-based compensation expense and payroll and other tax expense related to stock-based compensation,which havebeen,and will continue to be for the foreseeable future,significant recurring expenses in our business and an important part of our compensationstrategy;andAdjusted EBITDA excludes income tax benefit(expense).The following table presents a reconciliation of Free Cash Flow to net cash provided by(used in)operating activities,the most comparable GAAPfinancial measure,for each of the periods presented:Three Months Ended March 31,20242023(in thousands)Free Cash Flow reconciliation:Net cash provided by(used in)operating activities$88,352$151,102 Less:Purchases of property and equipment(50,448)(47,630)Free Cash Flow$37,904$103,472 38Table of ContentsThe following table presents a reconciliation of Adjusted EBITDA to net loss,the most comparable GAAP financial measure,for each of the periodspresented:Three Months Ended March 31,20242023(in thousands)Adjusted EBITDA reconciliation:Net loss$(305,090)$(328,674)Add(deduct):Interest income(39,898)(37,948)Interest expense4,743 5,885 Other(income)expense,net81(11,372)Income tax(benefit)expense6,932 6,845 Depreciation and amortization38,098 35,220 Stock-based compensation expense254,715 314,931 Payroll and other tax expense related to stock-based compensation15,970 15,926 Restructuring charges 70,108 Adjusted EBITDA$45,659$813(1)Restructuring charges primarily include$68.2 million of cash severance,stock-based compensation expense,and other charges associated with the2024 restructuring.These charges are not reflective of underlying trends in our business.Refer to Note 15 in our consolidated financial statements.ContingenciesWe are involved in claims,lawsuits,tax matters,government investigations,and proceedings arising in the ordinary course of our business.We recorda provision for a liability when we believe that it is both probable that a liability has been incurred and the amount can be reasonably estimated.We alsodisclose material contingencies when we believe that a loss is not probable but reasonably possible.Significant judgment is required to determine bothprobability and the estimated amount.Such claims,suits,and proceedings are inherently unpredictable and subject to significant uncertainties,some of whichare beyond our control.Many of these legal and tax contingencies can take years to resolve.Should any of these estimates and assumptions change or prove tobe incorrect,it could have a material impact on our results of operations,financial position,and cash flows.CommitmentsWe have non-cancelable contractual agreements primarily related to the hosting of our data processing,storage,and other computing services,as wellas lease,content and developer partner,and other commitments.We had$2.6 billion in commitments,as of March 31,2024,primarily due within three years.For additional discussion on our leases,see Note 9 to our consolidated financial statements.Critical Accounting Policies and EstimatesWe prepare our financial statements in accordance with GAAP.Preparing these financial statements requires us to make estimates and assumptionsthat affect the reported amounts of assets,liabilities,revenue,expenses,an

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  • 华特迪士尼公司(WALT DISNEY)2024财年第二季度财报(英文版)(23页).pdf

    May7,2024THEWALTDISNEYCOMPANYREPORTSSECONDQUARTERANDSIXMONTHSEARNINGSFORFISCAL2024BURBANK,Calif.TheWaltDisneyCompanytodayreportedearningsforitssecondquarterendedMarch30,2024.FinancialResultsfortheQuarter:Revenuesforthequarterincreasedto$22.1billionfrom$21.8billionintheprior-yearquarter.Dilutedearningspershare(EPS)wasalossof$0.01forthecurrentquartercomparedtoincomeof$0.69intheprior-yearquarter.DilutedEPSdecreasedtoanominallossduetogoodwillimpairmentsinthequarter,partiallyoffsetbyhigheroperatingincomeatEntertainmentandExperiences.Excludingcertainitems(1),dilutedEPSforthequarterincreasedto$1.21from$0.93intheprior-yearquarter.KeyPoints:Inthesecondfiscalquarterof2024,weachievedstrongdoubledigitpercentagegrowthinadjustedEPS(1),andmetorexceededourfinancialguidanceforthequarter.Asaresultofoutperformanceinthesecondquarter,ournewfullyearadjustedEPS(1)growthtargetisnow25%.Weremainontracktogenerateapproximately$14billionofcashprovidedbyoperationsandover$8billionoffreecashflow(1)thisfiscalyear.Werepurchased$1billionworthofsharesinthesecondquarterandlookforwardtocontinuingtoreturncapitaltoshareholders.TheEntertainmentDirect-to-Consumerbusinesswasprofitableinthesecondquarter.WhileweareexpectingsofterEntertainmentDTCresultsinQ3tobedrivenbyDisney Hotstar,wecontinuetoexpectourcombinedstreamingbusinessestobeprofitableinthefourthquarter,andtobeameaningfulfuturegrowthdriverforthecompany,withfurtherimprovementsinprofitabilityinfiscal2025.Disney Coresubscribersincreasedbymorethan6millioninthesecondquarter,andDisney CoreARPUincreasedsequentiallyby44cents.Sportsoperatingincomedeclinedslightlyversustheprioryear,reflectingthetimingimpactofCollegeFootballPlayoffgamesatESPN,offsetbyimprovedresultsatStarIndia.TheExperiencesbusinesswasalsoagrowthdriverinthesecondquarter,withrevenuegrowthof10%,segmentoperatingincomegrowthof12%,andmarginexpansionof60basispointsversustheprioryear.Althoughthethirdquarterssegmentoperatingincomeisexpectedtocomeinroughlycomparabletotheprioryear,wecontinuetoexpectrobustoperatingincomegrowthatExperiencesforthefullyear.FORIMMEDIATERELEASE1(1)DilutedEPSexcludingcertainitems(alsoreferredtohereinasadjustedEPS)andfreecashflowarenon-GAAPfinancialmeasures.ThemostcomparableGAAPmeasuresaredilutedEPSandcashprovidedbyoperations,respectively.Seethediscussiononpages17through21forhowwedefineandcalculatethesemeasuresandaquantitativereconciliationofhistoricalmeasuresthereofandtheforward-lookingmeasureoffreecashflowtothemostdirectlycomparableGAAPmeasuresandwhytheCompanyisnotprovidingaforward-lookingquantitativereconciliationofdilutedEPSexcludingcertainitemstothemostcomparableGAAPmeasure.MessageFromOurCEO:“OurstrongperformanceinQ2,withadjustedEPS(1)up30%comparedtotheprioryear,demonstrateswearedeliveringonourstrategicprioritiesandbuildingforthefuture,”saidRobertA.Iger,ChiefExecutiveOfficer,TheWaltDisneyCompany.“OurresultsweredriveninlargepartbyourExperiencessegmentaswellasourstreamingbusiness.Importantly,entertainmentstreamingwasprofitableforthequarter,andweremainontracktoachieveprofitabilityinourcombinedstreamingbusinessesinQ4.“Lookingatourcompanyasawhole,itsclearthattheturnaroundandgrowthinitiativeswesetinmotionlastyearhavecontinuedtoyieldpositiveresults.Wehaveanumberofhighlyanticipatedtheatricalreleasesarrivingoverthenextfewmonths;ourtelevisionshowsareresonatingwithaudiencesandcriticsalike;ESPNcontinuestobreakratingsrecordsaswefurtheritsevolutionintothepreeminentdigitalsportsplatform;andweareturbocharginggrowthinourExperiencesbusinesswithanumberofnear-andlong-termstrategicinvestments.”SUMMARIZEDFINANCIALRESULTSThefollowingtablesummarizessecondquarterresultsforfiscal2024and2023:QuarterEndedSixMonthsEnded($inmillions,exceptpershareamounts)March30,2024April1,2023ChangeMarch30,2024April1,2023ChangeRevenues$22,083$21,815 1%$45,632$45,327 1%Incomebeforeincometaxes$657$2,123(69)%$3,528$3,896(9)%Totalsegmentoperatingincome(1)$3,845$3,285 17%$7,721$6,328 22%DilutedEPS$(0.01)$0.69nm$1.03$1.39(26)%DilutedEPSexcludingcertainitems(1)$1.21$0.93 30%$2.44$1.91 28shprovidedbyoperations$3,666$3,236 13%$5,851$2,262 100%Freecashflow(1)$2,407$1,987 21%$3,293$(168)nm(1)Totalsegmentoperatingincome,dilutedEPSexcludingcertainitemsandfreecashflowarenon-GAAPfinancialmeasures.ThemostcomparableGAAPmeasuresareincomebeforeincometaxes,dilutedEPSandcashprovidedbyoperations,respectively.Seethediscussiononpages17through21forhowwedefineandcalculatethesemeasuresandareconciliationthereoftothemostdirectlycomparableGAAPmeasures.2SUMMARIZEDSEGMENTFINANCIALRESULTSThefollowingtablesummarizessecondquartersegmentrevenueandoperatingincomeforfiscal2024and2023:QuarterEndedSixMonthsEnded($inmillions)March30,2024April1,2023ChangeMarch30,2024April1,2023ChangeRevenues:Entertainment$9,796$10,309(5)%$19,777$20,984(6)%Sports4,3124,226 2%9,1478,866 3%Experiences8,3937,646 10,52516,191 8%Eliminations(2)(418)(366)(14)%(817)(714)(14)%Totalrevenues$22,083$21,815 1%$45,632$45,327 1%Segmentoperatingincome(loss):Entertainment$781$455 72%$1,655$800 100%Sports778794(2)g5630 7%Experiences2,2862,036 12%5,3914,898 10%Totalsegmentoperatingincome(1)$3,845$3,285 17%$7,721$6,328 22%(1)Totalsegmentoperatingincomeisanon-GAAPfinancialmeasure.ThemostcomparableGAAPmeasureisincomebeforeincometaxes.Seethediscussiononpages17through21.(2)ReflectsfeespaidbyDirect-to-ConsumertoSportsandotherEntertainmentbusinessesfortherighttoairtheirlinearnetworksonHuluLiveandfeespaidbyEntertainmenttoSportstoprogramsportsontheABCNetworkandStar .DISCUSSIONOFSECONDQUARTERSEGMENTRESULTSEntertainmentRevenueandoperatingincomefortheEntertainmentsegmentareasfollows:QuarterEndedChangeSixMonthsEnded($inmillions)March30,2024April1,2023March30,2024April1,2023ChangeRevenues:LinearNetworks$2,765$2,999(8)%$5,568$6,201(10)%Direct-to-Consumer5,6424,983 13,188 9,805 14%ContentSales/LicensingandOther1,3892,327(40)%3,021 4,978(39)%$9,796$10,309(5)%$19,777$20,984(6)%Operatingincome(loss):LinearNetworks$752$959(22)%$1,988$2,289(13)%Direct-to-Consumer47(587)nm(91)(1,571)94%ContentSales/LicensingandOther(18)83nm(242)82nm$781$455 72%$1,655$800 100%3TheincreaseinEntertainmentoperatingincomeinthecurrentquartercomparedtotheprior-yearquarterwasduetoimprovedresultsatDirect-to-Consumer,partiallyoffsetbydeclinesatLinearNetworksandContentSales/LicensingandOther.LinearNetworksLinearNetworksrevenuesandoperatingincomeareasfollows:QuarterEndedChange($inmillions)March30,2024April1,2023RevenueDomestic$2,269$2,440(7)%International496559(11)%$2,765$2,999(8)%OperatingincomeDomestic$520$635(18)%International92165(44)%Equityintheincomeofinvestees140159(12)%$752$959(22)%DomesticThedecreaseindomesticoperatingincomeinthecurrentquartercomparedtotheprior-yearquarterwasdueto:Loweraffiliaterevenueprimarilyduetoadecreaseinsubscribersincludingtheimpactofthenon-renewalofcarriageofcertainnetworksbyanaffiliate,partiallyoffsetbyhighercontractualrates Adeclineinadvertisingrevenueattributabletoadecreaseinimpressionsreflectingloweraverageviewership,partiallyoffsetbyhigherratesInternationalLowerinternationaloperatingincomewasduetoadecreaseinaffiliaterevenueprimarilyattributabletofewersubscribersandcontractualratedecreases.EquityintheIncomeofInvesteesIncomefromequityinvesteesdecreasedduetolowerincomefromA ETelevisionNetworks(A E)attributabletodecreasesinadvertisingandaffiliaterevenue.Direct-to-ConsumerDirect-to-Consumerrevenuesandoperatingincome(loss)areasfollows:QuarterEndedChange($inmillions)March30,2024April1,2023Revenue$5,642$4,983 13%Operatingincome(loss)$47$(587)nmTheimprovementinoperatingresultsinthecurrentquartercomparedtotheprior-yearquarterwasdueto:Subscriptionrevenuegrowthattributabletohigherratesduetoincreasesinretailpricingacrossourstreamingservices,andsubscribergrowthatDisney Core4 Lowerdistributioncosts Anincreaseinadvertisingrevenueduetohigherimpressions,partiallyoffsetbylowerrates Highermarketingcosts Anincreaseinprogrammingandproductioncostsduetomoreprogrammingonourservicesandhighersubscriber-basedfeesforprogrammingtheHuluLiveTVservice,partiallyoffsetbyloweraveragecostsperhourofcontentavailableonourservicesTheincreaseinHuluLiveTVsubscriber-basedfeeswasduetorateincreasesandmoresubscribersSecondQuarterofFiscal2024ComparisontoFirstQuarterofFiscal2024Inadditiontorevenue,costsandoperatingincome,managementusesthefollowingkeymetricstoanalyzetrendsandevaluatetheoverallperformanceofourDisney andHuludirect-to-consumer(DTC)productofferings(1),andwebelievethesemetricsareusefultoinvestorsinanalyzingthebusiness.Thefollowingtablesandrelateddiscussionareonasequentialquarterbasis.Paidsubscribers(1)at:(inmillions)March30,2024December30,2023ChangeDisney Domestic(U.S.andCanada)54.046.1 17%International(excludingDisney Hotstar)(1)63.665.2(2)%Disney Core(2)117.6111.3 6%Disney Hotstar36.038.3(6)%HuluSVODOnly45.845.1 2%LiveTV SVOD4.54.6(2)%TotalHulu(2)50.249.7 1%AverageMonthlyRevenuePerPaidSubscriber(1)forthequarterended:March30,2024December30,2023ChangeDisney Domestic(U.S.andCanada)$8.00$8.15(2)%International(excludingDisney Hotstar)(1)6.665.91 13%Disney Core7.286.84 6%Disney Hotstar0.701.28(45)%HuluSVODOnly11.8412.29(4)%LiveTV SVOD95.0193.61 1%(1)Seediscussiononpage16DTCProductDescriptionsandKeyDefinitions(2)TotalmaynotequalthesumofthecolumnduetoroundingDomesticDisney averagemonthlyrevenueperpaidsubscriberdecreasedfrom$8.15to$8.00duetoahighermixofwholesalesubscribers,partiallyoffsetbyincreasesinretailpricing.5InternationalDisney (excludingDisney Hotstar)averagemonthlyrevenueperpaidsubscriberincreasedfrom$5.91to$6.66duetoincreasesinretailpricingandalowermixofsubscriberstopromotionalofferings.Disney Hotstaraveragemonthlyrevenueperpaidsubscriberdecreasedfrom$1.28to$0.70duetoloweradvertisingrevenue.HuluSVODOnlyaveragemonthlyrevenueperpaidsubscriberdecreasedfrom$12.29to$11.84duetoloweradvertisingrevenue,partiallyoffsetbyincreasesinretailpricing.HuluLiveTV SVODaveragemonthlyrevenueperpaidsubscriberincreasedfrom$93.61to$95.01duetoincreasesinretailpricingandalowermixofsubscriberstopromotionalofferings,partiallyoffsetbyloweradvertisingrevenue.ContentSales/LicensingandOtherContentSales/LicensingandOtherrevenuesandoperatingincome(loss)areasfollows:QuarterEndedChange($inmillions)March30,2024April1,2023Revenue$1,389$2,327(40)%Operatingincome(loss)$(18)$83nmThedecreaseinoperatingresultswasdueto:LowertheatricaldistributionresultsastherewerenosignificanttitlesreleasedinthecurrentquartercomparedtoAnt-ManandtheWasp:Quantumaniaintheprior-yearquarter.Theprior-yearquarteralsoincludedthebenefitoftheongoingperformanceofAvatar:TheWayofWater,whichwasreleasedinDecember2022.Higherfilmcostimpairmentsinthecurrentquarter6SportsSportsrevenuesandoperatingincome(loss)areasfollows:QuarterEndedChange($inmillions)March30,2024April1,2023RevenueESPNDomestic$3,866$3,733 4%International341366(7)%4,2074,099 3%StarIndia105127(17)%$4,312$4,226 2%Operatingincome(loss)ESPNDomestic$780$858(9)%International19 19y9 877(9)%StarIndia(27)(99)73%Equityintheincomeofinvestees6 16(63)%$778$794(2)%DomesticESPNLowerdomesticESPNoperatingresultsinthecurrentquartercomparedtotheprior-yearquarterweredueto:AnincreaseinprogrammingandproductioncostsattributabletohighercostsforCollegeFootballPlayoff(CFP)programmingasaresultofairinganadditionalgameinthecurrentquarterduetotiming.Inthecurrentquarter,weairedthechampionshipgame,twosemi-finalgamesandonehostgamecomparedtotheairingofthechampionshipgameandtwohostgamesintheprior-yearquarter.Loweraffiliaterevenuedrivenbyfewersubscribers,partiallyoffsetbycontractualrateincreases Advertisingrevenuegrowthprimarilyduetoincreasesinratesand,toalesserextent,averageviewership.TheseincreasesincludebenefitsfromtheadditionalCFPgameandanadditionalNFLplayoffgameinthecurrentquarter.GrowthinESPN subscriptionrevenueduetohigherrates7StarIndiaThedecreaseinoperatinglossatStarIndiawasduetolowerprogrammingandproductioncostsattributabletothenon-renewalofBoardofControlforCricketinIndiarights,partiallyoffsetbyanincreaseincostsforIndianPremierLeaguematchesduetomorematchesairedinthecurrentquartercomparedtotheprior-yearquarter.SecondQuarterofFiscal2024ComparisontoFirstQuarterofFiscal2024Inadditiontorevenue,costsandoperatingincome,managementusesthefollowingkeymetricstoanalyzetrendsandevaluatetheoverallperformanceofourESPN DTCproductoffering(1),andwebelievethesemetricsareusefultoinvestorsinanalyzingthebusiness.Thefollowingtableandrelateddiscussionareonasequentialquarterbasis.March30,2024December30,2023ChangePaidsubscribers(1)at:(inmillions)24.825.2(2)%AverageMonthlyRevenuePerPaidSubscriber(1)forthequarterended:$6.30$6.09 3%(1)Seediscussiononpage16DTCProductDescriptionsandKeyDefinitionsTheincreaseinESPN averagemonthlyrevenueperpaidsubscriberwasduetoincreasesinretailpricingandhigheradvertisingrevenue.ExperiencesExperiencesrevenuesandoperatingincomeareasfollows:QuarterEndedChange($inmillions)March30,2024April1,2023RevenueParks&ExperiencesDomestic$5,958$5,572 7%International1,522 1,184 29%ConsumerProducts913 890 3%$8,393$7,646 10%OperatingincomeParks&ExperiencesDomestic$1,607$1,519 6%International292 156 87%ConsumerProducts387 361 7%$2,286$2,036 12%DomesticParksandExperiencesTheincreaseinoperatingincomeatourdomesticparksandexperienceswasduetohigherresultsatWaltDisneyWorldResortandDisneyCruiseLine,partiallyoffsetbylowerresultsatDisneylandResort.AtWaltDisneyWorldResort,higherresultsinthecurrentquartercomparedtotheprior-yearquarterweredueto:IncreasedguestspendingattributabletohigheraverageticketpricesHighercostsduetoinflation,partiallyoffsetbylowerdepreciationandcostsavinginitiatives8 GrowthatDisneyCruiseLinewasduetoanincreaseinaverageticketprices,partiallyoffsetbyhighercosts ThedecreaseinoperatingresultsatDisneylandResortwasdueto:HighercostsdrivenbyinflationAnincreaseinguestspendingattributabletohigheraverageticketpricesanddailyhotelroomratesHighervolumesduetoattendancegrowth,partiallyoffsetbyloweroccupiedroomnightsInternationalParksandExperiencesHigherinternationalparksandexperiencesoperatingresultsweredueto:AnincreaseinoperatingresultsatHongKongDisneylandResortattributableto:Guestspendinggrowthduetoincreasesinaverageticketpricesandfood,beverageandmerchandisespendingHighervolumesresultingfromincreasesinattendanceandoccupiedroomnights.VolumegrowthbenefittedfromadditionaldaysofoperationsinthecurrentquarteraswellastheopeningofWorldofFrozeninNovember2023IncreasedcostsdrivenbyinflationandnewguestofferingsConsumerProductsTheincreaseinconsumerproductsoperatingresultswasdrivenbyhighergameslicensingrevenue.OTHERFINANCIALINFORMATIONDTCStreamingBusinessesRevenueandoperatinglossforourcombinedDTCstreamingbusinesses,whichconsistoftheDirect-to-ConsumerlineofbusinessattheEntertainmentsegmentandESPN attheSportssegment,areasfollows:QuarterEndedChange($inmillions)March30,2024April1,2023Revenue$6,188$5,514 12%Operatingloss(1)$(18)$(659)97%(1)DTCstreamingbusinessesoperatinglossisnotafinancialmeasuredefinedbyGAAP.ThemostcomparableGAAPmeasuresaresegmentoperatingincomefortheEntertainmentsegmentandSportssegment.Seethediscussiononpage21forhowwedefineandcalculatethismeasureandareconciliationofittothemostdirectlycomparableGAAPmeasures.CorporateandUnallocatedSharedExpensesCorporateandunallocatedsharedexpensesincreased$112millionforthequarter,from$279millionto$391million,primarilyattributableto:Highercostsrelatedtoourproxysolicitationandannualshareholdermeeting Increasedcompensationcosts OthercostinflationRestructuringandImpairmentChargesInthecurrentquarter,theCompanyrecordedchargesof$2,052millionduetogoodwillimpairmentsrelatedtoStarIndiaandentertainmentlinearnetworks.TheimpairmentatStarIndiawasa9resultoftheCompanyenteringintoabindingagreementinthecurrentquartertocontributeourStarIndiaoperationsintoanewjointventure.Intheprior-yearquarter,theCompanyrecordedchargesof$152millionprimarilyforseverance.OtherIncome,netIntheprior-yearquarter,theCompanyrecordeda$149milliongaintoadjustitsinvestmentinDraftKings,Inc.tofairvalue.InterestExpense,netInterestexpense,netwasasfollows:QuarterEnded($inmillions)March30,2024April1,2023ChangeInterestexpense$(501)$(504)1%Interestincome,investmentincomeandother190182 4%Interestexpense,net$(311)$(322)3%EquityintheIncomeofInvesteesEquityintheincomeofinvesteeswasasfollows:QuarterEnded($inmillions)March30,2024April1,2023ChangeAmountsincludedinsegmentresults:Entertainment$138$160(14)%Sports616(63)%AmortizationofTFCFintangibleassetsrelatedtoequityinvestees(3)(3)%Equityintheincomeofinvestees$141$173(18)%Incomefromequityinvesteesdecreased$32million,to$141millionfrom$173million,duetolowerincomefromA E.IncomeTaxesTheeffectiveincometaxratewasasfollows:QuarterEndedMarch30,2024April1,2023Incomebeforeincometaxes$657$2,123 Incometaxexpense441 635 Effectiveincometaxrate 67.1).9%Theincreaseintheeffectiveincometaxratewasduetoanunfavorableimpactfromthegoodwillimpairmentsrecognizedinthecurrentquarter,whicharenottaxdeductible,partiallyoffsetbythebenefitfromadjustmentsrelatedtoprioryears,whichwerefavorableinthecurrentquarterandunfavorableintheprior-yearquarter.10NoncontrollingInterestsNetincomeattributabletononcontrollinginterestswasasfollows:QuarterEnded($inmillions)March30,2024April1,2023ChangeNetincomeattributabletononcontrollinginterests$(236)$(217)(9)%TheincreaseinnetincomeattributabletononcontrollinginterestswasprimarilyduetoimprovedresultsatHongKongDisneylandResort,partiallyoffsetbythecomparisontotheaccretionofNBCUniversalsinterestinHuluintheprior-yearquarterwithnoaccretioninthecurrentquarteraswehadfullyaccretedtotheamountpaidinDecember2023.Netincomeattributabletononcontrollinginterestsisdeterminedonincomeafterroyaltiesandmanagementfees,financingcostsandincometaxes,asapplicable.CashFlowCashprovidedbyoperationsandfreecashflowwereasfollows:SixMonthsEnded($inmillions)March30,2024April1,2023ChangeCashprovidedbyoperations$5,851$2,262$3,589Investmentsinparks,resortsandotherproperty(2,558)(2,430)(128)Freecashflow(1)$3,293$(168)$3,461(1)FreecashflowisnotafinancialmeasuredefinedbyGAAP.ThemostcomparableGAAPmeasureiscashprovidedbyoperations.Seethediscussiononpages17through21.Cashprovidedbyoperationsincreased$3.6billionto$5.9billioninthecurrentperiodfrom$2.3billionintheprior-yearperiod.Theincreasewasduetolowerfilmandtelevisionproductionspendingandthetimingofpaymentsforsportsrights.Theincreasealsoreflectedlowercollateralpaymentsrelatedtoourhedgingprogram,apaymentintheprior-yearperiodrelatedtotheterminationofcontentlicensesinfiscal2022andhigheroperatingincomeatExperiences.Theseincreaseswerepartiallyoffsetbypaymentinthecurrentperiodoffiscal2023federalandCaliforniaincometaxes,whichweredeferredpursuanttoreliefprovidedbytheInternalRevenueServiceandCaliforniaStateBoardofEqualizationasaresultof2023winterstormsinCalifornia.11CapitalExpendituresandDepreciationExpenseInvestmentsinparks,resortsandotherpropertywereasfollows:SixMonthsEnded($inmillions)March30,2024April1,2023Entertainment$522$541Sports17ExperiencesDomestic1,1981,024International466410TotalExperiences1,6641,434Corporate371448Totalinvestmentsinparks,resortsandotherproperty$2,558$2,430Capitalexpendituresincreasedto$2.6billionfrom$2.4billionduetohigherspendonnewattractionsandcruiseshipfleetexpansionattheExperiencessegment.Depreciationexpensewasasfollows:SixMonthsEnded($inmillions)March30,2024April1,2023Entertainment$332$304Sports2229ExperiencesDomestic850907International353333TotalExperiences1,2031,240Corporate105100Totaldepreciationexpense$1,662$1,67312THEWALTDISNEYCOMPANYCONDENSEDCONSOLIDATEDSTATEMENTSOFOPERATIONS(unaudited;$inmillions,exceptpersharedata)QuarterEndedSixMonthsEndedMarch30,2024April1,2023March30,2024April1,2023Revenues$22,083$21,815$45,632$45,327Costsandexpenses(19,204)(19,540)(39,817)(41,059)Restructuringandimpairmentcharges(2,052)(152)(2,052)(221)Otherincome,net149107Interestexpense,net(311)(322)(557)(622)Equityintheincomeofinvestees141173322364Incomebeforeincometaxes6572,1233,5283,896Incometaxes(441)(635)(1,161)(1,047)Netincome2161,4882,3672,849Netincomeattributabletononcontrollinginterests(236)(217)(476)(299)Netincome(loss)attributabletoTheWaltDisneyCompany(Disney)$(20)$1,271$1,891$2,550Earnings(loss)pershareattributabletoDisney:Diluted$(0.01)$0.69$1.03$1.39Basic$(0.01)$0.70$1.03$1.40Weightedaveragenumberofcommonandcommonequivalentsharesoutstanding:Diluted1,8341,8311,8381,829Basic1,8341,8281,8331,82713THEWALTDISNEYCOMPANYCONDENSEDCONSOLIDATEDBALANCESHEETS(unaudited;$inmillions,exceptpersharedata)March30,2024September30,2023ASSETSCurrentassetsCashandcashequivalents$6,635$14,182Receivables,net12,02612,330Inventories1,9481,963Contentadvances1,9213,002Othercurrentassets2,1061,286Totalcurrentassets24,63632,763Producedandlicensedcontentcosts32,59033,591Investments3,0073,080Parks,resortsandotherpropertyAttractions,buildingsandequipment72,17370,090Accumulateddepreciation(44,065)(42,610)28,10827,480Projectsinprogress6,2436,285Land1,1741,17635,52534,941Intangibleassets,net11,47413,061Goodwill73,91477,067Otherassets13,96411,076Totalassets$195,110$205,579LIABILITIESANDEQUITYCurrentliabilitiesAccountspayableandotheraccruedliabilities$18,798$20,671Currentportionofborrowings6,7894,330Deferredrevenueandother7,2876,138Totalcurrentliabilities32,87431,139Borrowings39,51042,101Deferredincometaxes6,8607,258Otherlong-termliabilities12,10312,069CommitmentsandcontingenciesRedeemablenoncontrollinginterests9,055EquityPreferredstockCommonstock,$0.01parvalue,Authorized4.6billionshares,Issued1.9billionsharesatMarch30,2024and1.8billionsharesatSeptember30,202358,02857,383Retainedearnings46,64946,093Accumulatedothercomprehensiveloss(3,509)(3,292)Treasurystock,atcost,27millionsharesatMarch30,2024and19millionsharesatSeptember30,2023(1,916)(907)TotalDisneyShareholdersequity99,25299,277Noncontrollinginterests4,5114,680Totalequity103,763103,957Totalliabilitiesandequity$195,110$205,57914THEWALTDISNEYCOMPANYCONDENSEDCONSOLIDATEDSTATEMENTSOFCASHFLOWS(unaudited;$inmillions)SixMonthsEndedMarch30,2024April1,2023OPERATINGACTIVITIESNetincome$2,367$2,849Depreciationandamortization2,4852,616Goodwillimpairment2,038Deferredincometaxes(211)(46)Equityintheincomeofinvestees(322)(364)Cashdistributionsreceivedfromequityinvestees300363Netchangeinproducedandlicensedcontentcostsandadvances1,699(824)Equity-basedcompensation675570Other,net(6)(320)ChangesinoperatingassetsandliabilitiesReceivables(156)(413)Inventories26(107)Otherassets(185)(345)Accountspayableandotherliabilities(1,075)(2,133)Incometaxes(1,784)416Cashprovidedbyoperations5,8512,262INVESTINGACTIVITIESInvestmentsinparks,resortsandotherproperty(2,558)(2,430)Other,net5(111)Cashusedininvestingactivities(2,553)(2,541)FINANCINGACTIVITIESCommercialpaperborrowings,net42714Borrowings13370Reductionofborrowings(645)(1,000)Dividends(549)Repurchasesofcommonstock(1,001)Contributionsfromnoncontrollinginterests178Acquisitionofredeemablenoncontrollinginterests(8,610)(900)Other,net(194)(188)Cashusedinfinancingactivities(10,824)(1,126)Impactofexchangeratesoncash,cashequivalentsandrestrictedcash17197Changeincash,cashequivalentsandrestrictedcash(7,509)(1,208)Cash,cashequivalentsandrestrictedcash,beginningofperiod14,23511,661Cash,cashequivalentsandrestrictedcash,endofperiod$6,726$10,45315DTCPRODUCTDESCRIPTIONSANDKEYDEFINITIONSProductofferingsIntheU.S.,Disney ,ESPN andHuluSVODOnlyareeachofferedasastandaloneserviceortogetheraspartofvariousmulti-productofferings.HuluLiveTV SVODincludesDisney andESPN .Disney isavailableinmorethan150countriesandterritoriesoutsidetheU.S.andCanada.InIndiaandcertainotherSoutheastAsiancountries,theserviceisbrandedDisney Hotstar.IncertainLatinAmericancountries,weofferDisney aswellasStar ,ageneralentertainmentSVODservice,whichisavailableonastandalonebasisortogetherwithDisney (Combo ).Dependingonthemarket,ourservicescanbepurchasedonourwebsitesorthroughthird-partyplatforms/appsorareavailableviawholesalearrangements.PaidsubscribersPaidsubscribersreflectsubscribersforwhichwerecognizedsubscriptionrevenue.Subscribersceasetobeapaidsubscriberasoftheireffectivecancellationdateorasaresultofafailedpaymentmethod.Subscriberstomulti-productofferingsintheU.S.arecountedasapaidsubscriberforeachserviceincludedinthemulti-productofferingandsubscriberstoHuluLiveTV SVODarecountedasonepaidsubscriberforeachoftheHuluLiveTV SVOD,Disney andESPN services.InLatinAmerica,ifasubscriberhaseitherthestandaloneDisney orStar serviceorsubscribestoCombo ,thesubscriberiscountedasoneDisney paidsubscriber.Subscribersincludethosewhoreceiveanentitlementtoaservicethroughwholesalearrangements,includingthoseforwhichtheserviceisavailabletoeachsubscriberofanexistingcontentdistributiontier.WhenweaggregatethetotalnumberofpaidsubscribersacrossourDTCstreamingservices,werefertothemaspaidsubscriptions.InternationalDisney (excludingDisney Hotstar)InternationalDisney (excludingDisney Hotstar)includestheDisney serviceoutsidetheU.S.andCanadaandtheStar serviceinLatinAmerica.AverageMonthlyRevenuePerPaidSubscriberHuluandESPN averagemonthlyrevenueperpaidsubscriberiscalculatedbasedontheaverageofthemonthlyaveragepaidsubscribersforeachmonthintheperiod.Themonthlyaveragepaidsubscribersiscalculatedasthesumofthebeginningofthemonthandendofthemonthpaidsubscribercount,dividedbytwo.Disney averagemonthlyrevenueperpaidsubscriberiscalculatedusingadailyaverageofpaidsubscribersfortheperiod.Revenueincludessubscriptionfees,advertising(excludingrevenueearnedfromsellingadvertisingspotstootherCompanybusinesses)andpremiumandfeatureadd-onrevenuebutexcludesPay-Per-Viewrevenue.AdvertisingrevenuegeneratedbycontentononeDTCstreamingservicethatisaccessedthroughanotherDTCstreamingservicebysubscriberstobothstreamingservicesisallocatedbetweenbothstreamingservices.Theaveragerevenueperpaidsubscriberisnetofdiscountsonofferingsthatcarrymorethanoneservice.Revenueisallocatedtoeachservicebasedontherelativeretailorwholesalepriceofeachserviceonastandalonebasis.HuluLiveTV SVODrevenueisallocatedtotheSVODservicesbasedonthewholesalepriceoftheHuluSVODOnly,Disney andESPN multi-productoffering.Ingeneral,wholesalearrangementshavealoweraveragemonthlyrevenueperpaidsubscriberthansubscribersthatweacquiredirectlyorthroughthird-partyplatforms.16NON-GAAPFINANCIALMEASURESThisearningsreleasepresentsdilutedEPSexcludingcertainitems(alsoreferredtoasadjustedEPS),totalsegmentoperatingincome,freecashflow,andDTCstreamingbusinessesoperatingincome(loss),allofwhichareimportantfinancialmeasuresfortheCompany,butarenotfinancialmeasuresdefinedbyGAAP.ThesemeasuresshouldbereviewedinconjunctionwiththemostcomparableGAAPfinancialmeasuresandarenotpresentedasalternativemeasuresofdilutedEPS,incomebeforeincometaxes,cashprovidedbyoperations,orEntertainmentandSportssegmentoperatingincome(loss)asdeterminedinaccordancewithGAAP.DilutedEPSexcludingcertainitems,totalsegmentoperatingincome,freecashflow,andDTCstreamingbusinessesoperatingincome(loss)aswehavecalculatedthemmaynotbecomparabletosimilarlytitledmeasuresreportedbyothercompanies.OurdefinitionsandcalculationsofdilutedEPSexcludingcertainitems,totalsegmentoperatingincome,freecashflow,andDTCstreamingbusinessesoperatingincome(loss),aswellasquantitativereconciliationsofeachofthesehistoricalmeasuresandtheforward-lookingmeasureoffreecashflowtothemostdirectlycomparableGAAPfinancialmeasureareprovidedbelow.TheCompanyisnotprovidingtheforward-lookingmeasurefordilutedEPS,whichisthemostdirectlycomparableGAAPmeasuretodilutedEPSexcludingcertainitems,oraquantitativereconciliationofforward-lookingdilutedEPSexcludingcertainitemstothatmostdirectlycomparableGAAPmeasure.TheCompanyisunabletopredictorestimatewithreasonablecertaintytheultimateoutcomeofcertainsignificantitemsrequiredforsuchGAAPmeasurewithoutunreasonableeffort.InformationaboutotheradjustingitemsthatiscurrentlynotavailabletotheCompanycouldhaveapotentiallyunpredictableandsignificantimpactonfutureGAAPfinancialresults.DilutedEPSexcludingcertainitemsTheCompanyusesdilutedEPSexcluding(1)certainitemsaffectingcomparabilityofresultsfromperiodtoperiodand(2)amortizationofTFCFandHuluintangibleassets,includingpurchaseaccountingstep-upadjustmentsforreleasedcontent,tofacilitatetheevaluationoftheperformanceoftheCompanysoperationsexclusiveoftheseitems,andtheseadjustmentsreflecthowseniormanagementisevaluatingsegmentperformance.TheCompanybelievesthatprovidingdilutedEPSexclusiveofcertainitemsimpactingcomparabilityisusefultoinvestors,particularlywheretheimpactoftheexcludeditemsissignificantinrelationtoreportedearningsandbecausethemeasureallowsforcomparabilitybetweenperiodsoftheoperatingperformanceoftheCompanysbusinessandallowsinvestorstoevaluatetheimpactoftheseitemsseparately.TheCompanyfurtherbelievesthatprovidingdilutedEPSexclusiveofamortizationofTFCFandHuluintangibleassetsassociatedwiththeacquisitionin2019isusefultoinvestorsbecausetheTFCFandHuluacquisitionwasconsiderablylargerthantheCompanyshistoricacquisitionswithasignificantlygreateracquisitionaccountingimpact.17ThefollowingtablereconcilesreporteddilutedEPStodilutedEPSexcludingcertainitemsforthesecondquarter:($inmillionsexceptEPS)Pre-TaxIncome/LossTaxBenefit/Expense(1)After-TaxIncome/Loss(2)DilutedEPS(3)Changevs.prior-yearperiodQuarterEndedMarch30,2024Asreported$657$(441)$216$(0.01)n/mExclude:Restructuringandimpairmentcharges(4)2,052(121)1,9311.06AmortizationofTFCFandHuluintangibleassetsandfairvaluestep-uponfilmandtelevisioncosts(5)434(101)3330.17Excludingcertainitems$3,143$(663)$2,480$1.21 30%QuarterEndedApril1,2023Asreported$2,123$(635)$1,488$0.69Exclude:AmortizationofTFCFandHuluintangibleassetsandfairvaluestep-uponfilmandtelevisioncosts(5)558(130)4280.23Restructuringandimpairmentcharges(4)152(35)1170.06Otherincome,net(6)(149)35(114)(0.06)Excludingcertainitems$2,684$(765)$1,919$0.93(1)Taxbenefit/expenseisdeterminedusingthetaxrateapplicabletotheindividualitem.(2)Beforenoncontrollinginterestshare.(3)Netofnoncontrollinginterestshare,whereapplicable.Totalmaynotequalthesumofthecolumnduetorounding.(4)Chargesinthecurrentquarterincludedimpairmentsofgoodwill($2,038million).Chargesintheprior-yearquarterwereprimarilyforseverance.(5)Forthecurrentquarter,intangibleassetamortizationwas$362million,step-upamortizationwas$69millionandamortizationofintangibleassetsrelatedtoTFCFequityinvesteeswas$3million.Fortheprior-yearquarter,intangibleassetamortizationwas$408million,step-upamortizationwas$147millionandamortizationofintangibleassetsrelatedtoTFCFequityinvesteeswas$3million.(6)DraftKingsgain($149million).18ThefollowingtablereconcilesreporteddilutedEPSfromcontinuingoperationstodilutedEPSexcludingcertainitemsforthesix-monthperiod:($inmillionsexceptEPS)Pre-TaxIncome/LossTaxBenefit/Expense(1)After-TaxIncome/Loss(2)DilutedEPS(3)Changevs.prioryearSixMonthsEndedMarch30,2024:Asreported$3,528$(1,161)$2,367$1.03 (26)%Exclude:Restructuringandimpairmentcharges(4)2,052(121)1,9311.06AmortizationofTFCFandHuluintangibleassetsandfairvaluestep-uponfilmandtelevisioncosts(5)885(206)6790.36 Excludingcertainitems$6,465$(1,488)$4,977$2.44 28%SixMonthsEndedApril1,2023:Asreported$3,896$(1,047)$2,849$1.39Exclude:AmortizationofTFCFandHuluintangibleassetsandfairvaluestep-uponfilmandtelevisioncosts(5)1,137(264)8730.47Restructuringandimpairmentcharges(4)221(43)1780.10Otherincome,net(6)(107)18(89)(0.05)Excludingcertainitems$5,147$(1,336)$3,811$1.91(1)Taxbenefit/expenseisdeterminedusingthetaxrateapplicabletotheindividualitem.(2)Beforenoncontrollinginterestshare.(3)Netofnoncontrollinginterestshare,whereapplicable.Totalmaynotequalthesumofthecolumnduetorounding.(4)Chargesforthecurrentperiodincludedimpairmentsofgoodwill($2,038million).Chargesfortheprior-yearperiodincludedseverance($125million)andexitingourbusinessesinRussia($69million).(5)Forthecurrentperiod,intangibleassetamortizationwas$742million,step-upamortizationwas$137millionandamortizationofintangibleassetsrelatedtoTFCFequityinvesteeswas$6million.Fortheprior-yearperiod,intangibleassetamortizationwas$825million,step-upamortizationwas$306millionandamortizationofintangibleassetsrelatedtoTFCFequityinvesteeswas$6million.(6)Fortheprior-yearperiod,otherincome,netwasduetotheDraftKingsgain($79million)andagainonthesaleofabusiness($28million).19TotalsegmentoperatingincomeTheCompanyevaluatestheperformanceofitsoperatingsegmentsbasedonsegmentoperatingincome,andmanagementusestotalsegmentoperatingincomeasameasureoftheperformanceofoperatingbusinessesseparatefromnon-operatingfactors.TheCompanybelievesthatinformationabouttotalsegmentoperatingincomeassistsinvestorsbyallowingthemtoevaluatechangesintheoperatingresultsoftheCompanysportfolioofbusinessesseparatefromnon-operationalfactorsthataffectnetincome,thusprovidingseparateinsightintobothoperationsandotherfactorsthataffectreportedresults.Thefollowingtablereconcilesincomebeforeincometaxestototalsegmentoperatingincome:QuarterEndedSixMonthsEnded($inmillions)March30,2024April1,2023ChangeMarch30,2024April1,2023ChangeIncomebeforeincometaxes$657$2,123(69)%$3,528$3,896(9)d(subtract):Corporateandunallocatedsharedexpenses391279(40)i9559(25)%Restructuringandimpairmentcharges2,052152(100)%2,052221(100)%Otherincome,net(149)(100)%(107)(100)%Interestexpense,net311322 3U7622 10%AmortizationofTFCFandHuluintangibleassetsandfairvaluestep-uponfilmandtelevisioncosts434558 2251,137 22%Totalsegmentoperatingincome$3,845$3,285 17%$7,721$6,328 22%FreecashflowTheCompanyusesfreecashflow(cashprovidedbyoperationslessinvestmentsinparks,resortsandotherproperty),amongothermeasures,toevaluatetheabilityofitsoperationstogeneratecashthatisavailableforpurposesotherthancapitalexpenditures.Managementbelievesthatinformationaboutfreecashflowprovidesinvestorswithanimportantperspectiveonthecashavailabletoservicedebtobligations,makestrategicacquisitionsandinvestmentsandpaydividendsorrepurchaseshares.ThefollowingtablepresentsasummaryoftheCompanysconsolidatedcashflows:QuarterEndedSixMonthsEnded($inmillions)March30,2024April1,2023March30,2024April1,2023Cashprovidedbyoperations$3,666$3,236$5,851$2,262Cashusedininvestingactivities(1,307)(1,249)(2,553)(2,541)Cashusedinfinancingactivities(2,818)(83)(10,824)(1,126)Impactofexchangeratesoncash,cashequivalentsandrestrictedcash(62)3317197Changeincash,cashequivalentsandrestrictedcash(521)1,937(7,509)(1,208)Cash,cashequivalentsandrestrictedcash,beginningofperiod7,2478,51614,23511,661Cash,cashequivalentsandrestrictedcash,endofperiod$6,726$10,453$6,726$10,45320ThefollowingtablereconcilestheCompanysconsolidatedcashprovidedbyoperationstofreecashflow:QuarterEndedSixMonthsEnded($inmillions)March30,2024April1,2023ChangeMarch30,2024April1,2023ChangeCashprovidedbyoperations$3,666$3,236$430$5,851$2,262$3,589 Investmentsinparks,resortsandotherproperty(1,259)(1,249)(10)(2,558)(2,430)(128)Freecashflow$2,407$1,987$420$3,293$(168)$3,461ThefollowingtablereconcilestheCompanysconsolidatedestimatedforward-lookingcashprovidedbyoperationstoestimatedforward-lookingfreecashflowforfullyearfiscal2024:(estimated$inbillions)Fullyearfiscal2024Cashprovidedbyoperations$14 Investmentsinparks,resortsandotherproperty(6)Freecashflow$8 DTCStreamingBusinessesTheCompanyusescombinedDTCstreamingbusinessesoperatingincome(loss)becauseitbelievesthatthismeasureallowsinvestorstoevaluatetheperformanceofitsportfolioofstreamingbusinessesandtrackprogressagainsttheCompanysgoalofreachingprofitabilityinthefourthquarteroffiscal2024atitscombinedstreamingbusinesses.ThefollowingtablesreconcileEntertainmentandSportssegmentoperatingincome(loss)totheDTCstreamingbusinessesoperatingloss:QuarterEndedMarch30,2024April1,2023($inmillions)EntertainmentSportsDTCStreamingBusinessesEntertainmentSportsDTCStreamingBusinessesLinearNetworks$752$843$959$866DTCstreamingbusinesses(Direct-to-ConsumerandESPN businesses)47(65)$(18)(587)(72)$(659)ContentSales/LicensingandOther(18)83Segmentoperatingincome(loss)$781$778$455$794SixMonthsEndedMarch30,2024April1,2023EntertainmentSportsDTCStreamingBusinessesEntertainmentSportsDTCStreamingBusinessesLinearNetworks$1,988$818$2,289$771DTCstreamingbusinesses(Direct-to-ConsumerandESPN businesses)(91)(143)$(234)(1,571)(141)$(1,712)ContentSales/LicensingandOther(242)82Segmentoperatingincome$1,655$675$800$63021FORWARD-LOOKINGSTATEMENTSCertainstatementsandinformationinthisearningsreleasemayconstitute“forward-lookingstatements”withinthemeaningofthePrivateSecuritiesLitigationReformActof1995,includingstatementsregardingfinancialperformance,earningsexpectations,expecteddriversandguidance,includingfutureoperatingincome,adjustedEPS,freecashflow,capitalallocation,includingsharerepurchases,plansfordirect-to-consumerprofitabilityandtiming;valueof,andopportunitiesforgrowthbasedon,ourintellectualproperty,contentofferings,businessesandassets;businessplans;plans,expectations,strategicprioritiesandinitiatives,consumersentiment,behaviorordemandanddriversofgrowthandprofitabilityandotherstatementsthatarenothistoricalinnature.Anyinformationthatisnothistoricalinnatureincludedinthisearningsreleaseissubjecttochange.Thesestatementsaremadeonthebasisofmanagementsviewsandassumptionsregardingfutureeventsandbusinessperformanceasofthetimethestatementsaremade.Managementdoesnotundertakeanyobligationtoupdatethesestatements.Actualresultsmaydiffermateriallyfromthoseexpressedorimplied.SuchdifferencesmayresultfromactionstakenbytheCompany,includingrestructuringorstrategicinitiatives(includingcapitalinvestments,assetacquisitionsordispositions,neworexpandedbusinesslinesorcessationofcertainoperations),ourexecutionofourbusinessplans(includingthecontentwecreateandIPweinvestin,ourpricingdecisions,ourcoststructureandourmanagementandotherpersonneldecisions),ourabilitytoquicklyexecuteoncostrationalizationwhilepreservingrevenue,thediscoveryofadditionalinformationorotherbusinessdecisions,aswellasfromdevelopmentsbeyondtheCompanyscontrol,including:theoccurrenceofsubsequentevents;deteriorationindomesticandglobaleconomicconditionsorfailureofconditionstoimproveasanticipated;deteriorationinorpressuresfromcompetitiveconditions,includingcompetitiontocreateoracquirecontent,competitionfortalentandcompetitionforadvertisingrevenue;consumerpreferencesandacceptanceofourcontent,offerings,pricingmodelandpriceincreases,andcorrespondingsubscriberadditionsandchurn,andthemarketforadvertisingsalesonourDTCservicesandlinearnetworks;healthconcernsandtheirimpactonourbusinessesandproductions;international,politicalormilitarydevelopments;regulatoryandlegaldevelopments;technologicaldevelopments;labormarketsandactivities,includingworkstoppages;adverseweatherconditionsornaturaldisasters;andavailabilityofcontent.Suchdevelopmentsmayfurtheraffectentertainment,travelandleisurebusinessesgenerallyandmay,amongotherthings,affect(orfurtheraffect,asapplicable):ouroperations,businessplansorprofitability,includingdirect-to-consumerprofitability;demandforourproductsandservices;theperformanceoftheCompanyscontent;ourabilitytocreateorobtaindesirablecontentatorunderthevalueweassignthecontent;theadvertisingmarketforprogramming;incometaxexpense;andperformanceofsomeorallCompanybusinesseseitherdirectlyorthroughtheirimpactonthosewhodistributeourproducts.AdditionalfactorsaresetforthintheCompanysAnnualReportonForm10-KfortheyearendedSeptember30,2023,includingunderthecaptions“RiskFactors,”“ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations,”and“Business,”quarterlyreportsonForm10-Q,includingunderthecaptions“RiskFactors”and“ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations,”andsubsequentfilingswiththeSecuritiesandExchangeCommission.Theterms“Company,”“we,”and“our”areusedinthisreporttorefercollectivelytotheparentcompanyandthesubsidiariesthroughwhichourvariousbusinessesareactuallyconducted.22CONFERENCECALLINFORMATIONInconjunctionwiththisrelease,TheWaltDisneyCompanywillhostaconferencecalltoday,May7,2024,at8:30AMEDT/5:30AMPDTviaaliveWebcast.ToaccesstheW

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  • 华特迪士尼公司(WALT DISNEY)2024财年第一季度财报(英文版)(23页).pdf

