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Item 7. Management’s Discussion and Analysis

2022-02-23 compared with 2021-02-24 · 500 added, 575 removed, 404 unchanged (73% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the audited consolidated financial statements of the Company included in Part II, Item 8 .

Financial Statements, of this Form 10-K.

Our objective within the following discussion is to provide an analysis of the Company’s Financial Condition, Cash Flows and Results of Operations from management's perspective which should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto, included in Part II, Item 8 .

Financial Statements, of this Annual Report on Form 10-K.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements concerning the Company’s expectations and beliefs.

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EXECUTIVE SUMMARY

(“Hasbro”) is a global play and entertainment company committed to Creating the World’s Best Play and Entertainment Experiences.

From toys, games and consumer products to television, movies, digital gaming, and other entertainment experiences, we connect to global audiences by bringing to life great innovations, stories and brands across established and inventive platforms.

(“Hasbro”) is a global play and entertainment company committed to Creating the World’s Best Play and Entertainment Experiences and making the world a better place for all children, fans and families.

Hasbro delivers immersive brand experiences for global audiences through consumer products, including toys and games;

entertainment through Entertainment One (“eOne”), our independent studio;

and gaming, led by the team at Wizards of the Coast, an award-winning developer of tabletop and digital games.

Our iconic brands include NERF, MAGIC:

THE GATHERING, MY LITTLE PONY, TRANSFORMERS, PLAY-DOH, MONOPOLY, BABY ALIVE, POWER RANGERS, PEPPA PIG and PJ MASKS, as well as premier partner brands.

Through our recently acquired global entertainment studio, Entertainment One (“eOne”), we are building our brands globally through great storytelling and content on all screens.

At Hasbro, we are committed to making the world a better place for all children, fans and families.

We believe that doing well includes doing good in the world and for all our constituents.

This is demonstrated in all we do, including through corporate social responsibility and philanthropy.

Our strategic plan is centered around Hasbro’s Brand Blueprint, a framework for bringing compelling and expansive brand experiences to consumers and audiences around the world.

Our brands are story-led consumer franchises brought to life through a wide array of consumer products, compelling content across a multitude of platforms and media, including a variety of digital experiences, as well as music, publishing and location-based entertainment.

Brands and content are at the center of the Hasbro Brand Blueprint.

The development and execution of our brands and content are informed by our proprietary consumer insights, which help us understand the behavior of our consumers, from a consumption of content and play standpoint.

Hasbro generates revenue and earns cash by developing, marketing and selling products based on global brands in a broad variety of consumer goods categories.

The Company also develops, acquires, produces, finances, distributes and sells entertainment content, some of which is based on the Company’s properties, in addition to the out-licensing of rights for third parties to use its properties in connection with products, including digital media and games and other consumer products.

Hasbro also leverages its competencies to develop and market products based on well-known licensed brands including, but not limited to, BEYBLADE, DISNEY PRINCESS and DISNEY FROZEN, DISNEY’S DESCENDANTS, MARVEL, SESAME STREET, STAR WARS, and DREAMWORKS’ TROLLS.

MARVEL, STAR WARS, DISNEY PRINCESS, DISNEY FROZEN and DISNEY’S DESCENDANTS are owned by The Walt Disney Company.

For the periods presented in this Form 10-K, the Company’s business is separated into four principal business segments:

and Canada, International, Entertainment, Licensing and Digital and eOne.

and Canada segment markets and sells both toy and game products primarily in the United States and Canada.

The International segment consists of the Company’s European, Asia Pacific and Latin and South American toy and game marketing and sales operations.

The Company’s Entertainment, Licensing and Digital segment includes the Company’s legacy consumer products licensing, digital licensing and gaming, and movie and television entertainment operations.

The eOne segment, which was added to the Company's reporting structure in the first quarter of 2020, engages in the development, acquisition, production, financing, distribution and sales of entertainment content and is comprised of all legacy eOne operations.

In addition to these primary segments, the Company’s product sourcing operations are managed through its Global Operations segment.

The impact of changes in foreign currency exchange rates used to translate the consolidated statements of operations is quantified by translating the current period revenues at the prior period exchange rates and comparing

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this amount to the prior period reported revenues.

THE GATHERING, MY LITTLE PONY, TRANSFORMERS, PLAY-DOH, MONOPOLY, BABY ALIVE, DUNGEONS & DRAGONS, POWER RANGERS, PEPPA PIG and PJ MASKS, as well as premier partner brands.