    February7,2024THEWALTDISNEYCOMPANYREPORTSFIRSTQUARTEREARNINGSFORFISCAL2024BURBANK,Calif.TheWaltDisneyCompanytodayreportedearningsforitsfirstquarterendedDecember30,2023.FinancialResultsfortheQuarter:Revenuesforthequarterwerecomparabletotheprior-yearquarterat$23.5billion.Dilutedearningspershare(EPS)forthequarterincreasedto$1.04from$0.70intheprior-yearquarter.Excludingcertainitems(1),dilutedEPSforthequarterincreasedto$1.22from$0.99intheprior-yearquarter.KeyPoints:Ourfirstquarterearningsresultsreflecttheprogresswevemadeinourstrategictransformation,aswecontinuetobuildfromapositionofstrength.Weareachievingsignificantcostreductionsacrossourbusinesses,asevidencedbytherealizationofover$500millioninselling,generalandadministrativeandotheroperatingexpensesavingsacrosstheenterpriseinthefirstquarter.Weareontracktomeetorexceedour$7.5billionannualizedsavingstargetbytheendoffiscal2024,whilewecontinuetolookforfurtherefficiencyopportunities.Basedonthestrengthoffirstquarterresultsaswellasourexpectationsforthebalanceoftheyear,weexpectfullyearfiscal2024earningspershareexcludingcertainitems(1)toincreasebyatleast20%versus2023,toapproximately$4.60.Further,wecontinuetoexpectfreecashflow(1)generationinfiscal2024tototalroughly$8billion.Wecontinuetoexpecttoreachprofitabilityatourcombinedstreamingbusinessesinthefourthquarteroffiscal2024,andaremakingtremendousprogressinthisarea,withfirstquarterEntertainmentDTCoperatinglossesimprovingbynearly$300millionversusthepriorquarter.WebelievethisbusinesswillultimatelybeakeyearningsgrowthdriverfortheCompany.Hulusubscribersincreasedby1.2millionfromthepriorquarter.Disney Coresubscribersdecreasedsequentiallyby1.3million,inlinewithpriorguidanceandreflectingasubstantialpriceincreaseinthequarteraswellastheendoftheglobalsummerpromotion.Disney CoreARPUincreasedsequentiallyby$0.14versusthefourthquarter.WeexpectDisney Coresubscribernetadditionsofbetween5.5and6millionandongoingpositivemomentuminARPUinthesecondquarter.ESPNsdomesticbusinessgrewbothrevenueandoperatingincomeyearoveryearinthefirstquarter,andwecontinuetobuildESPNintotheworldspreeminentdigitalsportsplatform.AtExperiences,wegeneratedall-timerecordsinrevenue,operatingincome,andoperatingmargininthefirstquarter,andwerecentlycelebratedthewell-receivedopeningsofWorldofFrozenatHongKongDisneylandResortandZootopiaatShanghaiDisneyResort.InFebruary2024,theBoardofDirectorsapprovedanewsharerepurchaseprogrameffectiveFebruary7,2024;weplantotarget$3billioninrepurchasesinfiscal2024.TheBoardalsodeclaredonFebruary7,2024acashdividendof$0.45pershare-anincreaseof50%versusthelastdividendpaidinJanuary-payableJuly25,2024toshareholdersofrecordatthecloseofbusinessonJuly8,2024.FORIMMEDIATERELEASE1(1)DilutedEPSexcludingcertainitemsandfreecashflowarenon-GAAPfinancialmeasures.ThemostcomparableGAAPmeasuresaredilutedEPSandcashprovidedbyoperations,respectively.Seethediscussiononpages18through21forhowwedefineandcalculatethesemeasuresandaquantitativereconciliationofhistoricalmeasuresthereoftothemostdirectlycomparableGAAPmeasuresandwhyDisneyisnotprovidingforward-lookingquantitativereconciliationtothemostcomparableGAAPmeasures.MessageFromOurCEO:“Justoneyearago,weoutlinedanambitiousplantoreturnTheWaltDisneyCompanytoaperiodofsustainedgrowthandshareholdervaluecreation,”saidRobertA.Iger,ChiefExecutiveOfficer,TheWaltDisneyCompany.“Ourstrongperformancethispastquarterdemonstrateswehaveturnedthecornerandenteredaneweraforourcompany,focusedonfortifyingESPNforthefuture,buildingstreamingintoaprofitablegrowthbusiness,reinvigoratingourfilmstudios,andturbocharginggrowthinourparksandexperiences.“Aswebuildforthefuture,thestepswearetakingtodaylendthemselvestosolidifyingDisneysplaceasthepreeminentcreatorofglobalcontent.LookingattherenewedstrengthofallofourbusinessesthisquarterfromSports,toEntertainment,toExperienceswebelievethestageisnowsetforsignificantgrowthandsuccess,includingampleopportunitytoincreaseshareholderreturnsasourearningsandfreecashflowcontinuetogrow.”SUMMARIZEDFINANCIALRESULTSThefollowingtablesummarizesfirstquarterresultsforfiscal2024and2023:QuarterEnded($inmillions,exceptpershareamounts)December30,2023December31,2022ChangeRevenues$23,549$23,512%Incomebeforeincometaxes$2,871$1,773 62%Totalsegmentoperatingincome(1)$3,876$3,043 27%DilutedEPS$1.04$0.70 49%DilutedEPSexcludingcertainitems(1)$1.22$0.99 23shprovidedby(usedin)operations$2,185$(974)nmFreecashflow(1)$886$(2,155)nm(1)Totalsegmentoperatingincome,dilutedEPSexcludingcertainitemsandfreecashflowarenon-GAAPfinancialmeasures.ThemostcomparableGAAPmeasuresareincomebeforeincometaxes,dilutedEPSandcashprovidedbyoperations,respectively.Seethediscussiononpages18through21forhowwedefineandcalculatethesemeasuresandareconciliationthereoftothemostdirectlycomparableGAAPmeasures.2SUMMARIZEDSEGMENTFINANCIALRESULTSThefollowingtablesummarizesfirstquartersegmentrevenueandoperatingincome(loss)forfiscal2024and2023:QuarterEnded($inmillions)December30,2023December31,2022ChangeRevenues:Entertainment$9,981$10,675(7)%Sports4,8354,640 4%Experiences9,1328,545 7%Eliminations(2)(399)(348)(15)%Totalrevenues$23,549$23,512%Segmentoperatingincome(loss):Entertainment$874$345 100%Sports(103)(164)37%Experiences3,1052,862 8%Totalsegmentoperatingincome(1)$3,876$3,043 27%(1)Totalsegmentoperatingincomeisanon-GAAPfinancialmeasure.ThemostcomparableGAAPmeasureisincomebeforeincometaxes.Seethediscussiononpages18through21.(2)ReflectsfeespaidbyDirect-to-ConsumertoSportsandotherEntertainmentbusinessesfortherighttoairtheirlinearnetworksonHuluLiveandfeespaidbyEntertainmenttoSportstoprogramsportsontheABCNetworkandStar .DISCUSSIONOFFIRSTQUARTERSEGMENTRESULTSEntertainmentRevenueandoperatingincome(loss)fortheEntertainmentsegmentareasfollows:QuarterEndedChange($inmillions)December30,2023December31,2022Revenues:LinearNetworks$2,803$3,202(12)%Direct-to-Consumer5,5464,822 15%ContentSales/LicensingandOther1,6322,651(38)%$9,981$10,675(7)%Operatingincome(loss):LinearNetworks$1,236$1,330(7)%Direct-to-Consumer(138)(984)86%ContentSales/LicensingandOther(224)(1)(100)%$874$345 100%TheincreaseinEntertainmentoperatingincomewasduetoimprovedresultsatDirect-to-Consumer,partiallyoffsetbyadeclineatContentSales/LicensingandOther.3LinearNetworksLinearNetworksrevenuesandoperatingincomeareasfollows:QuarterEndedChange($inmillions)December30,2023December31,2022RevenueDomestic$2,210$2,565(14)%International593637(7)%$2,803$3,202(12)%OperatingincomeDomestic$838$879(5)%International225258(13)%Equityintheincomeofinvestees173193(10)%$1,236$1,330(7)%DomesticThedecreaseindomesticoperatingincomeinthecurrentquartercomparedtotheprior-yearquarterwasdueto:LoweradvertisingrevenueprimarilyduetoadecreaseattheABCNetworkattributabletofewerimpressionsandlowerpoliticaladvertisingrevenueattheownedTVstationsLowernetworkimpressionswereinpartduetotheimpactoftheguildstrikesonourprogrammingscheduleprimarilyduetoashiftofunitstotheSportssegmentreflectingthesimulcastofcertainNFLgames Adeclineinaffiliaterevenueduetoadecreaseinsubscribersatourentertainmentcablenetworksincludingtheimpactofthenon-carriageofcertainnetworksbyanaffiliate,partiallyoffsetbyhighercontractualrates LowerprogrammingandproductioncostsattributabletoadecreaseattheABCNetworkduetofewerhoursofscriptedprogramminginthecurrentquarter,reflectingtheimpactoftheguildstrikes.Scriptedprogrammingwasprimarilyreplacedwithloweraveragecostnon-scriptedprogrammingaswellasESPNonABCsportsprogramming,thecostsofwhicharerecognizedintheSportssegment.InternationalThedecreaseininternationaloperatingincomewasduetoloweraffiliaterevenueprimarilyattributabletofewersubscribers.EquityintheIncomeofInvesteesIncomefromequityinvesteesdecreasedprimarilyduetolowerincomefromA ETelevisionNetworks(A E)attributabletodecreasesinadvertisingandaffiliaterevenue,partiallyoffsetbyagainonthesaleofaninvestment.4Direct-to-ConsumerDirect-to-Consumerrevenuesandoperatinglossareasfollows:QuarterEndedChange($inmillions)December30,2023December31,2022Revenue$5,546$4,822 15%Operatingloss$(138)$(984)86%Thedecreaseinoperatinglossinthecurrentquartercomparedtotheprior-yearquarterwasdueto:Subscriptionrevenuegrowthattributabletohigherratesduetoincreasesinretailpricingacrossourstreamingservices,andsubscribergrowthatDisney Coreand,toalesserextent,Hulu Anincreaseinadvertisingrevenueduetohigherimpressionsacrossourstreamingservices,partiallyoffsetbylowerratesatHuluTheincreaseinimpressionswasdueto:AiringmorehoursofInternationalCricketCouncil(ICC)cricketprogrammingcomparedtotheprior-yearquarterGrowthoftheU.S.ad-supportedDisney service,whichlaunchedinDecember2022MoreunitsdeliveredatHulu Adecreaseinprogrammingandproductioncostsattributabletoloweraveragecostsperhourofnon-sportscontent,partiallyoffsetbymorenon-sportsprogramming,highersubscriber-basedfeesforprogrammingtheHuluLiveTVserviceandanincreaseincostsforICCcricketprogrammingTheincreaseinsubscriber-basedfeesforprogrammingtheHuluLiveTVservicereflectedrateincreasesandmoresubscribersHigherICCcricketprogrammingcostswereduetohigheraveragecostspermatchandmorematchesaired5FirstQuarterofFiscal2024ComparisontoFourthQuarterofFiscal2023Inadditiontorevenue,costsandoperatingincome,managementusesthefollowingkeymetricstoanalyzetrendsandevaluatetheoverallperformanceofourDisney andHuludirect-to-consumer(DTC)productofferings(1),andwebelievethesemetricsareusefultoinvestorsinanalyzingthebusiness.Thefollowingtablesandrelateddiscussionareonasequentialquarterbasis.Paidsubscribers(1)at:(inmillions)December30,2023September30,2023ChangeDisney Domestic(U.S.andCanada)46.146.5(1)%International(excludingDisney Hotstar)(1)65.266.1(1)%Disney Core(2)111.3112.6(1)%Disney Hotstar38.337.6 2%HuluSVODOnly45.143.9 3%LiveTV SVOD4.64.6%TotalHulu(2)49.748.5 2%AverageMonthlyRevenuePerPaidSubscriber(1)forthequarterended:December30,2023September30,2023ChangeDisney Domestic(U.S.andCanada)$8.15$7.50 9%International(excludingDisney Hotstar)(1)5.916.10(3)%Disney Core6.846.70 2%Disney Hotstar1.280.70 83%HuluSVODOnly12.2912.11 1%LiveTV SVOD93.6190.08 4%(1)Seediscussiononpage17DTCProductDescriptionsandKeyDefinitions(2)TotalmaynotequalthesumofthecolumnduetoroundingDomesticDisney averagemonthlyrevenueperpaidsubscriberincreasedfrom$7.50to$8.15duetoincreasesinretailpricing,partiallyoffsetbyahighermixofsubscriberstopromotionalofferings.InternationalDisney (excludingDisney Hotstar)averagemonthlyrevenueperpaidsubscriberdecreasedfrom$6.10to$5.91duetoahighermixofsubscriberstopromotionalofferings.Disney Hotstaraveragemonthlyrevenueperpaidsubscriberincreasedfrom$0.70to$1.28duetohigheradvertisingrevenueandincreasesinretailpricing,partiallyoffsetbyahighermixofsubscribersfromlower-pricedmarkets.HuluSVODOnlyaveragemonthlyrevenueperpaidsubscriberincreasedfrom$12.11to$12.29duetoincreasesinretailpricing,partiallyoffsetbylowerper-subscriberadvertisingrevenueandahighermixofsubscriberstopromotionalofferings.HuluLiveTV SVODaveragemonthlyrevenueperpaidsubscriberincreasedfrom$90.08to$93.61duetoincreasesinretailpricing.6ContentSales/LicensingandOtherContentSales/LicensingandOtherrevenuesandoperatinglossareasfollows:QuarterEndedChange($inmillions)December30,2023December31,2022Revenue$1,632$2,651(38)%Operatingloss$(224)$(1)(100)%TheincreaseinoperatinglosswasduetotheperformanceofTheMarvelsandWishinthecurrentquartercomparedtoBlackPanther:WakandaForever,Avatar:TheWayofWaterandStrangeWorldintheprior-yearquarter.SportsSportsrevenuesandoperatingincome(loss)areasfollows:QuarterEndedChange($inmillions)December30,2023December31,2022RevenueESPNDomestic$4,073$4,049 1%International363358 1%4,4364,407 1%Star(India)399233 71%$4,835$4,640 4%Operatingincome(loss)ESPNDomestic$255$(41)nmInternational(56)3nm199(38)nmStar(India)(315)(129)(100)%Equityintheincomeofinvestees13 3 100%$(103)$(164)37%DomesticESPNHigherdomesticESPNoperatingresultsinthecurrentquartercomparedtotheprior-yearquarterweredueto:AdecreaseinprogrammingandproductioncostsattributabletolowercostsforCollegeFootballPlayoff(CFP)programmingduetothetimingofgamesrelativetoourfiscalperiods.Thecurrentquarterincludedthreehostgamescomparedtotwohostgamesandtwosemi-finalgamesintheprior-yearquarter.GrowthinESPN subscriptionrevenueduetohigherratesandmoresubscribers Loweradvertisingrevenueattributabletodecreasesinratesandimpressions.ThesedecreasesreflectedthetimingofCFPgames,partiallyoffsetbythebenefitsfromthetimingoftheweek17NFLgamethatairedinthecurrentquartercomparedtothesecondquarteroftheprioryearandthesimulcastofNFLgamesontheABCNetwork.7 Affiliaterevenuewascomparabletotheprior-yearquarterascontractualrateincreaseswereoffsetbyfewersubscribersInternationalESPNLowerinternationalESPNoperatingresultsweredrivenbyhigherprogrammingandproductioncostsattributabletonewsoccerrightsandproductioncostinflation,partiallyoffsetbyafavorableforeignexchangeimpact.Affiliaterevenuewascomparabletotheprior-yearquarterasanincreaseincontractualrateswaslargelyoffsetbyfewersubscribersandanunfavorableforeignexchangeimpact.StarTheincreaseinoperatinglossatStarwasduetotheairingoftheICCCricketWorldCupinthecurrentquartercomparedtotheICCT20WorldCupintheprior-yearquarter,whichresultedin:Anincreaseinprogrammingandproductioncostsattributabletohigheraveragecostspermatchandmorematchesaired Advertisingrevenuegrowthduetomoreunitsdeliveredandanincreaseinaverageviewership,partiallyoffsetbyadecreaseinratesFirstQuarterofFiscal2024ComparisontoFourthQuarterofFiscal2023Inadditiontorevenue,costsandoperatingincome,managementusesthefollowingkeymetricstoanalyzetrendsandevaluatetheoverallperformanceofourESPN DTCproductoffering(1),andwebelievethesemetricsareusefultoinvestorsinanalyzingthebusiness.Thefollowingtableandrelateddiscussionareonasequentialquarterbasis.December30,2023September30,2023ChangePaidsubscribers(1)at:(inmillions)25.226.0(3)%AverageMonthlyRevenuePerPaidSubscriber(1)forthequarterended:$6.09$5.34 14%(1)Seediscussiononpage17DTCProductDescriptionsandKeyDefinitionsTheincreaseinESPN averagemonthlyrevenueperpaidsubscriberwasduetoincreasesinretailpricingandhigheradvertisingrevenue.8ExperiencesExperiencesrevenuesandoperatingincomeareasfollows:QuarterEndedChange($inmillions)December30,2023December31,2022RevenueParks&ExperiencesDomestic$6,297$6,072 4%International1,476 1,094 35%ConsumerProducts1,359 1,379(1)%$9,132$8,545 7%OperatingincomeParks&ExperiencesDomestic$2,077$2,113(2)%International328 79 100%ConsumerProducts700 670 4%$3,105$2,862 8%DomesticParksandExperiencesThedecreaseinoperatingincomeatourdomesticparksandexperiencesreflectedlowerresultsatourdomesticparksandresorts,largelyoffsetbyhigherresultsatDisneyCruiseLine.Atourdomesticparksandresorts,lowerresultsinthecurrentquartercomparedtotheprior-yearquarterweredueto:AdecreaseatWaltDisneyWorldResortreflectingamodestdecreaseinrevenuesandhighercosts.Theseimpactsweredueto:Lowervolumesduetodecreasesinattendanceandoccupiedroomnights,bothofwhichreflectedthecomparisontothe50thanniversarycelebrationintheprior-yearquarterHighercostsduetoinflation,partiallyoffsetbycostsavinginitiativesandlowerdepreciationIncreasedguestspendingduetohigheraverageticketprices,partiallyoffsetbyloweraveragedailyroomratesResultsatDisneylandResortwerecomparabletotheprior-yearquarterasrevenuegrowthwaslargelyoffsetbyanincreaseincosts.Theseimpactswereattributableto:IncreasedguestspendingprimarilyduetohigheraverageticketpricesAttendancegrowthHighercostsdrivenbyinflation GrowthatDisneyCruiseLinewasduetoincreasesinaverageticketpricesandpassengercruisedays,partiallyoffsetbyhighercostsInternationalParksandExperiencesHigherinternationalparksandexperiencesoperatingresultsweredueto:GrowthatShanghaiDisneyResortdueto:Highervolumesattributabletoanincreaseinattendance.Theparkwasopenforallofthecurrentquartercomparedto58daysintheprior-yearquarterasaresultofCOVID-19relatedclosures.Guestspendinggrowthduetoanincreaseinaverageticketprices9 HigheroperatingincomeatHongKongDisneylandResortattributableto:GuestspendinggrowthprimarilyduetoanincreaseinaverageticketpricesHighervolumesresultingfromincreasesinattendance,whichbenefitedfromtheparkbeingopenformoredaysinthecurrentquarter,andoccupiedroomnightsIncreasedcostsdrivenbyinflationandnewguestofferings ResultsatDisneylandPariswerecomparabletotheprior-yearquarterdueto:HighercostsprimarilyattributabletoincreasedoperationssupportcostsandinflationLowervolumesprimarilyduetoadecreaseinattendance.Theprior-yearquarterincludedthe30thanniversarycelebration.Thecomparisontoalossintheprior-yearquarteronthedisposalofourownershipinterestinVillagesNatureConsumerProductsTheincreaseinconsumerproductsoperatingresultswasduetolicensingrevenuegrowthresultingfromhighersalesofproductsbasedonSpider-ManandMickeyandFriends,partiallyoffsetbyadecreaseinsalesofproductsbasedonStarWars.OTHERFINANCIALINFORMATIONDTCStreamingBusinessesRevenueandoperatinglossforourcombinedDTCstreamingbusinesses,whichconsistoftheDirect-to-ConsumerlineofbusinessattheEntertainmentsegmentandESPN attheSportssegment,areasfollows:QuarterEndedChange($inmillions)December30,2023December31,2022Revenue$6,075$5,307 14%Operatingloss(1)$(216)$(1,053)79%(1)DTCstreamingbusinessesoperatinglossisnotafinancialmeasuredefinedbyGAAP.ThemostcomparableGAAPmeasuresaresegmentoperatingincomefortheEntertainmentsegmentandSportssegment.Seethediscussiononpage21forhowwedefineandcalculatethismeasureandareconciliationofittothemostdirectlycomparableGAAPmeasures.CorporateandUnallocatedSharedExpensesCorporateandunallocatedsharedexpensesincreased$28millionforthequarter,from$280millionto$308million,primarilyduetohigherrentexpenseandinflation.RestructuringandImpairmentChargesIntheprior-yearquarter,theCompanyrecordedchargesof$69millionrelatedtoexitingourbusinessesinRussia.OtherExpense,netIntheprior-yearquarter,theCompanyrecordeda$70millionlosstoadjustitsinvestmentinDraftKings,Inc.tofairvalue,partiallyoffsetbya$28milliongainonthesaleofabusiness.10InterestExpense,netInterestexpense,netwasasfollows:QuarterEnded($inmillions)December30,2023December31,2022ChangeInterestexpense$(528)$(465)(14)%Interestincome,investmentincomeandother282165 71%Interestexpense,net$(246)$(300)18%Theincreaseininterestexpensewasprimarilyduetohigheraveragerates,partiallyoffsetbyloweraveragedebtbalances.Theincreaseininterestincome,investmentincomeandotherwasdrivenbyhigherinterestincomeoncashbalancesreflectinganincreaseininterestrates.EquityintheIncomeofInvesteesEquityintheincomeofinvesteeswasasfollows:QuarterEnded($inmillions)December30,2023December31,2022ChangeAmountsincludedinsegmentresults:Entertainment$171$193(11)%Sports133 100%Experiences(2)nmAmortizationofTFCFintangibleassetsrelatedtoequityinvestees(3)(3)%Equityintheincomeofinvestees$181$191(5)%IncomeTaxesTheeffectiveincometaxratewasasfollows:QuarterEndedDecember30,2023December31,2022Incomebeforeincometaxes$2,871$1,773 Incometaxexpense720 412 Effectiveincometaxrate 25.1#.2%Theincreaseintheeffectiveincometaxratewasduetotheimpactofadjustmentsrelatedtoprioryears,whichwasunfavorableinthecurrentquarterandfavorableintheprior-yearquarter,partiallyoffsetbylowereffectivetaxratesonforeignearningscomparedtotheprior-yearquarter.11NoncontrollingInterestsNetincomeattributabletononcontrollinginterestswasasfollows:QuarterEnded($inmillions)December30,2023December31,2022ChangeNetincomeattributabletononcontrollinginterests$(240)$(82)(100)%TheincreaseinnetincomeattributabletononcontrollinginterestswasprimarilyduetoimprovedresultsatourAsiaThemeParks,theaccretionofHulusnoncontrollinginteresttotheamountpaidtoNBCUniversalinDecember2023and,toalesserextent,improvedresultsatESPN,partiallyoffsetbythecomparisontotheimpactoftheprior-yearpurchaseofMajorLeagueBaseballs15%interestinBAMTechLLC.Netincomeattributabletononcontrollinginterestsisdeterminedonincomeafterroyaltiesandmanagementfees,financingcostsandincometaxes,asapplicable.CashFlowCashprovidedby(usedin)operationsandfreecashflowwereasfollows:QuarterEnded($inmillions)December30,2023December31,2022ChangeCashprovidedby(usedin)operations$2,185$(974)$3,159Investmentsinparks,resortsandotherproperty(1,299)(1,181)(118)Freecashflow(1)$886$(2,155)$3,041(1)FreecashflowisnotafinancialmeasuredefinedbyGAAP.ThemostcomparableGAAPmeasureiscashprovidedbyoperations.Seethediscussiononpages18through21.Cashprovidedbyoperationsincreasedby$3.2billionto$2.2billioninthecurrentquarterfromcashusedinoperationsof$1.0billionintheprior-yearquarter.Theincreasewasduetolowerfilmandtelevisionproductionspendingreflectingtheimpactoftheguildstrikesinthecurrentquarter,thetimingofpaymentsforsportsrightsandlowercollateralpaymentsrelatedtoourhedgingprogram.Theseincreaseswerepartiallyoffsetbythedeferraloffiscal2023federalandCaliforniataxpaymentsintothecurrentquarterpursuanttoreliefprovidedbytheInternalRevenueServiceandCaliforniaStateBoardofEqualizationasaresultof2023winterstormsinCalifornia.12CapitalExpendituresandDepreciationExpenseInvestmentsinparks,resortsandotherpropertywereasfollows:QuarterEnded($inmillions)December30,2023December31,2022Entertainment$309$273Sports6ExperiencesDomestic571519International244219TotalExperiences815738Corporate175164Totalinvestmentsinparks,resortsandotherproperty$1,299$1,181Capitalexpendituresincreasedfrom$1.2billionto$1.3billionduetohigherspendonnewattractionsandcruiseshipfleetexpansionattheExperiencessegment.Depreciationexpensewasasfollows:QuarterEnded($inmillions)December30,2023December31,2022Entertainment$163$154Sports1110ExperiencesDomestic424452International171164TotalExperiences595616Corporate5448Totaldepreciationexpense$823$82813THEWALTDISNEYCOMPANYCONDENSEDCONSOLIDATEDSTATEMENTSOFINCOME(unaudited;$inmillions,exceptpersharedata)QuarterEndedDecember30,2023December31,2022Revenues$23,549$23,512Costsandexpenses(20,613)(21,519)Restructuringandimpairmentcharges(69)Otherexpense,net(42)Interestexpense,net(246)(300)Equityintheincomeofinvestees181191Incomebeforeincometaxes2,8711,773Incometaxes(720)(412)Netincome2,1511,361Netincomeattributabletononcontrollinginterests(240)(82)NetincomeattributabletoTheWaltDisneyCompany(Disney)$1,911$1,279EarningspershareattributabletoDisney:Diluted$1.04$0.70Basic$1.04$0.70Weightedaveragenumberofcommonandcommonequivalentsharesoutstanding:Diluted1,8351,827Basic1,8321,82514THEWALTDISNEYCOMPANYCONDENSEDCONSOLIDATEDBALANCESHEETS(unaudited;$inmillions,exceptpersharedata)December30,2023September30,2023ASSETSCurrentassetsCashandcashequivalents$7,192$14,182Receivables,net14,11512,330Inventories1,9541,963Contentadvances1,4093,002Othercurrentassets1,3011,286Totalcurrentassets25,97132,763Producedandlicensedcontentcosts32,72533,591Investments3,0843,080Parks,resortsandotherpropertyAttractions,buildingsandequipment72,09670,090Accumulateddepreciation(43,575)(42,610)28,52127,480Projectsinprogress5,6186,285Land1,1821,17635,32134,941Intangibleassets,net12,63913,061Goodwill77,06677,067Otherassets10,96811,076Totalassets$197,774$205,579LIABILITIESANDEQUITYCurrentliabilitiesAccountspayableandotheraccruedliabilities$18,676$20,671Currentportionofborrowings6,0874,330Deferredrevenueandother6,2706,138Totalcurrentliabilities31,03331,139Borrowings41,60342,101Deferredincometaxes7,0417,258Otherlong-termliabilities12,59612,069CommitmentsandcontingenciesRedeemablenoncontrollinginterests9,055EquityPreferredstockCommonstock,$0.01parvalue,Authorized4.6billionshares,Issued1.9billionsharesatDecember30,2023and1.8billionsharesatSeptember30,202357,64057,383Retainedearnings47,49046,093Accumulatedothercomprehensiveloss(3,502)(3,292)Treasurystock,atcost,19millionshares(907)(907)TotalDisneyShareholdersequity100,72199,277Noncontrollinginterests4,7804,680Totalequity105,501103,957Totalliabilitiesandequity$197,774$205,57915THEWALTDISNEYCOMPANYCONDENSEDCONSOLIDATEDSTATEMENTSOFCASHFLOWS(unaudited;$inmillions)QuarterEndedDecember30,2023December31,2022OPERATINGACTIVITIESNetincome$2,151$1,361Depreciationandamortization1,2431,306Deferredincometaxes(51)(15)Equityintheincomeofinvestees(181)(191)Cashdistributionsreceivedfromequityinvestees153176Netchangeinproducedandlicensedcontentcostsandadvances2,642558Equity-basedcompensation308270Other,net(64)(163)ChangesinoperatingassetsandliabilitiesReceivables(1,554)(1,423)Inventories8(88)Otherassets30(443)Accountspayableandotherliabilities(1,396)(2,378)Incometaxes(1,104)56Cashprovidedby(usedin)operations2,185(974)INVESTINGACTIVITIESInvestmentsinparks,resortsandotherproperty(1,299)(1,181)Other,net53(111)Cashusedininvestingactivities(1,246)(1,292)FINANCINGACTIVITIESCommercialpaperborrowings,net1,046799Borrowings67Reductionofborrowings(309)(1,000)Contributionsfrom/salesofnoncontrollinginterests178Acquisitionofredeemablenoncontrollinginterests(8,610)(900)Other,net(133)(187)Cashusedinfinancingactivities(8,006)(1,043)Impactofexchangeratesoncash,cashequivalentsandrestrictedcash79164Changeincash,cashequivalentsandrestrictedcash(6,988)(3,145)Cash,cashequivalentsandrestrictedcash,beginningofperiod14,23511,661Cash,cashequivalentsandrestrictedcash,endofperiod$7,247$8,51616DTCPRODUCTDESCRIPTIONSANDKEYDEFINITIONSProductofferingsIntheU.S.,Disney ,ESPN andHuluSVODOnlyareeachofferedasastandaloneserviceortogetheraspartofvariousmulti-productofferings.HuluLiveTV SVODincludesDisney andESPN .Disney isavailableinmorethan150countriesandterritoriesoutsidetheU.S.andCanada.InIndiaandcertainotherSoutheastAsiancountries,theserviceisbrandedDisney Hotstar.IncertainLatinAmericancountries,weofferDisney aswellasStar ,ageneralentertainmentSVODservice,whichisavailableonastandalonebasisortogetherwithDisney (Combo ).Dependingonthemarket,ourservicescanbepurchasedonourwebsitesorthroughthird-partyplatforms/appsorareavailableviawholesalearrangements.PaidsubscribersPaidsubscribersreflectsubscribersforwhichwerecognizedsubscriptionrevenue.Subscribersceasetobeapaidsubscriberasoftheireffectivecancellationdateorasaresultofafailedpaymentmethod.Subscriberstomulti-productofferingsintheU.S.arecountedasapaidsubscriberforeachserviceincludedinthemulti-productofferingandsubscriberstoHuluLiveTV SVODarecountedasonepaidsubscriberforeachoftheHuluLiveTV SVOD,Disney andESPN services.InLatinAmerica,ifasubscriberhaseitherthestandaloneDisney orStar serviceorsubscribestoCombo ,thesubscriberiscountedasoneDisney paidsubscriber.Subscribersincludethosewhoreceiveaservicethroughwholesalearrangementsincludingthoseforwhichtheserviceisdistributedtoeachsubscriberofanexistingcontentdistributiontier.WhenweaggregatethetotalnumberofpaidsubscribersacrossourDTCstreamingservices,werefertothemaspaidsubscriptions.InternationalDisney (excludingDisney Hotstar)InternationalDisney (excludingDisney Hotstar)includestheDisney serviceoutsidetheU.S.andCanadaandtheStar serviceinLatinAmerica.AverageMonthlyRevenuePerPaidSubscriberHuluandESPN averagemonthlyrevenueperpaidsubscriberiscalculatedbasedontheaverageofthemonthlyaveragepaidsubscribersforeachmonthintheperiod.Themonthlyaveragepaidsubscribersiscalculatedasthesumofthebeginningofthemonthandendofthemonthpaidsubscribercount,dividedbytwo.Disney averagemonthlyrevenueperpaidsubscriberiscalculatedusingadailyaverageofpaidsubscribersfortheperiod.Revenueincludessubscriptionfees,advertising(excludingrevenueearnedfromsellingadvertisingspotstootherCompanybusinesses)andpremiumandfeatureadd-onrevenuebutexcludesPay-Per-Viewrevenue.Advertisingrevenuegeneratedbycontentofonestreamingservicethatisaccessedthroughanotherstreamingservice(forexample,HulucontentaccessedthroughDisney )isallocatedbetweenbothservices.Theaveragerevenueperpaidsubscriberisnetofdiscountsonofferingsthatcarrymorethanoneservice.Revenueisallocatedtoeachservicebasedontherelativeretailorwholesalepriceofeachserviceonastandalonebasis.HuluLiveTV SVODrevenueisallocatedtotheSVODservicesbasedonthewholesalepriceoftheHuluSVODOnly,Disney andESPN multi-productoffering.Ingeneral,wholesalearrangementshavealoweraveragemonthlyrevenueperpaidsubscriberthansubscribersthatweacquiredirectlyorthroughthird-partyplatforms.17NON-GAAPFINANCIALMEASURESThisearningsreleasepresentsdilutedEPSexcludingcertainitems,totalsegmentoperatingincome,freecashflow,andDTCstreamingbusinessesoperatingincome(loss),allofwhichareimportantfinancialmeasuresfortheCompany,butarenotfinancialmeasuresdefinedbyGAAP.ThesemeasuresshouldbereviewedinconjunctionwiththemostcomparableGAAPfinancialmeasuresandarenotpresentedasalternativemeasuresofdilutedEPS,incomebeforeincometaxes,cashprovidedbyoperations,orEntertainmentandSportssegmentoperatingincome(loss)asdeterminedinaccordancewithGAAP.DilutedEPSexcludingcertainitems,totalsegmentoperatingincome,freecashflow,andDTCstreamingbusinessesoperatingincome(loss)aswehavecalculatedthemmaynotbecomparabletosimilarlytitledmeasuresreportedbyothercompanies.OurdefinitionsandcalculationsofhistoricalmeasuresofdilutedEPSexcludingcertainitems,totalsegmentoperatingincome,freecashflow,andDTCstreamingbusinessesoperatingincome(loss),aswellasquantitativereconciliationsofeachofthesehistoricalmeasurestothemostdirectlycomparableGAAPfinancialmeasureareprovidedbelow.Disneyisnotprovidingforward-lookingmeasuresfordilutedEPSorcashprovidedbyoperations,whicharethemostdirectlycomparableGAAPmeasurestodilutedEPSexcludingcertainitemsandfreecashflow,respectively,oraquantitativereconciliationofforward-lookingdilutedEPSexcludingcertainitemsorfreecashflowtothosemostdirectlycomparableGAAPmeasures.DisneyisunabletopredictorestimatewithreasonablecertaintytheultimateoutcomeofcertainsignificantitemsrequiredforeachoftheseGAAPmeasureswithoutunreasonableeffort.InformationaboutotheradjustingitemsthatiscurrentlynotavailabletoDisneycouldhaveapotentiallyunpredictableandsignificantimpactonfutureGAAPfinancialresults.DilutedEPSexcludingcertainitemsTheCompanyusesdilutedEPSexcluding(1)certainitemsaffectingcomparabilityofresultsfromperiodtoperiodand(2)amortizationofTFCFandHuluintangibleassets,includingpurchaseaccountingstep-upadjustmentsforreleasedcontent,tofacilitatetheevaluationoftheperformanceoftheCompanysoperationsexclusiveoftheseitems,andtheseadjustmentsreflecthowseniormanagementisevaluatingsegmentperformance.TheCompanybelievesthatprovidingdilutedEPSexclusiveofcertainitemsimpactingcomparabilityisusefultoinvestors,particularlywheretheimpactoftheexcludeditemsissignificantinrelationtoreportedearningsandbecausethemeasureallowsforcomparabilitybetweenperiodsoftheoperatingperformanceoftheCompanysbusinessandallowsinvestorstoevaluatetheimpactoftheseitemsseparately.TheCompanyfurtherbelievesthatprovidingdilutedEPSexclusiveofamortizationofTFCFandHuluintangibleassetsassociatedwiththeacquisitionin2019isusefultoinvestorsbecausetheTFCFandHuluacquisitionwasconsiderablylargerthantheCompanyshistoricacquisitionswithasignificantlygreateracquisitionaccountingimpact.18ThefollowingtablereconcilesreporteddilutedEPStodilutedEPSexcludingcertainitemsforthefirstquarter:($inmillionsexceptEPS)Pre-TaxIncome/LossTaxBenefit/Expense(1)After-TaxIncome/Loss(2)DilutedEPS(3)Changevs.prior-yearperiodQuarterEndedDecember30,2023Asreported$2,871$(720)$2,151$1.04 49%Exclude:AmortizationofTFCFandHuluintangibleassetsandfairvaluestep-uponfilmandtelevisioncosts(4)451(106)3450.18Excludingcertainitems$3,322$(826)$2,496$1.22 23%QuarterEndedDecember31,2022Asreported$1,773$(412)$1,361$0.70Exclude:AmortizationofTFCFandHuluintangibleassetsandfairvaluestep-uponfilmandtelevisioncosts(4)579(135)4440.24Restructuringandimpairmentcharges(5)69(8)610.03Otherexpense,net(6)42(16)260.01Excludingcertainitems$2,463$(571)$1,892$0.99(1)Taxbenefit/expenseisdeterminedusingthetaxrateapplicabletotheindividualitem.(2)Beforenoncontrollinginterestshare.(3)Netofnoncontrollinginterestshare,whereapplicable.Totalmaynotequalthesumofthecolumnduetorounding.(4)Forthecurrentquarter,intangibleassetamortizationwas$380million,step-upamortizationwas$68millionandamortizationofintangibleassetsrelatedtoTFCFequityinvesteeswas$3million.Fortheprior-yearquarter,intangibleassetamortizationwas$417million,step-upamortizationwas$159millionandamortizationofintangibleassetsrelatedtoTFCFequityinvesteeswas$3million.(5)ChargesrelatedtoexitingourbusinessesinRussia.(6)DraftKingsloss($70million),partiallyoffsetbyagainonthesaleofabusiness($28million).19TotalsegmentoperatingincomeTheCompanyevaluatestheperformanceofitsoperatingsegmentsbasedonsegmentoperatingincome,andmanagementusestotalsegmentoperatingincomeasameasureoftheperformanceofoperatingbusinessesseparatefromnon-operatingfactors.TheCompanybelievesthatinformationabouttotalsegmentoperatingincomeassistsinvestorsbyallowingthemtoevaluatechangesintheoperatingresultsoftheCompanysportfolioofbusinessesseparatefromnon-operationalfactorsthataffectnetincome,thusprovidingseparateinsightintobothoperationsandotherfactorsthataffectreportedresults.Thefollowingtablereconcilesincomebeforeincometaxestototalsegmentoperatingincome:QuarterEnded($inmillions)December30,2023December31,2022ChangeIncomebeforeincometaxes$2,871$1,773 62d(subtract):Corporateandunallocatedsharedexpenses308280(10)%Restructuringandimpairmentcharges69 100%Otherexpense,net42 100%Interestexpense,net246300 18%AmortizationofTFCFandHuluintangibleassetsandfairvaluestep-uponfilmandtelevisioncosts451579 22%Totalsegmentoperatingincome$3,876$3,043 27%FreecashflowTheCompanyusesfreecashflow(cashprovidedbyoperationslessinvestmentsinparks,resortsandotherproperty),amongothermeasures,toevaluatetheabilityofitsoperationstogeneratecashthatisavailableforpurposesotherthancapitalexpenditures.Managementbelievesthatinformationaboutfreecashflowprovidesinvestorswithanimportantperspectiveonthecashavailabletoservicedebtobligations,makestrategicacquisitionsandinvestmentsandpaydividendsorrepurchaseshares.ThefollowingtablepresentsasummaryoftheCompanysconsolidatedcashflows:QuarterEnded($inmillions)December30,2023December31,2022Cashprovidedby(usedin)operations$2,185$(974)Cashusedininvestingactivities(1,246)(1,292)Cashusedinfinancingactivities(8,006)(1,043)Impactofexchangeratesoncash,cashequivalentsandrestrictedcash79164Changeincash,cashequivalentsandrestrictedcash(6,988)(3,145)Cash,cashequivalentsandrestrictedcash,beginningofperiod14,23511,661Cash,cashequivalentsandrestrictedcash,endofperiod$7,247$8,51620ThefollowingtablereconcilestheCompanysconsolidatedcashprovidedby(usedin)operationstofreecashflow:QuarterEnded($inmillions)December30,2023December31,2022ChangeCashprovidedby(usedin)operations$2,185$(974)$3,159 Investmentsinparks,resortsandotherproperty(1,299)(1,181)(118)Freecashflow$886$(2,155)$3,041DTCStreamingBusinessesTheCompanyusescombinedDTCstreamingbusinessesoperatingincome(loss)becauseitbelievesthatthismeasureallowsinvestorstoevaluatetheperformanceofitsportfolioofstreamingbusinessesandtrackprogressagainsttheCompanysgoalofreachingprofitabilityinthefourthquarteroffiscal2024atitscombinedstreamingbusinesses.ThefollowingtablesreconcileEntertainmentandSportssegmentoperatingincome(loss)totheDTCstreamingbusinessesoperatingloss:QuarterEndedDecember30,2023December31,2022($inmillions)EntertainmentSportsDTCStreamingBusinessesEntertainmentSportsDTCStreamingBusinessesLinearNetworks$1,236$(25)$1,330$(95)DTCstreamingbusinesses(Direct-to-ConsumerandESPN businesses)(138)(78)$(216)(984)(69)$(1,053)ContentSales/LicensingandOther(224)(1)Segmentoperatingincome(loss)$874$(103)$345$(164)21FORWARD-LOOKINGSTATEMENTSCertainstatementsandinformationinthisearningsreleasemayconstitute“forward-lookingstatements”withinthemeaningofthePrivateSecuritiesLitigationReformActof1995,includingstatementsregardingfinancialperformance,earningsexpectations,expecteddriversandguidance,includingfutureadjustedEPS,freecashflowandfundingsources,capitalallocation,includingdividendsandsharerepurchases,subscriberandrevenuegrowth,plansfordirect-to-consumerprofitabilityandtimingandcostreductions;valueof,andopportunitiesforgrowthbasedon,ourintellectualproperty,contentofferings,businessesandassets,includingtheatricalandsportscontent,franchisesandbrands;businessplans;futureperformanceandgrowth;plans,expectations,strategicprioritiesanddriversofgrowthandprofitabilityandotherstatementsthatarenothistoricalinnature.Anyinformationthatisnothistoricalinnatureincludedinthisearningsreleaseissubjecttochange.Thesestatementsaremadeonthebasisofmanagementsviewsandassumptionsregardingfutureeventsandbusinessperformanceasofthetimethestatementsaremade.Managementdoesnotundertakeanyobligationtoupdatethesestatements.Actualresultsmaydiffermateriallyfromthoseexpressedorimplied.SuchdifferencesmayresultfromactionstakenbytheCompany,includingrestructuringorstrategicinitiatives(includingcapitalinvestments,assetacquisitionsordispositions,neworexpandedbusinesslinesorcessationofcertainoperations),ourexecutionofourbusinessplans(includingthecontentwecreateandIPweinvestin,ourpricingdecisions,ourcoststructureandourmanagementandotherpersonneldecisions),ourabilitytoquicklyexecuteoncostrationalizationwhilepreservingrevenue,thediscoveryofadditionalinformationorotherbusinessdecisions,aswellasfromdevelopmentsbeyondtheCompanyscontrol,including:theoccurrenceofsubsequentevents;deteriorationindomesticandglobaleconomicconditionsorfailureofconditionstoimproveasanticipated;deteriorationinorpressuresfromcompetitiveconditions,includingcompetitiontocreateoracquirecontent,competitionfortalentandcompetitionforadvertisingrevenue;consumerpreferencesandacceptanceofourcontent,offerings,pricingmodelandpriceincreases,andcorrespondingsubscriberadditionsandchurn,andthemarketforadvertisingsalesonourDTCservicesandlinearnetworks;healthconcernsandtheirimpactonourbusinessesandproductions;international,politicalormilitarydevelopments;regulatoryandlegaldevelopments;technologicaldevelopments;labormarketsandactivities,includingworkstoppages;adverseweatherconditionsornaturaldisasters;andavailabilityofcontent.Suchdevelopmentsmayfurtheraffectentertainment,travelandleisurebusinessesgenerallyandmay,amongotherthings,affect(orfurtheraffect,asapplicable):ouroperations,businessplansorprofitability,includingdirect-to-consumerprofitability;demandforourproductsandservices;theperformanceoftheCompanyscontent;ourabilitytocreateorobtaindesirablecontentatorunderthevalueweassignthecontent;theadvertisingmarketforprogramming;incometaxexpense;andperformanceofsomeorallCompanybusinesseseitherdirectlyorthroughtheirimpactonthosewhodistributeourproducts.AdditionalfactorsaresetforthintheCompanysAnnualReportonForm10-KfortheyearendedSeptember30,2023,includingunderthecaptions“RiskFactors,”“ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations,”and“Business,”quarterlyreportsonForm10-Q,includingunderthecaptions“RiskFactors”and“ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations,”andsubsequentfilingswiththeSecuritiesandExchangeCommission.Theterms“Company,”“we,”and“our”areusedinthisreporttorefercollectivelytotheparentcompanyandthesubsidiariesthroughwhichourvariousbusinessesareactuallyconducted.22CONFERENCECALLINFORMATIONInconjunctionwiththisrelease,TheWaltDisneyCompanywillhostaconferencecalltoday,February7,2024,at4:30PMEST/1:30PMPSTviaaliveWebcast.ToaccesstheW

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  • 西门子(SIEMENS)2024财年第一季度财报(英文版)(29页).pdf

    Successful start to fiscal 2024Roland Busch,CEO Siemens AGRalf P.Thomas,CFO Siemens AGUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08Notes and forward-looking statements This document contains statements related to our future business and financial performance and future events or developments involving Siemens that may constitute forward-looking statements.These statements may be identified by words such as“expect,”“look forward to,”“anticipate,”“intend,”“plan,”“believe,”“seek,”“estimate,”“will,”“project”or words of similar meaning.We may also make forward-looking statements in other reports,in prospectuses,in presentations,in material delivered to shareholders and in press releases.In addition,our representatives may from time to time make oral forward-looking statements.Such statements are based on the current expectations and certain assumptions of Siemens management,of which many are beyond Siemens control.These are subject to a number of risks,uncertainties and factors,including,but not limited to those described in disclosures,in particular in the chapter Report on expected developments and associated material opportunities and risks in the Combined Management Report of the Siemens Report( in the Interim Group Management Report of the Half-year Financial Report(provided that it is already available for the current reporting year),which should be read in conjunction with the Combined Management Report.Should one or more of these risks or uncertainties materialize,should decisions,assessments or requirements of regulatory authorities deviate from our expectations,should events of force majeure,such as pandemics,unrest or acts of war,occur or should underlying expectations including future events occur at a later date or not at all or assumptions prove incorrect,actual results,performance or achievements of Siemens may(negatively or positively)vary materially from those described explicitly or implicitly in the relevant forward-looking statement.Siemens neither intends,nor assumes any obligation,to update or revise these forward-looking statements in light of developments which differ from those anticipated.This document includes in the applicable financial reporting framework not clearly defined supplemental financial measures that are or may be alternative performance measures(non-GAAP-measures).These supplemental financial measures should not be viewed in isolation or as alternatives to measures of Siemens net assets and financial positions or results of operations as presented in accordance with the applicable financial reporting framework in its Consolidated Financial Statements.Other companies that report or describe similarly titled alternative performance measures may calculate them differently.Due to rounding,numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.Unrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08Page 2Q1 Business highlightsStrong performance,accelerating transformation by combining the real and digital worldsUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08Page 3ROBUST TOPLINEOrders up Book-to-bill 1.21,driven by MO SI on a high level DI AUT sequentially upClear revenue growth Up 6%Driven by MO,SI and SHS DI slightly lowerCompetitive strength SI Electrification standing out,revenue up 20%STRINGENT EXECUTIONSuccessful conversion Q1 IB profit of 2.7bn IB margin at 15.8%Sharply improved free cash flow 1.3bn for IB 1.0bn“all in”Full-year guidance confirmedCONSISTENT STRATEGYAccelerating transformation Driving industrial metaverse Ecosystem expansion SaaS transition fully on track ARR up 15%,Cloud ARR at 1.3bnPortfolio optimization SE stake reduced to 17.1%Siemens Ltd.India acquired Heliox acquisition closedQ1 Key FinancialsUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08Page 4Orders22.3bn 2%Note:Orders and Revenue growth comparableRevenue18.4bn 6%IB Profit margin15.8%EPS pre PPA2.583.19 as reportedFree cash flow1.0bnIndustrial Net debt/EBITDA0.7xex SE invest Order backlog on record levelStringent execution building on resilient supply chains Unrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-085034225471017910114Order backlog Dec.20236.5FY 2024eFY 2025eAfter FY 2025e11338Expected revenue generation from backlogLeveraging operational excellencebnContinuing high demand in systems,solution and service businesses on secular trendsShort-cycle product orders further normalizing with ongoing destocking Stringent management of Red Sea logistical challenges,building on experience Excellent transparency through data analytics and AI in the supply chainResilience through localized value chainsDIMOSHSSIPOC/OtherPage 5Siemens delivers innovations to enable the industrial metaversePowerful tech event at CES 2024 Unrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08Page 6Siemens&AWS Access to generative AI Siemens&Sony Immersive engineeringSiemens Xcelerator Launch developer portal Combining Siemens NX software with Sonys new spatial content creation system Create and explore design objects in borderless immersive workspace Integration of AWS Bedrock into Siemens Mendix low code development platform Customers to create new and upgrade existing applications with latest generative AI technologies Simpler,faster and more efficient development to drive productivity Holistic space to explore and access Siemens and partner APIs Full set of developer resources and innovative AI companion Streamlined developer journey from discovery to deploymentAUTOMOTIVE RED BULL FORD POWER TRAINSSustainable future of motorsportSiemens Xcelerator as digital backbone for development of 2026 next generation hybrid power unit Siemens Xcelerator and vertical know-how drive customer valueSustainability impact through decarbonization,resource efficiency&people centricityUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08SEMICONDUCTOR INTELAdvanced manufacturingEnhanced efficiency and sustainability in semiconductor infrastructure,facilities and factory operations across entire value chainPUBLIC TRANSPORT LEIPZIG®ION75 Mireo regional trains Platform based trains,partially battery powered,covering 10.6 million train kilometers annually with up to 25%higher energy efficiencyFOOD&BEVERAGES HEINEKENDecarbonization of 15 production sitesEnergy digital twin simulation as basis for implementation of scalable solutions and services;save up to 20%energy&reduce 50%CO2 Verticaldomainknow-howCrosscollaborationCore TechnologiesPage 7Page 8DI SW Annual Recurring Revenue(ARR)6%Q1 FY2218%Q1 FY2324%Q2 FY2327%Q3 FY2330%Q4 FY2333%Q1 FY243.03.53.63.74.03.9 14%1) 15%1)SaaS transition with high momentum1 ARR:FX comparable Share of Cloud ARRbnCloud ARR:Up 2x y-o-y to 1.3bn59%Q1 FY2279%Q1 FY2381%Q2 FY2382%Q3 FY2384%Q4 FY2384%Q1 FY245005,4507,5209,26011,30012,590#Customers(accumulated):Customer transformation rate to SaaS:42Yuxy%Q1 FY22Q1 FY23Q2 FY23Q3 FY23Q4 FY23Q1 FY24Cloud invest:56m in Q1 FY 24|FY 24:targeted invest 250m Share of renewals based on total contract value(TCV)Therein 75%new customersSME customersRolling 4QUnrestrictedUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08Combining the real and digital worldsStrong underlying growth momentum with SaaS transformation at high pace Digital Industries(DI)SaaS transition accelerated,powerful start for cash generation,Automation stabilizingUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08 Sequential growth in Automation Continued destocking SW lower after record Q4/23 Book-to-bill at 0.87 Backlog 10.4bn,therein 5bn SW Automation down-4%PLM Software up 13%,EDA flat after exceptional Q4/23 performance Lower capacity utilization Less favorable product mix FX-effects of-100 bps Operating working capital on Q4/23 level Typical seasonal pattern due to incentive related pay-outOrdersbnRevenuebnProfit marginFree cash flowmx.xProfit margin excl.severancex.xsh Conversion Ratex.xxtherein SoftwareQ1 FY 23Q1 FY 246.04.0-31%1)1.13.7Q1 FY 231.23.4Q1 FY 244.84.6-1%1)Q1 FY 23Q1 FY 24-370bps19.6#.6.8-23#.3Y1606Q1 FY 23Q1 FY 24 3%0.530.681 Comparable,excl.FX and portfoliox.xPage 9Digital Industries(DI)Unrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08Automation orders sequentially up after trough in Q4 FY 23Lower fast turning orders affect revenue growth,backlog further normalizing-55%-9%OrdersRevenueQ1 FY 24 Key regions AutomationChina-29%-5%Germany-29%-11%Italy-20%-5%U.S.Q1 FY 24 Software 8.5%GlobalRobust start driven by PLMSaaS transition fully on trackOrders normalizing,sequentially up;Muted macro environment weighed on revenueOrders normalizing,sequentially upRevenue lower broad-basedOrders impacted by soft macro and destocking,but sequentially up;Revenue with tough compsOrders further normalizing;Process revenue modestly downNote:Growth rates Comparable,excl.FX and portfolioPage 10Digital Industries(DI)Vertical end market trendsUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08Still subdued macro environmentMuted growth momentum in key end marketsAutomotiveMachine BuildingFood&BeveragePharma&ChemicalsAerospace&DefenseElectronics&SemiconductorsVertical end marketsRevenueexposureMarket trend1Q4 FY 23Market trend1Q1 FY 2420%5%1 Y-o-Y industry revenue development for next 6 months based on industry production data from statistical office sources(e.g.NBoS,US Fed,Eurostat)Page 11Smart Infrastructure(SI)Excellent topline performance,record high profitability,robust start for free cash flowUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08 Book-to-bill at 1.21 Electrification flat,tough comps,Buildings up 4%,Electrical Products down-3%Several large orders from data center customers Record backlog 17bn Electrification with excellent growth of 20%,Electrical Products up 4%Buildings up 6%driven by solutions and services Service business up 12%Strong conversion on higher revenue and capacity utilization Positive effect of 190bps due to partial reversal of liability related to past portfolio activities Net positive economic equation FX-effects of-90bps Improved cash conversion Operating working capital seasonally up,mainly driven by higher inventories for further growthOrdersbnRevenuebnProfit marginFree cash flowm1 Comparable,excl.FX and portfolioProfit margin excl.severancex.xsh Conversion Ratex.xxtherein ServiceQ1 FY 23Q1 FY 246.05.8 1%1)1.03.6Q1 FY 231.13.7Q1 FY 244.64.8 9%1)-50290Q1 FY 23Q1 FY 24n/a-0.070.33Q1 FY 23Q1 FY 24 300bps15.5.5-16.3.3%x.xx.xPage 12Smart Infrastructure(SI)Unrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08Order growth driven by buildings business and large orders for data centerRevenue growth fueled by strong backlog execution in most regionsOrders RevenueQ1 FY 24 Key regions Q1 FY 24 Service 12%GlobalBroad-based double-digit growth across regions 4% 15%U.S.Orders up on tough comps driven by Buildings,supported by data center wins;Strong backlog execution,Electrification and Electrical Products(EP)drive growth 0% 0%GermanyOrder strength in Buildings balancing softer EP&Electrification on high comps;Revenue up in Buildings&Electrification-4%-1%ChinaDespite easy comps orders still bottoming out;Revenue soft on macro challenges-3% 10%Europeexcl.GermanyLower volume from large orders in Electrification on tough comps;Revenue growth driven by Electrification from power distribution&data centerNote:Growth rates Comparable,excl.FX and portfolioPage 13Smart Infrastructure(SI)Vertical end market trendsUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08Key verticals continue to grow in real termsPower Distribution and Data Center benefitting from secular growth trendsCommercial BuildingsPublic Sector/EducationData CenterPower DistributionElectrical&ElectronicsHealthcareVertical end marketsRevenueexposureMarket trend1Q4 FY 23Market trend1Q1 FY 2420%5%5%5%1 Trend next 3 4 quarters,Y-o-Y vertical market development Page 14Mobility(MO)Strong topline,profitability and free cash flow improvementUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08 Book-to-bill at 2.09 Several large orders in Rolling Stock Rail Infrastructure up double-digit Backlog at 47bn,therein 12.4bn service Double-digit growth across all businesses Stringent backlog execution Service up 20%Profitability improvement from higher revenue Benefitting from trailing effects related to Russia Seasonally low amount of milestone and downpayments Clear catch up in Q2 expectedOrdersbnRevenueProfit marginFree cash flowmCash Conversion Ratex.xxtherein ServiceQ1 FY 23Q1 FY 243.05.6 92%1)0.42.1Q1 FY 230.52.2Q1 FY 242.42.7 12%1)-257-57Q1 FY 23Q1 FY 24 78%-1.32-0.23Q1 FY 23Q1 FY 24 130bps9.3-13%8.0%1 Comparable,excl.FX and portfoliox.xx.xRevenuebn8.2%9.4%Profit margin excl.severancex.x%Page 15Below Industrial BusinessStrong operational performance,SE investment gain&change in consolidation methodUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08m2607839513IBSFSPOCOther Below IB items-197PPA-724TaxIncome Cont.OpsDisc.Ops.Net Income2,7232,5352,548Minorities160mTax Rate 22%Q1 FY 24 SFS:Exceptional performance driven by sale of an equity investment as planned Portfolio Companies:Robust profitability as expected Other Below IB items:SE Investment gain from transfer of shares&termination of equity accounting;remaining stake reported as financial investment Net Income:Reflecting very strong operational performance and lower tax rateNote:Other Below IB items contains SE Investment;SRE;Innovation;Governance;Pensions;Financing,Elimination,OtherDetailed split see page 22 Therein:479mSE InvestmentPage 16Key developmentsFree cash flow with sharp improvement over prior yearUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08FCF Industrial BusinessbnFCF“all in”bnFree cash flow improvement across all industrial businessesSeasonal increase in operating working capital,mainly driven by higher inventoriesCash Conversion Ratex.xQ1 FY 23Q2 FY 23Q3 FY 23Q4 FY 23Q1 FY 240.42.73.14.11.30.151.151.22Stringent working capital management1.040.47Page 172.1bn for 18%stake in Siemens Ltd.India to accelerate unbundling of business activities of Siemens and Siemens Energy in India(outside FCF)3bn share buyback finalized(Average price of 121)Q1 FY 23Q2 FY 23Q3 FY 23Q4 FY 23Q1 FY 240.12.33.04.61.00.052.052.440.660.41Capital allocation to execute strategyOutlook FY 2024 confirmedUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08Page 18This outlook excludes burdens from legal and regulatory mattersSiemens GroupSiemens BusinessesRevenue growthComparable Profit marginDigital Industries 0 3 23%Smart Infrastructure7 10 17%Mobility8 11%8 10%Book-to-bill1Revenue growthComparable4 8%EPS pre PPA excl.SE Investment10.40 11.00Unrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08Questions and AnswersPage 19Unrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08AppendixPage 2030Q1 FY 2371Q2 FY 2396Q3 FY 233Q4 FY 23149Q1 FY 2413217116595260FY 2023:RoE 16.3%Siemens Financial Services(SFS)Exceptional start into FY 2024 with successful execution of an investment sale as plannedPage 21mbntherein Equity Businesstherein Equity Business1.8Q1 FY 231.8Q2 FY 231.9Q3 FY 232.1Q4 FY 232.1Q1 FY 2431.531.331.532.932.0Earnings before Taxes(EBT)Total AssetsQ1 FY 2024:RoE 31.2%Higher results from debt business mainly due to lower expenses for credit risk provisionsEquity business results particularly high due to gain on sale of a stake in an equity investment,closing as expected in Q1Decrease in total assets compared to September 30,2023,mainly driven by negative currency translation effectsQ1 developmentsUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08Page 21Below Industrial BusinessStrong operational performance,SE investment gainUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08m2607847953113Inc.Cont.OpsTaxDisc.Ops.Net Income-724Fin.,Elim.,OtherPPAPensions-14Net Governance-59Innov.IB-46SRESE Investment-1972,7232,5352,548POCSFSQ1 FY 24Tax Rate 22%Minorities160mPage 22Net Debt bridgeCapital Structure remains rock solidUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08Net Debt Q4 20232.5-1.0 OWC-0.5Cash flows from investing activities-2.8Financing and other topicsNet Debt Q1 202426.1Net Debt adjustmentsInd.Net Debt Q1 202434.836.610.6Q1 Q4 SFS debt 28.0-0.8 Provisions for pensions-1.5-0.1 Credit guarantees-0.4 0.0Ind.Net Debt/EBITDA(c/o)0.7x(Q4 FY23:0.6x)Cash&cash equiv.11.1bn1)Cash&cash equiv.11.8bn2)Operating ActivitiesbnCash flows from operating activities(w/o OWC)1 Sum Cash&cash equivalents of 11.1bn incl.current interest bearing debt securities of 1.0bn2 Sum Cash&cash equivalents of 11.8bn incl.current interest bearing debt securities of 1.1bntherein:Inventories-0.8 Trade and other receivables-0.1 Trade payables-0.7 Contract assets/liabilities 0.5therein:Purchase of 18%share of Siemens Ltd.India from Siemens Energy-2.1 Share buyback-0.4 Interest paid-0.3 FX 0.6therein:CAPEX-0.4 Acquisition of businesses-0.3 SFS 0.4Page 23Capital structure on excellent levelContinuing robust cash performance,purchase of stake in Siemens Ltd.IndiaUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08Capital structure1.4x1.6x 1.6x1.0 x1.1x1.0 x0.8x0.6x0.7xQ1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24Industrial net debt/EBITDA Consistent cash generation with improvement over prior year Excellent position with strong investment grade rating Pension deficit on a very low level of 1.5bn Purchase of 18%stake in Siemens Ltd.India for 2.1bn 3bn share buyback finalized,new program to be started soon Opportunities from further portfolio optimizationTargetUp to 1.5xPage 24Financial strengthProvisions for pensions largely unchanged at historic low level Effects from funding of 8%stake in Siemens Energy and positive asset performance offset by lower discount rateUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08Page 25Q FY 2020 Pensions and similar obligations 1)All figures are reported on a continuing basis(w/o LHfS)2)Fair value of plan assets including effects from asset ceiling(Q1 2024:-0.5bn);Difference between DBO and fair value of plan assets additionally resulted in net defined benefit assets(Q1 2024:0.5bn)in bnFY 2021FY 2022Q1 FY 2023Q2 FY 2023Q3 FY 2023Q4 FY 2023Q1 FY 2024Defined benefit obligation(DBO)-35.5-27.8-27.2-27.3-28.1-26.6-28.8Fair value of plan assets33.525.925.725.926.725.527.7Provisions for pensions and similar obligations-2.8-2.3-1.8-1.8-1.7-1.4-1.5Discount rate1.3%3.9%3.9%3.8%3.8%4.6%3.5%Interest income0.30.30.20.20.20.20.3Actual return on plan assets2.5-6.70.40.70.1-1.01.7Profit Bridge from SHS disclosure to SAG disclosureDifferent profit definitions at SHS and SAG to be considered in modelsUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08Page 26mQ1 FY 24SHS EBIT(adjusted)74214.3%PPA(SHS logic)1-95Transaction,integration,retention,carve-out cost-5Gains and losses from divestments0Severance-24Expenses for other portfolio-related measures0Other restructuring expenses-23SHS EBIT(as reported)59411.5%PPA(SAG logic)291Consolidation/Accounting Differences7SAG Profit(as reported)69213.4%Severance24SAG Profit(excl.severance)71613.8%1PPA on intangible assets as well as other effects from IFRS 3 PPA adjustments2 PPA on intangible assetsUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08Outlook FY 2024 as presented by Siemens Healthineers on February 1,2024Page 27Siemens Financial FrameworkTargets over 3 5 year cycle Unrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02-08Revenuecomparable growthCapital efficiencyROCE1CashCash conversion rate(all in)2EarningsEPS pre PPACapital structureIndustrial net debt/EBITDADividendSiemens5720%1 comp.revenuegrowth rateHighsingle-digitgrowthup to1.5xProgressivedividend policyBusinessesDigital IndustriesSmart InfrastructureMobilitySiemens HealthineersFinancial Services1723161321%RoE 1520%1 comp.revenue growth rateARRServiceServiceProfit margin rangeCash conversion rateResilience KPI1 Excluding defined acquisition-related effects for Varian 2 Cash conversion rate:FCF/Net income 3“Profit”represents EBITA adjusted for amortization of intangible assets not acquired in business combinations;margin range for Siemens Healthineers reflects Siemens expectation 4 Return on Equity after taxPage 28Eva Scherer Head of Investor RNikola PChristopher HTobias AFinancial calendarUnrestricted|Siemens 2024|Investor Relations|Q1 Analyst Call|2024-02- 89 7805-32474Investor Relations ContactsMartin BNico ZFebruary 8,2024Q1 Earnings ReleaseMay 16,2024Q2 Earnings ReleaseFebruary 27,2024Roadshow ZurichMarch 19,2024Bank of America ConferenceCinzia FFebruary 29,2024Roadshow MunichApril 24,2024Hanover Fair Investor ToursPage 29

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  • 荷兰皇家壳牌石油公司2024年第一季度财报(英文版)(16页).pdf

    Shell plc|May 2,2024First quarter 2024 resultsDelivering strong results Shell plcMay 2,2024Shell plc|May 2,20242Definitions&cautionary note This presentation includes certain measures that are calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles(GAAP)such as IFRS,including Adjusted Earnings,Adjusted EBITDA,CFFO excluding working capital movements,Cash capital expenditure,free cash flow,Divestment proceeds and Net debt.This information,along with comparable GAAP measures,is useful to investors because it provides a basis for measuring Shell plcs operating performance and ability to retire debt and invest in new business opportunities.Shell plcs management uses these financial measures,along with the most directly comparable GAAP financial measures,in evaluating the business performance.This presentation may contain certain forward-looking non-GAAP measures such as capital expenditure and divestments.We are unable to provide a reconciliation of these forward-looking non-GAAP measures to the most comparable GAAP financial measures because certain information needed to reconcilethose non-GAAP measures to the most comparable GAAP financial measures is dependent on future events some of which are outside the control of Shell,such as oil and gas prices,interest rates and exchange rates.Moreover,estimating such GAAP measures with the required precision necessary to provide ameaningful reconciliation is extremely difficult and could not be accomplished without unreasonable effort.Non-GAAP measures in respect of future periods which cannot be reconciled to the most comparable GAAP financial measure are calculated in a manner which is consistent with the accounting policiesapplied in Shell plcs consolidated financial statements.“Adjusted Earnings”is the income attributable to Shell plc shareholders for the period,adjusted for the after-tax effect of oil price changes on inventory and for identified items,and excludes earnings attributable to non-controlling interest.In this presentation,“earnings”refers to“Adjusted Earnings”unless stated otherwise.We define“Adjusted EBITDA“as“Income/(loss)for the period“adjusted for current cost of supplies;identified items;tax charge/(credit);depreciation,amortisation and depletion;exploration well write-offs and net interest expense.All items include the non-controlling interest component.In this presentation,“operating expenses”,“costs”and“underlying costs”refer to“Underlying operating expenses”unless stated otherwise.Underlying operating expenses represent“operating expenses excluding identified items”.Operating expenses consist of the following lines in the Consolidated Statement of Income:(i)production and manufacturing expenses;(ii)selling,distribution and administrative expenses;and(iii)research and development expenses.Cash flow from operating activities excluding working capital movements is defined as“Cash flow from operating activities”less the sum of the following items in the Consolidated Statement of Cash Flows:(i)(increase)/decrease in inventories,(ii)(increase)/decrease in current receivables,and(iii)increase/(decrease)in current payables.In this presentation,“capex”refers to“Cash capital expenditure”unless stated otherwise.Cash capital expenditure comprises the following lines from the Consolidated Statement of Cash Flows:Capital expenditure,Investments in joint ventures and associates and Investments in equity securities.Free cash flow is defined as the sum of“Cash flow from operating activities”and“Cash flow from investing activities”.Organic free cash flow is defined as free cash flow excluding inorganic cash capital expenditure,divestment proceeds,and tax paid on divestments.In this presentation,“divestments”refers to“divestment proceeds”unless stated otherwise.Divestment proceeds are defined as the sum of(i)proceeds from sale of property,plant and equipment and businesses,(ii)proceeds from sale of joint ventures and associates,and(iii)proceeds from sale of equity securities.Net debt is defined as the sum of current and non-current debt,less cash and cash equivalents,adjusted for the fair value of derivative financial instruments used to hedge foreign exchange and interest rate risks relating to debt,and associated collateral balances.Reconciliations of the above non-GAAP measures are included in the Shell plc Unaudited Condensed Financial Report for the first quarter ended March 31,2024.The companies in which Shell plc directly and indirectly owns investments are separate legal entities.In this presentation“Shell”,“Shell Group”and“Group”are sometimes used for convenience where references are made to Shell plc and its subsidiaries in general.Likewise,the words“we”,“us”and“our”are also used to refer to Shell plc and its subsidiaries in general or to those who work for them.These terms are also used where no useful purpose is served by identifying the particular entity or entities.Subsidiaries,“Shell subsidiaries”and“Shell companies”as used in this presentation refer to entities over which Shell plc either directly or indirectly has control.The term“joint venture”,“joint operations”,“joint arrangements”,and“associates”may also be used to refer to a commercial arrangement in which Shell has a direct or indirect ownership interest with one or more parties.The term“Shell interest”is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in an entity or unincorporated joint arrangement,after exclusion of all third-party interest.This presentation contains forward-looking statements(within the meaning of the U.S.Private Securities Litigation Reform Act of 1995)concerning the financial condition,results of operations and businesses of Shell.All statements other than statements of historical fact are,or may be deemed to be,forward-looking statements.Forward-looking statements are statements of future expectations that are based on managements current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results,performance or events to differ materially from those expressed or implied in these statements.Forward-looking statements include,among other things,statements concerning the potential exposure of Shell to market risks and statements expressing managements expectations,beliefs,estimates,forecasts,projections and assumptions.These forward-looking statements are identified by their use of terms and phrases such as“aim”;“ambition”;anticipate;believe;“commit”;“commitment”;could;estimate;expect;goals;intend;may;“milestones”;objectives;outlook;plan;probably;project;risks;“schedule”;seek;should;target;will;“would”and similar terms and phrases.There are a number of factors that could affect the future operations of Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this presentation including(without limitation):(a)price fluctuations in crude oil and natural gas;(b)changes in demand for Shells products;(c)currency fluctuations;(d)drilling and production results;(e)reserves estimates;(f)loss of market share and industry competition;(g)environmental and physical risks;(h)risks associated with the identification of suitable potential acquisition properties and targets,and successful negotiation and completion of such transactions;(i)the risk of doing business in developing countries and countries subject to international sanctions;(j)legislative,judicial,fiscal and regulatory developments including regulatory measures addressing climate change;(k)economic and financial market conditions in various countries and regions;(l)political risks,including the risks of expropriation and renegotiation of the terms of contracts with governmental entities,delays or advancements in the approval of projects and delays in the reimbursement for shared costs;(m)risks associated with the impact of pandemics,such as the COVID-19(coronavirus)outbreak,regional conflicts,such as the Russia-Ukraine war,and a significant cybersecurity breach;and(n)changes in trading conditions.No assurance is provided that future dividend payments will match or exceed previous dividend payments.All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.Readers should not place undue reliance on forward-looking statements.Additional risk factors that may affect future results are contained in Shell plcs Form 20-F for the year ended December 31,2023(available at https:/ and www.sec.gov).These risk factors also expressly qualify all forward-looking statements contained in this presentation and should be considered by the reader.Each forward-looking statement speaks only as of the date of this presentation-May 2,2024.Neither Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information,future events or other information.In light of these risks,results could differ materially from those stated,implied or inferred from the forward-looking statements contained in this presentation.All amounts shown throughout this presentation are unaudited.The numbers presented throughout this presentation may not sum precisely to the totals provided and percentages may not precisely reflect the absolute figures,due to rounding.Also,in this presentation we may refer to Shells“Net Carbon Intensity”(NCI),which includes Shells carbon emissions from the production of our energy products,our suppliers carbon emissions in supplying energy for that production and our customers carbon emissions associated with their use of the energy products we sell.Shells NCI also includes the emissions associated with the production and use of energy products produced by others which Shell purchases for resale.Shell only controls its own emissions.The use of the terms Shells“Net Carbon Intensity”or NCI are for convenience only and not intended to suggest these emissions are those of Shell plc or its subsidiaries.Shells operating plan,outlook and budgets are forecasted for a ten-year period and are updated every year.They reflect the current economic environment and what we can reasonably expect to see over the next ten years.Accordingly,they reflect our Scope 1,Scope 2 and NCI targets over the next ten years.However,Shells operating plans cannot reflect our 2050 net-zero emissions target,as this target is currently outside our planning period.In the future,as society moves towards net-zero emissions,we expect Shells operating plans to reflect this movement.However,if society is not net zero in 2050,as of today,there would be significant risk that Shell may not meet this target.The contents of websites referred to in this presentation do not form part of this presentation.We may have used certain terms,such as resources,in this presentation that the United States Securities and Exchange Commission(SEC)strictly prohibits us from including in our filings with the SEC.Investors are urged to consider closely the disclosure in our Form 20-F,File No 1-32575,available on the SEC website www.sec.gov.The financial information presented in this presentation does not constitute statutory accounts within the meaning of section 434(3)of the Companies Act 2006(“the Act”).Statutory accounts for the year ended December 31,2023,were published in Shells Annual Report and Accounts,a copy of which was delivered to the Registrar of Companies for England and Wales,and in Shells Form 20-F.The auditors report on those accounts was unqualified,did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not contain a statement under sections 498(2)or 498(3)of the Act.The information in this presentation does not constitute the unaudited condensed consolidated financial statements which are contained in Shells first quarter 2024 unaudited results available on 207 934 5550;USA 1 832 337 4355Shell plc|May 2,20243Key messages APM reconciliations are available in the Q1 2024 Quarterly Databook here.1Income attributable to shareholders is$7.4 billion in Q1 2024.2Total debt$79.9 billion 3Q2 2023 to Q1 2024 4Expected to be completed by Q2 2024 results announcement.5Cash dividends paid to Shell plc shareholders$2.2 billion,repurchases of shares$2.8 billion.First quarter 2024 results Providing energy security,Enabling the energy transition$7.7 billionAdjusted Earnings1$13.3 billionCFFO$0.344Dividend per share$3.5 billionBuyback programme4Strong operational performance across the business$2225 billion cash capex outlook for 2024Strong balance sheet,net debt$40.5 billion2$13.2 billion buybacks executed over the last twelve months320%higher dividend per share than Q1 2023Total shareholder distributions in Q1 2024-$5.0 billion5Enhancing shareholder returnsPerformance DisciplineSimplificationShell plc|May 2,20244First quarter 2024 results Continued strong financial performanceIncome attributable to Shell plc shareholdersAdjusted EarningsAdjusted EBITDACash flow from operationsCash capital expenditureFree cash flow Net debtAPM reconciliations are available in the Q1 2024 Quarterly Databook here.Q1 2024$7.4 billion$7.7 billion$18.7 billion$13.3 billion$4.5 billion$9.8 billion$40.5 billionQ4 2023$0.5 billion$7.3 billion$16.3 billion$12.6 billion$7.1 billion$6.9 billion$43.5 billionShell plc|May 2,20247.37.702468105First quarter 2024 results Strong operational and financial performanceAdjusted Earnings Q4 2023 to Q1 2024$billionPrices&margins1:$(1.5)billion Volume&mix1:$0.2 billion Other2:$1.7 billion(0.3)(1.1)(0.0)1.6(0.0)0.3Cash conversion Q1 2024$billion7.718.713.30481216206.20.64.2(0.6)0.3(2.4)(1.2)0.6(2.1)1Integrated Gas and Upstream.2Mainly higher Chemicals and Products margins.3Non-controlling interest.4AR/AP&other includes initial margin.Working capital movement$(2.8)billionShell plc|May 2,20246Strong operational and financial performanceAPM reconciliations are available in the Q1 2024 Quarterly Databook here.1The wholesale commercial fuels business,previously reported in Chemicals&Products,is reported in the Marketing segment(Mobility)with effect from Q1 2024.Comparative information for Marketing and Chemicals&Products has been revised.2Non-controlling interest.First quarter 2024 results Adjusted EarningsAdjusted EBITDACFFO$billionQ1 2024Q4 2023Q1 2024Q4 2023Q1 2024Q4 2023Integrated Gas3.74.06.16.64.73.6Upstream1.93.17.97.95.75.8Marketing10.80.81.71.51.31.8Chemicals&Products11.60.02.80.7(0.3)1.2R&ES0.20.20.30.32.5(1.3)Corporate&NCI2(0.4)(0.7)(0.1)(0.5)(0.5)1.5Total7.77.318.716.313.312.6Shell plc|May 2,2024A pragmatic approach to capital allocation1Subject to Board approval.2Expected to be completed by Q2 2024 results announcement.Financial framework3040%of CFFO through the cycle4%progressive dividend annually1Enhanced Shareholder DistributionsDisciplined InvestmentCash capex:$2225 billion p.a.for 2024 and 2025AA credit metricsthrough the cycleBalanced Capital AllocationStrong Balance SheetNet Debt Net debt of$40.5 billion at the end of Q1,includes$26.9 billion of lease liabilities.Enhanced distributions$3.5 billion of share buybacks for the next 3 months27Shell plc|May 2,2024Upcoming events:Corporate reports:Annual Report 2023Energy Transition Strategy 2024Payments to Governments Report 2023Sustainability Report 2023Nigeria Briefing Notes 2022Useful links:Capital Markets DayAnnual and Quarterly DatabookShell Energy Transition StrategyESG Performance DataWar in Ukraine:Shells ResponseAug 1,2024Q2 2024 resultsOct 31,2024Q3 2024 resultsMay 21,2024Annual General Meeting8Shell plc|May 2,202410Volatility continuesData based on monthly averages.Macro environment6080100120140BrentJCC-3020406080Henry HubEU TTF-1000100200300400-10010203040IRMICM(RHS)$/bbl$/MMBtu$/tonne$/bblOilShell Indicative Refining Margin(IRM)and Indicative Chemical Margin(ICM)GasIRM:Q124:$1223FY:$12ICM:Q124:$15023FY:$133Henry Hub:Q124:$2.223FY:$2.5EU TTF:Q124:$8.723FY:$13.0Brent:Q124:$8323FY:$83JCC-3:Q124:$9223FY:$89Shell plc|May 2,2024Performing with purposeGeneratingshareholder valuePoweringlivesAchieving net-zeroemissionsRespectingnatureUnderpinned by our core values and our focus on safetyOur purpose is topower progress together by providing more and cleaner energy solutionsPowering Progress11Shell plc|May 2,202412The investment case through the energy transition 12023-2025.2Includes infrastructure&assets($20 billion)and low-carbon energy solutions($10-15 billion).32022 to 2025,for price assumptions see CMD materials.Providing Energy SecurityEnabling the Energy TransitionPerformance,Discipline,Simplification Committed to Enhancing Shareholder ReturnsReduce structural cost by$2-3 billion by end-2025&lower capital spend to$22-25 billion p.a.in 2024 and 2025Grow FCF/share 10%p.a.through 20253Shareholder returns increased to 30-40%of CFFO through the cycleDelivered dividend per share increase of 20%and$13.2 billion of buybacks completed over last twelve monthsProviding molecules to decarbonise the transport and industry sectors,while high-grading the Downstream businessInvesting$35 billion1,2 into Downstream and Renewables&Energy Solutions,of which$10-15 billion1 1 is directly into low-carbon energy solutionsCommitted to oil and gas,with a focus on LNG growthInvesting$40 billion1 1 in Leading Integrated Gas&Advantaged Upstream More value with less emissionsShell plc|May 2,2024Profitably transitioning towards Net Zero by 20501FCF 2022 to 2025/2030,price-normalised(refer to CMD 23 materials for price assumptions).22016 reference year.3From upstream operations;subject to completion of the sale of Shell Petroleum Development Company of Nigeria Limited.4Compared to 2021.These emissions were 517 million tonnes CO2e in 2023 and 569 million tonnes CO2e in 2021.More value with less emissions6%p.a.absolute free cash flow growththrough 20301Shareholder distributions of 30-40%of CFFO through the cycle10%p.a.FCF/share growth through 20251Structural cost reduction of$2-3 billion by end-2025Halve Scope 1 and 2 emissions under operational control by 2030,on a net basis2Eliminate routine flaring by 20253and achieve near-zero methane emissions by 2030Reduce the net carbon intensity(NCI)of the products we sell by 15-20%by 20302Ambition to reduce customer emissions from the use of our oil products by 15-20%by 20304(Scope 3,category 11)Emissions from our operations(Scope 1&2)Emissions from the products we sell(Scope 3)13Shell plc|May 2,202414Reducing emissions 2016-2023 data period.1Covers all Scope 1 and 2 emissions under Shells operational control.2016 reference year.2Operational control boundary.3Covers Scope 1,2 and 3 emissions as measured by our Net Carbon Footprint(NCF)methodology,available on our website.2016 reference year.More value with less emissionsScope 1&2 emissions1Methane emissions2Net carbon intensity3Routine flaring231%reduction(vs 2016)836858572016202120222023Scope 1Scope 2Million tonnes CO2e70%reduction(vs 2016)13855404120162021202220236.3%reduction(vs 2016)91%reduction(vs 2016)1.10.20.10.12016202120222023797776742016202120222023Thousand tonnesgCO2e/MJMillion tonnes of hydrocarbons flaredShell plc|May 2,202415Portfolio updatesClick on the icons on map for further details on the deal/project.2024 deliveryGrowthFor additional portfolio information visit our investors page on Shell Pakistan Limited divestment agreedAspired divestment of Singapore Energy&Chemicals ParkLongevityHigh-gradingMap not to scaleNigerian onshore(SPDC)divestment agreedEV growthFID to repurpose Rheinland Energy and Chemicals ParkSouthCoast Wind divestmentRydberg production startShell plc|May 2,202416Pipeline of major projects Further details are available on our investors page on KEYLow-carbon fuelsMap not to scaleProjects under constructionPeak production/Capacity/Products(100%)Shell share%CountryStart-up 2024-2025Mero-3 A180 kboe/d19.3BrazilMero-4 A180 kboe/d19.3 BrazilWhale100 kboe/d60USALNG Canada T1-214 mtpa40CanadaSprng Energy(multiple)B1,368 MW100IndiaSavion(multiple)B311 MW100USAShell Friesian350,000 MMBtu RNG100USANorthern Lights JV(Phase 1)1.5 mtpa CO2captured and/or stored33.3NorwayStart-up 2026 Marjoram/Rosmari100 kboe/d80MalaysiaSparta 90 kboe/d51USANLNG T77.6 mtpa26NigeriaQatarEnergy LNG NFE(2)8 mtpa25*QatarQatarEnergy LNG NFS(2)6 mtpa25*QatarHEFA Biofuels Plant Rotterdam820,000 tonnes of renewable fuels 100NetherlandsHolland Hydrogen I200 MW100NetherlandsEcowende/HKW B760 MW60NetherlandsAtlantic Shores-Project 1 B1,509 MW50USARepurposing Rheinland E&C Park300 ktpa100GermanyUpstreamLiquefaction plantsHydrogen electrolyserCCSSolarOffshore windA Subject to unitisation agreements,production shown is FPSO oil capacity as per operator.B Renewable generation capacity under construction and/or committed for sale,with multiple start-up dates.*A 25%share in a JV company which will own 25%of the QatarEnergy LNG NFE(2)expansion project and a 25%share in a JV company which will own 37.5%of the QatarEnergy LNG NFS(2)expansion project.Q1 2024 updates:Rydberg(Deepwater USA)and CrossWind(Offshore Netherlands)projects completed Chemicals conversion

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  • 辉瑞制药(Pfizer)2024年第一季度财报(英文版)(16页).pdf

    Breakthroughs that change patients lives May 1,2024First Quarter 2024 Earnings TeleconferenceIntroductionFrancesca DeMartinoChief Investor Relations Officer,Senior Vice President3First Quarter 2024 EarningsForward-Looking Statements and Non-GAAP Financial Informationl Our discussions during this conference call will include forward-looking statements that are subject to substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.We include forward-looking statements about,among other topics,our anticipated operating and financial performance,including financial guidance and projections;changes to Pfizers commercial organization;reorganizations;business plans,strategy,goals and prospects;our Environmental,Social and Governance(ESG)priorities,strategy and goals;expectations for our product pipeline,in-line products and product candidates,including anticipated regulatory submissions,data read-outs,study starts,approvals,launches,clinical trial results and other developing data,revenue contribution and projections,potential pricing and reimbursement,potential market dynamics,size and utilization rates,growth,performance,timing of exclusivity and potential benefits;strategic reviews,capital allocation objectives,an enterprise-wide cost realignment program(including anticipated costs,savings and potential benefits),dividends and share repurchases;plans for and prospects of our acquisitions,dispositions and other business development activities,including our December 2023 acquisition of Seagen,and our ability to successfully capitalize on these opportunities;manufacturing and product supply;our ongoing efforts to respond to COVID-19,including our COVID-19 products and our expectations regarding the impact of COVID-19 on our business,operations and financial results;and other statements about our business,operations and financial results.Among other things,statements regarding revenue and earnings per share growth;anticipated operating and financial performance;the development or commercial potential of our product pipeline,in-line products,product candidates and additional indications or combinations,including expected clinical trial protocols,the timing and potential for the initiation and progress of clinical trials and data read-outs from trials;the timing and potential for the submission of applications for and receipt of regulatory approvals;the timing and potential for product launches and commercialization;expected profile and labeling;potential revenue;anticipated COVID-19 vaccination rates and Paxlovid treatment courses sold;expected breakthrough,best or first-in-class or blockbuster status or expected market entry of our medicines or vaccines;the regulatory landscape;and the competitive landscape are forward-looking and are estimates that are subject to change and subject to,among other risks,assumptions and uncertainties,clinical trial,regulatory and commercial success,demand,availability of supply,excess inventory write-offs and competitive and market dynamics.These statements may be affected by underlying assumptions that may prove inaccurate or incomplete,and are subject to risks,uncertainties and other factors that may cause actual results to differ materially from past results,future plans and projected future results.Additional information regarding these and other factors can be found in Pfizers Annual Report on Form 10-K for the fiscal year ended December 31,2023 and its subsequent reports on Form 10-Q,including in the sections thereof captioned“Risk Factors”and“Forward-Looking Information and Factors That May Affect Future Results”,as well as in our subsequent reports on Form 8-K,all of which are filed with the U.S.Securities and Exchange Commission and available at www.sec.gov and .Potential risks and uncertainties also include global economic and/or geopolitical instability,foreign exchange rate fluctuations and inflationary pressures and the uncertainties regarding the impact of COVID-19.The forward-looking statements in this presentation speak only as of the original date of this presentation and we undertake no obligation to update or revise any of these statements.l Also,the discussions during this conference call will include certain financial measures that were not prepared in accordance with U.S.generally accepted accounting principles(GAAP).Additional information regarding non-U.S.GAAP financial measures can be found on slides 15-16 and in our earnings release furnished with Pfizers Current Report on Form 8-K dated May 1,2024.Any non-U.S.GAAP financial measures presented are not,and should not be viewed as,substitutes for financial measures required by U.S.GAAP,have no standardized meaning prescribed by U.S.GAAP and may not be comparable to the calculation of similar measures of other companies.l Todays discussions and presentation are intended for the investor community only;they are not intended to promote the products referenced herein or otherwise influence healthcare prescribing decisions.Definitive conclusions cannot be drawn from cross-trial comparisons or anticipated data as they may be confounded by various factors and should be interpreted with caution.All trademarks in this presentation are the property of their respective owners.l Certain of the products and product candidates discussed during this conference call are being co-researched,co-developed and/or co-promoted in collaboration with other companies for which Pfizers rights vary by market or are the subject of agreements pursuant to which Pfizer has commercialization rights in certain markets.Opening RemarksAlbert BourlaChairman and Chief Executive Officer5First Quarter 2024 EarningsQ1 2024:Strong Start to the YearBreakthroughs that change patients lives.119MYTD Q1 2024 with our medicines and vaccinesPatients Impacted11.See Slides 15-16 for definition.6First Quarter 2024 Earnings2024 Key PrioritiesExecuting with excellence against our strategic goals Achieve world-class oncology leadership Deliver the next wave of pipeline innovation Maximize performance of our new products Expand margins by realigning our cost base Allocate capital to enhance shareholder value7First Quarter 2024 EarningsAchieve World-Class Oncology Leadership1.Jointly developed and commercialized with Astellas Pharma Inc.2.Pfizer is working towards achievement of these 2030 goals,which are subject to,among other things,clinical trial,regulatory and commercial success and availability of supply.3.Blockbusters defined as peak revenue exceeding$1B.Q1 2024:Oncology Revenues 19%OpSuccessfulIntegration Highly experienced,best-of-both organizations Amplified impact of medical and commercial functions Double#of patients treated Increase#of blockbuster3 medicines from 5 to 8 Drive 10 x increase in proportion of revenue from biologics2030 OncologyGoals2118First Quarter 2024 EarningsDeliver Next Wave of Pipeline InnovationSharpened Focus Across Therapeutic AreasExcellent Progress in Oncology Three pivotal Phase 3 study starts in Q1 2024:Atirmociclib selective CDK4 inhibitor Sigvotatug vedotin integrin-beta-6-directed ADC ELREXFIO 4th Phase 3 trial in multiple myeloma 50 sponsored abstracts at ASCO 2024,including:5-year PFS data for LORBRENA in 1L ALK metastatic NSCLC(CROWN)Phase 3 data for ADCETRIS in DLBCL(ECHELON-3)Advancing respiratory portfolio:CDK4=Cyclin-dependent kinase 4;ADC=Antibody drug conjugates;ASCO=American Society of Clinical Oncology;PFS=Progression-free survival;ALK =Anaplastic Lymphoma Kinase Positive;NSCLC=Non-small cell lung cancer;DLBCL=Diffuse large B-cell lymphoma;GTx=Gene Therapy;PK=Pharmacokinetics.marstacimabPotential approvalbefore year endosivelotorPhase 3 study start Execution across growing hematology portfolio:9First Quarter 2024 EarningsMaximize Performance of New Products1.Prevnar family includes revenues from Prevnar 20/Apexxnar(pediatric and adult)and Prevnar 13/Prevenar 13(pediatric and adult).2.Vyndaqel family includes global revenues from Vyndaqel,as well as revenues for Vyndamax in the U.S.and Vynmac in Japan.Key Potential Growth DriversProtect/Grow Core Franchises and Key BlockbustersPrevnar family1family2Financial ReviewDavid DentonChief Financial Officer,Executive Vice President11First Quarter 2024 EarningsRevenues$14.9B (19)%op$12.5B1 11%opExcluding Comirnaty2 and Paxlovid,op growth primarily driven by legacy Seagen,Vyndaqel family,Eliquis,Abrysvo and Prevnar family,partially offset by lower revenues for Oncology biosimilars in U.S.,Sulperazon in ex-U.S.and IbranceQuarterly Income Statement HighlightsAdjusted2 R&D ExpensesAdjusted2 Cost of SalesDiluted EPSAdjusted2 SI&A ExpensesFX Impacts$3.0B (34)%op20.4%3 5.3 pptsDecrease in COS%driven primarily by favorable changes in sales mix,including lower sales of Comirnaty2 and,to a much lesser extent,the impact of final adjustment to Paxlovid revenue reversal recorded in Q4 2023Rep.2$0.55 (44)j.2$0.82 (32)%opBoth Reported2 and Adjusted2 diluted EPS include$0.11 favorable impact of final adjustment to Paxlovid revenue reversal recorded in Q4 2023$2.5B (1)%opPrimarily driven by lower spending as a result of our cost realignment program as well as lower spending on certain ongoing vaccine programs,largely offset by increased investments mainly to develop certain medicines acquired from Seagen$3.5B 3%opPrimarily driven by an increase in marketing and promotional expenses for recently acquired and launched products,partially offset by a decrease in marketing and promotional expenses for Paxlovid and ComirnatyRevenue$(107)M (1)j.2 Dil.EPS$(0.01)(1)%Primarily driven by USD strengthening against Turkish Lira,Japanese Yen and Chinese Renminbi1.Excludes Comirnaty2 and Paxlovid.2.See Slides 15-16 for definitions.3.Adjusted cost of sales as a percentage of revenues(COS%).12First Quarter 2024 EarningsQ1 2024:Allocating Capital to Enhance Shareholder ValuePost-Seagen De-Levering,Expect More Balanced Capital AllocationBetween Reinvestment and Returning Value to Shareholders1.Current financial guidance does not anticipate any share repurchases in 2024.Reinvest in BusinessMaintain and Grow Our DividendShare Repurchases1De-lever Our Balance Sheet$2.4BReturned to shareholders$1.3BIn debt paid$2.5BIn internalR&DDriving a balanced capital allocation strategy to reinvest in our business and return value to shareholders*Additional$1.0B debt repayment expected in May 2024None plannedin 202413First Quarter 2024 Earnings2024 Financial Guidance1:Maintains 2024 Revenue Range and Raises Adjusted1 Diluted EPS RangeRevenues$58.5 to$61.5 BillionAdjusted1 SI&A Expenses$13.8 to$14.8 BillionAdjusted1 R&D Expenses$11.0 to$12.0 BillionEffective Tax Rate on Adjusted1 Income15.0justed1 Diluted EPS$2.15 to$2.35(previously$2.05 to$2.25)1.See Slides 15-16 for definitions and additional information regarding Pfizers 2024 financial guidance.14First Quarter 2024 EarningsQ&A SessionChris BoshoffChief Oncology Officer,EVPAlexandre de GermayChief InternationalCommercial Officer,EVPMikael DolstenChief Scientific Officer&President,Pfizer R&DAamir MalikChief U.S.Commercial Officer,EVPAlbert BourlaChairman and CEODavid DentonChief Financial Officer,EVPFrancesca DeMartinoChief Investor Relations Officer,Senior Vice PresidentDoug LanklerGeneral Counsel,EVP15First Quarter 2024 EarningsFootnotes(Page 1 of 2)(1)As used in this document,“Comirnaty”refers to,as applicable,and as authorized or approved,the Pfizer-BioNTech COVID-19 Vaccine;Comirnaty(COVID-19 Vaccine,mRNA)original monovalent formula;the Pfizer-BioNTech COVID-19 Vaccine,Bivalent(Original and Omicron BA.4/BA.5);the Pfizer-BioNTech COVID-19 Vaccine(2023-2024 Formula);Comirnaty(COVID-19 Vaccine,mRNA)2023-2024 Formula;Comirnaty Original/Omicron BA.1;Comirnaty Original/Omicron BA.4/BA.5;and Comirnaty Omicron XBB.1.5.“Comirnaty”includes product revenues and alliance revenues related to sales of the above-mentioned vaccines.(2)Revenues is defined as revenues in accordance with U.S.generally accepted accounting principles(GAAP).Reported net income and its components are defined as net income attributable to Pfizer Imon shareholders and its components in accordance with U.S.GAAP.Reported diluted earnings per share(EPS)is defined as diluted EPS attributable to Pfizer Imon shareholders in accordance with U.S.GAAP.(3)Adjusted income and Adjusted diluted EPS are defined as U.S.GAAP net income attributable to Pfizer Imon shareholders and U.S.GAAP diluted EPS attributable to Pfizer Imon shareholders before the impact of amortization of intangible assets,certain acquisition-related items,discontinued operations and certain significant items.See the reconciliations of certain GAAP Reported to Non-GAAP Adjusted information for the first quarter of 2024 and 2023.Adjusted income and its components and Adjusted diluted EPS measures are not,and should not be viewed as,substitutes for U.S.GAAP net income and its components and diluted EPS(2).See the Non-GAAP Financial Measure:Adjusted Income section of Managements Discussion and Analysis of Financial Condition and Results of Operations in Pfizers 2023 Annual Report on Form 10-K and the Non-GAAP Financial Measure:Adjusted Income section in Pfizers earnings release furnished with Pfizers Current Report on Form 8-K dated May 1,2024 for a definition of each component of Adjusted income as well as other relevant information.(4)First-quarter 2024 Reported(2)and Adjusted(3)diluted EPS were favorably impacted by$0.11 resulting from a$771 million final adjustment to the estimated non-cash Paxlovid revenue reversal of$3.5 billion recorded in the fourth quarter of 2023,reflecting 5.1 million EUA-labeled treatment courses returned by the U.S.government through February 29,2024 versus the estimated 6.5 million treatment courses that were expected to be returned as of December 31,2023.(5)Pfizer does not provide guidance for GAAP Reported financial measures(other than revenues)or a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP Reported financial measures on a forward-looking basis because it is unable to predict with reasonable certainty the ultimate outcome of unusual gains and losses,certain acquisition-related expenses,gains and losses from equity securities,actuarial gains and losses from pension and postretirement plan remeasurements,potential future asset impairments and pending litigation without unreasonable effort.These items are uncertain,depend on various factors,and could have a material impact on GAAP Reported results for the guidance period.Financial guidance for full-year 2024 reflects the following:Does not assume the completion of any business development transactions not completed as of March 31,2024.An anticipated immaterial impact in fiscal-year 2024 of recent and expected generic and biosimilar competition for certain products that have recently lost patent protection or that are anticipated to lose patent protection.Exchange rates assumed are a blend of actual rates in effect through first-quarter 2024 and mid-April 2024 rates for the remainder of the year.Financial guidance reflects the anticipated unfavorable impact of approximately$0.4 billion on revenues and the anticipated favorable impact of approximately$0.02 on Adjusted(3)diluted EPS as a result of changes in foreign exchange rates relative to the U.S.dollar compared to foreign exchange rates from 2023.Guidance for Adjusted(3)diluted EPS assumes diluted weighted-average shares outstanding of approximately 5.75 billion shares,and assumes no share repurchases in 2024.16First Quarter 2024 EarningsFootnotes(Page 2 of 2)(6)References to operational variances in this presentation pertain to period-over-period changes that exclude the impact of foreign exchange rates.Although foreign exchange rate changes are part of Pfizers business,they are not within Pfizers control and because they can mask positive or negative trends in the business,Pfizer believes presenting operational variances excluding these foreign exchange changes provides useful information to evaluate Pfizers results.(7)Pfizers fiscal year-end for international subsidiaries is November 30 while Pfizers fiscal year-end for U.S.subsidiaries is December 31.Therefore,Pfizers first quarter for U.S.subsidiaries reflects the three months ended on March 31,2024 and April 2,2023 while Pfizers first quarter for subsidiaries operating outside the U.S.reflects the three months ended on February 25,2024 and February 26,2023.(8)The Patients Impacted metric is calculated from Pfizer and third-party datasets.Figures may be limited given the coverage provided by external sources(e.g.,calendar duration,geographic and product coverage)and are subject to change.Numbers are estimates and in some cases use global volume,daily dosage and number of treatment days to facilitate calculations.Methodologies to calculate estimates may vary by product type given the nature of the product and available data.Patients taking multiple Pfizer products may be counted as multiple patients towards total.Numbers do not include comprehensive estimated patient counts from Ex-US Access&Affordability programs.Historical estimates may periodically be subject to revision due to restatements in the underlying data source.lThe information contained on our website or any third-party website is not incorporated by reference into this presentation.

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  • 星巴克咖啡2024财年第二季度财报(英文版)(48页).pdf

    Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,DC 20549FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the Quarterly Period Ended March 31,2024OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to .Commission File Number:000-20322Starbucks Corporation(Exact Name of Registrant as Specified in its Charter)Washington91-1325671(State or Other Jurisdiction ofIncorporation or Organization)(IRS EmployerIdentification No.)2401 Utah Avenue South,Seattle,Washington 98134(Address of principal executive offices,zip code)(206)447-1575(Registrants Telephone Number,including Area Code)Securities registered pursuant to Section 12(b)of the Act:TitleTrading SymbolName of each exchange on which registeredCommon Stock,par value$0.001 per shareSBUXNasdaq Global Select MarketIndicate 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 duringthe 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 forthe past 90 days.Yes x No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit suchfiles).Yes x No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,smaller reporting company,or anemerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filerxAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth companyIf an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act):Yes No x Indicate the number of shares outstanding of each of the issuers classes of common stock,as of the latest practicable date.Shares Outstanding as of April 24,20241,132.7 millionTable of ContentsSTARBUCKS CORPORATIONFORM 10-QFor the Quarterly Period Ended March 31,2024Table of Contents PART I.FINANCIAL INFORMATIONItem 1Financial Statements(Unaudited)3Consolidated Statements of Earnings3Consolidated Statements of Comprehensive Income4Consolidated Balance Sheets5Consolidated Statements of Cash Flows6Consolidated Statements of Equity7Index for Notes to Consolidated Financial Statements9Notes to Consolidated Financial Statements10Item 2Managements Discussion and Analysis of Financial Condition and Results of Operations28Item 3Quantitative and Qualitative Disclosures About Market Risk40Item 4Controls and Procedures41PART II.OTHER INFORMATIONItem 1Legal Proceedings42Item 1ARisk Factors42Item 2Unregistered Sales of Equity Securities and Use of Proceeds42Item 3Defaults Upon Senior Securities42Item 4Mine Safety Disclosures42Item 5Other Information42Item 6Exhibits43Signatures44 Table of ContentsPART I FINANCIAL INFORMATIONItem 1.Financial StatementsSTARBUCKS CORPORATIONCONSOLIDATED STATEMENTS OF EARNINGS(in millions,except per share data,unaudited)Quarter EndedTwo Quarters EndedMar 31,2024Apr 2,2023Mar 31,2024Apr 2,2023Net revenues:Company-operated stores$7,052.6$7,142.3$14,807.9$14,225.7 Licensed stores1,054.5 1,069.5 2,246.6 2,189.0 Other455.9 508.0 933.8 1,019.1 Total net revenues8,563.0 8,719.8 17,988.3 17,433.8 Product and distribution costs2,648.7 2,801.7 5,629.2 5,611.9 Store operating expenses3,724.1 3,636.0 7,575.6 7,301.3 Other operating expenses132.8 126.2 283.2 255.4 Depreciation and amortization expenses371.9 341.9 737.2 669.0 General and administrative expenses654.6 620.4 1,302.6 1,201.3 Restructuring and impairments 8.8 14.7 Total operating expenses7,532.1 7,535.0 15,527.8 15,053.6 Income from equity investees68.0 51.4 123.8 109.2 Gain from sale of assets 91.3 91.3 Operating income1,098.9 1,327.5 2,584.3 2,580.7 Interest income and other,net34.1 18.4 67.9 30.0 Interest expense(140.6)(136.3)(280.7)(266.0)Earnings before income taxes992.4 1,209.6 2,371.5 2,344.7 Income tax expense219.9 301.3 574.6 581.1 Net earnings including noncontrolling interests772.5 908.3 1,796.9 1,763.6 Net earnings attributable to noncontrolling interests0.1 0.0 0.1 0.0 Net earnings attributable to Starbucks$772.4$908.3$1,796.8$1,763.6 Earnings per share-basic$0.68$0.79$1.58$1.54 Earnings per share-diluted$0.68$0.79$1.58$1.53 Weighted average shares outstanding:Basic1,132.4 1,148.5 1,134.5 1,148.4 Diluted1,135.4 1,152.7 1,138.0 1,152.8 See Notes to Consolidated Financial Statements.3Table of ContentsSTARBUCKS CORPORATIONCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(in millions,unaudited)Quarter EndedTwo Quarters EndedMar 31,2024Apr 2,2023Mar 31,2024Apr 2,2023Net earnings including noncontrolling interests$772.5$908.3$1,796.9$1,763.6 Other comprehensive income/(loss),net of tax:Unrealized holding gains/(losses)on available-for-sale debt securities(0.4)3.6 5.2 5.6 Tax(expense)/benefit0.1(0.8)(1.3)(1.3)Unrealized gains/(losses)on cash flow hedging instruments36.4(1.2)71.8(181.9)Tax(expense)/benefit(9.3)0.1(11.1)29.6 Unrealized gains/(losses)on net investment hedging instruments92.5(2.7)67.3(67.3)Tax(expense)/benefit(23.3)0.7(17.0)17.0 Translation adjustment and other(151.2)74.7 31.9 283.6 Tax(expense)/benefit1.1 (3.6)Reclassification adjustment for net(gains)/losses realized in netearnings for available-for-sale debt securities,hedging instruments,and translation adjustment(13.6)(66.6)11.3(165.0)Tax expense/(benefit)4.0 9.5 2.2 21.3 Other comprehensive income/(loss)(63.7)17.3 156.7(58.4)Comprehensive income including noncontrolling interests708.8 925.6 1,953.6 1,705.2 Comprehensive income attributable to noncontrolling interests 0.2 Comprehensive income attributable to Starbucks$708.8$925.6$1,953.4$1,705.2 See Notes to Consolidated Financial Statements.4Table of ContentsSTARBUCKS CORPORATIONCONSOLIDATED BALANCE SHEETS(in millions,except per share data,unaudited)Mar 31,2024Oct 1,2023ASSETSCurrent assets:Cash and cash equivalents$2,764.1$3,551.5 Short-term investments362.5 401.5 Accounts receivable,net1,110.3 1,184.1 Inventories1,744.0 1,806.4 Prepaid expenses and other current assets484.1 359.9 Total current assets6,465.0 7,303.4 Long-term investments280.4 247.4 Equity investments440.2 439.9 Property,plant and equipment,net7,817.4 7,387.1 Operating lease,right-of-use asset8,686.5 8,412.6 Deferred income taxes,net1,746.5 1,769.8 Other long-term assets587.2 546.5 Other intangible assets110.7 120.5 Goodwill3,229.3 3,218.3 TOTAL ASSETS$29,363.2$29,445.5 LIABILITIES AND SHAREHOLDERS EQUITY/(DEFICIT)Current liabilities:Accounts payable$1,487.4$1,544.3 Accrued liabilities2,016.0 2,145.1 Accrued payroll and benefits704.8 828.3 Current portion of operating lease liability1,406.6 1,275.3 Stored value card liability and current portion of deferred revenue1,872.0 1,700.2 Short-term debt42.1 33.5 Current portion of long-term debt 1,818.6 Total current liabilities7,528.9 9,345.3 Long-term debt15,547.5 13,547.6 Operating lease liability8,180.3 7,924.8 Deferred revenue6,058.4 6,101.8 Other long-term liabilities490.3 513.8 Total liabilities37,805.4 37,433.3 Shareholders deficit:Common stock($0.001 par value)authorized,2,400.0 shares;issued and outstanding,1,132.7 and 1,142.6shares,respectively1.1 1.1 Additional paid-in capital141.7 38.1 Retained deficit(7,970.7)(7,255.8)Accumulated other comprehensive income/(loss)(621.5)(778.2)Total shareholders deficit(8,449.4)(7,994.8)Noncontrolling interests7.2 7.0 Total deficit(8,442.2)(7,987.8)TOTAL LIABILITIES AND SHAREHOLDERS EQUITY/(DEFICIT)$29,363.2$29,445.5 See Notes to Consolidated Financial Statements.5Table of ContentsSTARBUCKS CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(in millions,unaudited)Two Quarters EndedMar 31,2024Apr 2,2023OPERATING ACTIVITIES:Net earnings including noncontrolling interests$1,796.9$1,763.6 Adjustments to reconcile net earnings to net cash provided by operating activities:Depreciation and amortization783.6 709.3 Deferred income taxes,net4.0 2.6 Income earned from equity method investees(132.3)(109.9)Distributions received from equity method investees154.5 88.0 Gain on sale of assets(91.3)Stock-based compensation173.0 159.3 Non-cash lease costs689.5 584.7 Loss on retirement and impairment of assets42.5 75.6 Other16.3 22.6 Cash provided by/(used in)changes in operating assets and liabilities:Accounts receivable86.4 26.2 Inventories64.5 194.6 Income taxes payable(84.9)15.8 Accounts payable(51.6)(51.2)Deferred revenue128.9 54.0 Operating lease liability(635.1)(621.8)Other operating assets and liabilities(146.3)(461.3)Net cash provided by operating activities2,889.9 2,360.8 INVESTING ACTIVITIES:Purchases of investments(472.0)(247.7)Sales of investments0.5 1.9 Maturities and calls of investments498.7 270.0 Additions to property,plant and equipment(1,255.0)(1,002.0)Proceeds from sale of assets 110.0 Other(36.2)(39.2)Net cash used in investing activities(1,264.0)(907.0)FINANCING ACTIVITIES:Net(payments)/proceeds from issuance of commercial paper(175.0)Net proceeds from issuance of short-term debt93.2 52.8 Repayments of short-term debt(80.5)Net proceeds from issuance of long-term debt1,995.3 1,497.8 Repayments of long-term debt(1,825.1)(1,000.0)Proceeds from issuance of common stock58.4 129.8 Cash dividends paid(1,293.5)(1,217.4)Repurchase of common stock(1,266.7)(479.3)Minimum tax withholdings on share-based awards(94.1)(81.4)Other(10.6)(10.7)Net cash used in financing activities(2,423.6)(1,283.4)Effect of exchange rate changes on cash and cash equivalents10.4 83.0 Net increase/(decrease)in cash and cash equivalents(787.3)253.4 CASH AND CASH EQUIVALENTS:Beginning of period3,551.5 2,818.4 End of period$2,764.1$3,071.8 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for:Interest,net of capitalized interest$275.6$250.4 Income taxes$850.9$636.8 See Notes to Consolidated Financial Statements.6Table of ContentsSTARBUCKS CORPORATIONCONSOLIDATED STATEMENTS OF EQUITYFor the Quarter Ended March 31,2024 and April 2,2023(in millions,except per share data,unaudited)Common StockAdditionalPaid-inCapitalRetainedEarnings/(Deficit)AccumulatedOtherComprehensiveIncome/(Loss)ShareholdersEquity/(Deficit)NoncontrollingInterestsTotal SharesAmountBalance,December 31,20231,132.2$1.1$38.2$(8,097.5)$(557.8)$(8,616.0)$7.1$(8,608.9)Net earnings 772.4 772.4 0.1 772.5 Other comprehensive loss (63.6)(63.6)(0.1)(63.7)Stock-based compensation expense 79.1 79.1 79.1 Exercise of stock options/vesting ofRSUs0.3 10.9 10.9 10.9 Sale of common stock0.2 13.0 13.0 13.0 Repurchase of common stock 0.5 0.1 0.6 0.6 Cash dividends declared,$0.57 pershare (645.7)(645.7)(645.7)Other (0.1)(0.1)0.1 Balance,March 31,20241,132.7$1.1$141.7$(7,970.7)$(621.5)$(8,449.4)$7.2$(8,442.2)Balance,January 1,20231,148.5$1.1$67.2$(8,203.2)$(538.9)$(8,673.8)$7.9$(8,665.9)Net earnings 908.3 908.3 908.3 Other comprehensive income 17.3 17.3 17.3 Stock-based compensation expense 75.0 75.0 75.0 Exercise of stock options/vesting ofRSUs1.3 68.2 68.2 68.2 Sale of common stock0.2 13.3 13.3 13.3 Repurchase of common stock(3.0)(182.5)(121.5)(304.0)(304.0)Cash dividends declared,$0.53 pershare (608.2)(608.2)(608.2)Purchase of noncontrolling interests(3.0)(3.0)(0.4)(3.4)Balance,April 2,20231,147.0$1.1$38.2$(8,024.6)$(521.6)$(8,506.9)$7.5$(8,499.4)Includes excise tax on share repurchases.See Notes to Consolidated Financial Statements.(1)(1)7Table of ContentsSTARBUCKS CORPORATIONCONSOLIDATED STATEMENTS OF EQUITYFor the Two Quarters Ended March 31,2024 and April 2,2023(in millions,except per share data,unaudited)Common StockAdditionalPaid-inCapitalRetainedEarnings/(Deficit)AccumulatedOtherComprehensiveIncome/(Loss)ShareholdersEquity/(Deficit)NoncontrollingInterestsTotal SharesAmountBalance,October 1,20231,142.6$1.1$38.1$(7,255.8)$(778.2)$(7,994.8)$7.0$(7,987.8)Net earnings 1,796.8 1,796.8 0.1 1,796.9 Other comprehensive income 156.6 156.6 0.1 156.7 Stock-based compensation expense 175.2 175.2 175.2 Exercise of stock options/vesting ofRSUs2.6(64.9)(64.9)(64.9)Sale of common stock0.3 29.2 29.2 29.2 Repurchase of common stock(12.8)(35.9)(1,223.9)(1,259.8)(1,259.8)Cash dividends declared,$1.14 pershare (1,287.8)(1,287.8)(1,287.8)Other 0.1 0.1 0.1 Balance,March 31,20241,132.7$1.1$141.7$(7,970.7)$(621.5)$(8,449.4)$7.2$(8,442.2)Balance,October 2,20221,147.9$1.1$205.3$(8,449.8)$(463.2)$(8,706.6)$7.9$(8,698.7)Net earnings 1,763.6 1,763.6 1,763.6 Other comprehensive loss (58.4)(58.4)(58.4)Stock-based compensation expense 161.4 161.4 161.4 Exercise of stock options/vesting ofRSUs3.7 23.5 23.5 23.5 Sale of common stock0.3 24.9 24.9 24.9 Repurchase of common stock(4.9)(373.9)(121.5)(495.4)(495.4)Cash dividends declared,$1.06 pershare (1,216.9)(1,216.9)(1,216.9)Purchase of noncontrolling interests(3.0)(3.0)(0.4)(3.4)Balance,April 2,20231,147.0$1.1$38.2$(8,024.6)$(521.6)$(8,506.9)$7.5$(8,499.4)Includes excise tax on share repurchases.See Notes to Consolidated Financial Statements.(1)(1)8Table of ContentsSTARBUCKS CORPORATIONINDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote 1Summary of Significant Accounting Policies and Estimates10Note 2Acquisitions,Divestitures,and Strategic Alliance10Note 3Derivative Financial Instruments11Note 4Fair Value Measurements16Note 5Inventories18Note 6Supplemental Balance Sheet and Statement of Earnings Information18Note 7Other Intangible Assets and Goodwill19Note 8Debt20Note 9Leases22Note 10Deferred Revenue23Note 11Equity24Note 12Employee Stock Plans25Note 13Earnings per Share26Note 14Commitments and Contingencies26Note 15Segment Reporting269Table of ContentsSTARBUCKS CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(unaudited)Note 1:Summary of Significant Accounting Policies and EstimatesFinancial Statement PreparationThe unaudited consolidated financial statements as of March 31,2024,and for the quarters and two quarters ended March 31,2024 and April 2,2023,havebeen prepared by Starbucks Corporation under the rules and regulations of the Securities and Exchange Commission(“SEC”).In the opinion of management,the financial information for the quarters and two quarters ended March 31,2024 and April 2,2023 reflects all adjustments and accruals,which are of a normalrecurring nature,necessary for a fair presentation of the financial position,results of operations,and cash flows for the interim periods.In this Quarterly Reporton Form 10-Q(“10-Q”),Starbucks Corporation is referred to as“Starbucks,”the“Company,”“we,”“us,”or“our.”Segment information is prepared on the same basis that our management reviews financial information for operational decision-making purposes.Certain prior period information on the consolidated statements of cash flows have been reclassified to conform to the current presentation.The financial information as of October 1,2023 is derived from our audited consolidated financial statements and notes for the fiscal year ended October 1,2023(“fiscal 2023”)included in Item 8 in the fiscal 2023 Annual Report on Form 10-K(“10-K”).The information included in this 10-Q should be read inconjunction with the footnotes and managements discussion and analysis of the consolidated financial statements in the 10-K.The results of operations for the quarter and two quarters ended March 31,2024 are not necessarily indicative of the results of operations that may be achievedfor the entire fiscal year ending September 29,2024(“fiscal 2024”).Recent Accounting Pronouncements Not Yet AdoptedIn November 2023,the Financial Accounting Standards Board(“FASB”)issued guidance expanding segment disclosure requirements.The amendmentsrequire enhanced disclosure for certain segment items and require disclosure on how management uses reported measures to assess segment performance.Theamendments do not change how segments are determined,aggregated,or how thresholds are applied to determine reportable segments.We expect to adopt theguidance for the fiscal year ending September 28,2025.We are currently evaluating the expanded disclosure requirements and do not expect the adoption ofthis guidance to have a material impact on our consolidated financial statements.In December 2023,the FASB issued guidance expanding disclosure requirements related to income taxes.The amendments require enhanced jurisdictionaldisclosures for the income tax rate reconciliation and related to cash income taxes paid.Additionally,specific disclosures related to unrecognized tax benefitsand indefinite reinvestment assertions were removed.The amendments are effective for our fiscal year ending September 27,2026.While we are stillevaluating the specific impacts and timing of adoption,we anticipate this guidance will have a significant impact on our annual income tax disclosures.In March 2024,the SEC issued its final climate disclosure rules,which require the disclosure of climate-related information in annual reports and registrationstatements.The rules require disclosure in the audited financial statements of certain effects of severe weather events and other natural conditions above certainfinancial thresholds,as well as amounts related to carbon offsets and renewable energy credits or certificates,if material.Disclosure requirements will beginphasing in for fiscal years beginning on or after January 1,2025.On April 4,2024,the SEC determined to voluntarily stay the final rules pending certain legalchallenges.We are currently evaluating the impact of the new rules and expect to include updated climate-related disclosures in our Annual Report on Form 10-K for our fiscal year ending September 27,2026,depending on the outcome of the legal challenges.Note 2:Acquisitions,Divestitures,and Strategic AllianceOn January 13,2023,we sold the assets,primarily consisting of intellectual properties associated with the Seattles Best Coffee brand,to Nestl for$110.0million.The transaction resulted in a pre-tax gain of$91.3 million,which was included in gain from sale of assets on our consolidated statements of earningsfor the quarter and two quarters ended April 2,2023.Results from Seattles Best Coffee operations prior to the sale are reported in our Channel Developmentoperating segment.10Table of ContentsNote 3:Derivative Financial InstrumentsInterest RatesFrom time to time,we enter into designated cash flow hedges to manage the variability in cash flows due to changes in benchmark interest rates.We enter intointerest rate swap agreements,including forward-starting interest rate swaps and treasury locks,settled in cash based upon the difference between an agreed-upon benchmark rate and the prevailing benchmark rate at settlement.These agreements are generally settled around the time of the pricing of the related debt.Each derivative agreements gain or loss is recorded in accumulated other comprehensive income(“AOCI”)and is subsequently reclassified to interest expenseover the life of the related debt.To hedge the exposure to changes in the fair value of our fixed-rate debt,we enter into interest rate swap agreements,which are designated as fair value hedges.The changes in fair values of these derivative instruments and the offsetting changes in fair values of the underlying hedged debt due to changes in the relevantbenchmark interest rates are recorded in interest expense.Refer to Note 8,Debt,for additional information on our long-term debt.Foreign CurrencyTo reduce cash flow volatility from foreign currency fluctuations,we enter into forward and swap contracts to hedge portions of cash flows of anticipatedroyalty payments,inventory purchases,and intercompany borrowing and lending activities.The resulting gains and losses from these derivatives are recordedin AOCI and subsequently reclassified to revenue,product and distribution costs,or interest income and other,net,respectively,when the hedged exposuresaffect net earnings.From time to time,we may enter into financial instruments,including,but not limited to,forward and swap contracts or foreign currency-denominated debt,tohedge the currency exposure of our net investments in certain international operations.The resulting gains and losses from these derivatives are recorded inAOCI and are subsequently reclassified to net earnings when the hedged net investment is either sold or substantially liquidated.Gains and losses from thesederivatives representing hedged components excluded from the assessment of effectiveness are amortized over the life of the hedging instrument using asystematic and rational method and recognized in interest expense.Foreign currency forward and swap contracts not designated as hedging instruments are used to mitigate the foreign exchange risk of certain other balancesheet items.Gains and losses from these derivatives are largely offset by the financial impact of translating foreign currency-denominated payables andreceivables,and these gains and losses are recorded in interest income and other,net.CommoditiesDepending on market conditions,we may enter into coffee forward contracts,futures contracts,and collars to hedge anticipated cash flows under our price-to-be-fixed green coffee contracts,which are described further in Note 5,Inventories,or our longer-dated forecasted coffee demand where underlying fixed priceand price-to-be-fixed contracts are not yet available.The resulting gains and losses are recorded in AOCI and are subsequently reclassified to product anddistribution costs when the hedged exposure affects net earnings.Depending on market conditions,we may also enter into dairy forward contracts and futures contracts to hedge a portion of anticipated cash flows under ourdairy purchase contracts and our forecasted dairy demand.The resulting gains or losses are recorded in AOCI and are subsequently reclassified to product anddistribution costs when the hedged exposure affects net earnings.Cash flow hedges related to anticipated transactions are designated and documented at the inception of each hedge.Cash flows from hedging transactions areclassified in the same categories as the cash flows from the respective hedged items.For de-designated cash flow hedges in which the underlying transactionsare no longer probable of occurring or where price variability in the underlying cash flow ceases to exist,the related accumulated derivative gains or losses arerecognized in interest income and other,net on our consolidated statements of earnings.These derivatives may be accounted for prospectively as non-designated derivatives until maturity,re-designated to new hedging relationships,or terminated early.We continue to believe transactions related to our otherdesignated cash flow hedges are probable to occur.To mitigate the price uncertainty of a portion of our future purchases,including diesel fuel and other commodities,we enter into swap contracts,futures,andcollars that are not designated as hedging instruments.The resulting gains and losses are recorded in interest income and other,net to help offset pricefluctuations on our beverage,food,packaging,and transportation costs,which are included in product and distribution costs on our consolidated statements ofearnings.11Table of ContentsGains and losses on derivative contracts and foreign currency-denominated debt designated as hedging instruments included in AOCI and expected to bereclassified into earnings within 12 months,net of tax(in millions):Net Gains/(Losses)Included in AOCINet Gains/(Losses)Expectedto be Reclassified from AOCIinto Earnings within 12MonthsOutstanding Contract/DebtRemaining Maturity(Months)Mar 31,2024Oct 1,2023Cash Flow Hedges:Coffee$16.2$(78.1)$16.2 4Cross-currency swaps0.2(0.6)8Dairy(1.3)(1.8)(1.3)8Foreign currency-other30.6 39.6 21.4 33Interest rates(5.1)(6.6)(3.0)0Net Investment Hedges:Cross-currency swaps127.9 87.1 120Foreign currency16.0 16.0 0Foreign currency debt135.3 140.2 012Table of ContentsPre-tax gains and losses on derivative contracts and foreign currency-denominated long-term debt designated as hedging instruments recognized in othercomprehensive income(“OCI”)and reclassifications from AOCI to earnings(in millions):Quarter EndedGains/(Losses)Recognized inOCI Before ReclassificationsGains/(Losses)Reclassified fromAOCI to EarningsLocation of gain/(loss)Mar 31,2024Apr 2,2023Mar 31,2024Apr 2,2023Cash Flow Hedges:Coffee$(1.2)$(0.5)$(6.2)$59.9 Product and distribution costsCross-currency swaps4.0(2.5)0.4(3.0)Interest expense3.3(0.1)Interest income and other,netDairy(1.3)(2.3)(2.3)(3.3)Product and distribution costsForeign currency-other34.9 3.8 7.4 4.0 Licensed stores revenue2.2 2.2 Product and distribution costsInterest rates 0.3(1.0)0.2 Interest expenseNet Investment Hedges:Cross-currency swaps 67.0(1.1)10.2 7.0 Interest expenseForeign currency debt25.5(1.6)Two Quarters EndedGains/(Losses)Recognized inOCI Before ReclassificationsGains/(Losses)Reclassified fromAOCI to EarningsLocation of gain/(loss)Mar 31,2024Apr 2,2023Mar 31,2024Apr 2,2023Cash Flow Hedges:Coffee$63.1$(119.9)$(46.6)$156.6 Product and distribution costsCross-currency swaps2.4(14.2)1.0(5.7)Interest expense0.6(9.2)Interest income and other,netDairy(3.2)(5.9)(3.9)(4.8)Product and distribution costsForeign currency-other9.5(42.2)16.2 11.9 Licensed stores revenue5.0 4.4 Product and distribution costs 0.2 Interest income and other,netInterest rates 0.3(2.0)(0.3)Interest expenseNet Investment Hedges:Cross-currency swaps73.6(15.1)19.1 12.3 Interest expenseForeign currency debt(6.3)(52.2)Gains and losses recognized in earnings relate to components excluded from the assessment of effectiveness.(1)(1)(1)13Table of ContentsPre-tax gains and losses on non-designated derivatives and designated fair value hedging instruments and the related fair value hedged item recognized inearnings(in millions):Gains/(Losses)Recognized in EarningsLocation of gain/(loss)recognized in earningsQuarter EndedTwo Quarters Ended Mar 31,2024Apr 2,2023Mar 31,2024Apr 2,2023Non-Designated Derivatives:Foreign currency-otherInterest income and other,net$3.6$1.6$1.2$(10.0)CoffeeInterest income and other,net (5.5)Diesel fuel and other commoditiesInterest income and other,net0.3(1.7)(0.4)(1.9)Fair Value Hedges:Interest rate swapsInterest expense(8.7)4.7 2.4 3.1 Long-term debt(hedged item)Interest expense5.7(12.1)(8.6)(15.4)Notional amounts of outstanding derivative contracts(in millions):Mar 31,2024Oct 1,2023Coffee$68$266 Cross-currency swaps1,746 1,076 Dairy52 71 Diesel fuel and other commodities14 7 Foreign currency-other1,191 1,164 Interest rate swaps350 1,100 14Table of ContentsFair value of outstanding derivative contracts(in millions)including the location of the asset and/or liability on the consolidated balance sheets:Derivative AssetsBalance Sheet LocationMar 31,2024Oct 1,2023Designated Derivative Instruments:Cross-currency swapsPrepaid expenses and other current assets$13.0$Other long-term assets164.5 130.1 DairyPrepaid expenses and other current assets0.5 0.4 Foreign currency-otherPrepaid expenses and other current assets27.3 32.0 Other long-term assets16.7 22.9 Interest rate swapsPrepaid expenses and other current assets 0.4 Non-designated Derivative Instruments:DairyPrepaid expenses and other current assets0.1 Diesel fuel and other commoditiesPrepaid expenses and other current assets0.2 0.7 Foreign currencyPrepaid expenses and other current assets7.0 7.5 Derivative LiabilitiesBalance Sheet LocationMar 31,2024Oct 1,2023Designated Derivative Instruments:DairyAccrued liabilities$1.7$1.1 Foreign currency-otherAccrued liabilities2.6 2.0 Other long-term liabilities2.2 Interest rate swapsOther long-term liabilities32.9 41.4 Non-designated Derivative Instruments:DairyAccrued liabilities0.4 Diesel fuel and other commoditiesAccrued liabilities0.1 Foreign currencyAccrued liabilities0.7 0.5 Other long-term liabilities 1.8 The following amounts were recorded on the consolidated balance sheets related to fixed-to-floating interest rate swaps designated in fair value hedgingrelationships(in millions):Carrying amount of hedged itemCumulative amount of fair value hedging adjustmentincluded in the carrying amountMar 31,2024Oct 1,2023Mar 31,2024Oct 1,2023Location on the balance sheetLong-term debt$318.6$1,060.0$(31.4)$(40.0)Balance as of October 1,2023 includes$750 million in senior notes that matured on October 1,2023 but remained in current portion of long-term debt onthe consolidated balance sheet as the debt repayment was not made until the first day of fiscal 2024.Additional disclosures related to cash flow gains and losses included in AOCI,as well as subsequent reclassifications to earnings,are included in Note 11,Equity.(1)(1)15Table of ContentsNote 4:Fair Value MeasurementsAssets and liabilities measured at fair value on a recurring basis(in millions):Fair Value Measurements at Reporting Date Using Balance atMarch 31,2024Quoted Prices in ActiveMarkets for Identical Assets(Level 1)Significant OtherObservable Inputs(Level 2)Significant Unobservable Inputs(Level 3)Assets:Cash and cash equivalents$2,764.1$2,764.1$Short-term investments:Available-for-sale debt securitiesCorporate debt securities37.7 37.7 Foreign corporate bonds0.2 0.2 Mortgage and other asset-backedsecurities0.3 0.3 State and local government obligations1.4 1.4 U.S.government treasury securities16.5 16.5 Total available-for-sale debt securities56.1 16.5 39.6 Structured deposits221.9 221.9 Marketable equity securities84.5 84.5 Total short-term investments362.5 101.0 261.5 Prepaid expenses and other current assets:Derivative assets48.1 48.1 Long-term investments:Available-for-sale debt securitiesCorporate debt securities127.4 116.9 10.5 Mortgage and other asset-backedsecurities52.6 52.6 State and local government obligations2.7 2.7 U.S.government treasury securities97.5 97.5 Total available-for-sale debt securities280.2 97.5 172.2 10.5 Structured deposits0.2 0.2 Total long-term investments280.4 97.5 172.4 10.5 Other long-term assets:Derivative assets181.2 181.2 Total assets$3,636.3$2,962.6$663.2$10.5 Liabilities:Accrued liabilities:Derivative liabilities$5.5$5.5$Other long-term liabilities:Derivative liabilities35.1 35.1 Total liabilities$40.6$40.6$16Table of Contents Fair Value Measurements at Reporting Date Using Balance atOctober 1,2023Quoted Prices in ActiveMarkets for IdenticalAssets(Level 1)Significant OtherObservable Inputs(Level 2)SignificantUnobservable Inputs(Level 3)Assets:Cash and cash equivalents$3,551.5$3,551.5$Short-term investments:Available-for-sale debt securitiesCorporate debt securities64.0 64.0 U.S.government treasury securities2.8 2.8 Foreign government obligations3.9 3.9 Total available-for-sale debt securities70.7 2.8 67.9 Structured deposits261.2 261.2 Marketable equity securities69.6 69.6 Total short-term investments401.5 72.4 329.1 Prepaid expenses and other current assets:Derivative assets41.0 41.0 Long-term investments:Available-for-sale debt securitiesCorporate debt securities91.1 91.1 Mortgage and other asset-backed securities50.2 50.2 State and local government obligations1.3 1.3 U.S.government treasury securities104.7 104.7 Total long-term investments247.3 104.7 142.6 Other long-term assets:Derivative assets153.0 153.0 Total assets$4,394.3$3,728.6$665.7$Liabilities:Accrued liabilities:Derivative liabilities$3.6$3.6$Other long-term liabilities:Derivative liabilities43.2 43.2 Total liabilities$46.8$46.8$There were no material transfers between levels,and there was no significant activity within Level 3 instruments during the periods presented.The fair valuesof any financial instruments presented above exclude the impact of netting assets and liabilities when a legally enforceable master netting agreement exists.Gross unrealized holding gains and losses on available-for-sale debt securities,structured deposits,and marketable equity securities were not material as ofMarch 31,2024 and October 1,2023.Assets and Liabilities Measured at Fair Value on a Nonrecurring BasisAssets and liabilities recognized or disclosed at fair value on the consolidated financial statements on a nonrecurring basis include items such as property,plantand equipment,ROU assets,goodwill and other intangible assets,equity and other investments,and other assets.These assets are measured at fair value ifdetermined to be impaired.The estimated fair value of our long-term debt based on the quoted market price(Level 2)is included at Note 8,Debt.There were no material fair valueadjustments during the two quarters ended March 31,2024 and April 2,2023.17Table of ContentsNote 5:Inventories(in millions):Mar 31,2024Oct 1,2023Coffee:Unroasted$694.9$747.7 Roasted257.7 280.3 Other merchandise held for sale313.4 364.6 Packaging and other supplies478.0 413.8 Total$1,744.0$1,806.4 Other merchandise held for sale includes,among other items,serveware,food,and tea.Inventory levels vary due to seasonality,commodity market supply,andprice fluctuations.As of March 31,2024,we had committed to purchasing green coffee totaling$398.6 million under fixed-price contracts and an estimated$855.6 million underprice-to-be-fixed contracts.A portion of our price-to-be-fixed contracts are effectively fixed through the use of futures.See Note 3,Derivative FinancialInstruments,for further discussion.Price-to-be-fixed contracts are purchase commitments whereby the quality,quantity,delivery period,and other negotiatedterms are agreed upon,but the date,and therefore the price,at which the base“C”coffee commodity price component will be fixed has not yet beenestablished.For most contracts,either Starbucks or the seller has the option to“fix”the base“C”coffee commodity price prior to the delivery date.For othercontracts,Starbucks and the seller may agree upon pricing parameters determined by the base“C”coffee commodity price.Until prices are fixed,we estimatethe total cost of these purchase commitments.We believe,based on established relationships with our suppliers and continuous monitoring,the risk of non-delivery on these purchase commitments is remote.Note 6:Supplemental Balance Sheet and Statement of Earnings Information(in millions):Property,Plant and Equipment,netMar 31,2024Oct 1,2023Land$46.1$46.1 Buildings671.8 666.5 Leasehold improvements10,532.8 10,133.7 Store equipment3,468.0 3,332.5 Roasting equipment880.1 859.4 Furniture,fixtures and other1,741.1 1,664.5 Work in progress713.5 607.5 Property,plant and equipment,gross18,053.4 17,310.2 Accumulated depreciation(10,236.0)(9,923.1)Property,plant and equipment,net$7,817.4$7,387.1 Accrued LiabilitiesMar 31,2024Oct 1,2023Accrued occupancy costs$78.0$86.7 Accrued dividends payable645.5 651.2 Accrued capital and other operating expenditures743.7 771.7 Insurance reserves252.0 233.5 Income taxes payable102.6 189.3 Accrued business taxes194.2 212.7 Total accrued liabilities$2,016.0$2,145.1 18Table of ContentsStore Operating ExpensesQuarter EndedTwo Quarters EndedMar 31,2024Apr 2,2023Mar 31,2024Apr 2,2023Wages and benefits$2,139.4$2,174.3$4,348.7$4,389.9 Occupancy costs741.3 703.4 1,487.0 1,374.9 Other expenses843.4 758.3 1,739.9 1,536.5 Total store operating expenses$3,724.1$3,636.0$7,575.6$7,301.3 Note 7:Other Intangible Assets and GoodwillIndefinite-Lived Intangible Assets(in millions)Mar 31,2024Oct 1,2023Trade names,trademarks and patents$79.5$79.4 Finite-Lived Intangible AssetsMar 31,2024Oct 1,2023(in millions)Gross CarryingAmountAccumulatedAmortizationNet CarryingAmountGross CarryingAmountAccumulatedAmortizationNet CarryingAmountAcquired and reacquired rights$962.0$(962.0)$957.6$(957.6)$Acquired trade secrets and processes27.6(27.6)27.6(27.6)Trade names,trademarks and patents130.3(100.6)29.7 131.0(91.9)39.1 Licensing agreements12.9(11.4)1.5 13.0(11.0)2.0 Other finite-lived intangible assets20.3(20.3)20.1(20.1)Total finite-lived intangible assets$1,153.1$(1,121.9)$31.2$1,149.3$(1,108.2)$41.1 Amortization expense for finite-lived intangible assets was$5.1 million and$10.2 million for the quarter and two quarters ended March 31,2024,respectively,and$5.3 million and$10.9 million for the quarter and two quarters ended April 2,2023,respectively.Estimated future amortization expense as of March 31,2024(in millions):Fiscal YearTotal2024(excluding the two quarters ended March 31,2024)$9.9 202514.0 20262.1 20271.8 20281.2 Thereafter2.2 Total estimated future amortization expense$31.2 GoodwillChanges in the carrying amount of goodwill by reportable operating segment(in millions):North AmericaInternationalChannel DevelopmentCorporate and OtherTotalGoodwill balance at October 1,2023$491.5$2,691.1$34.7$1.0$3,218.3 Other(0.1)11.1 11.0 Goodwill balance at March 31,2024$491.4$2,702.2$34.7$1.0$3,229.3“Other”consists of changes in the goodwill balance resulting from foreign currency translation.(1)(1)19Table of ContentsNote 8:DebtRevolving Credit FacilityOur$3.0 billion unsecured five-year revolving credit facility(the“2021 credit facility”),of which$150.0 million may be used for issuances of letters of credit,is currently set to mature on September 16,2026.The 2021 credit facility is available for working capital,capital expenditures,and other corporate purposes,including acquisitions and share repurchases.We have the option,subject to negotiation and agreement with the related banks,to increase the maximumcommitment amount by an additional$1.0 billion.Borrowings under the 2021 credit facility,which was most recently amended in April 2023,will bear interest at a variable rate based on Term SOFR,and,forU.S.dollar-denominated loans under certain circumstances,a Base Rate(as defined in the 2021 credit facility),in each case plus an applicable margin.Theapplicable margin is based on the Companys long-term credit ratings assigned by the Moodys and Standard&Poors rating agencies.The“Base Rate”is thehighest of(i)the Federal Funds Rate(as defined in the 2021 credit facility)plus 0.500%,(ii)Bank of Americas prime rate,and(iii)Term SOFR plus 1.000%.Term SOFR means the forward-looking SOFR term rate administrated by the Chicago Mercantile Exchange plus a SOFR Adjustment of 0.100%.The 2021 credit facility contains provisions requiring us to maintain compliance with certain covenants,including a minimum fixed charge coverage ratio,which measures our ability to cover financing expenses.As of March 31,2024,we were in compliance with all applicable covenants.No amounts wereoutstanding under our 2021 credit facility as of March 31,2024 or October 1,2023.Short-term DebtUnder our commercial paper program,we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of$3.0billion,with individual maturities that may vary but not exceed 397 days from the date of issue.Amounts outstanding under the commercial paper program arerequired to be backstopped by available commitments under our 2021 credit facility.The proceeds from borrowings under our commercial paper program maybe used for working capital needs,capital expenditures,and other corporate purposes,including,but not limited to,business expansion,payment of cashdividends on our common stock,and share repurchases.No amounts were outstanding under our commercial paper program as of March 31,2024 andOctober 1,2023.Additionally,we hold the following Japanese yen-denominated credit facilities that are available for working capital needs and capital expenditures within ourJapanese market:A 5.0 billion,or$33.0 million,credit facility is currently set to mature on December 30,2024.Borrowings under this credit facility are subject toterms defined within the facility and will bear interest at a variable rate based on Tokyo Interbank Offered Rate(“TIBOR”)plus an applicable marginof 0.400%.A 10.0 billion,or$66.1 million,credit facility is currently set to mature on March 27,2025.Borrowings under this credit facility are subject to termsdefined within the facility and will bear interest at a variable rate based on TIBOR plus an applicable margin of 0.300%.As of March 31,2024,we had 5.0 billion,or$33.0 million,of borrowings outstanding under these credit facilities.As of October 1,2023,we had 5.0 billion,or$33.5 million,of borrowings outstanding under these credit facilities.20Table of ContentsLong-term DebtComponents of long-term debt including the associated interest rates and related estimated fair values by calendar maturity(in millions,except interest rates):Mar 31,2024Oct 1,2023Stated Interest RateEffective InterestRateIssuanceAmountEstimated FairValueAmountEstimated FairValueOctober 2023 notes$750.0$749.9 3.850%2.859bruary 2024 notes 500.0 504.2 5.848%6.079%March 2024 notes 569.3 569.3 0.372%0.462%August 2025 notes1,250.0 1,225.4 1,250.0 1,210.5 3.800%3.721bruary 2026 notes1,000.0 994.3 1,000.0 985.5 4.750%4.788%June 2026 notes500.0 472.5 500.0 463.5 2.450%2.511bruary 2027 notes1,000.0 998.0 4.850%4.958%March 2027 notes500.0 459.6 500.0 446.1 2.000%2.058%March 2028 notes600.0 570.4 600.0 554.7 3.500%3.529%November 2028 notes750.0 726.8 750.0 704.5 4.000%3.958%August 2029 notes1,000.0 942.6 1,000.0 904.1 3.550%3.840%March 2030 notes750.0 646.4 750.0 615.1 2.250%3.084%November 2030 notes1,250.0 1,083.6 1,250.0 1,027.1 2.550%2.582bruary 2031 notes500.0 497.4 4.900%5.046bruary 2032 notes1,000.0 874.8 1,000.0 828.0 3.000%3.155bruary 2033 notes500.0 495.0 500.0 470.7 4.800%3.798bruary 2034 notes500.0 496.5 5.000%5.127%June 2045 notes350.0 303.7 350.0 275.3 4.300%4.348cember 2047 notes500.0 393.7 500.0 354.0 3.750%3.765%November 2048 notes1,000.0 878.0 1,000.0 799.0 4.500%4.504%August 2049 notes1,000.0 869.5 1,000.0 792.7 4.450%4.447%March 2050 notes500.0 355.8 500.0 328.6 3.350%3.362%November 2050 notes1,250.0 925.9 1,250.0 843.4 3.500%3.528%Total15,700.0 14,209.9 15,519.3 13,426.2 Aggregate debt issuance costs andunamortized premium/(discount),net(121.1)(113.1)Hedge accounting fair value adjustment(31.4)(40.0)Total$15,547.5$15,366.2 Includes the effects of the amortization of any premium or discount and any gain or loss upon settlement of related treasury locks or forward-startinginterest rate swaps utilized to hedge interest rate risk prior to the debt issuance.Amount includes the change in fair value due to changes in benchmark interest rates related to hedging our October 2023 notes and$350.0 million of ourAugust 2029 notes.Refer to Note 3,Derivative Financial Instruments,for additional information on our interest rate swap agreements designated as fairvalue hedges.Floating rate notes that bear interest at a rate equal to Compounded SOFR(as defined in the February 2024 notes)plus 0.420%,resulting in a statedinterest rate of 5.848%at maturity on February 14,2024.Japanese yen-denominated long-term debt.(1)(2)(3)(4)(2)(2)(1)(2)(3)(4)21Table of ContentsThe following table summarizes our long-term debt maturities as of March 31,2024 by fiscal year(in millions):Fiscal YearTotal2024$20251,250.0 20261,500.0 20271,500.0 2028600.0 Thereafter10,850.0 Total$15,700.0 Note 9:LeasesThe components of lease costs(in millions):Quarter EndedTwo Quarters EndedMar 31,2024Apr 2,2023Mar 31,2024Apr 2,2023Operating lease costs$424.1$401.7$841.5$786.5 Variable lease costs271.7 253.9 543.6 489.2 Short-term lease costs7.2 7.0 14.9 14.0 Total lease costs$703.0$662.6$1,400.0$1,289.7 Includes immaterial amounts of sublease income and rent concessions.The following table includes supplemental information(in millions):Two Quarters EndedMar 31,2024Apr 2,2023Cash paid related to operating lease liabilities$778.8$819.0 Operating lease liabilities arising from obtaining right-of-use assets980.5 828.0 Mar 31,2024Apr 2,2023Weighted-average remaining operating lease term8.6 years8.5 yearsWeighted-average operating lease discount rate3.2%2.9%Finance lease assets are recorded in property,plant and equipment,net with the corresponding lease liabilities included in accrued liabilities and other long-term liabilities on the consolidated balance sheet.There were no material finance leases as of March 31,2024 and October 1,2023.Minimum future maturities of operating lease liabilities(in millions):Fiscal YearTotal2024(excluding the two quarters ended March 31,2024)$861.1 20251,658.0 20261,515.8 20271,338.7 20281,139.4 Thereafter4,589.9 Total lease payments11,102.9 Less imputed interest(1,515.9)Total$9,587.0 As of March 31,2024,we have entered into operating leases that have not yet commenced of$1.6 billion,primarily related to real estate leases.These leaseswill commence between fiscal year 2024 and fiscal year 2027 with lease terms ranging from two to twenty years.(1)(1)22Table of ContentsNote 10:Deferred RevenueOur deferred revenue primarily consists of the prepaid royalty from Nestl,for which we have continuing performance obligations to support the Global CoffeeAlliance,our unredeemed stored value card liability,and unredeemed loyalty points(“Stars”)associated with our loyalty program.As of March 31,2024,the current and long-term deferred revenue related to the Nestl up-front payment was$177.0 million and$5.9 billion,respectively.Asof October 1,2023,the current and long-term deferred revenue related to the Nestl up-front payment was$177.0 million and$6.0 billion,respectively.Duringeach of the quarters ended March 31,2024 and April 2,2023,we recognized$44.1 million of prepaid royalty revenue related to Nestl.During each of the twoquarters ended March 31,2024 and April 2,2023,we recognized$88.2 million of prepaid royalty revenue related to Nestl.Changes in our deferred revenue balance related to our stored value cards and loyalty program(in millions):Quarter Ended March 31,2024TotalStored value cards and loyalty program at December 31,2023$2,169.7 Revenue deferred-card activations,card reloads and Stars earned3,456.5 Revenue recognized-card and Stars redemptions and breakage(3,792.4)Other(14.9)Stored value cards and loyalty program at March 31,2024$1,818.9 Quarter Ended April 2,2023TotalStored value cards and loyalty program at January 1,2023$2,025.6 Revenue deferred-card activations,card reloads and Stars earned3,416.0 Revenue recognized-card and Stars redemptions and breakage(3,778.4)Other1.3 Stored value cards and loyalty program at April 2,2023$1,664.5 Two Quarters Ended March 31,2024TotalStored value cards and loyalty program at October 1,2023$1,567.5 Revenue deferred-card activations,card reloads and Stars earned8,143.7 Revenue recognized-card and Stars redemptions and breakage(7,890.8)Other(1.5)Stored value cards and loyalty program at March 31,2024$1,818.9 Two Quarters Ended April 2,2023TotalStored value cards and loyalty program at October 2,2022$1,503.0 Revenue deferred-card activations,card reloads and Stars earned7,639.4 Revenue recognized-card and Stars redemptions and breakage(7,492.5)Other14.6 Stored value cards and loyalty program at April 2,2023$1,664.5“Other”primarily consists of changes in the stored value cards and loyalty program balances resulting from foreign currency translation.As of March 31,2024 and April 2,2023,approximately$1.7 billion and$1.6 billion,respectively,of these amounts were current.(1)(2)(1)(2)(1)(2)(1)(2)(1)(2)23Table of ContentsNote 11:EquityChanges in AOCI by component,net of tax(in millions):Quarter Ended Available-for-SaleDebt Securities Cash FlowHedges Net InvestmentHedgesTranslationAdjustment andOtherTotalMarch 31,2024Net gains/(losses)in AOCI,beginning of period$(7.9)$15.7$217.7$(783.3)$(557.8)Net gains/(losses)recognized in OCI before reclassifications(0.3)27.1 69.2(150.0)(54.0)Net(gains)/losses reclassified from AOCI to earnings0.3(2.2)(7.7)(9.6)Other comprehensive income/(loss)attributable to Starbucks 24.9 61.5(150.0)(63.6)Other comprehensive income/(loss)attributable to NCI (0.1)(0.1)Net gains/(losses)in AOCI,end of period$(7.9)$40.6$279.2$(933.4)$(621.5)April 2,2023Net gains/(losses)in AOCI,beginning of period$(13.9)$(34.9)$156.8$(646.9)$(538.9)Net gains/(losses)recognized in OCI before reclassifications2.8(1.1)(2.0)74.7 74.4 Net(gains)/losses reclassified from AOCI to earnings0.2(52.1)(5.2)(57.1)Other comprehensive income/(loss)attributable to Starbucks3.0(53.2)(7.2)74.7 17.3 Net gains/(losses)in AOCI,end of period$(10.9)$(88.1)$149.6$(572.2)$(521.6)Two Quarters EndedAvailable-for-SaleDebt SecuritiesCash FlowHedgesNet InvestmentHedgesTranslationAdjustment andOtherTotalMarch 31,2024Net gains/(losses)in AOCI,beginning of period$(12.3)$(47.5)$243.3$(961.7)$(778.2)Net gains/(losses)recognized in OCI before reclassifications3.9 60.7 50.3 28.2 143.1 Net(gains)/losses reclassified from AOCI to earnings0.5 27.4(14.4)13.5 Other comprehensive income/(loss)attributable to Starbucks4.4 88.1 35.9 28.2 156.6 Other comprehensive income/(loss)attributable to NCI 0.1 0.1 Net gains/(losses)in AOCI,end of period$(7.9)$40.6$279.2$(933.4)$(621.5)April 2,2023Net gains/(losses)in AOCI,beginning of period$(15.5)$199.0$209.1$(855.8)$(463.2)Net gains/(losses)recognized in OCI before reclassifications4.3(152.3)(50.3)283.6 85.3 Net(gains)/losses reclassified from AOCI to earnings0.3(134.8)(9.2)(143.7)Other comprehensive income/(loss)attributable to Starbucks4.6(287.1)(59.5)283.6(58.4)Net gains/(losses)in AOCI,end of period$(10.9)$(88.1)$149.6$(572.2)$(521.6)24Table of ContentsImpact of reclassifications from AOCI on the consolidated statements of earnings(in millions):Quarter EndedAOCIComponentsAmounts Reclassified from AOCIAffected Line Item inthe Statements of EarningsMar 31,2024Apr 2,2023Gains/(losses)on available-for-sale debt securities$(0.4)$(0.3)Interest income and other,netGains/(losses)on cash flow hedges3.8 59.9 Please refer to Note 3,Derivative Financial Instrumentsfor additional information.Gains/(losses)on net investment hedges10.2 7.0 Interest expense13.6 66.6 Total before tax(4.0)(9.5)Tax expense$9.6$57.1 Net of taxTwo Quarters EndedAOCIComponentsAmounts Reclassified from AOCIAffected Line Item inthe Statements of EarningsMar 31,2024Apr 2,2023Gains/(losses)on available-for-sale debt securities$(0.7)$(0.4)Interest income and other,netGains/(losses)on cash flow hedges(29.7)153.1 Please refer to Note 3,Derivative Financial Instrumentsfor additional information.Gains/(losses)on net investment hedges19.1 12.3 Interest expense(11.3)165.0 Total before tax(2.2)(21.3)Tax expense$(13.5)$143.7 Net of taxIn addition to 2.4 billion shares of authorized common stock with$0.001 par value per share,we have 7.5 million shares of authorized preferred stock,none ofwhich was outstanding as of March 31,2024.During the two quarters ended March 31,2024 and April 2,2023,we repurchased 12.8 million and 4.9 million shares of common stock on the open market for$1,250.1 million and$495.3 million,respectively.As of March 31,2024,29.8 million shares remained available for repurchase under current authorizations.During the second quarter of fiscal 2024,our Board of Directors approved a quarterly cash dividend to shareholders of$0.57 per share to be paid on May 31,2024 to shareholders of record as of the close of business on May 17,2024.Note 12:Employee Stock PlansAs of March 31,2024,there were 84.9 million shares of common stock available for issuance pursuant to future equity-based compensation awards and 10.0million shares available for issuance under our employee stock purchase plan.Stock-based compensation expense recognized in the consolidated statements of earnings(in millions):Quarter EndedTwo Quarters Ended Mar 31,2024Apr 2,2023Mar 31,2024Apr 2,2023Restricted Stock Units(“RSUs”)$78.3$74.1$173.2$159.2 Options(0.1)0.0(0.2)0.1 Total stock-based compensation expense$78.2$74.1$173.0$159.3 Stock option and RSU transactions from October 1,2023 through March 31,2024(in millions):Stock OptionsRSUsOptions outstanding/Nonvested RSUs,October 1,20232.0 7.3 Granted 4.1 Options exercised/RSUs vested(0.6)(2.9)Forfeited/expired(0.4)Options outstanding/Nonvested RSUs,March 31,20241.4 8.1 Total unrecognized stock-based compensation expense,net of estimated forfeitures,as of March 31,2024$314.1 25Table of ContentsNote 13:Earnings per ShareCalculation of net earnings per common share(“EPS”)basic and diluted(in millions,except EPS):Quarter EndedTwo Quarters EndedMar 31,2024Apr 2,2023Mar 31,2024Apr 2,2023Net earnings attributable to Starbucks$772.4$908.3$1,796.8$1,763.6 Weighted average common shares outstanding(for basic calculation)1,132.4 1,148.5 1,134.5 1,148.4 Dilutive effect of outstanding common stock options and RSUs3.0 4.2 3.5 4.4 Weighted average common and common equivalent shares outstanding(for diluted calculation)1,135.4 1,152.7 1,138.0 1,152.8 EPS basic$0.68$0.79$1.58$1.54 EPS diluted$0.68$0.79$1.58$1.53 Potential dilutive shares consist of the incremental common shares issuable upon the exercise of outstanding stock options(both vested and non-vested)andunvested RSUs,calculated using the treasury stock method.The calculation of dilutive shares outstanding excludes anti-dilutive stock options or unvestedRSUs,which were immaterial in the periods presented.Note 14:Commitments and ContingenciesLegal ProceedingsStarbucks is involved in various legal proceedings arising in the ordinary course of business,including litigation matters associated with labor union organizingefforts and certain employment litigation cases that have been certified as class or collective actions,but is not currently a party to any legal proceeding thatmanagement believes could have a material adverse effect on our consolidated financial position,results of operations,or cash flows.While we are closelymonitoring the operational and financial impacts of labor union organizing efforts on our business,as of the date of this filing,we believe the risk of a materialcontingent loss associated with these litigation matters is remote.Refer to the Risk Factors in Part I,Item 1A of our most recently filed 10-K for furtherdiscussion of potential risks to our brand and related impacts on our financial results.Note 15:Segment ReportingSegment information is prepared on the same basis that our chief executive officer,who is our chief operating decision maker,manages the segments,evaluatesfinancial results,and makes key operating decisions.Consolidated revenue mix by product type(in millions):Quarter EndedTwo Quarters EndedMar 31,2024Apr 2,2023Mar 31,2024Apr 2,2023Beverage$5,160.6 60%$5,226.9 60%$10,856.4 60%$10,401.4 60%Food1,583.0 18%1,590.9 18%3,339.9 19%3,157.0 18%Other1,819.4 22%1,902.0 22%3,792.0 21%3,875.4 22%Total$8,563.0 100%$8,719.8 100%$17,988.3 100%$17,433.8 100%“Beverage”represents sales within our company-operated stores.“Food”includes sales within our company-operated stores.“Other”primarily consists of packaged and single-serve coffees and teas,royalty and licensing revenues,beverage-related ingredients,and serveware,among other items.(1)(2)(3)(1)(2)(3)26Table of ContentsThe tables below present financial information for our reportable operating segments and Corporate and Other(in millions):Quarter EndedNorth AmericaInternationalChannelDevelopmentCorporate andOtherTotalMarch 31,2024Total net revenues$6,380.0$1,757.3$418.2$7.5$8,563.0 Depreciation and amortization expenses257.1 84.3 30.5 371.9 Income from equity investees 0.2 67.8 68.0 Operating income/(loss)$1,148.3$233.8$216.3$(499.5)$1,098.9 April 2,2023Total net revenues$6,380.6$1,854.8$480.7$3.7$8,719.8 Depreciation and amortization expenses226.3 86.3 0.0 29.3 341.9 Income from equity investees 0.8 50.6 51.4 Operating income/(loss)$1,217.9$314.7$262.1$(467.2)$1,327.5 Two Quarters EndedNorth AmericaInternationalChannelDevelopmentCorporate andOtherTotalMarch 31,2024Total net revenues$13,500.7$3,603.6$866.2$17.8$17,988.3 Depreciation and amortization expenses507.5 168.3 61.4 737.2 Income from equity investees 0.3 123.5 123.8 Operating income/(loss)$2,669.1$475.3$426.0$(986.1)$2,584.3 April 2,2023Total net revenues$12,931.8$3,534.9$958.9$8.2$17,433.8 Depreciation and amortization expenses443.1 167.7 0.1 58.1 669.0 Income from equity investees 1.2 108.0 109.2 Operating income/(loss)$2,430.4$555.1$488.4$(893.2)$2,580.7 27Table of ContentsItem 2.Managements Discussion and Analysis of Financial Condition and Results of OperationsCAUTIONARY STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995Certain statements contained herein are“forward-looking”statements within the meaning of applicable securities laws and regulations.Generally,thesestatements can be identified by the use of words such as“aim,”“anticipate,”“believe,”“continue,”“could,”“estimate,”“expect,”“feel,”“forecast,”“intend,”“may,”“outlook,”“plan,”“potential,”“predict,”“project,”“seek,”“should,”“will,”“would,”and similar expressions intended to identifyforward-looking statements,although not all forward-looking statements contain these identifying words.By their nature,forward-looking statements involverisks,uncertainties,and other factors(many beyond our control)that could cause our actual results to differ materially from our historical experience or fromour current expectations or projections.Our forward-looking statements,and the risks and uncertainties related thereto,include,but are not limited to,thosedescribed under the“Risk Factors”and“Managements Discussion and Analysis of Financial Condition and Results of Operations”sections of our mostrecently filed 10-K and 10-Q and in other filings with the SEC,as well as:our ability to preserve,grow,and leverage our brands,including the risk of negative responses by consumers(such as boycotts or negative publicitycampaigns)or governmental actors(such as retaliatory legislative treatment)who object to certain actions taken or not taken by the Company,whichresponses could adversely affect our brand value;the acceptance of the Companys products and changes in consumer preferences,consumption,or spending behavior and our ability to anticipate orreact to them;shifts in demographic or health and wellness trends;or unfavorable consumer reaction to new products,platforms,reformulations,orother innovations;our anticipated operating expenses,including our anticipated total capital expenditures;the costs associated with,and the successful execution and effects of,our existing and any future business opportunities,expansions,initiatives,strategies,investments,and plans,including our Triple Shot Reinvention with Two Pumps Plan(“Reinvention”);the impacts of partner investments and changes in the availability and cost of labor including any union organizing efforts and our responses to suchefforts;the ability of our business partners,suppliers,and third-party providers to fulfill their responsibilities and commitments;higher costs,lower quality,or unavailability of coffee,dairy,cocoa,energy,water,raw materials,or product ingredients;the impact of significant increases in logistics costs;a worsening in the terms and conditions upon which we engage with our manufacturers and source suppliers,whether resulting from broader local orglobal conditions,or dynamics specific to our relationships with such parties;unfavorable global or regional economic conditions and related economic slowdowns or recessions,low consumer confidence,high unemployment,weak credit or capital markets,budget deficits,burdensome government debt,austerity measures,higher interest rates,higher taxes,politicalinstability,higher inflation,or deflation;inherent risks of operating a global business including geopolitical instability;failure to attract or retain key executive or partner talent or successfully transition executives;the potential negative effects of incidents involving food or beverage-borne illnesses,tampering,adulteration,contamination,or mislabeling;negative publicity related to our Company,products,brands,marketing,executive leadership,partners,Board of Directors,founder,operations,business performance,expansions,initiatives,strategies,investments,plans,or prospects;potential negative effects of a material breach,failure,or corruption of our information technology systems or those of our direct and indirectbusiness partners,suppliers,or third-party providers,or failure to comply with data protection laws;our environmental,social,and governance(“ESG”)efforts and any reaction related thereto,such as the rise in opposition to ESG and inclusion anddiversity efforts;risks associated with acquisitions,dispositions,business partnerships,or investments such as acquisition integration,termination difficulties orcosts,or impairment in recorded value;the impact of foreign currency translation,particularly a stronger U.S.dollar;the impact of substantial competition from new entrants,consolidations by competitors,and other competitive activities,such as pricing actions(including price reductions,promotions,discounting,couponing,or free goods),marketing,category expansion,product introductions,or entry orexpansion in our geographic markets;the impact of changes in U.S.tax law and related guidance and regulations that may be implemented,including on tax rates;the impact of health epidemics,pandemics,or other public health events on our business and financial results,and the risk of negative economicimpacts and related regulatory measures or voluntary actions that may be put in place,including restrictions on business operations or socialdistancing requirements,and the duration and efficacy of such restrictions;failure to comply with anti-corruption laws,trade sanctions,and restrictions,or similar laws or regulations;andthe impact of significant legal disputes and proceedings,or government investigations.In addition,many of the foregoing risks and uncertainties are,or could be,exacerbated by any worsening of the global business and economic environment.Aforward-looking statement is neither a prediction nor a guarantee of future events or28Table of Contentscircumstances,and those future events or circumstances may not occur.You should not place undue reliance on the forward-looking statements,which speakonly as of the date of this report.We are under no obligation to update or alter any forward-looking statements,whether as a result of new information,futureevents,or otherwise.This information should be read in conjunction with the unaudited consolidated financial statements and the notes included in Item 1 of Part I of this 10-Q andthe audited consolidated financial statements and notes,and Managements Discussion and Analysis of Financial Condition and Results of Operations(“MD&A”),contained in the 10-K filed with the SEC on November 17,2023.29Table of ContentsIntroduction and OverviewStarbucks is the premier roaster,marketer,and retailer of specialty coffee in the world,operating in 86 markets.As of March 31,2024,Starbucks had morethan 38,900 company-operated and licensed stores,an increase of 6%from the prior year.Additionally,we sell a variety of consumer-packaged goods,primarily through the Global Coffee Alliance established with Nestl and other partnerships and joint ventures.We have three reportable operating segments:1)North America,which is inclusive of the U.S.and Canada;2)International,which is inclusive of China,Japan,Asia Pacific,Europe,Middle East,Africa,Latin America,and the Caribbean;and 3)Channel Development.Unallocated corporate expenses are reportedwithin Corporate and Other.We believe our financial results and long-term growth model will continue to be driven by new store openings,comparable store sales growth,and operatingmargin management,underpinned by disciplined capital allocation.We believe these key operating metrics are useful to investors because management usesthese metrics to assess the growth of our business and the effectiveness of our marketing and operational strategies.Throughout this MD&A,we commonlydiscuss the following key operating metrics:New store openings and store countComparable store sales growthOperating marginComparable store sales growth represents the percentage change in sales in one period from the same prior year period for company-operated stores open for13 months or longer and excludes the impact of foreign currency translation.We analyze comparable store sales growth on a constant currency basis as thishelps identify underlying business trends,without distortion from the effects of currency movements.Stores that are temporarily closed or operating at reducedhours remain in comparable store sales while stores identified for permanent closure have been removed.Our fiscal year ends on the Sunday closest to September 30.Fiscal 2024 and 2023 include 52 weeks.All references to store counts,including data for new storeopenings,are reported net of store closures,unless otherwise noted.Starbucks results for the second quarter of fiscal 2024 reflect a complex operating environment globally,including softening consumer sentiment,a pervasiveinflationary environment,and disruptions due to multiple international conflicts.However,efficiencies continue to be realized from the strategies underpinningReinvention,leading to tangible financial benefits,which counterbalance broader headwinds.During the second quarter of fiscal 2024,consolidated netrevenues decreased 2%to$8.6 billion compared to$8.7 billion in the second quarter of fiscal 2023,primarily driven by a decline in global comparable storesales and unfavorable foreign currency fluctuations,partially offset by incremental revenues from net new company-operated store openings over the past 12months.During the quarter ended March 31,2024,our global comparable store sales declined 4%,primarily driven by a 3cline in the U.S.market and a6cline internationally.Consolidated operating margin decreased 240 basis points from the prior year to 12.8%,primarily driven by deleverage,increasedinvestments in store partner wages and benefits,increased promotional activity,lapping the gain from the sale of our Seattles Best Coffee brand in the secondquarter of fiscal 2023,and higher general and administrative expenses,primarily in support of Reinvention.These decreases were partially offset by strategicpricing and in-store operational efficiencies.We anticipate the complex global operating environment and the related headwinds we experienced in the first half of fiscal 2024 may continue to impact thebalance of our fiscal year.Despite these challenges,we have many strengths to build upon,including our global brand,our loyal global customer base,strongnew store performance,an innovative pipeline of products,and our continued execution against Reinvention-related operational efficiencies.Our Triple ShotReinvention strategy is progressing,enhancing our capabilities and giving us continued confidence in our long-term growth and durable business model.Results of Operations(in millions)Revenues Quarter EndedTwo Quarters EndedMar 31,2024Apr 2,2023$Change%ChangeMar 31,2024Apr 2,2023$Change%ChangeCompany-operated stores$7,052.6$7,142.3$(89.7)(1.3)%$14,807.9$14,225.7$582.2 4.1%Licensed stores1,054.5 1,069.5(15.0)(1.4)2,246.6 2,189.0 57.6 2.6 Other455.9 508.0(52.1)(10.3)933.8 1,019.1(85.3)(8.4)Total net revenues$8,563.0$8,719.8$(156.8)(1.8)%$17,988.3$17,433.8$554.5 3.2%For the quarter ended March 31,2024 compared with the quarter ended April 2,202330Table of ContentsTotal net revenues for the second quarter of fiscal 2024 decreased$157 million,primarily due to lower revenues from company-operated stores($90 million).The decrease in revenues from company-operated stores was driven by a 4crease in comparable store sales($253 million),attributable to a 6crease incomparable transactions and a 2%increase in average ticket.Also contributing to company-operated stores revenue were unfavorable foreign currencytranslation impacts($91 million).Partially offsetting these decreases were incremental revenues from 1,454 net new company-operated stores,or an 8%increase,over the past 12 months($255 million).Licensed stores revenue decreased$15 million,primarily driven by lower product and equipment sales to and royalty revenues from our licensees($11 million)and unfavorable foreign currency translation impacts($7 million).Other revenues decreased$52 million,primarily due to a decline in revenue in the Global Coffee Alliance($59 million)following the sale of our Seattles BestCoffee brand to Nestl in the second quarter of fiscal 2023 as well as product SKU optimization.For the two quarters ended March 31,2024 compared with the two quarters ended April 2,2023Total net revenues for the first two quarters of fiscal 2024 increased$555 million,primarily due to higher revenues from company-operated stores($582million).The growth of company-operated stores revenue was driven by incremental revenues from 1,454 net newcompany-operated stores,or an 8%increase,over the past 12 months($582 million).Also contributing to the growth of company-operated stores revenue was a 1%increase in comparable store sales($117million),attributable to a 2%increase in average ticket,partially offset by a 1crease in comparable transactions.Partially offsetting these increases tocompany-operated stores revenue were unfavorable foreign currency translation impacts($121 million).Licensed stores revenue increased$58 million,driven by higher product and equipment sales to,and royalty revenues from,our licensees($51 million),primarily driven by revenues from 863 net new licensed store openings,or a 5%increase,over the past 12 months.Other revenues decreased$85 million,primarily due to a decline in revenue in the Global Coffee Alliance($78 million)following the sale of our Seattles BestCoffee brand to Nestl in the second quarter of fiscal 2023 as well as product SKU optimization.Operating Expenses Quarter EndedTwo Quarters EndedMar 31,2024Apr 2,2023$ChangeMar 31,2024Apr 2,2023Mar 31,2024Apr 2,2023$ChangeMar 31,2024Apr 2,2023As a%ofTotal Net RevenuesAs a%ofTotal Net RevenuesProduct and distributioncosts$2,648.7$2,801.7$(153.0)30.92.1%$5,629.2$5,611.9$17.3 31.32.2%Store operating expenses3,724.1 3,636.0 88.1 43.5 41.7 7,575.6 7,301.3 274.3 42.1 41.9 Other operating expenses132.8 126.2 6.6 1.6 1.4 283.2 255.4 27.8 1.6 1.5 Depreciation andamortization expenses371.9 341.9 30.0 4.3 3.9 737.2 669.0 68.2 4.1 3.8 General and administrativeexpenses654.6 620.4 34.2 7.6 7.1 1,302.6 1,201.3 101.3 7.2 6.9 Restructuring andimpairments 8.8(8.8)0.1 14.7(14.7)0.1 Total operating expenses7,532.1 7,535.0(2.9)88.0 86.4 15,527.8 15,053.6 474.2 86.3 86.3 Income from equityinvestees68.0 51.4 16.6 0.8 0.6 123.8 109.2 14.6 0.7 0.6 Gain from sale of assets 91.3(91.3)1.0 91.3(91.3)0.5 Operating income$1,098.9$1,327.5$(228.6)12.8.2%$2,584.3$2,580.7$3.6 14.4.8%Store operating expenses as a%ofcompany-operated stores revenue52.8P.9Q.2Q.3%For the quarter ended March 31,2024 compared with the quarter ended April 2,2023 31Table of ContentsProduct and distribution costs as a percentage of total net revenues decreased 120 basis points for the second quarter of fiscal 2024,primarily due to the impactof increased sales from pricing(approximately 60 basis points)and a reduction in supply chain costs(approximately 50 basis points).Store operating expenses as a percentage of total net revenues increased 180 basis points for the second quarter of fiscal 2024.Store operating expenses as apercentage of company-operated stores revenue increased 190 basis points,primarily due to increased investments in store partner wages and benefits(approximately 160 basis points),deleverage(approximately 110 basis points),and increased promotional activity(approximately 60 basis points).Theseincreases were partially offset by in-store operational efficiencies(approximately 180 basis points).Other operating expenses increased$7 million,primarily due to support costs for our growing licensed markets.Depreciation and amortization expenses as a percentage of total net revenues increased 40 basis points,primarily due to deleverage.General and administrative expenses increased$34 million,primarily due to certain proxy solicitation and advisory services costs($30 million)andincremental investments in technology($22 million).These increases were partially offset by the lapping of a donation to the Starbucks Foundation made inthe second quarter of fiscal 2023($15 million).Gain from sale of assets includes the sale of our Seattles Best Coffee Brand to Nestl in the second quarter of fiscal 2023.Income from equity investees increased$17 million,primarily due to higher income from our North American Coffee Partnership joint venture.The combination of these changes resulted in an overall decrease in operating margin of 240 basis points for the second quarter of fiscal 2024.For the two quarters ended March 31,2024 compared with the two quarters ended April 2,2023Product and distribution costs as a percentage of total net revenues decreased 90 basis points for the first two quarters of fiscal 2024,primarily due to theimpact of increased sales from pricing(approximately 60 basis points).Store operating expenses as a percentage of total net revenues increased 20 basis points for the first two quarters of fiscal 2024.Store operating expenses as apercentage of company-operated stores revenue decreased 10 basis points,primarily due to in-store operational efficiencies(approximately 210 basis points),partially offset by increased investments in store partner wages and benefits(approximately 150 basis points),and increased promotional activity(approximately 50 basis points).Other operating expenses increased$28 million,primarily due to support costs for our growing licensed markets.Depreciation and amortization expenses as a percentage of total net revenues increased 30 basis points,primarily due to deleverage.General and administrative expenses increased$101 million,primarily due to incremental investments in technology($52 million),investments in partnerwages and benefits($48 million),and certain proxy solicitation and advisory services costs($30 million).These increases were partially offset by the lappingof a donation to the Starbucks Foundation made in the second quarter of fiscal 2023($15 million).Gain from sale of assets includes the sale of our Seattles Best Coffee Brand to Nestl in the second quarter of fiscal 2023.Income from equity investees increased$15 million,primarily due to higher income from our North American Coffee Partnership joint venture.The combination of these changes resulted in an overall decrease in operating margin of 40 basis points for the first two quarters of fiscal 2024.32Table of ContentsOther Income and Expenses Quarter EndedTwo Quarters EndedMar 31,2024Apr 2,2023$ChangeMar 31,2024Apr 2,2023Mar 31,2024Apr 2,2023$ChangeMar 31,2024Apr 2,2023As a%of TotalNet RevenuesAs a%of TotalNet RevenuesOperating income$1,098.9$1,327.5$(228.6)12.8.2%$2,584.3$2,580.7$3.6 14.4.8%Interest income and other,net34.1 18.4 15.7 0.4 0.2 67.9 30.0 37.9 0.4 0.2 Interest expense(140.6)(136.3)(4.3)(1.6)(1.6)(280.7)(266.0)(14.7)(1.6)(1.5)Earnings before incometaxes992.4 1,209.6(217.2)11.6 13.9 2,371.5 2,344.7 26.8 13.2 13.4 Income tax expense219.9 301.3(81.4)2.6 3.5 574.6 581.1(6.5)3.2 3.3 Net earnings includingnoncontrolling interests772.5 908.3(135.8)9.0 10.4 1,796.9 1,763.6 33.3 10.0 10.1 Net earningsattributable tononcontrolling interests0.1 0.1 0.0 0.1 0.1 0.0 Net earningsattributable toStarbucks$772.4$908.3$(135.9)9.0.4%$1,796.8$1,763.6$33.2 10.0.1fective tax rate includingnoncontrolling interests22.2$.9$.2$.8%For the quarter ended March 31,2024 compared with the quarter ended April 2,2023Interest income and other,net increased$16 million and interest expense increased$4 million,both primarily due to higher interest rates in the current year.The effective tax rate for the quarter ended March 31,2024 was 22.2%compared to 24.9%for the same period in fiscal 2023.The decrease was primarily dueto electing an alternative tax approach in a certain foreign jurisdiction that resulted in a tax benefit in the second quarter of fiscal 2024(approximately 300 basispoints).For the two quarters ended March 31,2024 compared with the two quarters ended April 2,2023Interest income and other,net increased$38 million and interest expense increased$15 million,both primarily due to higher interest rates in the current year.The effective tax rate for the first two quarters ended March 31,2024 was 24.2%compared to 24.8%for the same period in fiscal 2023.The decrease was dueto electing an alternative tax approach in a certain foreign jurisdiction that resulted in a tax benefit in the second quarter of fiscal 2024(approximately 130 basispoints),partially offset by the accrual of foreign withholding taxes related to the current year earnings of certain foreign subsidiaries(approximately 60 basispoints).33Table of ContentsSegment InformationResults of operations by segment(in millions):North America Quarter EndedTwo Quarters EndedMar 31,2024Apr 2,2023$ChangeMar 31,2024Apr 2,2023Mar 31,2024Apr 2,2023$ChangeMar 31,2024Apr 2,2023As a%of North AmericaTotal Net RevenuesAs a%of North AmericaTotal Net RevenuesNet revenues:Company-operatedstores$5,724.5$5,742.7$(18.2)89.7.0%$12,105.7$11,613.2$492.5 89.7.8%Licensed stores654.8 637.4 17.4 10.3 10.0 1,392.7 1,317.4 75.3 10.3 10.2 Other0.7 0.5 0.2 0.0 0.0 2.3 1.2 1.1 0.0 0.0 Total net revenues6,380.0 6,380.6(0.6)100.0 100.0 13,500.7 12,931.8 568.9 100.0 100.0 Product anddistribution costs1,767.7 1,821.7(54.0)27.7 28.6 3,791.6 3,739.3 52.3 28.1 28.9 Store operatingexpenses3,037.4 2,951.6 85.8 47.6 46.3 6,185.1 5,983.0 202.1 45.8 46.3 Other operatingexpenses67.1 63.4 3.7 1.1 1.0 144.5 128.9 15.6 1.1 1.0 Depreciation andamortization expenses257.1 226.3 30.8 4.0 3.5 507.5 443.1 64.4 3.8 3.4 General andadministrativeexpenses102.4 91.2 11.2 1.6 1.4 202.9 193.5 9.4 1.5 1.5 Restructuring andimpairments 8.5(8.5)0.1 13.6(13.6)0.1 Total operatingexpenses5,231.7 5,162.7 69.0 82.0 80.9 10,831.6 10,501.4 330.2 80.2 81.2 Operating income$1,148.3$1,217.9$(69.6)18.0.1%$2,669.1$2,430.4$238.7 19.8.8%Store operating expenses as a%ofcompany-operated stores revenue53.1Q.4Q.1Q.5%For the quarter ended March 31,2024 compared with the quarter ended April 2,2023RevenuesNorth America total net revenues for the second quarter of fiscal 2024 were nearly flat when compared to the prior year period,primarily due to a 3creasein comparable store sales($178 million)driven by a 7crease in comparable transactions,partially offset by a 4%increase in average ticket,primarily dueto annualization of pricing and a mix shift to cold beverages.This comparable store sales decrease was partially offset by performance of net new company-operated store openings over the past 12 months($160 million),as well as higher product and equipment sales to,and royalty revenues from,our licensees($14 million).Operating MarginNorth America operating income for the second quarter of fiscal 2024 decreased 6%to$1.1 billion,compared to$1.2 billion in the second quarter of fiscal2023.Operating margin decreased 110 basis points to 18.0%,primarily due to deleverage(approximately 190 basis points),increased investments in storepartner wages and benefits(approximately 140 basis points),and increased promotional activity(approximately 90 basis points),partially offset by strategicpricing(approximately 200 basis points)and in-store operational efficiencies(approximately 180 basis points).34Table of ContentsFor the two quarters ended March 31,2024 compared with the two quarters ended April 2,2023RevenuesNorth America total net revenues for the first two quarters of fiscal 2024 increased$569 million,or 4%,primarily due to net new company-operated storeopenings over the past 12 months($382 million)and a 1%increase in comparable store sales($110 million)driven by a 4%increase in average ticket,primarily due to annualization of pricing.This was partially offset by a 3crease in comparable transactions.Also contributing to these increases werehigher product and equipment sales to,and royalty revenues from,our licensees($63 million).Operating MarginNorth America operating income for the first two quarters of fiscal 2024 increased 10%to$2.7 billion,compared to$2.4 billion in the first two quarters offiscal 2023.Operating margin increased 100 basis points to 19.8%,primarily driven by in-store operational efficiencies(approximately 220 basis points)andstrategic pricing(approximately 180 basis points),partially offset by increased investments in store partner wages and benefits(approximately 130 basispoints)and increased promotional activity(approximately 70 basis points).International Quarter EndedTwo Quarters Ended Mar 31,2024Apr 2,2023$ChangeMar 31,2024Apr 2,2023Mar 31,2024Apr 2,2023$ChangeMar 31,2024Apr 2,2023As a%of InternationalTotal Net RevenuesAs a%of InternationalTotal Net RevenuesNet revenues:Company-operatedstores$1,328.1$1,399.6$(71.5)75.6u.5%$2,702.2$2,612.5$89.7 75.0s.9%Licensed stores399.7 432.1(32.4)22.7 23.3 853.9 871.6(17.7)23.7 24.7 Other29.5 23.1 6.4 1.7 1.2 47.5 50.8(3.3)1.3 1.4 Total net revenues1,757.3 1,854.8(97.5)100.0 100.0 3,603.6 3,534.9 68.7 100.0 100.0 Product anddistribution costs619.8 632.9(13.1)35.3 34.1 1,286.4 1,226.5 59.9 35.7 34.7 Store operatingexpenses686.7 684.4 2.3 39.1 36.9 1,390.5 1,318.3 72.2 38.6 37.3 Other operatingexpenses50.0 49.9 0.1 2.8 2.7 110.1 100.6 9.5 3.1 2.8 Depreciation andamortization expenses84.3 86.3(2.0)4.8 4.7 168.3 167.7 0.6 4.7 4.7 General andadministrativeexpenses82.9 87.4(4.5)4.7 4.7 173.3 167.9 5.4 4.8 4.7 Total operatingexpenses1,523.7 1,540.9(17.2)86.7 83.1 3,128.6 2,981.0 147.6 86.8 84.3 Income from equityinvestees0.2 0.8(0.6)0.0 0.0 0.3 1.2(0.9)0.0 0.0 Operating income$233.8$314.7$(80.9)13.3.0%$475.3$555.1$(79.8)13.2.7%Store operating expenses as a%of company-operated stores revenue51.7H.9Q.5P.5%For the quarter ended March 31,2024 compared with the quarter ended April 2,2023RevenuesInternational total net revenues for the second quarter of fiscal 2024 decreased$98 million,or 5%,primarily due to unfavorable foreign currency translationimpacts($102 million),as well as a 6cline in comparable store sales($75 million),driven by a 3cline in comparable transactions and a 3cline inaverage ticket.Also contributing to the decline in international total net revenues were lower product and equipment sales to,and royalty revenues from,ourlicensees($25 million),largely driven35Table of Contentsby disruptions due to multiple international conflicts.These decreases were partially offset by 974 net new company-operated store openings,or a 12%increase,over the past 12 months($95 million).Operating MarginInternational operating income for the second quarter of fiscal 2024 decreased to$234 million,compared to$315 million in the second quarter of fiscal 2023.Operating margin decreased 370 basis points to 13.3%,primarily due to increased promotional activity(approximately 220 basis points),increased investmentsin store partner wages and benefits(approximately 130 basis points),and sales mix shift(approximately 90 basis points),partially offset by pricing in certainmarkets(approximately 100 basis points).For the two quarters ended March 31,2024 compared with the two quarters ended April 2,2023RevenuesInternational total net revenues for the first two quarters of fiscal 2024 increased$69 million,or 2%,primarily due to 974 net new company-operated storeopenings,or a 12%increase,over the past 12 months($199 million).This increase was partially offset by unfavorable foreign currency translation impacts($130 million).Operating MarginInternational operating income for the first two quarters of fiscal 2024 decreased to$475 million,compared to$555 million for the same period in fiscal 2023.Operating margin decreased 250 basis points to 13.2%,primarily due to increased promotional activity(approximately 190 basis points),increased investmentsin store partner wages and benefits(approximately 120 basis points),and sales mix shift(approximately 80 basis points).These decreases were partially offsetby leverage(approximately 120 basis points)and pricing in certain markets(approximately 70 basis points).Channel Development Quarter EndedTwo Quarters Ended Mar 31,2024Apr 2,2023$ChangeMar 31,2024Apr 2,2023Mar 31,2024Apr 2,2023$ChangeMar 31,2024Apr 2,2023As a%of ChannelDevelopmentTotal Net RevenuesAs a%of ChannelDevelopmentTotal Net RevenuesNet revenues$418.2$480.7$(62.5)$866.2$958.9$(92.7)Product anddistribution costs252.6 345.6(93.0)60.4q.9S1.5 639.8(108.3)61.4f.7%Other operatingexpenses15.2 12.8 2.4 3.6 2.7 28.0 25.8 2.2 3.2 2.7 Depreciation andamortization expenses 0.1(0.1)0.0 General andadministrativeexpenses1.9 2.1(0.2)0.5 0.4 4.2 4.1 0.1 0.5 0.4 Total operatingexpenses269.7 360.5(90.8)64.5 75.0 563.7 669.8(106.1)65.1 69.9 Income from equityinvestees67.8 50.6 17.2 16.2 10.5 123.5 108.0 15.5 14.3 11.3 Gain from sale ofassets 91.3(91.3)19.0 91.3(91.3)9.5 Operatingincome$216.3$262.1$(45.8)51.7T.5%$426.0$488.4$(62.4)49.2P.9%For the quarter ended March 31,2024 compared with the quarter ended April 2,2023RevenuesChannel Development total net revenues for the second quarter of fiscal 2024 decreased$63 million,or 13%,primarily due to a decline in revenue in theGlobal Coffee Alliance($59 million),following the sale of our Seattles Best Coffee brand to Nestl in the second quarter of fiscal 2023 as well as productSKU optimization.36Table of ContentsOperating MarginChannel Development operating income for the second quarter of fiscal 2024 decreased 17%to$216 million,compared to$262 million in the second quarterof fiscal 2023.Operating margin decreased 280 basis points to 51.7%,primarily driven by lapping the gain from the sale of our Seattles Best Coffee brand inthe second quarter of fiscal 2023(approximately 1,900 basis points),partially offset by growth in our North American Coffee Partnership joint venture income(approximately 570 basis points),mix shift(approximately 510 basis points),lapping impairment charges against certain manufacturing assets in the secondquarter of fiscal 2023(approximately 350 basis points),and lower product costs related to the Global Coffee Alliance(approximately 240 basis points).For the two quarters ended March 31,2024 compared with the two quarters ended April 2,2023RevenuesChannel Development total net revenues for the first two quarters of fiscal 2024 decreased$93 million,or 10%,primarily due to a decline in revenue in theGlobal Coffee Alliance($78 million),primarily following the sale of our Seattles Best Coffee brand to Nestl in the second quarter of fiscal 2023 as well asproduct SKU optimization,and lower revenue in our global ready-to-drink business($21 million).Operating MarginChannel Development operating income for the first two quarters of fiscal 2024 decreased 13%to$426 million,compared to$488 million for the same periodin fiscal 2023.Operating margin decreased 170 basis points to 49.2%,primarily due to lapping the gain from the sale of our Seattles Best Coffee brand in thesecond quarter of fiscal 2023(approximately 950 basis points),partially offset by mix shift(approximately 440 basis points)and growth in our North AmericanCoffee Partnership joint venture income(approximately 300 basis points).Corporate and Other Quarter EndedTwo Quarters EndedMar 31,2024Apr 2,2023$Change%ChangeMar 31,2024Apr 2,2023$Change%ChangeNet revenues:Other$7.5$3.7$3.8 102.7%$17.8$8.2$9.6 117.1%Total net revenues7.5 3.7 3.8 102.7 17.8 8.2 9.6 117.1 Product and distribution costs8.6 1.5 7.1 473.3 19.7 6.3 13.4 212.7 Other operating expenses0.5 0.1 0.4 400.0 0.6 0.1 0.5 500.0 Depreciation and amortization expenses30.5 29.3 1.2 4.1 61.4 58.1 3.3 5.7 General and administrative expenses467.4 439.7 27.7 6.3 922.2 835.8 86.4 10.3 Restructuring and impairments 0.3(0.3)nm 1.1(1.1)nmTotal operating expenses507.0 470.9 36.1 7.7 1,003.9 901.4 102.5 11.4 Operating loss$(499.5)$(467.2)$(32.3)6.9%$(986.1)$(893.2)$(92.9)10.4%Corporate and Other primarily consists of our unallocated corporate expenses.Unallocated corporate expenses include corporate administrative functions thatsupport the operating segments but are not specifically attributable to or managed by any segment and are not included in the reported financial results of theoperating segments.For the quarter ended March 31,2024 compared with the quarter ended April 2,2023Corporate and Other operating loss increased by 7%to$500 million for the second quarter of fiscal 2024 compared to$467 million for the second quarter offiscal 2023.This increase was primarily driven by certain proxy solicitation and advisory services costs($30 million)and incremental investments intechnology in support of Reinvention($22 million).These increases were partially offset by the lapping of a donation to the Starbucks Foundation made in thesecond quarter of fiscal 2023($15 million).For the two quarters ended March 31,2024 compared with the two quarters ended April 2,2023Corporate and Other operating loss increased to$986 million for the first two quarters of fiscal 2024,or 10%,compared to$893 million for the same period infiscal 2023.This increase was primarily driven by incremental investments in technology in support of Reinvention($52 million),certain proxy solicitationand advisory services costs($30 million),and investments in partner wages and benefits($28 million).These increases were partially offset by the lapping of adonation to the Starbucks Foundation made in the second quarter of fiscal 2023($15 million).37Table of ContentsQuarterly Store DataOur store data for the periods presented is as follows:Net stores opened/(closed)and transferred during the period Quarter EndedTwo Quarters EndedStores open as ofMar 31,2024Apr 2,2023Mar 31,2024Apr 2,2023Mar 31,2024Apr 2,2023North AmericaCompany-operated stores112 91 199 131 10,827 10,347 Licensed stores22 10 56 56 7,238 7,135 Total North America134 101 255 187 18,065 17,482 InternationalCompany-operated stores132 174 318 271 9,282 8,308 Licensed stores98 189 340 465 11,604 10,844 Total International230 363 658 736 20,886 19,152 Total Company364 464 913 923 38,951 36,634 Financial Condition,Liquidity and Capital ResourcesCash and Investment OverviewOur cash and investments were$3.4 billion as of March 31,2024 and$4.2 billion as of October 1,2023.We actively manage our cash and investments in orderto internally fund operating needs,make scheduled interest and principal payments on our borrowings,fund acquisitions,and return cash to shareholdersthrough common stock cash dividend payments and share repurchases.Our investment portfolio primarily includes highly liquid available-for-sale securities,including corporate debt securities,government treasury securities(domestic and foreign),and commercial paper,as well as principal-protected structureddeposits.As of March 31,2024,approximately$2.0 billion of cash and short-term investments were held in foreign subsidiaries.Borrowing CapacityRevolving Credit FacilityOur$3.0 billion unsecured five-year revolving credit facility(the“2021 credit facility”),of which$150.0 million may be used for issuances of letters of credit,is currently set to mature on September 16,2026.The 2021 credit facility is available for working capital,capital expenditures,and other corporate purposes,including acquisitions and share repurchases.We have the option,subject to negotiation and agreement with the related banks,to increase the maximumcommitment amount by an additional$1.0 billion.Borrowings under the 2021 credit facility,which was most recently amended in April 2023,will bear interest at a variable rate based on Term SOFR,and,forU.S.dollar-denominated loans under certain circumstances,a Base Rate(as defined in the 2021 credit facility),in each case plus an applicable margin.Theapplicable margin is based on the Companys long-term credit ratings assigned by the Moodys and Standard&Poors rating agencies.The“Base Rate”is thehighest of(i)the Federal Funds Rate(as defined in the 2021 credit facility)plus 0.500%,(ii)Bank of Americas prime rate,and(iii)Term SOFR plus 1.000%.Term SOFR means the forward-looking SOFR term rate administrated by the Chicago Mercantile Exchange plus a SOFR Adjustment of 0.100%.The 2021 credit facility contains provisions requiring us to maintain compliance with certain covenants,including a minimum fixed charge coverage ratio,which measures our ability to cover financing expenses.As of March 31,2024,we were in compliance with all applicable covenants.No amounts wereoutstanding under our 2021 credit facility as of March 31,2024 or October 1,2023.Commercial PaperUnder our commercial paper program,we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of$3.0billion,with individual maturities that may vary but not exceed 397 days from the date of issue.Amounts outstanding under the commercial paper program arerequired to be backstopped by available commitments under our 2021 credit facility.The proceeds from borrowings under our commercial paper program maybe used for working capital needs,capital expenditures,and other corporate purposes,including,but not limited to,business expansion,payment of cashdividends on our common stock,and share repurchases.No amounts were outstanding under our commercial paper program as38Table of Contentsof March 31,2024 and October 1,2023.Our total available contractual borrowing capacity for general corporate purposes was$3.0 billion as of the end of oursecond quarter of fiscal 2024.Credit Facilities in JapanAdditionally,we hold the following Japanese yen-denominated credit facilities that are available for working capital needs and capital expenditures within ourJapanese market.A 5.0 billion,or$33.0 million,credit facility is currently set to mature on December 30,2024.Borrowings under this credit facility are subject toterms defined within the facility and will bear interest at a variable rate based on TIBOR plus an applicable margin of 0.400%.A 10.0 billion,or$66.1 million,credit facility is currently set to mature on March 27,2025.Borrowings under this credit facility are subject to termsdefined within the facility and will bear interest at a variable rate based on TIBOR plus an applicable margin of 0.300%.As of March 31,2024,we had 5.0 billion,or$33.0 million,of borrowings outstanding under these credit facilities.As of October 1,2023,we had 5.0 billion,or$33.5 million,of borrowings outstanding under these credit facilities.See Note 8,Debt,to the consolidated financial statements included in Item 1 of Part I of this 10-Q for details of the components of our long-term debt.Our ability to incur new liens and conduct sale and leaseback transactions on certain material properties is subject to compliance with terms of the indenturesunder which the long-term notes were issued.As of March 31,2024,we were in compliance with all applicable covenants.Use of CashWe expect to use our available cash and investments,including,but not limited to,additional potential future borrowings under the credit facilities,commercialpaper program,and the issuance of debt to support and invest in our core businesses,including investing in new ways to serve our customers and supportingour store partners,repaying maturing debts,returning cash to shareholders through common stock cash dividend payments and discretionary share repurchases,and investing in new business opportunities related to our core and developing businesses.Furthermore,we may use our available cash resources to makeproportionate capital contributions to our investees.We may also seek strategic acquisitions to leverage existing capabilities and further build our business.Acquisitions may include increasing our ownership interests in our investees.Any decisions to increase such ownership interests will be driven by valuationand fit with our ownership strategy.We believe that net future cash flows generated from operations and existing cash and investments both domestically and internationally,combined with ourability to leverage our balance sheet through the issuance of debt,will be sufficient to finance capital requirements for our core businesses as well asshareholder distributions for at least the next 12 months.We are currently not aware of any trends or demands,commitments,events,or uncertainties that willresult in,or that are reasonably likely to result in,our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyondthe next 12 months.We have borrowed funds and continue to believe we have the ability to do so at reasonable interest rates;however,additional borrowingswould result in increased interest expense in the future.In this regard,we may incur additional debt,within targeted levels,as part of our plans to fund ourcapital programs,including cash returns to shareholders through future dividends and discretionary share repurchases,refinancing debt maturities,as well asinvesting in new business opportunities.If necessary,we may pursue additional sources of financing,including both short-term and long-term borrowings anddebt issuances.We regularly review our cash positions and our determination of partial indefinite reinvestment of foreign earnings.In the event we determine that all oranother portion of such foreign earnings are no longer indefinitely reinvested,we may be subject to additional foreign withholding taxes,which could bematerial.Any foreign earnings that are not indefinitely reinvested may be repatriated at managements discretion.In anticipation of repatriation of current yearearnings of certain foreign subsidiaries,we accrued approximately$11 million for foreign withholding taxes during the first two quarters of fiscal year 2024.During the second quarter of fiscal 2024,our Board of Directors approved a quarterly cash dividend to shareholders of$0.57 per share to be paid on May 31,2024 to shareholders of record as of the close of business on May 17,2024.During the two quarters ended March 31,2024,we repurchased 12.8 million shares of common stock for$1,250.1 million on the open market.As of March 31,2024,29.8 million shares remained available for repurchase under current authorizations.Other than normal operating expenses,cash requirements for the remainder of fiscal 2024 are expected to consist primarily of capital expenditures forinvestments in our new and existing stores,our supply chain,and corporate facilities.Total capital expenditures for fiscal 2024 are expected to beapproximately$3.0 billion.39Table of ContentsIn the MD&A included in the 10-K,we disclosed that we had$33.9 billion of current and long-term material cash requirements as of October 1,2023.Therehave been no material changes to our material cash requirements during the period covered by this 10-Q outside of the normal course of our business.Cash FlowsNet cash provided by operating activities was$2.9 billion for the first two quarters of fiscal 2024,compared to$2.4 billion for the same period in fiscal 2023.The change was primarily due to an increase in net cash provided by changes in operating assets and liabilities,an increase in non-cash lease costs,and lappingthe gain on sale of assets from the prior year sale of Seattles Best Coffee brand to Nestl.Net cash used in investing activities totaled$1.3 billion for the first two quarters of fiscal 2024,compared to$907.0 million for the same period in fiscal 2023.The change was primarily due to an increase in capital expenditures,purchases of investments,and lapping the proceeds from sale of assets from the prior yearsale of Seattles Best Coffee brand to Nestl,partially offset by an increase in maturities and calls of investments.Net cash used in financing acti

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    Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,DC 20549FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the Quarterly Period Ended December 31,2023OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to .Commission File Number:000-20322Starbucks Corporation(Exact Name of Registrant as Specified in its Charter)Washington91-1325671(State or Other Jurisdiction ofIncorporation or Organization)(IRS EmployerIdentification No.)2401 Utah Avenue South,Seattle,Washington 98134(Address of principal executive offices,zip code)(206)447-1575(Registrants Telephone Number,including Area Code)Securities registered pursuant to Section 12(b)of the Act:TitleTrading SymbolName of each exchange on which registeredCommon Stock,par value$0.001 per shareSBUXNasdaq Global Select MarketIndicate 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 duringthe 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 forthe past 90 days.Yes x No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit suchfiles).Yes x No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,smaller reporting company,or anemerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filerxAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth companyIf an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act):Yes No x Indicate the number of shares outstanding of each of the issuers classes of common stock,as of the latest practicable date.Shares Outstanding as of January 24,20241,132.2 millionTable of ContentsSTARBUCKS CORPORATIONFORM 10-QFor the Quarterly Period Ended December 31,2023Table of Contents PART I.FINANCIAL INFORMATIONItem 1Financial Statements(Unaudited)3Consolidated Statements of Earnings3Consolidated Statements of Comprehensive Income4Consolidated Balance Sheets5Consolidated Statements of Cash Flows6Consolidated Statements of Equity7Index for Notes to Consolidated Financial Statements8Notes to Consolidated Financial Statements9Item 2Managements Discussion and Analysis of Financial Condition and Results of Operations24Item 3Quantitative and Qualitative Disclosures About Market Risk34Item 4Controls and Procedures35PART II.OTHER INFORMATIONItem 1Legal Proceedings36Item 1ARisk Factors36Item 2Unregistered Sales of Equity Securities and Use of Proceeds36Item 3Defaults Upon Senior Securities36Item 4Mine Safety Disclosures36Item 5Other Information36Item 6Exhibits38Signatures39 Table of ContentsPART I FINANCIAL INFORMATIONItem 1.Financial StatementsSTARBUCKS CORPORATIONCONSOLIDATED STATEMENTS OF EARNINGS(in millions,except per share data)(unaudited)Quarter EndedDec 31,2023Jan 1,2023Net revenues:Company-operated stores$7,755.2$7,083.5 Licensed stores1,192.1 1,119.5 Other478.0 510.9 Total net revenues9,425.3 8,713.9 Product and distribution costs2,980.6 2,810.2 Store operating expenses3,851.5 3,665.3 Other operating expenses150.4 129.3 Depreciation and amortization expenses365.3 327.1 General and administrative expenses648.0 580.9 Restructuring and impairments 5.8 Total operating expenses7,995.8 7,518.6 Income from equity investees55.9 57.8 Operating income1,485.4 1,253.1 Interest income and other,net33.8 11.6 Interest expense(140.1)(129.7)Earnings before income taxes1,379.1 1,135.0 Income tax expense354.7 279.8 Net earnings including noncontrolling interests1,024.4 855.2 Net earnings attributable to noncontrolling interests0.0 0.0 Net earnings attributable to Starbucks$1,024.4$855.2 Earnings per share-basic$0.90$0.74 Earnings per share-diluted$0.90$0.74 Weighted average shares outstanding:Basic1,136.6 1,148.5 Diluted1,140.6 1,152.9 See Notes to Consolidated Financial Statements.3Table of ContentsSTARBUCKS CORPORATIONCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(in millions,unaudited)Quarter EndedDec 31,2023Jan 1,2023Net earnings including noncontrolling interests$1,024.4$855.2 Other comprehensive income/(loss),net of tax:Unrealized holding gains/(losses)on available-for-sale debt securities5.6 2.0 Tax(expense)/benefit(1.4)(0.5)Unrealized gains/(losses)on cash flow hedging instruments35.4(180.7)Tax(expense)/benefit(1.8)29.5 Unrealized gains/(losses)on net investment hedging instruments(25.2)(64.6)Tax(expense)/benefit6.3 16.3 Translation adjustment and other183.1 208.9 Tax(expense)/benefit(4.7)Reclassification adjustment for net(gains)/losses realized in net earnings for available-for-sale debt securities,hedging instruments,and translation adjustment24.9(98.4)Tax expense/(benefit)(1.8)11.8 Other comprehensive income/(loss)220.4(75.7)Comprehensive income including noncontrolling interests1,244.8 779.5 Comprehensive income attributable to noncontrolling interests0.2 Comprehensive income attributable to Starbucks$1,244.6$779.5 See Notes to Consolidated Financial Statements.4Table of ContentsSTARBUCKS CORPORATIONCONSOLIDATED BALANCE SHEETS(in millions,except per share data)(unaudited)Dec 31,2023Oct 1,2023ASSETSCurrent assets:Cash and cash equivalents$3,000.4$3,551.5 Short-term investments383.0 401.5 Accounts receivable,net1,165.1 1,184.1 Inventories1,646.3 1,806.4 Prepaid expenses and other current assets374.7 359.9 Total current assets6,569.5 7,303.4 Long-term investments239.8 247.4 Equity investments401.0 439.9 Property,plant and equipment,net7,611.7 7,387.1 Operating lease,right-of-use asset8,638.6 8,412.6 Deferred income taxes,net1,769.4 1,769.8 Other long-term assets531.1 546.5 Other intangible assets115.8 120.5 Goodwill3,302.8 3,218.3 TOTAL ASSETS$29,179.7$29,445.5 LIABILITIES AND SHAREHOLDERS EQUITY/(DEFICIT)Current liabilities:Accounts payable$1,460.7$1,544.3 Accrued liabilities2,326.9 2,145.1 Accrued payroll and benefits648.5 828.3 Current portion of operating lease liability1,309.4 1,275.3 Stored value card liability and current portion of deferred revenue2,199.8 1,700.2 Short-term debt349.5 33.5 Current portion of long-term debt1,100.8 1,818.6 Total current liabilities9,395.6 9,345.3 Long-term debt13,564.8 13,547.6 Operating lease liability8,139.0 7,924.8 Deferred revenue6,129.0 6,101.8 Other long-term liabilities560.2 513.8 Total liabilities37,788.6 37,433.3 Shareholders deficit:Common stock($0.001 par value)authorized,2,400.0 shares;issued and outstanding,1,132.2 and 1,142.6 shares,respectively1.1 1.1 Additional paid-in capital38.2 38.1 Retained deficit(8,097.5)(7,255.8)Accumulated other comprehensive income/(loss)(557.8)(778.2)Total shareholders deficit(8,616.0)(7,994.8)Noncontrolling interests7.1 7.0 Total deficit(8,608.9)(7,987.8)TOTAL LIABILITIES AND SHAREHOLDERS EQUITY/(DEFICIT)$29,179.7$29,445.5 See Notes to Consolidated Financial Statements.5Table of ContentsSTARBUCKS CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(in millions,unaudited)Quarter EndedDec 31,2023Jan 1,2023OPERATING ACTIVITIES:Net earnings including noncontrolling interests$1,024.4$855.2 Adjustments to reconcile net earnings to net cash provided by operating activities:Depreciation and amortization384.4 342.5 Deferred income taxes,net26.1 15.8 Income earned from equity method investees(59.0)(56.9)Distributions received from equity method investees105.2 45.7 Stock-based compensation94.8 85.2 Non-cash lease costs278.0 263.7 Loss on retirement and impairment of assets28.3 21.1 Other17.8 6.7 Cash provided by/(used in)changes in operating assets and liabilities:Accounts receivable42.3 42.0 Inventories174.3 108.5 Income taxes payable189.6 147.6 Accounts payable(95.8)(117.3)Deferred revenue508.5 461.0 Operating lease liability(290.5)(281.4)Other operating assets and liabilities(44.5)(346.2)Net cash provided by operating activities2,383.9 1,593.2 INVESTING ACTIVITIES:Purchases of investments(217.1)(10.5)Sales of investments 0.8 Maturities and calls of investments253.5 253.3 Additions to property,plant and equipment(595.9)(516.8)Other(9.3)(6.1)Net cash used in investing activities(568.8)(279.3)FINANCING ACTIVITIES:Net(payments)/proceeds from issuance of commercial paper300.0(175.0)Net proceeds from issuance of short-term debt49.1 Repayments of short-term debt(33.8)Repayments of long-term debt(750.0)Proceeds from issuance of common stock32.3 45.9 Cash dividends paid(648.1)(608.3)Repurchase of common stock(1,266.7)(191.4)Minimum tax withholdings on share-based awards(92.1)(79.0)Net cash used in financing activities(2,409.3)(1,007.8)Effect of exchange rate changes on cash and cash equivalents43.1 62.0 Net increase/(decrease)in cash and cash equivalents(551.1)368.1 CASH AND CASH EQUIVALENTS:Beginning of period3,551.5 2,818.4 End of period$3,000.4$3,186.5 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for:Interest,net of capitalized interest$120.1$116.7 Income taxes$143.0$106.2 See Notes to Consolidated Financial Statements.6Table of ContentsSTARBUCKS CORPORATIONCONSOLIDATED STATEMENTS OF EQUITYFor the Quarter Ended December 31,2023 and January 1,2023(in millions,except per share data,unaudited)Common StockAdditionalPaid-inCapitalRetainedEarnings/(Deficit)AccumulatedOtherComprehensiveIncome/(Loss)ShareholdersEquity/(Deficit)NoncontrollingInterestsTotal SharesAmountBalance,October 1,20231,142.6$1.1$38.1$(7,255.8)$(778.2)$(7,994.8)$7.0$(7,987.8)Net earnings 1,024.4 1,024.4 1,024.4 Other comprehensive income 220.2 220.2 0.2 220.4 Stock-based compensation expense 96.1 96.1 96.1 Exercise of stock options/vesting ofRSUs2.3(75.8)(75.8)(75.8)Sale of common stock0.1 16.2 16.2 16.2 Repurchase of common stock(12.8)(36.4)(1,224.0)(1,260.4)(1,260.4)Cash dividends declared,$0.57 pershare (642.1)(642.1)(642.1)Other 0.2 0.2(0.1)0.1 Balance,December 31,20231,132.2$1.1$38.2$(8,097.5)$(557.8)$(8,616.0)$7.1$(8,608.9)Balance,October 2,20221,147.9$1.1$205.3$(8,449.8)$(463.2)$(8,706.6)$7.9$(8,698.7)Net earnings 855.2 855.2 855.2 Other comprehensive loss (75.7)(75.7)(75.7)Stock-based compensation expense 86.4 86.4 86.4 Exercise of stock options/vesting ofRSUs2.4(44.7)(44.7)(44.7)Sale of common stock0.1 11.6 11.6 11.6 Repurchase of common stock(1.9)(191.4)(191.4)(191.4)Cash dividends declared,$0.53 pershare (608.6)(608.6)(608.6)Balance,January 1,20231,148.5$1.1$67.2$(8,203.2)$(538.9)$(8,673.8)$7.9$(8,665.9)See Notes to Consolidated Financial Statements.7Table of ContentsSTARBUCKS CORPORATIONINDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote 1Summary of Significant Accounting Policies and Estimates9Note 2Derivative Financial Instruments9Note 3Fair Value Measurements13Note 4Inventories15Note 5Supplemental Balance Sheet and Statement of Earnings Information15Note 6Other Intangible Assets and Goodwill16Note 7Debt17Note 8Leases19Note 9Deferred Revenue20Note 10Equity21Note 11Employee Stock Plans21Note 12Earnings per Share22Note 13Commitments and Contingencies22Note 14Segment Reporting238Table of ContentsSTARBUCKS CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(unaudited)Note 1:Summary of Significant Accounting Policies and EstimatesFinancial Statement PreparationThe unaudited consolidated financial statements as of December 31,2023,and for the quarters ended December 31,2023 and January 1,2023,have beenprepared by Starbucks Corporation under the rules and regulations of the Securities and Exchange Commission(“SEC”).In the opinion of management,thefinancial information for the quarters ended December 31,2023 and January 1,2023 reflects all adjustments and accruals,which are of a normal recurringnature,necessary for a fair presentation of the financial position,results of operations,and cash flows for the interim periods.In this Quarterly Report on Form10-Q(“10-Q”),Starbucks Corporation is referred to as“Starbucks,”the“Company,”“we,”“us,”or“our.”Segment information is prepared on the same basis that our management reviews financial information for operational decision-making purposes.The financial information as of October 1,2023 is derived from our audited consolidated financial statements and notes for the fiscal year ended October 1,2023(“fiscal 2023”)included in Item 8 in the fiscal 2023 Annual Report on Form 10-K(“10-K”).The information included in this 10-Q should be read inconjunction with the footnotes and managements discussion and analysis of the consolidated financial statements in the 10-K.The results of operations for the quarter ended December 31,2023 are not necessarily indicative of the results of operations that may be achieved for the entirefiscal year ending September 29,2024(“fiscal 2024”).Recent Accounting Pronouncements Not Yet AdoptedIn November 2023,the Financial Accounting Standards Board(“FASB”)issued guidance expanding segment disclosure requirements.The amendmentsrequire enhanced disclosure for certain segment items and required disclosure on how management uses reported measures to assess segment performance.Theamendments do not change how segments are determined,aggregated,or how thresholds are applied to determine reportable segments.We expect to adopt theguidance for the fiscal year ending September 28,2025.We are currently evaluating the expanded disclosure requirements and do not expect the adoption ofthe amendments to have a material impact on our consolidated financial statements.In December 2023,the FASB issued guidance expanding disclosure requirements related to income taxes.The amendments require enhanced jurisdictionaldisclosures for the income tax rate reconciliation and related to cash income taxes paid.Additionally,specific disclosures related to unrecognized tax benefitsand indefinite reinvestment assertions were removed.The amendments are effective for our fiscal year ending September 27,2026.While we are stillevaluating the specific impacts and timing of adoption,we anticipate this guidance will have a significant impact on our annual income tax disclosures.Note 2:Derivative Financial InstrumentsInterest RatesFrom time to time,we enter into designated cash flow hedges to manage the variability in cash flows due to changes in benchmark interest rates.We enter intointerest rate swap agreements,including forward-starting interest rate swaps and treasury locks,settled in cash based upon the difference between an agreed-upon benchmark rate and the prevailing benchmark rate at settlement.These agreements are generally settled around the time of the pricing of the related debt.Each derivative agreements gain or loss is recorded in accumulated other comprehensive income(“AOCI”)and is subsequently reclassified to interest expenseover the life of the related debt.To hedge the exposure to changes in the fair value of our fixed-rate debt,we enter into interest rate swap agreements,which are designated as fair value hedges.The changes in fair values of these derivative instruments and the offsetting changes in fair values of the underlying hedged debt due to changes in the relevantbenchmark interest rates are recorded in interest expense.Refer to Note 7,Debt,for additional information on our long-term debt.9Table of ContentsForeign CurrencyTo reduce cash flow volatility from foreign currency fluctuations,we enter into forward and swap contracts to hedge portions of cash flows of anticipatedintercompany royalty payments,inventory purchases,and intercompany borrowing and lending activities.The resulting gains and losses from these derivativesare recorded in AOCI and subsequently reclassified to revenue,product and distribution costs,or interest income and other,net,respectively,when the hedgedexposures affect net earnings.From time to time,we may enter into financial instruments,including,but not limited to,forward and swap contracts or foreign currency-denominated debt,tohedge the currency exposure of our net investments in certain international operations.The resulting gains and losses from these derivatives are recorded inAOCI and are subsequently reclassified to net earnings when the hedged net investment is either sold or substantially liquidated.Gains and losses from thesederivatives representing hedged components excluded from the assessment of effectiveness are amortized over the life of the hedging instrument using asystematic and rational method and recognized in interest expense.Foreign currency forward and swap contracts not designated as hedging instruments are used to mitigate the foreign exchange risk of certain other balancesheet items.Gains and losses from these derivatives are largely offset by the financial impact of translating foreign currency-denominated payables andreceivables,and these gains and losses are recorded in interest income and other,net.CommoditiesDepending on market conditions,we may enter into coffee forward contracts,futures contracts,and collars to hedge anticipated cash flows under our price-to-be-fixed green coffee contracts,which are described further in Note 4,Inventories,or our longer-dated forecasted coffee demand where underlying fixed priceand price-to-be-fixed contracts are not yet available.The resulting gains and losses are recorded in AOCI and are subsequently reclassified to product anddistribution costs when the hedged exposure affects net earnings.Depending on market conditions,we may also enter into dairy forward contracts and futures contracts to hedge a portion of anticipated cash flows under ourdairy purchase contracts and our forecasted dairy demand.The resulting gains or losses are recorded in AOCI and are subsequently reclassified to product anddistribution costs when the hedged exposure affects net earnings.Cash flow hedges related to anticipated transactions are designated and documented at the inception of each hedge.Cash flows from hedging transactions areclassified in the same categories as the cash flows from the respective hedged items.For de-designated cash flow hedges in which the underlying transactionsare no longer probable of occurring,the related accumulated derivative gains or losses are recognized in interest income and other,net on our consolidatedstatements of earnings.These derivatives may be accounted for prospectively as non-designated derivatives until maturity,re-designated to new hedgingrelationships,or terminated early.We continue to believe transactions related to our other designated cash flow hedges are probable to occur.To mitigate the price uncertainty of a portion of our future purchases,including diesel fuel and other commodities,we enter into swap contracts,futures,andcollars that are not designated as hedging instruments.The resulting gains and losses are recorded in interest income and other,net to help offset pricefluctuations on our beverage,food,packaging,and transportation costs,which are included in product and distribution costs on our consolidated statements ofearnings.10Table of ContentsGains and losses on derivative contracts and foreign currency-denominated debt designated as hedging instruments included in AOCI and expected to bereclassified into earnings within 12 months,net of tax(in millions):Net Gains/(Losses)Included in AOCINet Gains/(Losses)Expectedto be Reclassified from AOCIinto Earnings within 12MonthsOutstanding Contract/DebtRemaining Maturity(Months)Dec 31,2023Oct 1,2023Cash Flow Hedges:Coffee$11.9$(78.1)$3.2 7Cross-currency swaps(0.1)(0.6)11Dairy(2.0)(1.8)(2.0)8Foreign currency-other11.7 39.6 10.1 33Interest rates(5.8)(6.6)(3.0)0Net Investment Hedges:Cross-currency swaps85.5 87.1 111Foreign currency16.0 16.0 0Foreign currency debt116.2 140.2 3Pre-tax gains and losses on derivative contracts and foreign currency-denominated long-term debt designated as hedging instruments recognized in othercomprehensive income(“OCI”)and reclassifications from AOCI to earnings(in millions):Quarter EndedGains/(Losses)Recognized inOCI Before ReclassificationsGains/(Losses)Reclassified fromAOCI to EarningsLocation of gain/(loss)Dec 31,2023Jan 1,2023Dec 31,2023Jan 1,2023Cash Flow Hedges:Coffee$64.3$(119.4)$(40.4)$96.7 Product and distribution costsCross-currency swaps(1.6)(11.7)0.6(2.7)Interest expense(2.7)(9.1)Interest income and other,netDairy(1.9)(3.6)(1.6)(1.5)Product and distribution costsForeign currency-other(25.4)(46.0)8.8 8.0 Licensed stores revenue2.8 2.2 Product and distribution costs 0.2 Interest income and other,netInterest rates (1.0)(0.5)Interest expenseNet Investment Hedges:Cross-currency swaps 6.6(14.0)8.9 5.3 Interest expenseForeign currency debt(31.8)(50.6)Gains and losses recognized in earnings relate to components excluded from the assessment of effectiveness.Pre-tax gains and losses on non-designated derivatives and designated fair value hedging instruments and the related fair value hedged item recognized inearnings(in millions):Gains/(Losses)Recognized in EarningsLocation of gain/(loss)recognized in earningsQuarter Ended Dec 31,2023Jan 1,2023Non-Designated Derivatives:Foreign currency-otherInterest income and other,net$(2.4)$(11.6)CoffeeInterest income and other,net(5.5)Diesel fuel and other commoditiesInterest income and other,net(0.7)(0.2)Fair Value Hedges:Interest rate swapsInterest expense11.1(1.6)Long-term debt(hedged item)Interest expense(14.3)(3.3)(1)(1)11Table of ContentsNotional amounts of outstanding derivative contracts(in millions):Dec 31,2023Oct 1,2023Coffee$212$266 Cross-currency swaps1,234 1,076 Dairy47 71 Diesel fuel and other commodities9 7 Foreign currency-other1,149 1,164 Interest rate swaps350 1,100 Fair value of outstanding derivative contracts(in millions)including the location of the asset and/or liability on the consolidated balance sheets:Derivative AssetsBalance Sheet LocationDec 31,2023Oct 1,2023Designated Derivative Instruments:Cross-currency swapsPrepaid expenses and other current assets$13.7$Other long-term assets108.5 130.1 DairyPrepaid expenses and other current assets0.1 0.4 Foreign currency-otherPrepaid expenses and other current assets18.0 32.0 Other long-term assets10.7 22.9 Interest rate swapsPrepaid expenses and other current assets 0.4 Non-designated Derivative Instruments:Diesel fuel and other commoditiesPrepaid expenses and other current assets 0.7 Foreign currencyPrepaid expenses and other current assets5.4 7.5 Derivative LiabilitiesBalance Sheet LocationDec 31,2023Oct 1,2023Designated Derivative Instruments:Cross-currency swapsOther long-term liabilities$0.8$DairyAccrued liabilities0.9 1.1 Foreign currency-otherAccrued liabilities7.3 2.0 Other long-term liabilities7.2 Interest rate swapsOther long-term liabilities30.4 41.4 Non-designated Derivative Instruments:DairyAccrued liabilities0.3 Diesel fuel and other commoditiesAccrued liabilities0.4 Foreign currencyAccrued liabilities1.6 0.5 Other long-term liabilities 1.8 The following amounts were recorded on the consolidated balance sheets related to fixed-to-floating interest rate swaps designated in fair value hedgingrelationships(in millions):Carrying amount of hedged itemCumulative amount of fair value hedging adjustmentincluded in the carrying amountDec 31,2023Oct 1,2023Dec 31,2023Oct 1,2023Location on the balance sheetLong-term debt$324.2$1,060.0$(25.8)$(40.0)Balance as of October 1,2023 includes$750 million in Senior Notes that matured on October 1,2023 but remained in current portion of long-term debt onthe consolidated balance sheet as the debt repayment was not made until the first day of fiscal 2024.Additional disclosures related to cash flow gains and losses included in AOCI,as well as subsequent reclassifications to earnings,are included in Note 10,Equity.(1)(1)12Table of ContentsNote 3:Fair Value MeasurementsAssets and liabilities measured at fair value on a recurring basis(in millions):Fair Value Measurements at Reporting Date Using Balance atDecember 31,2023Quoted Prices in ActiveMarkets for Identical Assets(Level 1)Significant OtherObservable Inputs(Level 2)Significant Unobservable Inputs(Level 3)Assets:Cash and cash equivalents$3,000.4$3,000.4$Short-term investments:Available-for-sale debt securitiesCorporate debt securities65.1 65.1 U.S.government treasury securities10.4 10.4 Foreign government obligations4.0 4.0 Mortgage and other asset-backedsecurities0.3 0.3 Total available-for-sale debt securities79.8 10.4 69.4 Structured deposits225.5 225.5 Marketable equity securities77.7 77.7 Total short-term investments383.0 88.1 294.9 Prepaid expenses and other current assets:Derivative assets37.2 37.2 Long-term investments:Available-for-sale debt securitiesCorporate debt securities89.2 78.9 10.3 Mortgage and other asset-backedsecurities50.0 50.0 State and local government obligations1.4 1.4 U.S.government treasury securities99.2 99.2 Total long-term investments239.8 99.2 130.3 10.3 Other long-term assets:Derivative assets119.2 119.2 Structured deposits0.1 0.1 Total assets$3,779.7$3,187.7$581.7$10.3 Liabilities:Accrued liabilities:Derivative liabilities$10.5$10.5$Other long-term liabilities:Derivative liabilities38.4 38.4 Total liabilities$48.9$48.9$13Table of Contents Fair Value Measurements at Reporting Date Using Balance atOctober 1,2023Quoted Prices in ActiveMarkets for IdenticalAssets(Level 1)Significant OtherObservable Inputs(Level 2)SignificantUnobservable Inputs(Level 3)Assets:Cash and cash equivalents$3,551.5$3,551.5$Short-term investments:Available-for-sale debt securitiesCorporate debt securities64.0 64.0 U.S.government treasury securities2.8 2.8 Foreign government obligations3.9 3.9 Total available-for-sale debt securities70.7 2.8 67.9 Structured deposits261.2 261.2 Marketable equity securities69.6 69.6 Total short-term investments401.5 72.4 329.1 Prepaid expenses and other current assets:Derivative assets41.0 41.0 Long-term investments:Available-for-sale debt securitiesCorporate debt securities91.1 91.1 Mortgage and other asset-backed securities50.2 50.2 State and local government obligations1.3 1.3 U.S.government treasury securities104.7 104.7 Total long-term investments247.3 104.7 142.6 Other long-term assets:Derivative assets153.0 153.0 Total assets$4,394.3$3,728.6$665.7$Liabilities:Accrued liabilities:Derivative liabilities$3.6$3.6$Other long-term liabilities:Derivative liabilities43.2 43.2 Total liabilities$46.8$46.8$There were no material transfers between levels,and there was no significant activity within Level 3 instruments during the periods presented.The fair valuesof any financial instruments presented above exclude the impact of netting assets and liabilities when a legally enforceable master netting agreement exists.Gross unrealized holding gains and losses on available-for-sale debt securities,structured deposits,and marketable equity securities were not material as ofDecember 31,2023 and October 1,2023.Assets and Liabilities Measured at Fair Value on a Nonrecurring BasisAssets and liabilities recognized or disclosed at fair value on the consolidated financial statements on a nonrecurring basis include items such as property,plantand equipment,ROU assets,goodwill and other intangible assets,equity and other investments,and other assets.These assets are measured at fair value ifdetermined to be impaired.The estimated fair value of our long-term debt based on the quoted market price(Level 2)is included at Note 7,Debt.There were no material fair valueadjustments during the quarter ended December 31,2023 and January 1,2023.14Table of ContentsNote 4:Inventories(in millions):Dec 31,2023Oct 1,2023Coffee:Unroasted$632.7$747.7 Roasted251.2 280.3 Other merchandise held for sale361.5 364.6 Packaging and other supplies400.9 413.8 Total$1,646.3$1,806.4 Other merchandise held for sale includes,among other items,serveware,food,and tea.Inventory levels vary due to seasonality,commodity market supply,andprice fluctuations.As of December 31,2023,we had committed to purchasing green coffee totaling$396.4 million under fixed-price contracts and an estimated$843.7 millionunder price-to-be-fixed contracts.A portion of our price-to-be-fixed contracts are effectively fixed through the use of futures.See Note 2,Derivative FinancialInstruments,for further discussion.Price-to-be-fixed contracts are purchase commitments whereby the quality,quantity,delivery period,and other negotiatedterms are agreed upon,but the date,and therefore the price,at which the base“C”coffee commodity price component will be fixed has not yet beenestablished.For most contracts,either Starbucks or the seller has the option to“fix”the base“C”coffee commodity price prior to the delivery date.For othercontracts,Starbucks and the seller may agree upon pricing parameters determined by the base“C”coffee commodity price.Until prices are fixed,we estimatethe total cost of these purchase commitments.We believe,based on established relationships with our suppliers and continuous monitoring,the risk of non-delivery on these purchase commitments is remote.Note 5:Supplemental Balance Sheet and Statement of Earnings Information(in millions):Property,Plant and Equipment,netDec 31,2023Oct 1,2023Land$46.1$46.1 Buildings678.4 666.5 Leasehold improvements10,321.7 10,133.7 Store equipment3,432.6 3,332.5 Roasting equipment886.7 859.4 Furniture,fixtures and other1,717.4 1,664.5 Work in progress610.3 607.5 Property,plant and equipment,gross17,693.2 17,310.2 Accumulated depreciation(10,081.5)(9,923.1)Property,plant and equipment,net$7,611.7$7,387.1 Accrued LiabilitiesDec 31,2023Oct 1,2023Accrued occupancy costs$84.7$86.7 Accrued dividends payable645.2 651.2 Accrued capital and other operating expenditures745.9 771.7 Insurance reserves251.0 233.5 Income taxes payable374.6 189.3 Accrued business taxes225.5 212.7 Total accrued liabilities$2,326.9$2,145.1 15Table of ContentsStore Operating ExpensesQuarter EndedDec 31,2023Jan 1,2023Wages and benefits$2,209.3$2,215.7 Occupancy costs745.7 671.5 Other expenses896.5 778.1 Total store operating expenses$3,851.5$3,665.3 Note 6:Other Intangible Assets and GoodwillIndefinite-Lived Intangible Assets(in millions)Dec 31,2023Oct 1,2023Trade names,trademarks and patents$79.5$79.4 Finite-Lived Intangible AssetsDec 31,2023Oct 1,2023(in millions)Gross CarryingAmountAccumulatedAmortizationNet CarryingAmountGross CarryingAmountAccumulatedAmortizationNet CarryingAmountAcquired and reacquired rights$990.6$(990.6)$957.6$(957.6)$Acquired trade secrets and processes27.6(27.6)27.6(27.6)Trade names,trademarks and patents131.1(96.7)34.4 131.0(91.9)39.1 Licensing agreements13.8(11.9)1.9 13.0(11.0)2.0 Other finite-lived intangible assets20.6(20.6)20.1(20.1)Total finite-lived intangible assets$1,183.7$(1,147.4)$36.3$1,149.3$(1,108.2)$41.1 Amortization expense for finite-lived intangible assets was$5.1 million for the quarter ended December 31,2023 and$5.6 million for the quarter endedJanuary 1,2023.Estimated future amortization expense as of December 31,2023(in millions):Fiscal YearTotal2024(excluding the quarter ended December 31,2023)$14.9 202514.1 20262.1 20271.8 20281.2 Thereafter2.2 Total estimated future amortization expense$36.3 GoodwillChanges in the carrying amount of goodwill by reportable operating segment(in millions):North AmericaInternationalChannel DevelopmentCorporate and OtherTotalGoodwill balance at October 1,2023$491.5$2,691.1$34.7$1.0$3,218.3 Other0.5 84.0 84.5 Goodwill balance at December 31,2023$492.0$2,775.1$34.7$1.0$3,302.8“Other”consists of changes in the goodwill balance resulting from foreign currency translation.(1)(1)16Table of ContentsNote 7:DebtRevolving Credit FacilityOur$3.0 billion unsecured five-year revolving credit facility(the“2021 credit facility”),of which$150.0 million may be used for issuances of letters of credit,is currently set to mature on September 16,2026.The 2021 credit facility is available for working capital,capital expenditures,and other corporate purposes,including acquisitions and share repurchases.We have the option,subject to negotiation and agreement with the related banks,to increase the maximumcommitment amount by an additional$1.0 billion.Borrowings under the 2021 credit facility,which was most recently amended in April 2023,will bear interest at a variable rate based on Term SOFR,and,forU.S.dollar-denominated loans under certain circumstances,a Base Rate(as defined in the 2021 credit facility),in each case plus an applicable margin.Theapplicable margin is based on the Companys long-term credit ratings assigned by the Moodys and Standard&Poors rating agencies.The“Base Rate”is thehighest of(i)the Federal Funds Rate(as defined in the 2021 credit facility)plus 0.500%,(ii)Bank of Americas prime rate,and(iii)Term SOFR plus 1.000%.Term SOFR means the forward-looking SOFR term rate administrated by the Chicago Mercantile Exchange plus a SOFR Adjustment of 0.100%.The 2021 credit facility contains provisions requiring us to maintain compliance with certain covenants,including a minimum fixed charge coverage ratio,which measures our ability to cover financing expenses.As of December 31,2023,we were in compliance with all applicable covenants.No amounts wereoutstanding under our 2021 credit facility as of December 31,2023 or October 1,2023.Short-term DebtUnder our commercial paper program,we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of$3.0billion,with individual maturities that may vary but not exceed 397 days from the date of issue.Amounts outstanding under the commercial paper program arerequired to be backstopped by available commitments under our 2021 credit facility.The proceeds from borrowings under our commercial paper program maybe used for working capital needs,capital expenditures,and other corporate purposes,including,but not limited to,business expansion,payment of cashdividends on our common stock,and share repurchases.As of December 31,2023,we had$300.0 million in borrowings outstanding under the program.As ofOctober 1,2023,we had no borrowings outstanding under this program.Additionally,we hold the following Japanese yen-denominated credit facilities that are available for working capital needs and capital expenditures within ourJapanese market:A 5.0 billion,or$35.4 million,credit facility is currently set to mature on December 30,2024.Borrowings under this credit facility are subject toterms defined within the facility and will bear interest at a variable rate based on Tokyo Interbank Offered Rate(“TIBOR”)plus an applicable marginof 0.400%.A 10.0 billion,or$70.7 million,credit facility is currently set to mature on March 27,2024.Borrowings under this credit facility are subject to termsdefined within the facility and will bear interest at a variable rate based on TIBOR plus an applicable margin of 0.300%.As of December 31,2023,we had 7.0 billion,or$49.5 million,of borrowings outstanding under these credit facilities.As of October 1,2023,we had5.0 billion,or$33.5 million,of borrowings outstanding under these credit facilities.17Table of ContentsLong-term DebtComponents of long-term debt including the associated interest rates and related estimated fair values by calendar maturity(in millions,except interest rates):Dec 31,2023Oct 1,2023Stated Interest RateEffective InterestRateIssuanceAmountEstimated FairValueAmountEstimated FairValueOctober 2023 notes$750.0$749.9 3.850%2.859bruary 2024 notes500.0 500.0 500.0 504.2 5.998%6.229%March 2024 notes601.1 601.0 569.3 569.3 0.372%0.462%August 2025 notes1,250.0 1,227.2 1,250.0 1,210.5 3.800%3.721bruary 2026 notes1,000.0 1,004.6 1,000.0 985.5 4.750%4.788%June 2026 notes500.0 475.5 500.0 463.5 2.450%2.511%March 2027 notes500.0 462.5 500.0 446.1 2.000%2.058%March 2028 notes600.0 575.4 600.0 554.7 3.500%3.529%November 2028 notes750.0 739.5 750.0 704.5 4.000%3.958%August 2029 notes1,000.0 964.1 1,000.0 904.1 3.550%3.840%March 2030 notes750.0 659.1 750.0 615.1 2.250%3.084%November 2030 notes1,250.0 1,105.0 1,250.0 1,027.1 2.550%2.582bruary 2032 notes1,000.0 896.1 1,000.0 828.0 3.000%3.155bruary 2033 notes500.0 510.2 500.0 470.7 4.800%3.798%June 2045 notes350.0 312.8 350.0 275.3 4.300%4.348cember 2047 notes500.0 403.7 500.0 354.0 3.750%3.765%November 2048 notes1,000.0 911.3 1,000.0 799.0 4.500%4.504%August 2049 notes1,000.0 909.8 1,000.0 792.7 4.450%4.447%March 2050 notes500.0 374.6 500.0 328.6 3.350%3.362%November 2050 notes1,250.0 969.4 1,250.0 843.4 3.500%3.528%Total14,801.1 13,601.8 15,519.3 13,426.2 Aggregate debt issuance costs andunamortized premium/(discount),net(109.7)(113.1)Hedge accounting fair value adjustment(25.8)(40.0)Total$14,665.6$15,366.2 Includes the effects of the amortization of any premium or discount and any gain or loss upon settlement of related treasury locks or forward-startinginterest rate swaps utilized to hedge interest rate risk prior to the debt issuance.Amount includes the change in fair value due to changes in benchmark interest rates related to hedging our October 2023 notes and$350 million of ourAugust 2029 notes.Refer to Note 2,Derivative Financial Instruments,for additional information on our interest rate swap designated as a fair value hedge.Floating rate notes that bear interest at a rate equal to Compounded SOFR(as defined in the February 2024 notes)plus 0.420%,resulting in a statedinterest rate of 5.998%at December 31,2023.Japanese yen-denominated long-term debt.(1)(2)(3)(4)(2)(2)(1)(2)(3)(4)18Table of ContentsThe following table summarizes our long-term debt maturities as of December 31,2023 by fiscal year(in millions):Fiscal YearTotal2024$1,101.1 20251,250.0 20261,500.0 2027500.0 2028600.0 Thereafter9,850.0 Total$14,801.1 Note 8:LeasesThe components of lease costs(in millions):Quarter EndedDec 31,2023Jan 1,2023Operating lease costs$417.4$384.8 Variable lease costs271.9 235.3 Short-term lease costs7.7 7.0 Total lease costs$697.0$627.1 Includes immaterial amounts of sublease income and rent concessions.The following table includes supplemental information(in millions):Quarter EndedDec 31,2023Jan 1,2023Cash paid related to operating lease liabilities$428.6$404.1 Operating lease liabilities arising from obtaining right-of-use assets470.9 367.3 Dec 31,2023Jan 1,2023Weighted-average remaining operating lease term8.6 years8.5 yearsWeighted-average operating lease discount rate3.1%2.7%Finance lease assets are recorded in property,plant and equipment,net with the corresponding lease liabilities included in accrued liabilities and other long-term liabilities on the consolidated balance sheet.There were no material finance leases as of December 31,2023 and October 1,2023.Minimum future maturities of operating lease liabilities(in millions):Fiscal YearTotal2024(excluding the quarter ended December 31,2023)$1,214.9 20251,587.2 20261,465.0 20271,281.1 20281,076.3 Thereafter4,260.5 Total lease payments10,885.0 Less imputed interest(1,436.6)Total$9,448.4 As of December 31,2023,we have entered into operating leases that have not yet commenced of$1.5 billion,primarily related to real estate leases.Theseleases will commence between fiscal year 2024 and fiscal year 2027 with lease terms ranging from two to twenty years.(1)(1)19Table of ContentsNote 9:Deferred RevenueOur deferred revenue primarily consists of the prepaid royalty from Nestl,for which we have continuing performance obligations to support the Global CoffeeAlliance,our unredeemed stored value card liability and unredeemed loyalty points(“Stars”)associated with our loyalty program.As of December 31,2023 and October 1,2023,the current and long-term deferred revenue related to the Nestl up-front payment was$177.0 million and$6.0billion,respectively.During each of the quarters ended December 31,2023 and January 1,2023,we recognized$44.1 million of prepaid royalty revenuerelated to Nestl.Changes in our deferred revenue balance related to our stored value cards and loyalty program(in millions):Quarter Ended December 31,2023TotalStored value cards and loyalty program at October 1,2023$1,567.5 Revenue deferred-card activations,card reloads and Stars earned4,687.2 Revenue recognized-card and Stars redemptions and breakage(4,098.4)Other13.4 Stored value cards and loyalty program at December 31,2023$2,169.7 Quarter Ended January 1,2023TotalStored value cards and loyalty program at October 2,2022$1,503.0 Revenue deferred-card activations,card reloads and Stars earned4,223.4 Revenue recognized-card and Stars redemptions and breakage(3,714.1)Other13.3 Stored value cards and loyalty program at January 1,2023$2,025.6“Other”primarily consists of changes in the stored value cards and loyalty program balances resulting from foreign currency translation.As of December 31,2023 and January 1,2023,approximately$2.0 billion and$1.9 billion,respectively,of these amounts were current.(1)(2)(1)(2)(1)(2)20Table of ContentsNote 10:EquityChanges in AOCI by component,net of tax(in millions):Quarter Ended Available-for-SaleDebt Securities Cash FlowHedges Net InvestmentHedgesTranslationAdjustment andOtherTotalDecember 31,2023Net gains/(losses)in AOCI,beginning of period$(12.3)$(47.5)$243.3$(961.7)$(778.2)Net gains/(losses)recognized in OCI before reclassifications4.2 33.6(18.9)178.2 197.1 Net(gains)/losses reclassified from AOCI to earnings0.2 29.6(6.7)23.1 Other comprehensive income/(loss)attributable to Starbucks4.4 63.2(25.6)178.2 220.2 Other comprehensive income/(loss)attributable to NCI 0.2 0.2 Net gains/(losses)in AOCI,end of period$(7.9)$15.7$217.7$(783.3)$(557.8)January 1,2023Net gains/(losses)in AOCI,beginning of period$(15.5)$199.0$209.1$(855.8)$(463.2)Net gains/(losses)recognized in OCI before reclassifications1.5(151.2)(48.3)208.9 10.9 Net(gains)/losses reclassified from AOCI to earnings0.1(82.7)(4.0)(86.6)Other comprehensive income/(loss)attributable to Starbucks1.6(233.9)(52.3)208.9(75.7)Net gains/(losses)in AOCI,end of period$(13.9)$(34.9)$156.8$(646.9)$(538.9)Impact of reclassifications from AOCI on the consolidated statements of earnings(in millions):Quarter EndedAOCIComponentsAmounts Reclassified from AOCIAffected Line Item inthe Statements of EarningsDec 31,2023Jan 1,2023Gains/(losses)on available-for-sale debt securities$(0.3)$(0.2)Interest income and other,netGains/(losses)on cash flow hedges(33.5)93.3 Please refer to Note 2,Derivative Financial Instrumentsfor additional information.Gains/(losses)on net investment hedges8.9 5.3 Interest expense(24.9)98.4 Total before tax1.8(11.8)Tax expense$(23.1)$86.6 Net of taxIn addition to 2.4 billion shares of authorized common stock with$0.001 par value per share,we have 7.5 million shares of authorized preferred stock,none ofwhich was outstanding as of December 31,2023.During the quarters ended December 31,2023 and January 1,2023,we repurchased 12.8 million and 1.9 million shares of common stock on the open marketfor$1,250.1 million and$191.4 million,respectively.As of December 31,2023,29.8 million shares remained available for repurchase under currentauthorizations.During the first quarter of fiscal 2024,our Board of Directors approved a quarterly cash dividend to shareholders of$0.57 per share to be paid on February 23,2024 to shareholders of record as of the close of business on February 9,2024.Note 11:Employee Stock PlansAs of December 31,2023,there were 84.9 million shares of common stock available for issuance pursuant to future equity-based compensation awards and10.1 million shares available for issuance under our employee stock purchase plan.21Table of ContentsStock-based compensation expense recognized in the consolidated statements of earnings(in millions):Quarter Ended Dec 31,2023Jan 1,2023Restricted Stock Units(“RSUs”)$94.8$85.0 Options 0.1 Total stock-based compensation expense$94.8$85.1 Stock option and RSU transactions from October 1,2023 through December 31,2023(in millions):Stock OptionsRSUsOptions outstanding/Nonvested RSUs,October 1,20232.0 7.3 Granted 3.9 Options exercised/RSUs vested(0.4)(2.8)Forfeited/expired(0.2)Options outstanding/Nonvested RSUs,December 31,20231.6 8.2 Total unrecognized stock-based compensation expense,net of estimated forfeitures,as of December 31,2023$380.5 Note 12:Earnings per ShareCalculation of net earnings per common share(“EPS”)basic and diluted(in millions,except EPS):Quarter EndedDec 31,2023Jan 1,2023Net earnings attributable to Starbucks$1,024.4$855.2 Weighted average common shares outstanding(for basic calculation)1,136.6 1,148.5 Dilutive effect of outstanding common stock options and RSUs4.0 4.4 Weighted average common and common equivalent shares outstanding(for diluted calculation)1,140.6 1,152.9 EPS basic$0.90$0.74 EPS diluted$0.90$0.74 Potential dilutive shares consist of the incremental common shares issuable upon the exercise of outstanding stock options(both vested and non-vested)andunvested RSUs,calculated using the treasury stock method.The calculation of dilutive shares outstanding excludes anti-dilutive stock options or unvestedRSUs,which were immaterial in the periods presented.Note 13:Commitments and ContingenciesLegal ProceedingsStarbucks is involved in various legal proceedings arising in the ordinary course of business,including litigation matters associated with labor union organizingefforts and certain employment litigation cases that have been certified as class or collective actions,but is not currently a party to any legal proceeding thatmanagement believes could have a material adverse effect on our consolidated financial position,results of operations,or cash flows.While we are closelymonitoring the operational and financial impacts of labor union organizing efforts on our business,as of the date of this filing,we believe the risk of a materialcontingent loss associated with these litigation matters is remote.Refer to the Risk Factors in Part I,Item 1A of our most recently filed 10-K for furtherdiscussion of potential risks to our brand and related impacts on our financial results.22Table of ContentsNote 14:Segment ReportingSegment information is prepared on the same basis that our chief executive officer,who is our chief operating decision maker,manages the segments,evaluatesfinancial results,and makes key operating decisions.Consolidated revenue mix by product type(in millions):Quarter EndedDec 31,2023Jan 1,2023Beverage$5,695.9 60%$5,173.0 59%Food1,757.1 19%1,565.9 18%Other1,972.3 21%1,975.0 23%Total$9,425.3 100%$8,713.9 100%“Beverage”represents sales within our company-operated stores.“Food”includes sales within our company-operated stores.“Other”primarily consists of packaged and single-serve coffees and teas,royalty and licensing revenues,serveware,and beverage-related ingredients,among other items.The tables below present financial information for our reportable operating segments and Corporate and Other segment(in millions):Quarter EndedNorth AmericaInternationalChannelDevelopmentCorporate andOtherTotalDecember 31,2023Total net revenues$7,120.7$1,846.3$448.0$10.3$9,425.3 Depreciation and amortization expenses250.4 84.1 30.8 365.3 Income from equity investees 0.2 55.7 55.9 Operating income/(loss)$1,520.8$241.5$209.7$(486.6)$1,485.4 January 1,2023Total net revenues$6,551.3$1,680.1$478.2$4.3$8,713.9 Depreciation and amortization expenses216.9 81.5 28.7 327.1 Income from equity investees 0.5 57.3 57.8 Operating income/(loss)$1,212.4$240.4$226.3$(426.0)$1,253.1(1)(2)(3)(1)(2)(3)23Table of ContentsItem 2.Managements Discussion and Analysis of Financial Condition and Results of OperationsCAUTIONARY STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995Certain statements contained herein are“forward-looking”statements within the meaning of applicable securities laws and regulations.Generally,thesestatements can be identified by the use of words such as“aim,”“anticipate,”“believe,”“continue,”“could,”“estimate,”“expect,”“feel,”“forecast,”“intend,”“may,”“outlook,”“plan,”“potential,”“predict,”“project,”“seek,”“should,”“will,”“would,”and similar expressions intended to identifyforward-looking statements,although not all forward-looking statements contain these identifying words.By their nature,forward-looking statements involverisks,uncertainties,and other factors(many beyond our control)that could cause our actual results to differ materially from our historical experience or fromour current expectations or projections.Our forward-looking statements,and the risks and uncertainties related thereto,include,but are not limited to,thosedescribed under the“Risk Factors”and“Managements Discussion and Analysis of Financial Condition and Results of Operations”sections of our mostrecently filed 10-K and 10-Q and in other filings with the SEC,as well as:our ability to preserve,grow,and leverage our brands,including the risk of negative responses by consumers(such as boycotts or negative publicitycampaigns)or governmental actors(such as retaliatory legislative treatment)who object to certain actions taken or not taken by the Company,whichresponses could adversely affect our brand value;the acceptance of the Companys products and changes in consumer preferences,consumption,or spending behavior and our ability to anticipate orreact to them;shifts in demographic or health and wellness trends;or unfavorable consumer reaction to new products,platforms,reformulations,orother innovations;our anticipated operating expenses,including our anticipated total capital expenditures;the costs associated with,and the successful execution and effects of,our existing and any future business opportunities,expansions,initiatives,strategies,investments,and plans,including our Triple Shot Reinvention with Two Pumps Plan(“Reinvention”);the impacts of partner investments and changes in the availability and cost of labor including any union organizing efforts and our responses to suchefforts;the ability of our business partners,suppliers,and third-party providers to fulfill their responsibilities and commitments;higher costs,lower quality,or unavailability of coffee,dairy,energy,water,raw materials,or product ingredients;the impact of significant increases in logistics costs;a worsening in the terms and conditions upon which we engage with our manufacturers and source suppliers,whether resulting from broader local orglobal conditions,or dynamics specific to our relationships with such parties;unfavorable global or regional economic conditions and related economic slowdowns or recessions,low consumer confidence,high unemployment,weak credit or capital markets,budget deficits,burdensome government debt,austerity measures,higher interest rates,higher taxes,politicalinstability,higher inflation,or deflation;inherent risks of operating a global business including geopolitical instability;failure to attract or retain key executive or partner talent or successfully transition executives;the potential negative effects of incidents involving food or beverage-borne illnesses,tampering,adulteration,contamination,or mislabeling;negative publicity related to our Company,products,brands,marketing,executive leadership,partners,Board of Directors,founder,operations,business performance,or prospects;potential negative effects of a material breach,failure,or corruption of our information technology systems or those of our direct and indirectbusiness partners,suppliers,or third-party providers,or failure to comply with personal data protection laws;our environmental,social,and governance(“ESG”)efforts and any reaction related thereto,such as the rise in opposition to ESG and inclusion anddiversity efforts;risks associated with acquisitions,dispositions,business partnerships,or investments such as acquisition integration,termination difficulties orcosts,or impairment in recorded value;the impact of foreign currency translation,particularly a stronger U.S.dollar;the impact of substantial competition from new entrants,consolidations by competitors,and other competitive activities,such as pricing actions(including price reductions,promotions,discounting,couponing,or free goods),marketing,category expansion,product introductions,or entry orexpansion in our geographic markets;the impact of changes in U.S.tax law and related guidance and regulations that may be implemented,including on tax rates;the impact of health epidemics,pandemics,or other public health events on our business and financial results,and the risk of negative economicimpacts and related regulatory measures or voluntary actions that may be put in place,including restrictions on business operations or socialdistancing requirements,and the duration and efficacy of such restrictions;failure to comply with anti-corruption laws,trade sanctions,and restrictions or similar laws or regulations;andthe impact of significant legal disputes and proceedings,or government investigations.In addition,many of the foregoing risks and uncertainties are,or could be,exacerbated by any worsening of the global business and economic environment.Aforward-looking statement is neither a prediction nor a guarantee of future events or circumstances,and those future events or circumstances may not occur.You should not place undue reliance on the forward-24Table of Contentslooking statements,which speak only as of the date of this report.We are under no obligation to update or alter any forward-looking statements,whether as aresult of new information,future events,or otherwise.This information should be read in conjunction with the unaudited consolidated financial statements and the notes included in Item 1 of Part I of this 10-Q andthe audited consolidated financial statements and notes,and Managements Discussion and Analysis of Financial Condition and Results of Operations(“MD&A”),contained in the 10-K filed with the SEC on November 17,2023.25Table of ContentsIntroduction and OverviewStarbucks is the premier roaster,marketer,and retailer of specialty coffee in the world,operating in 86 markets.As of December 31,2023,Starbucks had morethan 38,500 company-operated and licensed stores,an increase of 7%from the prior year.Additionally,we sell a variety of consumer-packaged goods,primarily through the Global Coffee Alliance established with Nestl and other partnerships and joint ventures.We have three reportable operating segments:1)North America,which is inclusive of the U.S.and Canada;2)International,which is inclusive of China,Japan,Asia Pacific,Europe,Middle East,Africa,Latin America,and the Caribbean;and 3)Channel Development.Unallocated corporate expenses are reportedwithin Corporate and Other.We believe our financial results and long-term growth model will continue to be driven by new store openings,comparable store sales growth,and operatingmargin management,underpinned by disciplined capital allocation.We believe these key operating metrics are useful to investors because management usesthese metrics to assess the growth of our business and the effectiveness of our marketing and operational strategies.Throughout this MD&A,we commonlydiscuss the following key operating metrics:New store openings and store countComparable store sales growthOperating marginComparable store sales growth represents the percentage change in sales in one period from the same prior year period for company-operated stores open for13 months or longer and excludes the impact of foreign currency translation.We analyze comparable store sales growth on a constant currency basis as thishelps identify underlying business trends,without distortion from the effects of currency movements.Stores that are temporarily closed or operating at reducedhours remain in comparable store sales while stores identified for permanent closure have been removed.Our fiscal year ends on the Sunday closest to September 30.Fiscal 2024 and 2023 include 52 weeks.All references to store counts,including data for new storeopenings,are reported net of store closures,unless otherwise noted.Starbucks results for the first quarter of fiscal 2024 continue to demonstrate the overall strength of our brand and efficiencies realized from Reinvention,despite certain headwinds.Consolidated net revenues increased 8%to$9.4 billion in the first quarter of fiscal 2024 compared to$8.7 billion in the first quarterof fiscal 2023,primarily driven by growth in our North America business and our International segment,largely related to lapping prior year COVID-19pandemic-related business disruptions in China.During the quarter ended December 31,2023,our global comparable store sales grew 5%,primarily driven by5%growth in the U.S.market and 7%growth internationally,demonstrating the endurance of the Starbucks brand globally.Consolidated operating marginincreased 140 basis points from the prior year to 15.8%,primarily driven by sales leverage and in-store operational efficiencies.These increases were partiallyoffset by increased investments in store partner wages and benefits,as well as higher general and administrative expenses,primarily in support of Reinvention.We anticipate these headwinds experienced in the first quarter of fiscal 2024,although transitory,may continue to impact the balance of our fiscal year.Despitethese transitory headwinds,we remain confident in our long-term growth and durable business model,as our Triple Shot Reinvention is unlocking multiplelevers to drive balanced earnings growth,as evidenced in our first quarter of fiscal 2024 results.Results of Operations(in millions)Revenues Quarter EndedDec 31,2023Jan 1,2023$Change%ChangeCompany-operated stores$7,755.2$7,083.5$671.7 9.5%Licensed stores1,192.1 1,119.5 72.6 6.5 Other478.0 510.9(32.9)(6.4)Total net revenues$9,425.3$8,713.9$711.4 8.2%For the quarter ended December 31,2023 compared with the quarter ended January 1,2023Total net revenues for the first quarter of fiscal 2024 increased$711 million,primarily due to higher revenues from company-operated stores($672 million).The growth of company-operated stores revenue was driven by a 5%increase in comparable store sales($369 million),attributable to a 3%increase incomparable transactions and a 2%increase in average ticket.Also contributing to company-operated stores revenue were incremental revenues from 1,475 netnew Starbuckscompany-operated 26Table of Contentsstores,or an 8%increase,over the past 12 months($326 million).Partially offsetting these increases was unfavorable foreign currency translation($30million).Licensed stores revenue increased$73 million contributing to the increase in total net revenues,driven by higher product and equipment sales to and royaltyrevenues from our licensees($64 million),primarily driven by revenues from 942 net new licensed store openings,or a 5%increase,over the past 12 months.Other revenues decreased$33 million,primarily due to a decline in revenue in the Global Coffee Alliance following the sale of our Seattles Best Coffee brandto Nestl in the second quarter of fiscal 2023($19 million)and lower revenue in our global ready-to-drink business($11 million).Operating Expenses Quarter EndedDec 31,2023Jan 1,2023$ChangeDec 31,2023Jan 1,2023As a%ofTotal Net RevenuesProduct and distribution costs$2,980.6$2,810.2$170.4 31.62.2%Store operating expenses3,851.5 3,665.3 186.2 40.9 42.1 Other operating expenses150.4 129.3 21.1 1.6 1.5 Depreciation and amortization expenses365.3 327.1 38.2 3.9 3.8 General and administrative expenses648.0 580.9 67.1 6.9 6.7 Restructuring and impairments 5.8(5.8)0.1 Total operating expenses7,995.8 7,518.6 477.2 84.8 86.3 Income from equity investees55.9 57.8(1.9)0.6 0.7 Operating income$1,485.4$1,253.1$232.3 15.8.4%Store operating expenses as a%of company-operated stores revenue49.7Q.7%For the quarter ended December 31,2023 compared with the quarter ended January 1,2023Product and distribution costs as a percentage of total net revenues decreased 60 basis points for the first quarter of fiscal 2024,primarily due to the impact ofincreased sales from pricing.Store operating expenses as a percentage of total net revenues decreased 120 basis points for the first quarter of fiscal 2024.Store operating expenses as apercentage of company-operated stores revenue decreased 200 basis points,primarily due to in-store operational efficiencies(approximately 210 basis points),and sales leverage(approximately 160 basis points).These were partially offset by increased investments in store partner wages and benefits(approximately130 basis points).Other operating expenses increased$21 million,primarily due to support costs in wages and benefits and marketing for our growing licensed markets.Depreciation and amortization expenses as a percentage of total net revenues increased 10 basis points,primarily due to higher capital investments in supportof our retail stores.General and administrative expenses increased$67 million,primarily due to investments in partner wages and benefits($33 million)and incrementalinvestments in technology in support of our Reinvention($32 million).The combination of these changes resulted in an overall increase in operating margin of 140 basis points for the first quarter of fiscal 2024.27Table of ContentsOther Income and Expenses Quarter EndedDec 31,2023Jan 1,2023$ChangeDec 31,2023Jan 1,2023As a%of TotalNet RevenuesOperating income$1,485.4$1,253.1$232.3 15.8.4%Interest income and other,net33.8 11.6 22.2 0.4 0.1 Interest expense(140.1)(129.7)(10.4)(1.5)(1.5)Earnings before income taxes1,379.1 1,135.0 244.1 14.6 13.0 Income tax expense354.7 279.8 74.9 3.8 3.2 Net earnings including noncontrolling interests1,024.4 855.2 169.2 10.9 9.8 Net earnings attributable to noncontrolling interests0.0 0.0 0.0 0.0 0.0 Net earnings attributable to Starbucks$1,024.4$855.2$169.2 10.9%9.8fective tax rate including noncontrolling interests25.7$.6%For the quarter ended December 31,2023 compared with the quarter ended January 1,2023Interest income and other,net increased$22 million and interest expense increased$10 million,both primarily due to higher interest rates in the current year.The effective tax rate for the quarter ended December 31,2023 was 25.7%compared to 24.6%for the same period in fiscal 2023.The increase was primarilydue to the accrual of foreign withholding taxes related to the current-year earnings of certain foreign subsidiaries(approximately 80 basis points).28Table of ContentsSegment InformationResults of operations by segment(in millions):North America Quarter EndedDec 31,2023Jan 1,2023$ChangeDec 31,2023Jan 1,2023As a%of North AmericaTotal Net RevenuesNet revenues:Company-operated stores$6,381.1$5,870.6$510.5 89.6.6%Licensed stores737.9 680.0 57.9 10.4 10.4 Other1.7 0.7 1.0 0.0 0.0 Total net revenues7,120.7 6,551.3 569.4 100.0 100.0 Product and distribution costs2,023.9 1,917.6 106.3 28.4 29.3 Store operating expenses3,147.7 3,031.4 116.3 44.2 46.3 Other operating expenses77.4 65.6 11.8 1.1 1.0 Depreciation and amortization expenses250.4 216.9 33.5 3.5 3.3 General and administrative expenses100.5 102.3(1.8)1.4 1.6 Restructuring and impairments 5.1(5.1)0.1 Total operating expenses5,599.9 5,338.9 261.0 78.6 81.5 Operating income$1,520.8$1,212.4$308.4 21.4.5%Store operating expenses as a%of company-operated stores revenue49.3Q.6%For the quarter ended December 31,2023 compared with the quarter ended January 1,2023RevenuesNorth America total net revenues for the first quarter of fiscal 2024 increased$569 million,or 9%,primarily due to a 5%increase in comparable store sales($288 million)driven by a 4%increase in average ticket,primarily due to annualization of pricing,and a 1%increase in comparable transactions.Alsocontributing to revenue growth were the performance of net new company-operated store openings over the past 12 months($222 million)and higher productand equipment sales to and royalty revenues from our licensees($49 million).Operating MarginNorth America operating income for the first quarter of fiscal 2024 increased 25%to$1.5 billion,compared to$1.2 billion in the first quarter of fiscal 2023.Operating margin increased 290 basis points to 21.4%,primarily due to in-store operational efficiencies(approximately 240 basis points)and sales leverage(approximately 180 basis points),partially offset by increased investments in store partner wages and benefits(approximately 120 basis points).29Table of ContentsInternational Quarter Ended Dec 31,2023Jan 1,2023$ChangeDec 31,2023Jan 1,2023As a%of InternationalTotal Net RevenuesNet revenues:Company-operated stores$1,374.1$1,212.9$161.2 74.4r.2%Licensed stores454.2 439.5 14.7 24.6 26.2 Other18.0 27.7(9.7)1.0 1.6 Total net revenues1,846.3 1,680.1 166.2 100.0 100.0 Product and distribution costs666.5 593.6 72.9 36.1 35.3 Store operating expenses703.8 633.9 69.9 38.1 37.7 Other operating expenses60.1 50.7 9.4 3.3 3.0 Depreciation and amortization expenses84.1 81.5 2.6 4.6 4.9 General and administrative expenses90.5 80.5 10.0 4.9 4.8 Total operating expenses1,605.0 1,440.2 164.8 86.9 85.7 Income from equity investees0.2 0.5(0.3)0.0 0.0 Operating income$241.5$240.4$1.1 13.1.3%Store operating expenses as a%of company-operated stores revenue51.2R.3%For the quarter ended December 31,2023 compared with the quarter ended January 1,2023RevenuesInternational total net revenues for the first quarter of fiscal 2024 increased$166 million,or 10%,primarily due to 1,016 net new Starbucks company-operatedstores,or a 12%increase over the past 12 months($104 million),as well as a 7%increase in comparable store sales($81 million)driven by an 11%increase incustomer transactions,primarily attributable to lapping prior-year impacts from COVID-19 pandemic related disruptions in China.These increases werepartially offset by unfavorable foreign currency translation($30 million).Also contributing to the increase in revenue was growth related to 851 net newlicensed store openings,an 8%increase over the past 12 months,partially offset by unfavorable impacts related to certain headwinds.Operating MarginInternational operating income for the first quarter of fiscal 2024 increased to$242 million,compared to$240 million in the first quarter of fiscal 2023.Operating margin decreased 120 basis points to 13.1%,primarily due to investments in store partner wages and benefits(approximately 130 basis points),business mix shift toward company-operated stores(approximately 120 basis points),and strategic investments(approximately 100 basis points).Thesedecreases were partially offset by sales leverage(approximately 300 basis points).30Table of ContentsChannel Development Quarter Ended Dec 31,2023Jan 1,2023$ChangeDec 31,2023Jan 1,2023As a%of Channel DevelopmentTotal Net RevenuesNet revenues$448.0$478.2$(30.2)Product and distribution costs279.0 294.2(15.2)62.3a.5%Other operating expenses12.8 13.0(0.2)2.9 2.7 General and administrative expenses2.2 2.0 0.2 0.5 0.4 Total operating expenses294.0 309.2(15.2)65.6 64.7 Income from equity investees55.7 57.3(1.6)12.4 12.0 Operating income$209.7$226.3$(16.6)46.8G.3%For the quarter ended December 31,2023 compared with the quarter ended January 1,2023RevenuesChannel Development total net revenues for the first quarter of fiscal 2024 decreased$30 million,or 6%,primarily due to a decline in revenue in the GlobalCoffee Alliance following the sale of our Seattles Best Coffee brand to Nestl in the second quarter of fiscal 2023($19 million)and lower revenue in ourglobal ready-to-drink business($11 million).Operating MarginChannel Development operating income for the first quarter of fiscal 2024 decreased 7%to$210 million,compared to$226 million in the first quarter of fiscal2023.Operating margin decreased 50 basis points to 46.8%,primarily driven by product costs related to the Global Coffee Alliance(approximately 430 basispoints),partially offset by business mix shift(approximately 370 basis points).Corporate and Other Quarter EndedDec 31,2023Jan 1,2023$Change%ChangeNet revenues:Other$10.3$4.3$6.0 139.5%Total net revenues10.3 4.3 6.0 139.5 Product and distribution costs11.2 4.8 6.4 133.3 Other operating expenses0.1 0.1 nmDepreciation and amortization expenses30.8 28.7 2.1 7.3 General and administrative expenses454.8 396.1 58.7 14.8 Restructuring and impairments 0.7(0.7)nmTotal operating expenses496.9 430.3 66.6 15.5 Operating loss$(486.6)$(426.0)$(60.6)14.2%Corporate and Other primarily consists of our unallocated corporate expenses.Unallocated corporate expenses include corporate administrative functions thatsupport the operating segments but are not specifically attributable to or managed by any segment and are not included in the reported financial results of theoperating segments.For the quarter ended December 31,2023 compared with the quarter ended January 1,2023Corporate and Other operating loss increased by 14%to$487 million for the first quarter of fiscal 2024 compared to$426 million for the first quarter of fiscal2023.This increase was primarily driven by incremental investments in technology in support of our Reinvention($30 million)and higher partner wages andbenefits($17 million).31Table of ContentsQuarterly Store DataOur store data for the periods presented is as follows:Net stores opened/(closed)and transferredduring the period Quarter EndedStores open as ofDec 31,2023Jan 1,2023Dec 31,2023Jan 1,2023North AmericaCompany-operated stores87 40 10,715 10,256 Licensed stores34 46 7,216 7,125 Total North America121 86 17,931 17,381 InternationalCompany-operated stores186 97 9,150 8,134 Licensed stores242 276 11,506 10,655 Total International428 373 20,656 18,789 Total Company549 459 38,587 36,170 Financial Condition,Liquidity and Capital ResourcesCash and Investment OverviewOur cash and investments were$3.6 billion as of December 31,2023 and$4.2 billion as of October 1,2023.We actively manage our cash and investments inorder to internally fund operating needs,make scheduled interest and principal payments on our borrowings,fund acquisitions,and return cash to shareholdersthrough common stock cash dividend payments and share repurchases.Our investment portfolio primarily includes highly liquid available-for-sale securities,including corporate debt securities,government treasury securities(domestic and foreign),and commercial paper,as well as principal-protected structureddeposits.As of December 31,2023,approximately$2.4 billion of cash and short-term investments were held in foreign subsidiaries.Borrowing CapacityRevolving Credit FacilityOur$3.0 billion unsecured five-year revolving credit facility(the“2021 credit facility”),of which$150.0 million may be used for issuances of letters of credit,is currently set to mature on September 16,2026.The 2021 credit facility is available for working capital,capital expenditures,and other corporate purposes,including acquisitions and share repurchases.We have the option,subject to negotiation and agreement with the related banks,to increase the maximumcommitment amount by an additional$1.0 billion.Borrowings under the 2021 credit facility,which was most recently amended in April 2023,will bear interest at a variable rate based on Term SOFR,and,forU.S.dollar-denominated loans under certain circumstances,a Base Rate(as defined in the 2021 credit facility),in each case plus an applicable margin.Theapplicable margin is based on the Companys long-term credit ratings assigned by the Moodys and Standard&Poors rating agencies.The“Base Rate”is thehighest of(i)the Federal Funds Rate(as defined in the 2021 credit facility)plus 0.500%,(ii)Bank of Americas prime rate,and(iii)Term SOFR plus 1.000%.Term SOFR means the forward-looking SOFR term rate administrated by the Chicago Mercantile Exchange plus a SOFR Adjustment of 0.100%.The 2021 credit facility contains provisions requiring us to maintain compliance with certain covenants,including a minimum fixed charge coverage ratio,which measures our ability to cover financing expenses.As of December 31,2023,we were in compliance with all applicable covenants.No amounts wereoutstanding under our 2021 credit facility as of December 31,2023 or October 1,2023.Commercial PaperUnder our commercial paper program,we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of$3.0billion,with individual maturities that may vary but not exceed 397 days from the date of issue.Amounts outstanding under the commercial paper program arerequired to be backstopped by available commitments under our 2021 credit facility.The proceeds from borrowings under our commercial paper program maybe used for working capital needs,capital expenditures,and other corporate purposes,including,but not limited to,business expansion,payment of cashdividends on our common stock,and share repurchases.As of December 31,2023,we had$300.0 million in borrowings32Table of Contentsoutstanding under our commercial paper program.As of October 1,2023,we had no borrowings outstanding under this program.Our total availablecontractual borrowing capacity for general corporate purposes was$2.7 billion as of the end of our first quarter of fiscal 2024.Credit Facilities in JapanAdditionally,we hold the following Japanese yen-denominated credit facilities that are available for working capital needs and capital expenditures within ourJapanese market.A 5.0 billion,or$35.4 million,credit facility is currently set to mature on December 30,2024.Borrowings under this credit facility are subject toterms defined within the facility and will bear interest at a variable rate based on TIBOR plus an applicable margin of 0.400%.A 10.0 billion,or$70.7 million,credit facility is currently set to mature on March 27,2024.Borrowings under this credit facility are subject to termsdefined within the facility and will bear interest at a variable rate based on TIBOR plus an applicable margin of 0.300%.As of December 31,2023,we had 7.0 billion,or$49.5 million,of borrowings outstanding under these credit facilities.As of October 1,2023,we had5.0 billion,or$33.5 million,of borrowings outstanding under these credit facilities.See Note 7,Debt,to the consolidated financial statements included in Item 1 of Part I of this 10-Q for details of the components of our long-term debt.Our ability to incur new liens and conduct sale and leaseback transactions on certain material properties is subject to compliance with terms of the indenturesunder which the long-term notes were issued.As of December 31,2023,we were in compliance with all applicable covenants.Use of CashWe expect to use our available cash and investments,including,but not limited to,additional potential future borrowings under the credit facilities,commercialpaper program,and the issuance of debt to support and invest in our core businesses,including investing in new ways to serve our customers and supportingour store partners,repaying maturing debts,returning cash to shareholders through common stock cash dividend payments and discretionary share repurchases,and investing in new business opportunities related to our core and developing businesses.Furthermore,we may use our available cash resources to makeproportionate capital contributions to our investees.We may also seek strategic acquisitions to leverage existing capabilities and further build our business.Acquisitions may include increasing our ownership interests in our investees.Any decisions to increase such ownership interests will be driven by valuationand fit with our ownership strategy.We believe that net future cash flows generated from operations and existing cash and investments both domestically and internationally,combined with ourability to leverage our balance sheet through the issuance of debt,will be sufficient to finance capital requirements for our core businesses as well asshareholder distributions for at least the next 12 months.We are currently not aware of any trends or demands,commitments,events,or uncertainties that willresult in,or that are reasonably likely to result in,our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyondthe next 12 months.We have borrowed funds and continue to believe we have the ability to do so at reasonable interest rates;however,additional borrowingswould result in increased interest expense in the future.In this regard,we may incur additional debt,within targeted levels,as part of our plans to fund ourcapital programs,including cash returns to shareholders through future dividends and discretionary share repurchases,refinancing debt maturities,as well asinvesting in new business opportunities.If necessary,we may pursue additional sources of financing,including both short-term and long-term borrowings anddebt issuances.We regularly review our cash positions and our determination of partial indefinite reinvestment of foreign earnings.In the event we determine that all oranother portion of such foreign earnings are no longer indefinitely reinvested,we may be subject to additional foreign withholding taxes,which could bematerial.Any foreign earnings that are not indefinitely reinvested may be repatriated at managements discretion.In anticipation of repatriation of current-yearearnings of certain foreign subsidiaries,we accrued approximately$10 million for foreign withholding taxes during the first quarter of fiscal year 2024.During the first quarter of fiscal 2024,our Board of Directors approved a quarterly cash dividend to shareholders of$0.57 per share to be paid on February 23,2024 to shareholders of record as of the close of business on February 9,2024.During the quarter ended December 31,2023,we repurchased 12.8 million shares of common stock for$1,250.1 million on the open market.As ofDecember 31,2023,29.8 million shares remained available for repurchase under current authorizations.Other than normal operating expenses,cash requirements for the remainder of fiscal 2024 are expected to consist primarily of capital expenditures forinvestments in our new and existing stores,our supply chain,and corporate facilities.Total capital expenditures for fiscal 2024 are expected to beapproximately$3.0 billion.33Table of ContentsIn the MD&A included in the 10-K,we disclosed that we had$33.9 billion of current and long-term material cash requirements as of October 1,2023.Therehave been no material changes to our material cash requirements during the period covered by this 10-Q outside of the normal course of our business.Cash FlowsNet cash provided by operating activities was$2.4 billion for the first quarter of fiscal 2024,compared to$1.6 billion for the same period in fiscal 2023.Thechange was primarily due to an increase in net cash provided by changes in operating assets and liabilities and higher net earnings during the period.Net cash used in investing activities totaled$568.8 million for the first quarter of fiscal 2024,compared to$279.3 million for the same period in fiscal 2023.The change was primarily due to an increase in purchases of investments and higher capital expenditures.Net cash used in financing activities for the first quarter of fiscal 2024 totaled$2.4 billion,compared to$1.0 billion for the same period in fiscal 2023.Thechange was primarily due to an increase in share repurchase activities and repayments of debt,partially offset by proceeds from issuance of commercial paper.Commodity Prices,Availability and General Risk ConditionsCommodity price risk represents our primary market risk,generated by our purchases of green coffee and dairy products,among other items.We purchase,roast,and sell high-quality arabica coffee and related products,and risk arises from the price volatility of green coffee.In addition to coffee,we also purchasesignificant amounts of dairy products to support the needs of our company-operated stores.The price and availability of these commodities directly impact ourresults of operations,and we expect commodity prices,particularly coffee,to impact future results of operations.For additional details,see Product Supply inItem 1 of the 10-K,as well as Risk Factors in Part I,Item 1A of the 10-K.Seasonality and Quarterly ResultsOur business is subject to moderate seasonal fluctuations,of which our fiscal second quarter typically experiences lower revenues and operating income.Additionally,as Starbucks Cards are issued to and loaded by customers during the holiday season,we tend to have higher cash flows from operations duringthe first quarter of the fiscal year.However,since revenues from Starbucks Cards are recognized upon redemption and not when cash is loaded onto theStarbucks Card,the impact of seasonal fluctuations on the consolidated statements of earnings is much less pronounced.As a result of moderate seasonalfluctuations,results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.Critical Accounting EstimatesThe preparation of financial statements and related disclosures in conformity with U.S.generally accepted accounting principles and the Companys discussionand analysis of its financial condition and operating results require the Companys management to make judgments,assumptions,and estimates that affect theamounts reported.Note 1,Summary of Significant Accounting Policies and Estimates,to the consolidated financial statements included in Item 1 of Part I ofthis 10-Q and in the Notes to Consolidated Financial Statements in Part II,Item 8 of the 10-K describe the significant accounting policies and methods used inthe preparation of the Companys consolidated financial statements.There have been no material changes to the Companys critical accounting estimates sincethe 10-K.RECENT ACCOUNTING PRONOUNCEMENTSSee Note 1,Summary of Significant Accounting Policies and Estimates,to the consolidated financial statements included in Item 1 of Part I of this 10-Q,for adetailed description of recent accounting pronouncements.Item 3.Quantitative and Qualitative Disclosures About Market RiskThere has been no material change in the commodity price risk,foreign currency exchange risk,equity security price risk,or interest rate risk discussed inItem 7A of the 10-K.34Table of ContentsItem 4.Controls and ProceduresWe maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed orsubmitted under the Securities Exchange Act of 1934,as amended(the“Exchange Act”),is recorded,processed,summarized,and reported within the timeperiods specified in the SECs rules and forms.Our disclosure controls and procedures are also designed to ensure that information required to be disclosed inthe reports we file or submit under the Exchange Act is accumulated and communicated to our management,including our principal executive officer andprincipal financial officer as appropriate,to allow timely decisions regarding required disclosure.During the first quarter of fiscal 2024,we carried out an evaluation,under the supervision and with the participation of our management,including our chiefexecutive officer and our chief financial officer,of the effectiveness of the design and operation of our disclosure controls and procedures,as defined in Rules13a-15(e)and 15d-15(e)under the Exchange Act.Based upon that evaluation,our chief executive officer and chief financial officer concluded that ourdisclosure controls and procedures were effective,as of the end of the period covered by this report(December 31,2023).There were no changes in our internal control over financial reporting(as defined in Rules 13a-15(f)and 15d-15(f)of the Exchange Act)during our mostrecently completed fiscal quarter that materially affected,or are reasonably likely to materially affect,our internal control over financial reporting.35Table of ContentsPART II OTHER INFORMATIONItem 1.Legal ProceedingsSee Note 13,Commitments and Contingencies,to the consolidated financial statements included in Item 1 of Part I of this 10-Q for information regardingcertain legal proceedings in which we are involved.Item 1A.Risk FactorsIn addition to the other information set forth in this 10-Q,you should carefully consider the risks and uncertainties discussed in Part I,Item 1A.Risk Factors inour 10-K and Part II,Item 1A of this 10-Q.There have been no material changes to the risk factors disclosed in our 10-K.Item 2.Unregistered Sales of Equity Securities and Use of ProceedsInformation regarding repurchases of our common stock during the quarter ended December 31,2023:TotalNumber ofSharesPurchasedAveragePricePaid perShareTotal Numberof SharesPurchased asPart of PubliclyAnnouncedPlans orProgramsMaximumNumber ofShares that MayYet BePurchasedUnder the Plansor ProgramsPeriod October 2,2023-October 29,20233,877,436$92.85 3,877,436 38,712,225 October 30,2023-November 26,20234,146,201 101.31 4,146,201 34,566,024 November 27,2023-December 31,20234,754,654 98.86 4,754,654 29,811,370 Total12,778,291$97.83 12,778,291 Monthly information is presented by reference to our fiscal months during the first quarter of fiscal 2024.Share repurchases are conducted under our ongoing share repurchase program announced in September 2001,which has no expiration date,and for whichthe authorized number of shares has been increased by our Board of Directors numerous times,with our Board of Directors most recently authorizing therepurchase of up to an additional 40 million shares in March 2022.This column includes the total number of shares available for repurchase under the Companys ongoing share repurchase program.Shares under ourongoing share repurchase program may be repurchased in open market transactions,including pursuant to a trading plan adopted in accordance with Rule10b5-1 of the Exchange Act,or through privately negotiated transactions.The timing,manner,price,and amount of repurchases will be determined at ourdiscretion and the share repurchase program may be suspended,terminated,or modified at any time for any reason.Item 3.Defaults upon Senior SecuritiesNone.Item 4.Mine Safety DisclosuresNot applicable.Item 5.Other InformationInsider Adoption or Termination of Trading Arrangements:During the fiscal quarter ended December 31,2023,none of our directors or officers informed us of the adoption or termination of a“Rule 10b5-1 tradingarrangement”or“non-Rule 10b5-1 trading arrangement,”as those terms are defined in Regulation S-K,Item 408,except as described in the table below:(2)(3)(1)(1)(2)(3)36Table of ContentsName&TitleDate AdoptedCharacter of TradingArrangementAggregate Number of Shares of Common Stock to bePurchased or Sold Pursuant to Trading ArrangementDurationOther MaterialTermsDate TerminatedRachelRuggeri,executive vicepresident,chieffinancialofficerNovember 28,2023Rule 10b5-1 TradingArrangementUp to$900,000 of shares to be soldPlusUp to 4,979 shares to be soldPlusUp to 2,165 shares to be soldDecember 3,2024N/AN/A Except as indicated by footnote,each trading arrangement marked as a“Rule 10b5-1 Trading Arrangement”is intended to satisfy the affirmative defense ofRule 10b5-1(c),as amended(the“Rule”).Ms.Ruggeris trading plan provides for the sale of up to$300,000 of shares pursuant to each of three orders,to be entered in March,May,and August 2024,respectively,with such sales subject to a limit price of$80 during the applicable good-until-cancelled period for such order.Ms.Ruggeris trading plan provides for the sale,on November 11,2024,at market price,of up to 4,979 shares to be received by Ms.Ruggeri upon thevesting of performance-based RSUs in November 2024.Ms.Ruggeris trading plan provides for the sale,on November 18,2024,at market price,of up to up to 2,165 shares to be received by Ms.Ruggeri upon thevesting of time-based RSUs in November 2024.Except as indicated by footnote,each trading arrangement permitted or permits transactions through and including the earlier to occur of(a)the completionof all purchases or sales or the expiration of all of the orders relating to such trades,or(b)the date listed in the table.The trading arrangement marked as a“Rule 10b5-1 Trading Arrangement”only permits transactions upon expiration of the applicable mandatory cooling-off period under the Rule.The arrangement also provides for automatic expiration in the event of Ms.Ruggeris death,bankruptcy,or insolvency,notice from Ms.Ruggeri or her agentof termination of the trading arrangement,or a determination by the broker that the trading arrangement has been terminated or that a breach by Mr.Ruggerihas occurred or upon the brokers exercise of its termination rights under the trading arrangement.(1)(5)(2)(3)(4)(6)(1)(2)(3)(4)(5)(6)37Table of ContentsItem 6.Exhibits Incorporated by Reference ExhibitNo.Exhibit DescriptionFormFile No.Date ofFilingExhibitNumberFiledHerewith3.1Restated Articles of Incorporation of Starbucks Corporation10-Q000-203224/28/20153.13.2Amended and Restated Bylaws of Starbucks Corporation(Asamended and restated through March 17,2021)8-K000-203223/19/20213.131.1Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)of the Securities Exchange Act of 1934,as Adopted Pursuantto Section 302 of the Sarbanes-Oxley Act of 2002X31.2Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)of the Securities Exchange Act of 1934,as Adopted Pursuantto Section 302 of the Sarbanes-Oxley Act of 2002X32*Certifications of Principal Executive Officer and Principal FinancialOfficer Pursuant to 18 U.S.C.Section 1350,as Adopted Pursuant toSection 906 of the Sarbanes-Oxley Act of 2002101The following financial statements from the Companys 10-Q forthe fiscal quarter ended December 31,2023,formatted in iXBRL:(i)Consolidated Statements of Earnings,(ii)ConsolidatedStatements of Comprehensive Income,(iii)Consolidated BalanceSheets,(iv)Consolidated Statements of Cash Flows,(v)Consolidated Statements of Equity,and(vi)Notes to ConsolidatedFinancial StatementsX104Cover Page Interactive Data File(formatted in iXBRL andcontained in Exhibit 101)X*Furnished herewith.38Table of ContentsSIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934,the registrant has duly caused this report to be signed on its behalf by the undersignedthereunto duly authorized.January 30,2024 STARBUCKS CORPORATIONBy:/s/Rachel RuggeriRachel Ruggeriexecutive vice president,chief financial officerSigning on behalf of the registrant and asprincipal financial officer39Exhibit 31.1CERTIFICATION PURSUANT TO RULE 13a-14(a)OF THE SECURITIES EXCHANGE ACT OF 1934AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I,Laxman Narasimhan,certify that:1.I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended December 31,2023,of Starbucks Corporation;2.Based on my knowledge,this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made,in light of the circumstances under which such statements were made,not misleading with respect to the period covered by thisreport;3.Based on my knowledge,the financial statements,and other financial information included in this report,fairly present in all material respects thefinancial condition,results of operations and cash flows of the registrant as of,and for,the periods presented in this report;4.The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures(as defined inExchange Act Rules 13a-15(e)and 15d-15(e)and internal control over financial reporting(as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)for the registrant and have:(a)Designed such disclosure controls and procedures,or caused such disclosure controls and procedures to be designed under our supervision,toensure that material information relating to the registrant,including its consolidated subsidiaries,is made known to us by others within thoseentities,particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting,or caused such internal control over financial reporting to be designed under oursupervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures,as of the end of the period covered by this report based on such evaluation;and(d)Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recentfiscal quarter(the registrants fourth fiscal quarter in the case of an annual report)that has materially affected,or is reasonably likely tomaterially affect,the registrants internal control over financial reporting;and5.The registrants other certifying officer and I have disclosed,based on our most recent evaluation of internal control over financial reporting,to theregistrants auditors and the audit committee of the registrants board of directors(or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrants ability to record,process,summarize and report financial information;and(b)Any fraud,whether or not material,that involves management or other employees who have a significant role in the registrants internalcontrol over financial reporting.Date:January 30,2024/s/Laxman NarasimhanLaxman Narasimhanchief executive officerExhibit 31.2CERTIFICATION PURSUANT TO RULE 13a-14(a)OF THE SECURITIES EXCHANGE ACT OF 1934AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I,Rachel Ruggeri,certify that:1.I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended December 31,2023,of Starbucks Corporation;2.Based on my knowledge,this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made,in light of the circumstances under which such statements were made,not misleading with respect to the period covered by thisreport;3.Based on my knowledge,the financial statements,and other financial information included in this report,fairly present in all material respects thefinancial condition,results of operations and cash flows of the registrant as of,and for,the periods presented in this report;4.The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures(as defined inExchange Act Rules 13a-15(e)and 15d-15(e)and internal control over financial reporting(as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)for the registrant and have:(a)Designed such disclosure controls and procedures,or caused such disclosure controls and procedures to be designed under our supervision,toensure that material information relating to the registrant,including its consolidated subsidiaries,is made known to us by others within thoseentities,particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting,or caused such internal control over financial reporting to be designed under oursupervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures,as of the end of the period covered by this report based on such evaluation;and(d)Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recentfiscal quarter(the registrants fourth fiscal quarter in the case of an annual report)that has materially affected,or is reasonably likely tomaterially affect,the registrants internal control over financial reporting;and5.The registrants other certifying officer and I have disclosed,based on our most recent evaluation of internal control over financial reporting,to theregistrants auditors and the audit committee of the registrants board of directors(or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrants ability to record,process,summarize and report financial information;and(b)Any fraud,whether or not material,that involves management or other employees who have a significant role in the registrants internalcontrol over financial reporting.Date:January 30,2024/s/Rachel RuggeriRachel Ruggeriexecutive vice president,chief financial officerExhibit 32CERTIFICATIONS PURSUANT TO 18 U.S.C.SECTION 1350AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Quarterly Report of Starbucks Corporation(“Starbucks”)on Form 10-Q for the fiscal quarter ended December 31,2023,as filed withthe Securities and Exchange Commission on January 30,2024(the“Report”),Laxman Narasimhan,chief executive officer of Starbucks,and Rachel Ruggeri,executive vice president,chief financial officer of Starbucks,each hereby certifies,pursuant to 18 U.S.C.Section 1350,as adopted pursuant to Section 906 ofthe Sarbanes-Oxley Act of 2002,that,to their knowledge:(1)the Report fully complies with the requirements of Section 13(a)or 15(d)of the Securities Exchange Act of 1934;and(2)the information contained in the Report fairly presents,in all material respects,the financial condition and results of operations of Starbucks.January 30,2024/s/Laxman NarasimhanLaxman Narasimhanchief executive officerJanuary 30,2024/s/Rachel RuggeriRachel Ruggeriexecutive vice president,chief financial officer

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  • eBay2024年第一季度财报(英文版)(13页).pdf

    Exhibit 99.1eBay Inc.Reports First Quarter 2024 Results Revenue of$2.6 billion,up 2%on an as-reported basis and up 2%on an FX-Neutral basis Gross Merchandise Volume of$18.6 billion,up 1%on an as-reported basis and roughly flat on an FX-Neutral basis GAAP and Non-GAAP earnings per diluted share of$0.85 and$1.25,respectively GAAP and Non-GAAP operating margin of 24.7%and 30.3%,respectively Returned$638 million to shareholders in Q1,including$499 million of share repurchases and$139 million paid in cash dividendsSan Jose,California,May 1,2024 eBay Inc.(Nasdaq:EBAY),a global commerce leader that connects millions of buyers and sellers around the world,today reported financial results for its first quarter ended March 31,2024.“eBays Q1 results marked a strong start to 2024 as we continue to make progress toward our goal of sustainable GMV growth,”said Jamie Iannone,Chief Executive Officer at eBay.“We believe our accelerating pace of innovation is fundamentally changing the selling and buying experience on eBay,generating better outcomes for customers,increasing productivity across our organization,and ultimately driving more value for shareholders.”“Our Q1 results highlight the resilience of our marketplace and business model amid persistent challenges in the global economy,”said Steve Priest,Chief Financial Officer at eBay.“We exceeded our outlook across our key financial metrics and made significant progress against our long-term strategic objectives.”First Quarter Financial HighlightsRevenue was$2.6 billion,up 2%on an as-reported basis and up 2%on a foreign exchange(FX)neutral basis.Gross Merchandise Volume(GMV)was$18.6 billion,up 1%on an as-reported basis and roughly flat on an FX-Neutral basis.GAAP net income from continuing operations was$439 million,or$0.85 per diluted share.Non-GAAP net income from continuing operations was$648 million,or$1.25 per diluted share.GAAP and Non-GAAP operating margin was 24.7%and 30.3%,respectively.Generated$615 million of operating cash flow and$472 million of free cash flow.Returned$638 million to shareholders,including$499 million of share repurchases and$139 million paid in cash dividends.Business HighlightseBays first-party advertising products delivered$370 million of revenue in the first quarter,up 30%on an as-reported basis and up 28%on an FX-Neutral basis.The companys total advertising offerings generated$384 million of revenue in the first quarter,representing 2.1%of GMV.In Q1,eBay Motors redesigned the self-service experience for its MyFitment toolkit,simplifying how sellers onboard,view and publish fitment data for Parts&Accessories listings.On the buying side,the new Motors DIY Guides offer expert content for common maintenance jobs alongside eBay listings for the specific parts,tools and materials needed to complete them.eBay expanded its consignment service to include luxury apparel,giving casual sellers the opportunity to leverage eBay experts to list and sell their luxury apparel on their behalf.During the quarter,eBay and Balenciaga collaborated to advocate for more sustainability within the fashion industry.At Paris Fashion Week in March,Balenciaga debuted its Winter 24 Collection,a line of co-branded streetwear which sourced pre-loved items from eBay.To celebrate the world-renowned“Pokmon Day,”eBay held a Pokmon“Catch 151”Auction event featuring 151 ultra-rare cards and collectibles at accessible price points.The event highlighted the vast array of Pokmon inventory available on eBay and gave enthusiasts an opportunity to elevate their collections with iconic pieces.To further reduce friction for sellers,eBay introduced a simplified mobile listing experience for Sports Trading Cards in the U.S.that pre-fills relevant item aspects,offers simplified shipping options,and provides intelligent pricing recommendations to drive measurable improvements in listing time,listing completion and sold items per customer.The company continued to enhance eBay Live in Q1,expanding to new categories like comics and sports memorabilia and revamping the auctions experience for more seamless bidding.eBay also improved event discoverability by enabling live event viewing on desktop and surfacing personalized live event recommendations on the homepage.In February,eBay announced the appointment of Zane Rowe,CFO at Workday,to its Board of Directors as well as the companys Audit Committee.ImpactDuring the quarter,eBay U.K.and eBay Australia announced their respective Circular Fashion Fund finalists and winner,demonstrating the companys continued commitment to sustainable fashion.eBay Inc.contributed$9 million to the eBay Foundation in Q1 in support of nonprofit organizations advancing inclusive entrepreneurship.eBay for Charity contributed more than$46 million globally in Q1,up 18%year-over-year.2First Quarter 2024 Financial Highlights(presented in millions,except per share data and percentages)First Quarter20242023ChangeeBay Inc.Net revenues$2,556$2,510$46 2%GAAP Continuing OperationsNet income$439$569$(130)(23)rnings per diluted share$0.85$1.05$(0.20)(19)%Non-GAAP Continuing OperationsNet income$648$600$48 8rnings per diluted share$1.25$1.11$0.14 13%Other Selected Financial and Operational ResultsOperating margin GAAP operating margin increased to 24.7%for the first quarter of 2024,compared to 22.2%for the same period last year.Non-GAAP operating margin increased to 30.3%for the first quarter of 2024,compared to 29.6%for the same period last year.Taxes The GAAP effective tax rate for continuing operations for the first quarter of 2024 was 18.1%,compared to 22.1%for the first quarter of 2023.The non-GAAP effective tax rate for continuing operations for the first quarter of 2024 was 16.5%(1).Cash flow The company generated$615 million of operating cash flow and$472 million of free cash flow during the first quarter of 2024.Capital returns The company repurchased$499 million of its common stock,or approximately 10 million shares,in the first quarter of 2024.The companys total repurchase authorization remaining as of March 31,2024 was approximately$2.9 billion.The company also paid cash dividends of$139 million during the first quarter of 2024.Cash and cash equivalents and non-equity investments The companys cash and cash equivalents and non-equity investments portfolio totaled$4.9 billion as of March 31,2024.Business OutlookeBay is providing the following guidance for the second quarter 2024.In billions,except per share data and percentagesQ2 2024 GuidanceRevenue$2.49-$2.54FX-Neutral Y/Y Growth(1)%-1%Diluted GAAP EPS$0.76-$0.81Diluted Non-GAAP EPS$1.10-$1.15Dividend DeclarationeBays Board of Directors has declared a cash dividend of$0.27 per share of the companys common stock.The dividend is payable on June 14,2024 to stockholders of record as of May 31,2024.(1)We use a non-GAAP effective tax rate for evaluating our operating results.Based on our current long-term projections,we are using a non-GAAP tax rate of 16.5%.This non-GAAP tax rate could change for various reasons including significant changes in our geographic earnings mix or fundamental tax law changes in major jurisdictions in which we operate.3Quarterly Conference Call and WebcasteBay Inc.will host a conference call to discuss first quarter 2024 results at 2:00 p.m.Pacific Time today.Investors and participants can access the call by dialing(855)761-5600 in the U.S.and(646)307-1097 internationally.The passcode for the conference line is 7435074.A live webcast of the conference call,together with a slide presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures,can be accessed through the companys Investor Relations website at https:/.In addition,an archive of the webcast will be accessible for at least three months through the same link.eBay Inc.uses its Investor Relations website at https:/ as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.Accordingly,investors should monitor this website,in addition to following our press releases,SEC filings,public conference calls and webcasts.About eBayeBay Inc.(Nasdaq:EBAY)is a global commerce leader that connects people and builds communities to create economic opportunity for all.Our technology empowers millions of buyers and sellers in more than 190 markets around the world,providing everyone the opportunity to grow and thrive.Founded in 1995 in San Jose,California,eBay is one of the worlds largest and most vibrant marketplaces for discovering great value and unique selection.In 2023,eBay enabled more than$73 billion of gross merchandise volume.For more information about the company and its global portfolio of online brands,visit .PresentationAll growth rates represent year-over-year comparisons,except as otherwise noted.All amounts in tables are presented in U.S.dollars,rounded to the nearest million,except as otherwise noted.As a result,certain amounts may not sum or recalculate using the rounded dollar amounts provided.References to“revenue”refer to“net revenues”as reported in the companys consolidated statement of income.Non-GAAP Financial Measures This press release includes the following financial measures defined as“non-GAAP financial measures”by the Securities and Exchange Commission(SEC):non-GAAP net income,non-GAAP earnings per diluted share,non-GAAP operating income and margin,non-GAAP effective tax rate,free cash flow and FX-Neutral basis.These non-GAAP financial measures are presented on a continuing operations basis.These measures may be different from non-GAAP financial measures used by other companies.The presentation of this financial information,which is not prepared under any comprehensive set of accounting rules or principles,is not intended to be considered in isolation of,or as a substitute for,the financial information prepared and presented in accordance with generally accepted accounting principles(GAAP).For a reconciliation of these non-GAAP financial measures,except for figures in this press release presented on an“FX-Neutral basis,”to the nearest comparable GAAP measures,see“Business Outlook,”“Non-GAAP Measures of Financial Performance,”“Reconciliation of GAAP Operating Income to Non-GAAP Operating Income,”“Reconciliation of GAAP Net Income to Non-GAAP Net Income and Reconciliation of GAAP Effective Tax Rate to Non-GAAP Effective Tax Rate”and“Reconciliation of Operating Cash Flow to Free Cash Flow”included in this press release.For figures in this press release reported“on an FX-Neutral basis,”we calculate the year-over-year impact of foreign currency movements using prior period foreign currency rates,excluding hedging activity,applied to current year transactional currency amounts.Forward-Looking Statements This press release contains forward-looking statements relating to,among other things,the future performance of eBay Inc.and its consolidated subsidiaries that are based on the companys current expectations,forecasts and assumptions and involve risks and uncertainties.These statements include,but are not limited to,statements regarding the future performance of eBay Inc.and its consolidated subsidiaries,including managements vision for the future of eBay and our ability to accomplish our vision,expected financial results for the second quarter and full year 2024 and the future growth in our business,the effects and potential of current and contemplated strategic initiatives and offerings including with respect to artificial intelligence,the effects of geopolitical events,foreign currency volatility,and inflationary pressure on our business and operations and our ability to respond to such effects,operating efficiency and margins,reinvestments,dividends and share repurchases.Actual results could differ materially from those expressed or implied and reported results should not be considered as an indication of future performance.Factors that could cause or contribute to such differences include,but are not limited to:fluctuations in,and our ability to predict,our results of operations and cash flows;our ability to convert visits into sales for our sellers,attract and retain sellers and buyers and execute on our business strategy;our ability to compete in the markets in which we participate;our ability to generate revenue from our foreign operations and expand in international markets;the impact of inflationary pressure,fluctuations in foreign currency exchange rates,increasing interest rates and geopolitical events such as the ongoing wars in Ukraine and in Israel and Gaza,including the related disruptions to international shipping in the Red Sea;our ability to keep pace with rapid technological developments or continue to innovate and create new initiatives to provide new programs,products and services;our ability to operate and continuously develop our payments system and financial services offerings;the impact of 4evolving domestic and foreign government laws,regulations,rules and standards that affect us,our business and/or our industry;our reliance on third-party providers;our ability to protect or enforce our intellectual property rights;our ability to deal effectively with fraudulent activities on our platforms;the impact of any security breaches,cyberattacks or system failures and resulting interruptions;our ability to attract,retain and develop highly skilled employees;our ability to accomplish or accurately track and report results related to our environmental,social and governance goals;current and potential litigation and regulatory and government inquiries,investigations and disputes involving us or our industry;our ability to generate sufficient cash flow to service our indebtedness;the impact of evolving sales and other tax regimes in various jurisdictions and anticipated tax liabilities;and the success of our pending or potential acquisitions,dispositions,joint ventures,strategic partnerships and strategic investments,including the proposed transactions involving Adevinta,Goldin,Collectors and PSA.The forward-looking statements in this release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof.More information about factors that could affect the companys operating results is included under the captions“Risk Factors”and“Managements Discussion and Analysis of Financial Condition and Results of Operations”in the companys most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q,copies of which may be obtained by visiting the companys Investor Relations website at https:/ or the SECs website at www.sec.gov.Undue reliance should not be placed on the forward-looking statements in this press release,which are based on information available to the company on the date hereof.The company assumes no obligation to update such statements.Investor Relations Contact:John EMedia Relations Contact:Trina SCompany News:https:/ Relations website:https:/ 5eBay Inc.Unaudited Condensed Consolidated Balance Sheet March 31,2024December 31,2023(In millions)ASSETSCurrent assets:Cash and cash equivalents$2,130$1,985 Short-term investments 1,743 2,533 Equity investment in Adevinta 4,240 4,474 Customer accounts and funds receivable 1,108 1,013 Other current assets 1,185 1,011 Total current assets 10,406 11,016 Long-term investments 1,546 1,129 Property and equipment,net 1,281 1,243 Goodwill 4,235 4,267 Operating lease right-of-use assets 469 493 Deferred tax assets 3,052 3,089 Other assets 429 383 Total assets$21,418$21,620 LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Short-term debt$1,551$750 Accounts payable 300 267 Customer accounts and funds payable 1,145 1,054 Accrued expenses and other current liabilities 1,929 2,196 Income taxes payable 308 253 Total current liabilities 5,233 4,520 Operating lease liabilities 362 387 Deferred tax liabilities 2,417 2,408 Long-term debt 6,174 6,973 Other liabilities 959 936 Total liabilities 15,145 15,224 Total stockholders equity 6,273 6,396 Total liabilities and stockholders equity$21,418$21,620 6eBay Inc.Unaudited Condensed Consolidated Statement of Income Three Months EndedMarch 31,20242023(In millions,except per share amounts)Net revenues$2,556$2,510 Cost of net revenues(1)700 700 Gross profit 1,856 1,810 Operating expenses:Sales and marketing(1)541 511 Product development(1)351 352 General and administrative(1)238 297 Provision for transaction losses 91 84 Amortization of acquired intangible assets 4 8 Total operating expenses 1,225 1,252 Income from operations 631 558 Interest and other:Gain(loss)on equity investments and warrant,net(97)198 Interest expense(66)(68)Interest income and other,net 68 42 Income from continuing operations before income taxes 536 730 Income tax provision(97)(161)Income from continuing operations 439 569 Loss from discontinued operations,net of income taxes(1)(2)Net income$438$567 Income per share basic:Continuing operations$0.85$1.06 Discontinued operations Net income per share basic$0.85$1.06 Income per share diluted:Continuing operations$0.85$1.05 Discontinued operations Net income per share diluted$0.85$1.05 Weighted average shares:Basic 516 537 Diluted 519 541(1)Includes stock-based compensation as follows:Cost of net revenues$13$13 Sales and marketing 23 20 Product development 64 59 General and administrative 46 36$146$128 7eBay Inc.Unaudited Condensed Consolidated Statement of Cash Flows Three Months EndedMarch 31,20242023(In millions)Cash flows from operating activities:Net income$438$567 Loss from discontinued operations,net of income taxes 1 2 Adjustments:Provision for transaction losses 91 84 Depreciation and amortization 76 107 Stock-based compensation 146 128 Loss(gain)on investments and other,net 11 10 Deferred income taxes 40 33 Change in fair value of warrant(149)(38)Change in fair value of equity investment in Adevinta 234 (174)Changes in assets and liabilities,net of acquisition effects(273)122 Net cash provided by operating activities 615 841 Cash flows from investing activities:Purchases of property and equipment(143)(132)Purchases of investments(3,312)(3,543)Maturities and sales of investments 3,703 4,404 Other 2 (28)Net cash provided by investing activities 250 701 Cash flows from financing activities:Repurchases of common stock(453)(242)Payments for taxes related to net share settlements of restricted stock units and awards(51)(92)Payments for dividends(139)(134)Repayment of debt (1,150)Net funds receivable and payable activity(28)230 Other(15)Net cash used in financing activities(686)(1,388)Effect of exchange rate changes on cash,cash equivalents and restricted cash(11)5 Net increase in cash,cash equivalents and restricted cash 168 159 Cash,cash equivalents and restricted cash at beginning of period 2,493 2,272 Cash,cash equivalents and restricted cash at end of period$2,661$2,431 8eBay Inc.Unaudited Summary of Consolidated Net RevenuesThree Months EndedMarch 31,2024December 31,2023September 30,2023June 30,2023March 31,2023(In millions,except percentages)Total net revenues(1)(2)$2,556$2,562$2,500$2,540$2,510 Current quarter vs prior year quarter 2%2%5%5%1%Percent from international 49PPPP%(1)Hedge gain/(loss)$(10)$11$2$14$29(2)Foreign currency impact$14$63$43$(9)$(45)eBay Inc.Unaudited Supplemental Operating DataThree Months EndedMarch 31,2024December 31,2023September 30,2023June 30,2023March 31,2023(In millions,except percentages)Active Buyers(1)132 132 132 132 133 Current quarter vs prior year quarter(1)%(2)%(3)%(4)%(7)tive Buyers excluding GittiGidiyor and TCGplayer(2)131 131 131 131 131 Current quarter vs prior year quarter 0%(1)%(1)%(3)%(5)%Gross Merchandise Volume(3)U.S.$8,974$8,891$8,638$8,702$9,010 Current quarter vs prior year quarter 0%0%(1)%(3)%(3)%International$9,649$9,700$9,353$9,512$9,400 Current quarter vs prior year quarter 3%4%4%(1)%(7)%Total Gross Merchandise Volume$18,623$18,591$17,991$18,214$18,410 Current quarter vs prior year quarter 1%2%2%(2)%(5)%(1)Active Buyers consist of all buyers who paid for a transaction on our platforms within the previous 12-month period.Buyers may register more than once,and as a result,may have more than one account.(2)On June 20,2022 we announced the closure of our marketplace business in Turkey,GittiGidiyor.On October 31,2022,we completed the acquisition of TCGplayer.(3)Gross Merchandise Volume consists of the total value of all paid transactions between users on our platforms during the applicable period inclusive of shipping fees and taxes.9eBay Inc.Business OutlookThe guidance figures provided below and elsewhere in this press release are forward-looking statements,reflect a number of estimates,assumptions and other uncertainties,and are approximate in nature because the companys future performance is difficult to predict.Such guidance is based on information available on the date of this press release,and the company assumes no obligation to update it.The companys future performance involves risks and uncertainties,and the companys actual results could differ materially from the information below and elsewhere in this press release.Some of the factors that could affect the companys operating results are set forth under the caption“Forward-Looking Statements”above in this press release.More information about factors that could affect the companys operating results is included under the captions“Risk Factors”and“Managements Discussion and Analysis of Financial Condition and Results of Operations”in the companys most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q,copies of which may be obtained by visiting eBays investor relations website at https:/ or the SECs website at www.sec.gov.eBay Inc.Three Months EndingJune 30,2024(In billions,except per share amounts)GAAPNon-GAAP(a)Net revenues$2.49-$2.54$2.49-$2.54Diluted EPS from continuing operations$0.76-$0.81$1.10-$1.15(a)Estimated non-GAAP amounts above for the three months ending June 30,2024 reflect adjustments that exclude the estimated amortization of acquired intangible assets of approximately$8 million,estimated stock-based compensation expense and associated employer payroll tax expense of approximately$155-$165 million,and estimated adjustment between our GAAP and non-GAAP tax rate of approximately$25-$35 million.The estimated GAAP diluted EPS above does not assume any gains or losses on our equity investments.10eBay Inc.Non-GAAP Measures of Financial Performance To supplement the companys condensed consolidated financial statements presented in accordance with generally accepted accounting principles,or GAAP,the company uses non-GAAP measures of certain components of financial performance.These non-GAAP measures include non-GAAP net income,non-GAAP earnings per diluted share,non-GAAP operating income and margin,non-GAAP effective tax rate,free cash flow and figures in this press release presented on an FX-Neutral basis.These non-GAAP financial measures are presented on a continuing operations basis.These non-GAAP measures are not in accordance with,or an alternative to,measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies.In addition,these non-GAAP measures are not based on any comprehensive set of accounting rules or principles.Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the companys results of operations as determined in accordance with GAAP.These measures should only be used to evaluate the companys results of operations in conjunction with the corresponding GAAP measures.Reconciliation to the nearest GAAP measure of all non-GAAP measures included in this press release,except for figures in this press release presented on an“FX-Neutral basis,”can be found in the tables included in this press release.For figures in this press release reported on an FX-Neutral basis,”the company calculates the year-over-year impact of foreign currency movements using prior period foreign currency rates,excluding hedging activity,applied to current year transactional currency amounts.These non-GAAP measures are provided to enhance investors overall understanding of the companys current financial performance and its prospects for the future.Specifically,the company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses,gains and losses,or net purchases of property and equipment,as the case may be,that may not be indicative of its core operating results and business outlook.In addition,because the company has historically reported certain non-GAAP results to investors,the company believes that the inclusion of non-GAAP measures provides consistency in the companys financial reporting.For its internal budgeting process,and as discussed further below,the companys management uses financial measures that do not include stock-based compensation expense,employer payroll taxes on stock-based compensation,amortization or impairment of acquired intangible assets,impairment of goodwill,amortization of deferred tax assets associated with the realignment of its legal structure and related foreign exchange effects,significant gains or losses from the disposal/acquisition of a business,certain gains and losses on investments including changes in fair value,changes in foreign currency exchange rates and the impact of any related foreign exchange derivative instruments,gains or losses associated with a warrant agreement that the company entered into with Adyen,restructuring-related charges and the income taxes associated with the foregoing.In addition to the corresponding GAAP measures,the companys management also uses the foregoing non-GAAP measures in reviewing the financial results of the company.The company excludes the following items from non-GAAP net income,non-GAAP earnings per diluted share,non-GAAP operating income and margin and non-GAAP effective tax rate:Stock-based compensation expense and related employer payroll taxes.This expense consists of expenses for stock options,restricted stock and employee stock purchases.The company excludes stock-based compensation expense from its non-GAAP measures primarily because they are non-cash expenses that management does not believe are reflective of ongoing operating results.The related employer payroll taxes are dependent on the companys stock price and the vesting of restricted stock by employees and the timing and size of stock option exercises,over which management has limited to no control,and as such management does not believe it correlates to the companys operation of the business.Amortization or impairment of acquired intangible assets,impairment of goodwill,certain amortization of deferred tax assets and related foreign exchange effects,significant gains or losses and transaction expenses from the acquisition or disposal of a business and certain gains or losses on investments.The company incurs amortization or impairment of acquired intangible assets and goodwill in connection with acquisitions and may incur significant gains or losses from the acquisition or disposal of a business and therefore excludes these amounts from its non-GAAP measures.The company also excludes certain gains and losses on investments.The company excludes the non-cash amortization of deferred tax assets associated with the realignment of its legal structure,which is not reduced by the effects of the Tax Cuts and Jobs Act,and related foreign exchange effects.The company excludes these items because management does not believe they correlate to the ongoing operating results of the companys business.Restructuring.These charges consist of expenses for employee severance and other exit and disposal costs.The company excludes significant restructuring charges primarily because management does not believe they are reflective of ongoing operating results.Other certain significant gains,losses,or charges that are not indicative of the companys core operating results.These are significant gains,losses,or charges during a period that are the result of isolated events or transactions which have not occurred frequently in the past and are not expected to occur regularly or be repeated in the future.The company excludes these amounts from its results primarily because management does not believe they are indicative of its current or ongoing operating results.These amounts include changes in fair value and the related change in foreign currency exchange rates of equity securities with readily determinable fair values,globally.Change in fair market value of warrant.These are gains or losses associated with a warrant agreement that the company entered into with Adyen,which are attributable to changes in fair value during the period.Income tax effects and adjustments.We use a non-GAAP tax rate for evaluating our operating results.Based on our current long-term projections,we are using a non-GAAP tax rate of 16.5%.This non-GAAP tax rate could change for various reasons including significant changes in our geographic earnings mix or fundamental tax law changes in major jurisdictions in which we operate.In addition to the non-GAAP measures discussed above,the company also uses free cash flow.Free cash flow represents operating cash flows less purchases of property and equipment.The company considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of property,buildings,and equipment,which can then be used to,among other things,invest in the companys business,make strategic acquisitions,repurchase stock and pay dividends.A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in the companys cash balance for the period and does not exclude certain non-discretionary expenditures,such as mandatory debt service requirements.11eBay Inc.Reconciliation of GAAP Operating Income to Non-GAAP Operating Income*Three Months EndedMarch 31,20242023(In millions,except percentages)GAAP operating income$631$558 Stock-based compensation expense and related employer payroll taxes 150 132 Amortization of acquired intangible assets within cost of net revenues and operating expenses 8 10 Restructuring(9)42 Non-recurring legal matters(6)Other general and administrative expenses 2 Total non-GAAP operating income adjustments 143 186 Non-GAAP operating income$774$744 GAAP operating margin 24.7.2%Non-GAAP operating margin 30.3).6%*Presented on a continuing operations basisReconciliation of GAAP Net Income to Non-GAAP Net Income and GAAP Effective Tax Rate to Non-GAAP Effective Tax RateThree Months EndedMarch 31,20242023(In millions,except per share amounts and percentages)GAAP income from continuing operations before income taxes$536$730 GAAP provision for income taxes(97)(161)GAAP net income from continuing operations$439$569 Non-GAAP adjustments to net income from continuing operations:Non-GAAP operating income from continuing operations adjustments(see table above)$143$186 Change in fair value of equity investment in Adevinta 234 (174)Change in fair market value of warrant(149)(38)Change in fair market value of other equity investments 12 14 Income tax effects and adjustments(31)43 Non-GAAP net income from continuing operations$648$600 Diluted net income from continuing operations per share:GAAP$0.85$1.05 Non-GAAP$1.25$1.11 Shares used in GAAP diluted net income per share calculation 519 541 Shares used in non-GAAP diluted net income per share calculation 519 541 GAAP effective tax rate Continuing operations 18.1.1%Income tax effects and adjustments to net income from continuing operations(1.6)%(5.6)%Non-GAAP effective tax rate Continuing operations 16.5.5Reconciliation of Operating Cash Flow to Free Cash FlowThree Months EndedMarch 31,20242023(In millions)Net cash provided by operating activities$615$841 Less:Purchases of property and equipment(143)(132)Free cash flow$472$709 13

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  • 高通(Qualcomm)2024财年第一财季财报(英文版)(50页).pdf

    UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549_FORM 10-Q _(Mark one)QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 24,2024ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to .Commission File Number 0-19528 QUALCOMM Incorporated(Exact name of registrant as specified in its charter)Delaware 95-3685934(State or Other Jurisdiction ofIncorporation or Organization)(I.R.S.EmployerIdentification No.)5775 Morehouse Dr.,San Diego,California 92121-1714(Address of Principal Executive Offices)(Zip Code)(858)587-1121(Registrants telephone number,including area code)Securities registered pursuant to Section 12(b)of the Act:Title of each class Trading Symbol(s)Name of each exchange on which registeredCommon Stock,$0.0001 par value QCOMThe Nasdaq Stock Market LLCIndicate 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 No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting companyEmerging growth companyIf an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No The number of shares outstanding of the registrants common stock was 1,116 million at April 29,2024.QUALCOMM IncorporatedForm 10-QFor the Quarter Ended March 24,2024PageRisk Factors Summary4PART I.FINANCIAL INFORMATIONItem 1.Condensed Consolidated Financial Statements(Unaudited)Condensed Consolidated Balance Sheets6Condensed Consolidated Statements of Operations7Condensed Consolidated Statements of Comprehensive Income8Condensed Consolidated Statements of Cash Flows9Condensed Consolidated Statements of Stockholders Equity10Notes to Condensed Consolidated Financial Statements11Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations18Item 3.Quantitative and Qualitative Disclosures About Market Risk47Item 4.Controls and Procedures47PART II.OTHER INFORMATIONItem 1.Legal Proceedings48Item 1A.Risk Factors48Item 2.Unregistered Sales of Equity Securities and Use of Proceeds48Item 3.Defaults Upon Senior Securities48Item 4.Mine Safety Disclosures48Item 5.Other Information48Item 6.Exhibits49SIGNATURES503Risk Factors Summary:Our business is subject to numerous risks and uncertainties,including those described in the section labeled“Risk Factors”in“Part I,Item 2,Managements Discussion and Analysis of Financial Condition and Results of Operations”of this Quarterly Report.These risks include,but are not limited to,the following:RISKS RELATED TO OUR OPERATING BUSINESSESWe derive a significant portion of our revenues from a small number of customers and licensees,and particularly from their sale of premium tier handset devices.If revenues derived from these customers or licensees decrease or the timing of such revenues fluctuates,our business and results of operations could be negatively affected.Our business,particularly our semiconductor business,may suffer as a result of our customers vertically integrating(i.e.,developing their own integrated circuit products).A significant portion of our business is concentrated in China,and the risks of such concentration are exacerbated by U.S./China trade and national security tensions.RISKS RELATED TO NEW INITIATIVESOur growth depends in part on our ability to extend our technologies and products into new and expanded product areas,and industries and applications beyond mobile handsets.Our research,development and other investments in these new and expanded product areas,industries and applications,and related technologies and products,as well as in our existing technologies and products,and new technologies,may not generate operating income or contribute to future results of operations that meet our expectations.We may engage in acquisitions and other strategic transactions or make investments,or be unable to consummate planned strategic acquisitions,which could adversely affect our results of operations or fail to enhance stockholder value.RISKS RELATED TO SUPPLY AND MANUFACTURINGWe depend on a limited number of third-party suppliers for the procurement,manufacture,assembly and testing of our products manufactured in a fabless production model.If we fail to execute supply strategies that provide supply assurance,technology leadership and reasonable margins,our business and results of operations may be harmed.We are also subject to order and shipment uncertainties that could negatively impact our results of operations.There are numerous risks associated with the operation and control of our manufacturing facilities,including a higher portion of fixed costs relative to a fabless model;environmental compliance and liability;impacts related to climate change;exposure to natural disasters,health crises,geopolitical conflicts and cyber-attacks;timely supply of equipment and materials;and various manufacturing issues.RISKS RELATED TO CYBERSECURITY OR MISAPPROPRIATION OF OUR CRITICAL INFORMATIONOur business and operations could suffer in the event of security breaches of our IT systems,or other misappropriation of our technology,intellectual property or other proprietary or confidential information.RISKS RELATED TO HUMAN CAPITAL MANAGEMENTWe may not be able to attract or retain qualified employees.RISKS SPECIFIC TO OUR LICENSING BUSINESSThe continued and future success of our licensing programs requires us to continue to evolve our patent portfolio and to renew or renegotiate license agreements that are expiring.Efforts by some OEMs to avoid paying fair and reasonable royalties for the use of our intellectual property may require the investment of substantial management time and financial resources and may result in legal decisions or actions by governments,courts,regulators or agencies,Standards Development Organizations(SDOs)or other industry organizations that harm our business.Changes in our patent licensing practices,whether due to governmental investigations,legal challenges or otherwise,could adversely impact our business and results of operations.4RISKS RELATED TO REGULATORY AND LEGAL CHALLENGESOur business may suffer as a result of adverse rulings in governmental investigations or proceedings or other legal proceedings.RISKS RELATED TO INDUSTRY DYNAMICS AND COMPETITIONOur revenues depend on our customers and licensees sales of products and services based on CDMA,OFDMA and other communications technologies,including 5G,and customer demand for our products based on these technologies.Our industry is subject to intense competition in an environment of rapid technological change.Our success depends in part on our ability to adapt to such change and compete effectively;and such change and competition could result in decreased demand for our products and technologies or declining average selling prices for our products or those of our customers or licensees.RISKS RELATED TO PRODUCT DEFECTS OR SECURITY VULNERABILITIESFailures in our products,or in the products of our customers or licensees,including those resulting from security vulnerabilities,defects or errors,could harm our business.RISKS RELATED TO INTELLECTUAL PROPERTYThe enforcement and protection of our intellectual property may be expensive,could fail to prevent misappropriation or unauthorized use of our intellectual property,could result in the loss of our ability to enforce one or more patents,and could be adversely affected by changes in patent laws,by laws in certain foreign jurisdictions that may not effectively protect our intellectual property and by ineffective enforcement of laws in such jurisdictions.Claims by other companies that we infringe their intellectual property could adversely affect our business.Our use of open source software may harm our business.GENERAL RISK FACTORSWe operate in the highly cyclical semiconductor industry,which is subject to significant downturns.We are also susceptible to declines in global,regional and local economic conditions generally.Our stock price and financial results are subject to substantial quarterly and annual fluctuations due to these dynamics,among others.Geopolitical conflicts,natural disasters,pandemics and other health crises,and other factors outside of our control,could significantly disrupt our business.Our business may suffer due to the impact of,or our failure to comply with,the various existing,new or amended laws,regulations,policies or standards to which we are subject.There are risks associated with our debt.Tax liabilities could adversely affect our results of operations.5PART I.FINANCIAL INFORMATIONITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)QUALCOMM IncorporatedCONDENSED CONSOLIDATED BALANCE SHEETS(In millions,except par value amounts)(Unaudited)March 24,2024September 24,2023ASSETSCurrent assets:Cash and cash equivalents$9,219$8,450 Marketable securities 4,632 2,874 Accounts receivable,net 3,054 3,183 Inventories 6,087 6,422 Held for sale assets 341 Other current assets 1,240 1,194 Total current assets 24,232 22,464 Deferred tax assets 3,978 3,310 Property,plant and equipment,net 4,724 5,042 Goodwill 10,760 10,642 Other intangible assets,net 1,331 1,408 Held for sale assets 88 Other assets 8,142 8,086 Total assets$53,167$51,040 LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Trade accounts payable$2,314$1,912 Payroll and other benefits related liabilities 1,253 1,685 Unearned revenues 253 293 Short-term debt 914 914 Held for sale liabilities 333 Other current liabilities 4,409 4,491 Total current liabilities 9,143 9,628 Unearned revenues 135 99 Income taxes payable 526 1,080 Long-term debt 14,543 14,484 Held for sale liabilities 38 Other liabilities 4,351 4,130 Total liabilities 28,698 29,459 Commitments and contingencies(Note 5)Stockholders equity:Preferred stock,$0.0001 par value;8 shares authorized;none outstanding Common stock and paid-in capital,$0.0001 par value;6,000 shares authorized;1,118 and 1,114 shares issued and outstanding,respectively 66 490 Retained earnings 23,965 20,733 Accumulated other comprehensive income 438 358 Total stockholders equity 24,469 21,581 Total liabilities and stockholders equity$53,167$51,040 See accompanying notes.6QUALCOMM IncorporatedCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In millions,except per share data)(Unaudited)Three Months EndedSix Months EndedMarch 24,2024March 26,2023March 24,2024March 26,2023Revenues:Equipment and services$7,950$7,846$16,266$15,630 Licensing 1,439 1,429 3,059 3,108 Total revenues 9,389 9,275 19,325 18,738 Costs and expenses:Cost of revenues 4,106 4,153 8,418 8,197 Research and development 2,236 2,210 4,332 4,461 Selling,general and administrative 707 614 1,335 1,238 Other(Note 2)208 (28)288 Total costs and expenses 7,049 7,185 14,057 14,184 Operating income 2,340 2,090 5,268 4,554 Interest expense(172)(179)(350)(348)Investment and other income(expense),net 330 (16)542 60 Income from continuing operations before income taxes 2,498 1,895 5,460 4,266 Income tax expense(223)(193)(373)(291)Income from continuing operations 2,275 1,702 5,087 3,975 Discontinued operations,net of income taxes 51 2 6 (36)Net income$2,326$1,704$5,093$3,939 Basic earnings(loss)per share:Continuing operations$2.03$1.53$4.55$3.55 Discontinued operations 0.05 0.01 (0.03)Net income$2.08$1.53$4.56$3.52 Diluted earnings(loss)per share:Continuing operations$2.02$1.52$4.50$3.52 Discontinued operations 0.04 0.01 (0.03)Net income$2.06$1.52$4.51$3.49 Shares used in per share calculations:Basic 1,117 1,116 1,116 1,119 Diluted 1,130 1,123 1,129 1,127 See accompanying notes.7QUALCOMM IncorporatedCONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(In millions)(Unaudited)Three Months EndedSix Months EndedMarch 24,2024March 26,2023March 24,2024March 26,2023Net income$2,326$1,704$5,093$3,939 Other comprehensive income,net of income taxes:Foreign currency translation(losses)gains(62)72 21 234 Net unrealized gains on available-for-sale debt securities 6 21 38 36 Net unrealized(losses)gains on derivative instruments(13)16 4 134 Other(losses)gains(1)6 6 Other reclassifications included in net income 15 10 17 30 Total other comprehensive(loss)income(55)125 80 440 Comprehensive income$2,271$1,829$5,173$4,379 See accompanying notes.8QUALCOMM IncorporatedCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions)(Unaudited)Six Months EndedMarch 24,2024March 26,2023Operating Activities:Net income from continuing operations$5,087$3,975 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization expense 848 868 Income tax provision less than income tax payments(1,764)(631)Share-based compensation expense 1,307 1,262 Net gains on marketable securities and other investments(273)(45)Impairment losses on other investments 62 101 Other items,net(30)16 Changes in assets and liabilities:Accounts receivable,net 92 1,964 Inventories 328 (396)Other assets 221 615 Trade accounts payable 420 (2,358)Payroll,benefits and other liabilities 286 (672)Unearned revenues 10 (86)Net cash used by operating activities from discontinued operations(91)(61)Net cash provided by operating activities 6,503 4,552 Investing Activities:Capital expenditures(398)(851)Purchases of debt and equity marketable securities(2,842)(22)Proceeds from sales and maturities of debt and equity marketable securities 1,178 491 Acquisitions and other investments,net of cash acquired(165)(61)Proceeds from sales of property,plant and equipment 8 121 Proceeds from other investments 62 11 Other items,net(38)(46)Net cash used by investing activities(2,195)(357)Financing Activities:Proceeds from short-term debt 799 4,668 Repayment of short-term debt(799)(4,668)Proceeds from long-term debt 1,880 Repayment of long-term debt (1,446)Proceeds from issuance of common stock 195 232 Repurchases and retirements of common stock(1,515)(2,173)Dividends paid(1,790)(1,676)Payments of tax withholdings related to vesting of share-based awards(515)(332)Other items,net 4 (43)Net cash used by financing activities(3,621)(3,558)Effect of exchange rate changes on cash and cash equivalents 5 46 Net increase in total cash and cash equivalents 692 683 Total cash and cash equivalents at beginning of period(including$77 and$326 classified as held for sale at September 24,2023 and September 25,2022,respectively)8,527 3,099 Total cash and cash equivalents at end of period(including$294 classified as held for sale at March 26,2023)$9,219$3,782 See accompanying notes.9QUALCOMM IncorporatedCONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY(In millions,except per share data)(Unaudited)Three Months EndedSix Months EndedMarch 24,2024March 26,2023March 24,2024March 26,2023Total stockholders equity,beginning balance$23,058$18,810$21,581$18,013 Common stock and paid-in capital:Balance at beginning of period$490$195 Common stock issued under employee benefit plans 193 194 195 232 Repurchases and retirements of common stock(731)(827)(1,504)(1,418)Share-based compensation 748 656 1,377 1,323 Tax withholdings related to vesting of share-based payments(144)(23)(515)(332)Common stock issued in acquisition 23 Balance at end of period 66 66 Retained earnings:Balance at beginning of period 22,565 18,517 20,733 17,840 Net income 2,326 1,704 5,093 3,939 Repurchases and retirements of common stock (76)(11)(755)Dividends(926)(865)(1,850)(1,744)Balance at end of period 23,965 19,280 23,965 19,280 Accumulated other comprehensive income(loss):Balance at beginning of period 493 293 358 (22)Other comprehensive(loss)income(55)125 80 440 Balance at end of period 438 418 438 418 Total stockholders equity,ending balance$24,469$19,698$24,469$19,698 Dividends per share announced$0.80$0.75$1.60$1.50 See accompanying notes.10Note 1.Basis of Presentation and Significant Accounting Policies UpdateFinancial Statement Preparation.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 notes required by GAAP for complete financial statements.In the opinion of management,the interim financial information includes all normal recurring adjustments necessary for a fair statement of the results for the interim periods.These condensed consolidated financial statements are unaudited and should be read in conjunction with our Annual Report on Form 10-K for our fiscal year ended September 24,2023.Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.We operate and report using a 52-53 week fiscal year ending on the last Sunday in September.Each of the three and six months ended March 24,2024 and March 26,2023 included 13 weeks and 26 weeks,respectively.The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our condensed consolidated financial statements and the accompanying notes.Actual results could differ from those estimates.Certain prior year amounts have been reclassified to conform to the current year presentation.Recent Accounting Pronouncements.Segment Reporting Disclosures:In November 2023,the Financial Accounting Standards Board(FASB)issued new requirements to disclose certain incremental segment information on an annual and interim basis,including(among other items)additional disclosure about significant segment expenses.We will adopt the new requirements for our annual periods starting in fiscal 2025(and interim periods thereafter)on a retrospective basis.Income Tax Disclosures:In December 2023,the FASB issued new requirements to disclose annually certain additional detailed income tax information related to the effective tax rate reconciliation and income taxes paid,among other items.We will adopt the new requirements starting in fiscal 2026 on a retrospective basis.Note 2.Composition of Certain Financial Statement ItemsInventories(in millions)March 24,2024September 24,2023Raw materials$157$176 Work-in-process 3,670 4,096 Finished goods 2,260 2,150$6,087$6,422 Other Current Liabilities(in millions)March 24,2024September 24,2023Customer incentives and other customer-related liabilities$2,441$1,821 Income taxes payable 1,093 1,717 Other 875 953$4,409$4,491 Revenues.We disaggregate our revenues by segment(Note 6),by products and services(as presented on our condensed consolidated statement of operations),and for our QCT(Qualcomm CDMA Technologies)segment,by revenue stream,which is based on the industry and application in which our products are sold(as presented below).In certain cases,the determination of QCT revenues by industry and application requires the use of certain assumptions.Substantially all of QCTs revenues consist of equipment revenues that are recognized at a point in time,and substantially all of QTLs(Qualcomm Technology Licensing)revenues represent licensing revenues that are recognized over time and are principally from royalties generated through our licensees sales of mobile handsets.QUALCOMM IncorporatedNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)11QCT revenue streams were as follows(in millions):Three Months EndedSix Months EndedMarch 24,2024March 26,2023March 24,2024March 26,2023Handsets(1)$6,180$6,105$12,867$11,860 Automotive(2)603 447 1,201 903 IoT(internet of things)(3)1,243 1,390 2,381 3,071 Total QCT revenues$8,026$7,942$16,449$15,834 (1)Includes revenues from products sold for use in mobile handsets.(2)Includes revenues from products sold for use in automobiles,including connectivity,digital cockpit and advanced driver assistance systems(ADAS)and automated driving(AD).(3)Primarily includes products sold for use in the following industries and applications:consumer(including computing,voice and music and extended reality(XR),edge networking(including mobile broadband and wireless access points)and industrial(including handhelds,retail,tracking and logistics and utilities).Revenues recognized from performance obligations satisfied(or partially satisfied)in previous periods generally include certain QCT sales-based royalty revenues related to system software,certain amounts related to QCT customer incentives and QTL royalty revenues recognized related to devices sold in prior periods(including adjustments to prior period royalty estimates,which includes the impact of the reporting by our licensees of actual royalties due)and were as follows(in millions):Three Months EndedSix Months EndedMarch 24,2024March 26,2023March 24,2024March 26,2023Revenues recognized from previously satisfied performance obligations$55$170$206$337 Unearned revenues(which are considered contract liabilities)consist primarily of certain customer contracts for which QCT received fees upfront and QTL license fees for intellectual property with continuing performance obligations.In the six months ended March 24,2024 and March 26,2023,we recognized revenues of$227 million and$241 million,respectively,that were recorded as unearned revenues at September 24,2023 and September 25,2022,respectively.Remaining performance obligations,which are primarily included in unearned revenues(as presented on our condensed consolidated balance sheet),represent the aggregate amount of the transaction price of certain customer contracts yet to be recognized as revenues as of the end of the reporting period and exclude revenues related to(a)contracts that have an original expected duration of one year or less and(b)sales-based royalties(i.e.,future royalty revenues)pursuant to our license agreements.Concentrations.A significant portion of our revenues are concentrated with a small number of customers/licensees of our QCT and QTL segments.The comparability of customer/licensee concentrations for the interim periods presented are impacted by the timing of customer/licensee device launches and/or innovation cycles and other seasonal trends,among other fluctuations in demand.Revenues from each customer/licensee that were 10%or greater of total revenues were as follows:Three Months EndedSix Months EndedMarch 24,2024March 26,2023March 24,2024March 26,2023Customer/licensee(x)24%!%Customer/licensee(y)19 27 22 31 Customer/licensee(z)14*14*Less than 10%QUALCOMM IncorporatedNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)12Other Income,Costs and Expenses.Other income and expenses in the three months ended March 26,2023 and six months ended March 24,2024 and March 26,2023 included certain restructuring amounts(primarily related to accrued severance costs)from cost reduction actions initiated in fiscal 2023.Investment and Other Income(Expense),Net(in millions)Three Months EndedSix Months EndedMarch 24,2024March 26,2023March 24,2024March 26,2023Interest and dividend income$160$59$312$114 Net(losses)gains on marketable securities(3)9 8 20 Net gains on other investments 155 159 Net gains on deferred compensation plan assets 62 21 126 47 Impairment losses on other investments(50)(87)(62)(101)Other 6 (18)(1)(20)$330$(16)$542$60 Discontinued Operations.On June 1,2023,SSW Partners completed the sale of Veoneers Active Safety business to Magna International Inc.for net cash proceeds of$1.5 billion.On March 1,2024,SSW Partners completed the sale of Veoneers Restraint Control Systems(RCS)business(collectively with the Active Safety business,the Non-Arriver businesses)to American Industrial Partners Capital Fund VII.Through the date of disposition by SSW Partners,the assets and liabilities of the Non-Arriver businesses have been presented as held for sale on our condensed consolidated balance sheets,and the operating results(including the gain or loss on sale,the amounts of which were not material)and cash flows have been presented as discontinued operations.Cash flows from investing(which includes cash proceeds from the sale of the RCS business)and financing activities from discontinued operations reported for the periods presented were not material.Note 3.Income TaxesWe estimate our annual effective income tax rate to be 7%for fiscal 2024,which is lower than the U.S.federal statutory rate,primarily due to(i)a significant portion of our income qualifying for preferential treatment as foreign-derived intangible income(FDII)at a 13fective tax rate,which includes certain additional benefits from the requirement to capitalize research and development expenditures for federal income tax purposes,(ii)a benefit from our federal research and development tax credit and(iii)excess tax benefits associated with share-based awards.Our effective tax rate of 9%for the second quarter of fiscal 2024 was higher than our estimated annual effective tax rate of 7%primarily due to net discrete tax benefits realized in the first quarter of fiscal 2024.Our effective tax rate of 9%for the second quarter of fiscal 2024 was lower than our effective tax rate of 10%for the second quarter of fiscal 2023,in part reflecting the additional benefit from FDII deductions related to certain changes made in the second half of fiscal 2023 related to income attribution and sourcing of research and development expenditures.Note 4.Capital StockStock Repurchase Program.On October 12,2021,we announced a$10.0 billion stock repurchase program.The stock repurchase program has no expiration date.At March 24,2024,$3.6 billion remained authorized for repurchase under our stock repurchase program.Shares Outstanding.Shares of common stock outstanding at March 24,2024 were as follows(in millions):Balance at September 24,2023 1,114 Issued 15 Repurchased(11)Balance at March 24,2024 1,118 Dividends.On March 5,2024,we announced an increase in our quarterly dividend per share of common stock from$0.80 to$0.85,which is effective for dividends payable after March 21,2024.On April 17,2024,we announced a cash dividend of$0.85 per share on our common stock,payable on June 20,2024 to stockholders of record as of the close of business on May 30,2024.QUALCOMM IncorporatedNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)13Earnings Per Common Share.Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period.Diluted earnings per share is computed by dividing net income by the combination of the weighted-average number of common shares outstanding and the weighted-average number of dilutive common share equivalents,comprised of shares issuable under our share-based compensation plans,during the reporting period,using the treasury stock method.The following table provides information about the diluted earnings per share calculation(in millions):Three Months EndedSix Months EndedMarch 24,2024March 26,2023March 24,2024March 26,2023Dilutive common share equivalents included in diluted shares 13 7 12 8 Shares of common stock equivalents not included because the effect would be anti-dilutive or certain performance conditions were not satisfied at the end of the period 5 7 5 Note 5.Commitments and ContingenciesLegal and Regulatory Proceedings.Consolidated Securities Class Action Lawsuit:On January 23,2017 and January 26,2017,securities class action complaints were filed by purported stockholders of us in the United States District Court for the Southern District of California against us and certain of our then current and former officers and directors.The complaints alleged,among other things,that we violated Sections 10(b)and 20(a)of the Securities Exchange Act of 1934,as amended,and Rule 10b-5 thereunder,by making false and misleading statements and omissions of material fact in connection with certain allegations that we are or were engaged in anticompetitive conduct.The complaints sought unspecified damages,interest,fees and costs.The court consolidated the two actions,and on July 3,2017,the plaintiffs filed a consolidated amended complaint asserting the same basic theories of liability and requesting the same basic relief.On May 23,2022,the plaintiffs filed a motion for class certification,and on March 20,2023,the court issued an order granting in part and denying in part the plaintiffs motion for class certification.The order denied class certification on the basis of alleged misrepresentations relating to our chip-level licensing practices,but certified a class on the basis of alleged misrepresentations relating to the separate operations of QCT and QTL.Trial is scheduled to begin on October 28,2024.We intend to continue to vigorously defend ourselves in this matter.Consumer Class Action Lawsuits:Beginning in January 2017,a number of consumer class action complaints were filed against us in the United States District Courts for the Southern and Northern Districts of California,each on behalf of a putative class of purchasers of cellular phones and other cellular devices.The cases filed in the Southern District of California were subsequently transferred to the Northern District of California.On July 11,2017,the plaintiffs filed a consolidated amended complaint alleging that we violated California and federal antitrust and unfair competition laws by,among other things,refusing to license standard-essential patents to our competitors,conditioning the supply of certain of our baseband chipsets on the purchaser first agreeing to license our entire patent portfolio,entering into exclusive deals with companies,including Apple Inc.,and charging unreasonably high royalties that do not comply with our commitments to standard setting organizations.The complaint sought unspecified damages and disgorgement and/or restitution,as well as an order that we be enjoined from further unlawful conduct.On September 27,2018,the court certified the class.We appealed the courts class certification order to the United States Court of Appeals for the Ninth Circuit(Ninth Circuit).On September 29,2021,the Ninth Circuit vacated the class certification order,ruling that the district court had failed to correctly assess the propriety of applying California law to a nationwide class,and remanded the case to the district court.On June 10,2022,the plaintiffs filed an amended complaint,limiting the proposed class to California residents rather than a nationwide class.We filed a motion to dismiss the amended complaint,and on January 6,2023,the court issued an order granting in part and denying in part our motion to dismiss.We subsequently filed a motion for summary judgment on the plaintiffs remaining claims.The court granted our motion in its entirety and,on October 5,2023,entered final judgment in Qualcomms favor.On November 2,2023,the plaintiffs filed a notice of appeal to the Ninth Circuit.We intend to continue to vigorously defend ourselves in this matter.QUALCOMM IncorporatedNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)14Beginning in November 2017,several other consumer class action complaints were filed against us in Canada(in the Supreme Court of British Columbia and the Quebec Superior Court),Israel(in the Haifa District Court)and the United Kingdom(in the Competition Appeal Tribunal),each on behalf of a putative class of purchasers of cellular phones and other cellular devices,alleging violations of certain of those countries competition and consumer protection laws and seeking damages.The claims in these complaints are similar to those in the U.S.consumer class action complaints described above.These matters are at various stages of litigation,and we intend to continue to vigorously defend ourselves.ParkerVision,Inc.v.QUALCOMM Incorporated:On May 1,2014,ParkerVision filed a complaint against us in the United States District Court for the Middle District of Florida alleging that certain of our products infringed seven ParkerVision patents.On August 21,2014,ParkerVision amended the complaint,alleging that we infringed 11 ParkerVision patents and sought damages and injunctive and other relief.ParkerVision subsequently reduced the number of patents asserted to three.The asserted patents are now expired,and injunctive relief is no longer available.ParkerVision continues to seek damages related to the sale of many of our radio frequency(RF)products sold between 2008 and 2018.On March 23,2022,the court entered judgment in our favor on all claims and closed the case.On April 20,2022,ParkerVision filed a notice of appeal to the United States Court of Appeals for the Federal Circuit,and on November 6,2023,the court held a hearing on the appeal.The court has not yet issued a ruling.We intend to continue to vigorously defend ourselves in this matter.Arm Ltd.v.QUALCOMM Incorporated:On August 31,2022,Arm Ltd.(Arm)filed a complaint against us in the United States District Court for the District of Delaware.Our subsidiaries Qualcomm Technologies,Inc.and NuVia,Inc.(Nuvia)are also named in the complaint.The complaint alleges that following our acquisition of Nuvia,we and Nuvia breached Nuvias Architecture License Agreement with Arm(the Nuvia ALA)by failing to comply with the termination obligations under the Nuvia ALA.The complaint seeks specific performance,including that we cease all use of and destroy any technology that was developed under the Nuvia ALA,including processor core technology.Arm also contends that we violated the Lanham Act through trademark infringement and false designation of origin through unauthorized use of Arms trademarks and seeks associated injunctive and declaratory relief.Arm further seeks exemplary or punitive damages,costs,expenses and reasonable attorneys fees,and equitable relief addressing any infringement occurring after entry of judgment.On September 30,2022,we filed our Answer and Counterclaim in response to Arms complaint denying Arms claims.Our counterclaim seeks a declaratory judgment that we did not breach the Nuvia ALA or the Technology License Agreement between Nuvia and Arm(together with the Nuvia ALA,the Arm-Nuvia Agreements)and that,following the acquisition of Nuvia,our architected cores(including all further developments,iterations or instantiations of the technology we acquired from Nuvia),server System-on-Chip(SoC)and compute SoC are fully licensed under our existing Architecture License Agreement with Arm(the Qualcomm ALA)and Technology License Agreement with Arm(together with the Qualcomm ALA,the Arm-Qualcomm Agreements).We further seek an order enjoining Arm from making any claim that our products are not licensed under the Arm-Qualcomm Agreements,are not Arm-compliant or that we are prohibited from using Arms marks in the marketing of any such products.On October 26,2022,we filed an Amended Counterclaim seeking additional declaratory relief that certain statements Arm is making in the marketplace concerning our rights under the Arm-Qualcomm Agreements are false,and that Arm has no right to prevent us from shipping our products,which are validly licensed.On March 22,2024,we filed a Second Amended Counterclaim asserting that Arm has breached the Arm-Nuvia Agreements by continuing to use Nuvia technology and by failing to return or destroy Nuvia confidential information after the Arm-Nuvia Agreements were terminated.The Second Amended Counterclaim seeks damages related to the asserted breaches.Trial is scheduled to begin on December 16,2024.We intend to continue to vigorously defend ourselves against Arms claims in this matter.On April 18,2024,we filed a separate complaint(captioned QUALCOMM Incorporated v.Arm Ltd.)against Arm in the United States District Court for the District of Delaware.The complaint alleges that Arm has breached the Qualcomm ALA by failing to provide certain deliverables that Arm is obligated to provide.The complaint seeks an order that Arm comply with its contractual obligations,damages,and additional relief.Contingent Losses and Other Considerations:Litigation and investigations are inherently uncertain,and we face difficulties in evaluating or estimating likely outcomes or ranges of possible loss,particularly in antitrust and trade regulation investigations.We have not recorded any accrual at March 24,2024 for contingent losses associated with the pending matters described above based on our belief that losses,while reasonably possible,are not probable.Further,any possible amount or range of loss cannot be reasonably estimated at this time.The unfavorable resolution of one or more of these matters could have a material adverse effect on our business,results of operations,financial condition or cash flows.We are engaged in numerous other legal actions not described above(for example,our 2010 European Commission matter relating to the Icera QUALCOMM IncorporatedNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)15complaint,and other matters arising in the ordinary course of our business,including those relating to employment matters or the initiation or defense of proceedings relating to intellectual property rights)and,while there can be no assurance,we believe that the ultimate outcome of these other legal actions will not have a material adverse effect on our business,results of operations,financial condition or cash flows.Note 6.Segment InformationWe are organized on the basis of products and services and have three reportable segments.We conduct business primarily through our QCT semiconductor business and our QTL licensing business.QCT develops and supplies integrated circuits and system software based on 3G/4G/5G and other technologies,including RFFE(radio frequency front-end),for use in mobile devices;automotive systems for connectivity,digital cockpit and ADAS/AD;and IoT including consumer electronic devices,industrial devices,and edge networking products.QTL grants licenses or otherwise provides rights to use portions of our intellectual property portfolio,which includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products.Our QSI(Qualcomm Strategic Initiatives)reportable segment makes strategic investments.We also have nonreportable segments,including QGOV(Qualcomm Government Technologies)and our cloud computing processing initiative.The table below presents revenues and earnings(loss)before income taxes(EBT)for reportable segments(in millions):Three Months EndedSix Months EndedMarch 24,2024March 26,2023March 24,2024March 26,2023RevenuesQCT$8,026$7,942$16,449$15,834 QTL 1,318 1,290 2,778 2,814 QSI 3 7 16 13 Reconciling items 42 36 82 77 Total$9,389$9,275$19,325$18,738 EBTQCT$2,288$2,107$4,881$4,291 QTL 933 871 2,013 1,988 QSI 96 (53)107 (61)Reconciling items(819)(1,030)(1,541)(1,952)Total$2,498$1,895$5,460$4,266 Reconciling items for revenues and EBT in the previous table were as follows(in millions):Three Months EndedSix Months EndedMarch 24,2024March 26,2023March 24,2024March 26,2023RevenuesNonreportable segments$42$36$82$77 EBTUnallocated cost of revenues$(57)$(47)$(113)$(112)Unallocated research and development expenses(584)(494)(1,116)(1,018)Unallocated selling,general and administrative expenses(229)(126)(414)(292)Unallocated other(expenses)income(Note 2)(208)28 (288)Unallocated interest expense(172)(178)(350)(348)Unallocated investment and other income,net 228 36 434 123 Nonreportable segments(5)(13)(10)(17)$(819)$(1,030)$(1,541)$(1,952)QUALCOMM IncorporatedNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)16Note 7.Fair Value Measurements and Marketable SecuritiesThe following table presents our fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at March 24,2024(in millions):Level 1Level 2Level 3TotalAssets Cash equivalents$6,197$1,813$8,010 Marketable securities:Corporate bonds and notes 3,844 3,844 U.S.Treasury securities and government-related securities 217 39 256 Mortgage-and asset-backed securities 402 402 Equity securities 130 130 Total marketable securities 347 4,285 4,632 Derivative instruments 27 27 Other investments 889 33 922 Total assets measured at fair value$7,433$6,125$33$13,591 Liabilities Derivative instruments$243$243 Other liabilities 886 886 Total liabilities measured at fair value$886$243$1,129 Long-term Debt.At March 24,2024,the aggregate fair value of our outstanding fixed-rate notes,based on Level 2 inputs,was approximately$14.8 billion.Marketable Securities.At March 24,2024 and September 24,2023,our marketable securities were all classified as current and were primarily comprised of available-for-sale debt securities(substantially all of which were corporate bonds and notes).The contractual maturities of available-for-sale debt securities were as follows(in millions):March 24,2024Years to MaturityLess than one year$1,728 One to five years 2,367 Five to ten years 5 No single maturity date 402 Total$4,502 Debt securities with no single maturity date included mortgage-and asset-backed securities.QUALCOMM IncorporatedNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)17ITEM 2.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThis information should be read in conjunction with the condensed consolidated financial statements and the notes thereto included in“Part I,Item 1”of this Quarterly Report and with“Managements Discussion and Analysis of Financial Condition and Results of Operations”for the fiscal year ended September 24,2023 contained in our 2023 Annual Report on Form 10-K.This Quarterly Report(including but not limited to this section titled Managements Discussion and Analysis of Financial Condition and Results of Operations)contains forward-looking statements.Words such as“expects,”“anticipates,”“intends,”“plans,”“believes,”“seeks,”“estimates,”“may,”“will,”“would”and similar expressions or variations of such words are intended to identify forward-looking statements,but are not the exclusive means of identifying forward-looking statements in this Quarterly Report.Additionally,statements concerning future matters such as our future business,prospects,results of operations or financial condition;research and development or technology investments;new or enhanced products,services or technologies;emerging industries or business models;design wins or product launches;industry,market or technology trends,dynamics or transitions;our expectations regarding future demand or supply conditions;strategic investments or acquisitions,and the anticipated timing or benefits thereof;legal or regulatory matters;U.S./China trade or national security tensions;vertical integration by our customers;competition;annual effective tax rates;and other statements regarding matters that are not historical are also forward-looking statements.Although forward-looking statements in this Quarterly Report reflect our good faith judgment,such statements can only be based on facts and factors currently known by us.Consequently,forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements.Factors that could cause or contribute to such differences in results and outcomes include without limitation those discussed under the heading“Risk Factors”below,as well as those discussed elsewhere in this Quarterly Report.Readers are urged not to place undue reliance on these forward-looking statements,which speak only as of the date of this Quarterly Report.We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report.Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report,which attempt to advise interested parties of the risks and factors that may affect our business,financial condition,results of operations and prospects.Second Quarter Fiscal 2024 OverviewRevenues for the second quarter of fiscal 2024 were$9.4 billion,an increase of 1%compared to the year ago quarter,with net income of$2.3 billion,an increase of 37%compared to the year ago quarter.Key items from the second quarter of fiscal 2024 included:QCT revenues increased by 1%in the second quarter of fiscal 2024 compared to the year ago quarter,due to higher automotive and handsets revenues,partially offset by lower IoT revenues.QTL revenues increased by 2%in the second quarter of fiscal 2024 compared to the year ago quarter,due to an increase in estimated sales of 3G/4G/5G-based multimode products.Investment and other income(expense),net increased$346 million compared to the year ago quarter,primarily due to higher net gains on QSI investments and higher interest and dividend income.Our Business and Operating SegmentsWe develop and commercialize foundational technologies and products used in mobile devices and other wireless products.We derive revenues principally from sales of integrated circuit products and licensing our intellectual property,including patents and other rights.We are organized on the basis of products and services and have three reportable segments.We conduct business primarily through our QCT(Qualcomm CDMA Technologies)semiconductor business and our QTL(Qualcomm Technology Licensing)licensing business.Our QSI(Qualcomm Strategic Initiatives)reportable segment makes strategic investments.We also have nonreportable segments,including QGOV(Qualcomm Government Technologies)and our cloud computing processing initiative.Our reportable segments are operated by QUALCOMM Incorporated and its direct and indirect subsidiaries.QTL is operated by QUALCOMM Incorporated,which owns the vast majority of our patent portfolio.Substantially all of our products and services businesses,including QCT,and substantially all of our engineering and research and development functions are operated by Qualcomm Technologies,Inc.(QTI),a wholly-owned subsidiary of QUALCOMM Incorporated,18and QTIs subsidiaries.Neither QTI nor any of its subsidiaries has any right,power or authority to grant any licenses or other rights under or to any patents owned by QUALCOMM Incorporated.Seasonality.Many of our products and much of our intellectual property are incorporated into consumer wireless devices,which are subject to seasonality and other fluctuations in demand.Our revenues have historically fluctuated based on consumer demand for devices,as well as on the timing of customer/licensee device launches and/or innovation cycles(such as the transition to the next generation of wireless technologies).This has resulted in fluctuations in QCT revenues in advance of and during device launches incorporating our products and in QTL revenues when licensees sales occur.These trends may or may not continue in the future.Further,the trends for QTL have been,and may in the future be,impacted by disputes and/or resolutions with licensees and/or governmental investigations or proceedings.Results of OperationsRevenues(in millions)Three Months EndedSix Months EndedMarch 24,2024March 26,2023ChangeMarch 24,2024March 26,2023ChangeEquipment and services$7,950$7,846$104$16,266$15,630$636 Licensing 1,439 1,429 10 3,059 3,108 (49)$9,389$9,275$114$19,325$18,738$587 Second quarter 2024 vs.2023The increase in revenues in the second quarter of fiscal 2024 was primarily due to$98 million in higher equipment and services revenues from our QCT segment.First six months 2024 vs.2023The increase in revenues in the first six months of fiscal 2024 was primarily due to$624 million in higher equipment and services revenues from our QCT segment.Costs and Expenses(in millions,except percentages)Three Months EndedSix Months EndedMarch 24,2024March 26,2023ChangeMarch 24,2024March 26,2023ChangeCost of revenues$4,106$4,153$(47)$8,418$8,197$221 Gross margin 56UVV%Second quarter 2024 vs.2023Gross margin percentage increased in the second quarter of fiscal 2024 primarily due to an increase in QCT gross margin.Three Months EndedSix Months EndedMarch 24,2024March 26,2023ChangeMarch 24,2024March 26,2023ChangeResearch and development$2,236$2,210$26$4,332$4,461$(129)%of revenues 24$%Second quarter 2024 vs.2023The increase in research and development expenses in the second quarter of fiscal 2024 was primarily due to: $42 million increase in share-based compensation expense $23 million increase in expenses driven by revaluation of our deferred compensation obligation-$38 million decrease driven by lower costs related to the development of wireless and integrated circuit technologies(including 5G and application processor technologies).This was primarily driven by a decrease in employee-related costs as a result of certain restructuring actions initiated in fiscal 2023(which were substantially completed by the first quarter of fiscal 2024)to fund continued investments in key growth and diversification opportunities,partially offset by higher employee cash incentive program costs.19First six months 2024 vs.2023The decrease in research and development expenses in the first six months of fiscal 2024 was primarily due to:-$194 million decrease driven by lower costs related to the development of wireless and integrated circuit technologies(including 5G and application processor technologies).This was primarily driven by a decrease in employee-related costs as a result of certain restructuring actions initiated in fiscal 2023(which were substantially completed by the first quarter of fiscal 2024)to fund continued investments in key growth and diversification opportunities,partially offset by higher employee cash incentive program costs. $48 million increase in expenses driven by revaluation of our deferred compensation obligationThree Months EndedSix Months EndedMarch 24,2024March 26,2023ChangeMarch 24,2024March 26,2023ChangeSelling,general and administrative$707$614$93$1,335$1,238$97%of revenues 8%7%7%7%Second quarter 2024 vs.2023The increase in selling,general and administrative expenses in the second quarter of fiscal 2024 included: $30 million increase in share-based compensation expense $15 million increase in expenses driven by revaluation of our deferred compensation obligation $15 million increase in sales and marketing expensesFirst six months 2024 vs.2023The increase in selling,general and administrative expenses in the first six months of fiscal 2024 included: $30 million increase in expenses driven by revaluation of our deferred compensation obligation $21 million increase in share-based compensation expense $21 million increase in litigation costs-$26 million decrease in employee-related expenses(which included higher employee cash incentive program costs)Three Months EndedSix Months EndedMarch 24,2024March 26,2023ChangeMarch 24,2024March 26,2023ChangeOther expense(income)$208$(208)$(28)$288$(316)Second quarter and first six months 2024 vs.2023Other income and expenses in the second quarter of fiscal 2023 and the first six months of fiscal 2024 and 2023 included certain restructuring amounts(primarily related to accrued severance costs)from cost reduction actions initiated in fiscal 2023.20Interest Expense and Investment and Other Income,Net(in millions)Three Months EndedSix Months EndedMarch 24,2024March 26,2023ChangeMarch 24,2024March 26,2023ChangeInterest expense$172$179$(7)$350$348$2 Investment and other income(expense),netInterest and dividend income$160$59$101$312$114$198 Net(losses)gains on marketable securities(3)9 (12)8 20 (12)Net gains on other investments 155 155 159 159 Net gains on deferred compensation plan assets 62 21 41 126 47 79 Impairment losses on other investments(50)(87)37 (62)(101)39 Other 6 (18)24 (1)(20)19$330$(16)$346$542$60$482 The increase in interest and dividend income in the second quarter and first six months of fiscal 2024 was primarily due to higher interest rates earned on higher balances of interest-bearing securities.Net gains on other investments in the second quarter and first six months of fiscal 2024 was primarily driven by certain of our QSI non-marketable equity investments.Income Tax Expense(in millions,except percentages)The following table summarizes the primary factors that caused our income tax provision to differ from the expected income tax provision at the U.S.federal statutory rate:Three Months EndedSix Months EndedMarch 24,2024March 26,2023March 24,2024March 26,2023Expected income tax provision at federal statutory tax rate$525$398$1,147$896 Benefit from foreign-derived intangible income(FDII)deduction related to capitalizing research and development expenditures(133)(140)(323)(252)Benefit from FDII deduction,excluding the impact of capitalizing research and development expenditures(145)(88)(309)(209)Benefit related to the research and development tax credit(59)(68)(135)(122)Foreign currency loss(gain)related to foreign withholding tax receivable 41 17 2 (113)Excess tax(benefit)deficiency associated with share-based awards(23)2 (51)(21)Other 17 72 42 112 Income tax expense$223$193$373$291 Effective tax rate 9%7%7%We estimate our annual effective income tax rate to be 7%for fiscal 2024,which is lower than the U.S.federal statutory rate.Our estimated annual,second quarter and first six months of fiscal 2024 effective tax rates reflect the additional benefit from FDII deductions related to certain changes made in the second half of fiscal 2023 related to income attribution and sourcing of research and development expenditures.Additional information regarding our annual effective income tax rate and income tax expense is provided in this Quarterly Report in“Notes to Condensed Consolidated Statements,Note 3.Income Taxes.”21Discontinued Operations(in millions)Three Months EndedSix Months EndedMarch 24,2024March 26,2023ChangeMarch 24,2024March 26,2023ChangeDiscontinued operations,net of income taxes$51$2$49$6$(36)$42 Discontinued operations in the second quarter and first six months of fiscal 2024 and 2023 related to the Non-Arriver businesses.Information regarding the Non-Arriver businesses is provided in this Quarterly Report in“Notes to Condensed Consolidated Financial Statements,Note 2.Composition of Certain Financial Statement Items-Discontinued Operations.”Segment ResultsThe following should be read in conjunction with our financial results for the second quarter of fiscal 2024 for each reportable segment included in this Quarterly Report in“Notes to Condensed Consolidated Financial Statements,Note 6.Segment Information.”QCT Segment(in millions,except percentages)Three Months EndedSix Months EndedMarch 24,2024March 26,2023ChangeMarch 24,2024March 26,2023ChangeRevenuesHandsets$6,180$6,105$75$12,867$11,860$1,007 Automotive 603 447 156 1,201 903 298 IoT(internet of things)1,243 1,390 (147)2,381 3,071 (690)Total revenues(1)$8,026$7,942$84$16,449$15,834$615 EBT(2)$2,288$2,107$181$4,881$4,291$590 EBT as a%of revenues 29%2 points 30%3 points(1)Descriptions of our three QCT revenue streams can be found in this Quarterly Report in“Notes to Condensed Consolidated Financial Statements,Note 2.Composition of Certain Financial Statement Items.”(2)Earnings(loss)before income taxes.Substantially all of QCTs revenues consist of equipment and services revenues,which were$7.9 billion and$7.8 billion in the second quarter of fiscal 2024 and 2023,respectively,and$16.2 billion and$15.5 billion in the first six months of fiscal 2024 and 2023,respectively.QCT handsets,automotive and IoT revenues mostly relate to sales of our Snapdragon platforms(which include processors and modems),stand-alone Mobile Data Modems,radio frequency transceiver,power management and wireless connectivity integrated chipsets as well as sales of 4G,5G sub 6 and 5G millimeter wave RFFE products.Second quarter 2024 vs.2023The increase in QCT revenues in the second quarter of fiscal 2024 was primarily due to: higher automotive revenues,primarily driven by an increase in demand for digital cockpit and connectivity products higher handsets revenues,due to$384 million in higher revenues per chipset driven by favorable mix,partially offset by$328 million in lower chipset shipments driven by certain major OEMs-lower IoT revenues,primarily driven by unfavorable mixQCT EBT as a percentage of revenues increased in the second quarter of fiscal 2024 primarily due to: lower research and development expenses higher gross margin percentage,primarily driven by lower net product reserve chargesFirst six months 2024 vs.2023The increase in QCT revenues in the first six months of fiscal 2024 was primarily due to: higher handsets revenues,due to$549 million in higher revenues per chipset primarily driven by favorable mix and an increase in average selling prices,and$449 million in higher chipset shipments driven by certain major OEMs(primarily driven by the normalization of customer inventory levels,which were elevated in the prior year) higher automotive revenues,primarily driven by an increase in demand for digital cockpit and connectivity products-lower IoT revenues,due to$411 million in lower revenues per unit primarily driven by unfavorable mix and$279 million decrease in demand(primarily in edge networking products)22QCT EBT as a percentage of revenues increased in the first six months of fiscal 2024 primarily due to: lower research and development expenses higher revenuesQTL Segment(in millions,except percentages)Three Months EndedSix Months EndedMarch 24,2024March 26,2023ChangeMarch 24,2024March 26,2023ChangeLicensing revenues$1,318$1,290$28$2,778$2,814$(36)EBT 933 871 62 2,013 1,988 25 EBT as a%of revenues 71h%3 points 72q%1 pointSecond quarter 2024 vs.2023The increase in QTL licensing revenues in the second quarter of fiscal 2024 was primarily due to an increase in estimated sales of 3G/4G/5G-based multimode products.QTL EBT as a percentage of revenues increased in the second quarter of fiscal 2024 primarily due to lower cost of sales driven by a decrease in amortization expense related to acquired patents.First six months 2024 vs.2023The decrease in QTL licensing revenues in the first six months of fiscal 2024 was primarily due to:-$75 million decrease in estimated revenues per unit-$68 million decrease in revenues from the ending of the recognition of certain upfront license fee consideration in the first quarter of fiscal 2023 from our long-term license agreement with Nokia $119 million increase in estimated sales of 3G/4G/5G-based multimode productsQTL EBT as a percentage of revenues increased in the first six months of fiscal 2024 primarily due to lower cost of sales driven by a decrease in amortization expense related to acquired patents.QSI Segment(in millions)Three Months EndedSix Months EndedMarch 24,2024March 26,2023ChangeMarch 24,2024March 26,2023ChangeEquipment and services revenues$3$7$(4)$16$13$3 EBT 96 (53)149 107 (61)168 Second quarter and first six months 2024 vs.2023 QSI EBT increased in the second quarter and first six months of fiscal 2024 primarily due to net gains on certain of our non-marketable equity investments.Looking ForwardWe believe that 5G combined with high-performance,low-power processing and on-device intelligence will continue to drive adoption of certain technologies that are already commonly used in smartphones by industries and applications beyond mobile handsets,such as automotive and IoT.We believe it is important that we remain a leader in 5G technology development,standardization,intellectual property creation and licensing,and a leading developer and supplier of 5G integrated circuit products in order to sustain and grow our business long-term.As we look forward to the next several quarters:We expect certain IoT customers will continue to draw down on their inventory(which remains at elevated levels),which will continue to have a negative impact on our revenues,results of operations and cash flows.Our inventory levels continue to be elevated,and we expect this will continue in the near term.If we overestimate future customer demand,it may result in increased excess or obsolete inventory or reserve charges,negatively impacting our results of operations and cash flows.We expect transitions to new generations of leading process technology nodes to continue to drive product cost increases from certain of our key semiconductor wafer suppliers.We expect continued intense competition,including from vertical integration by certain of our customers(for example,Samsung and Huawei).23Current U.S./China trade relations and/or national security protection policies may negatively impact our business,growth prospects and results of operations.See“Risk Factors”in this Quarterly Report,including the Risk Factor titled“A significant portion of our business is concentrated in China,and the risks of such concentration are exacerbated by U.S./China trade and national security tensions.”We have recently extended,renewed or entered into license agreements with several key OEMs.We are currently pursuing negotiations with other key OEMs whose agreements expire in early fiscal 2025(including Huawei).We also continue to engage in negotiations toward a comprehensive resolution with a growing,China-headquartered OEM that sells primarily in developing regions.See“Risk Factors”in this Quarterly Report,including the Risk Factor titled“The continued and future success of our licensing programs requires us to continue to evolve our patent portfolio and to renew or renegotiate license agreements that are expiring.”In addition to the foregoing business and market-based matters,we continue to devote resources to working with and educating participants in the wireless industry and governments as to the benefits of our licensing programs and our extensive technology investments in promoting a highly competitive and innovative wireless industry.However,we expect that certain companies may be dissatisfied with the need to pay reasonable royalties for the use of our technologies and not welcome the success of our licensing programs in enabling new,highly cost-effective competitors to their products.Accordingly,such companies and/or governments or regulators may continue to challenge our business model in various forums throughout the world.Further discussion of risks related to our business is provided in the section titled“Risk Factors”included in this Quarterly Report.Liquidity and Capital ResourcesOur principal sources of liquidity are our existing cash,cash equivalents and marketable securities,cash generated from operations and cash provided by our debt programs.The following tables present selected financial information related to our liquidity at March 24,2024 and September 24,2023 and for the first six months of fiscal 2024 and 2023(in millions):March 24,2024September 24,2023ChangeCash,cash equivalents and marketable securitiesCash and cash equivalents(1)$9,219$8,450$769 Marketable securities 4,632 2,874 1,758$13,851$11,324$2,527 Debt(2)$15,457$15,398$59(1)Excludes$77 million of cash and cash equivalents classified as held for sale at September 24,2023.(2)Includes our issued debt reported as long-term and$914 million reported as short-term debt(which matures in May 2024).As of March 24,2024 and September 24,2023,our credit facility was undrawn,and we had no commercial paper outstanding.Six Months EndedMarch 24,2024March 26,2023ChangeNet cash provided by operating activities$6,503$4,552$1,951 Net cash used by investing activities(2,195)(357)(1,838)Net cash used by financing activities(3,621)(3,558)(63)Cash,cash equivalents and marketable securities.The net increase in cash,cash equivalents and marketable securities for the first six months of fiscal 2024 was primarily due to net cash provided by operating activities,partially offset by$1.8 billion in cash dividends paid,$1.5 billion in payments to repurchase 11 million shares of our common stock,$515 million in payments of tax withholdings related to the vesting of share-based awards and$398 million in capital expenditures.During the first six months of fiscal 2024,income taxes paid were in excess of our provision,negatively impacting net cash provided by operating activities.This was driven primarily by our payment of$1.0 billion related to certain previously postponed U.S.federal income tax-payments from fiscal 2023,the adverse impact of the requirement to capitalize and amortize research and development expenditures for federal income tax purposes and an installment payment for a one-time U.S.repatriation tax accrued in fiscal 2018 of$414 million.24Net changes in our operating assets and liabilities for the first six months of fiscal 2024 positively impacted our operating cash flows primarily from an increase in accrued customer incentives,which included the impact of timing of related payments,a decrease in inventory as we sold a portion of our elevated inventory and an increase in accounts payable due to timing and amount of inventory purchases.This was partially offset by approximately$360 million in severance payments related to restructuring actions initiated in fiscal 2023.Capital Return Program.Our stock repurchase program is subject to periodic evaluations to determine when and if repurchases are in the best interests of our stockholders,and we may accelerate,suspend,delay or discontinue repurchases at any time.On March 5,2024,we annou