For the past decade, we have been consistently recognized for our corporate citizenship, including being named one of the 100 Best Corporate Citizens by 3BL Media and one of the World’s Most Ethical Companies by Ethisphere Institute.

Our strategic plan is centered around the Hasbro Brand Blueprint, a framework for bringing compelling and expansive brand experiences to consumers and audiences around the world.

Our brands are story-led consumer franchises brought to life through a wide array of consumer products, digital gaming and compelling content offered across a multitude of platforms and media.

Hasbro generates revenue and earns cash across our Brand Blueprint by developing, marketing, licensing, distributing and selling products and entertainment content, based on our global brands as well as other IP in a broad variety of categories.

This includes:

the marketing and sale of toys and games, including our owned and partner brands, innovative gaming brands and role-playing and fantasy card collecting games, through retail stores, e-commerce platforms and Hasbro PULSE, our direct-to-consumer platform;

the distribution, license and sale of digital games developed internally, such as Magic:

The Gathering Arena and other digital games based on our IP that is licensed to third parties.

Additionally, the Company generates revenue though the development, acquisition, production, distribution and sales of entertainment content as well as out-licensing our brands for uses in consumer products, such as apparel and publishing, and for use in theme park attractions, other forms of location-based entertainment and within formats such as film and TV programming.

The realigned segments represent changes to our reporting structure and reflect management’s allocation of decision-making responsibilities for evaluating the Company’s performance.

Our reportable segments are:

Consumer Products, Wizards of the Coast & Digital Gaming, Entertainment and Corporate and Other.

See Part I, Item 1.

Business , and note 21 to the consolidated financial statements included in Part II, Item 8.

Financial Statements , of this Form 10-K for further information on our reportable segments.

The Company believes that the presentation of the impact of changes in exchange rates, which are beyond the Company’s control, is helpful to an investor’s understanding of the performance of the underlying business.

The Company has also included in this report, the 2020 impact of eOne acquisition and related costs, purchased intangible amortization, other severance costs and income tax expense associated with United Kingdom (“UK”) tax reform.

In addition, the impact on 2019 net earnings and earnings per share, of the termination and settlement of its U.S.

defined benefit pension plan and the impact of certain transaction costs, financing transaction fees and net hedge gains in association with the Company's agreement to acquire eOne.

Acquisition of Entertainment One

On December 30, 2019, the Company completed the acquisition of eOne for an aggregate purchase price of approximately $4.6 billion, comprised of $3.8 billion of cash consideration for shares outstanding and $0.8 billion related to the redemption of eOne's outstanding senior secured notes and the payoff of eOne's revolving credit facility.

The Company financed the acquisition through a combination of the following debt and equity financings:

(i) the issuance of senior unsecured notes in an aggregate principal amount of $2.4 billion;

(ii) the issuance of 10,592,106 shares of common stock at a public offering price of $95.00 per share;

and (iii) $1.0 billion in term loans.

eOne's results of operations and financial position are included in the Company's consolidated financial statements and accompanying condensed footnotes since the date of acquisition.

eOne is a global independent studio that specializes in the development, acquisition, production, financing, distribution and sales of entertainment content.

The addition of eOne accelerates the Company’s brand blueprint strategy by expanding our brand portfolio with eOne’s global preschool brands, adding proven TV and film expertise and executive leadership, as well as by enhancing brand building capabilities and our storytelling capabilities to strengthen Hasbro brands.

For more information on the eOne Acquisition see note 3 to the consolidated financial statements included in Part II, Item 8.

Financial Statements, of this Form 10-K.

The Company’s 2020 results presented in this Form 10-K include eOne's results of operations and financial position beginning on December 30, 2019, the date of acquisition.

The Company’s 2019 and prior years' results are presented as reported and do not include eOne results.

The Company’s 2021 and 2020 results presented in this Form 10-K include eOne's results of operations and financial position beginning on December 30, 2019, the date of acquisition.

The Company’s 2019 results do not include eOne results.

During each of the periods presented in this Form 10-K there were significant charges and benefits incurred which impacted operating results.

These charges are detailed below in the Summary of Financial Performance.

2021 highlights

• Net revenues of $6,420.4 million increased 17% from $5,465.4 million in 2020.

The increase in net revenues includes an unfavorable foreign currency translation of $15.9 million attributable to the Company’s legacy Hasbro business.

and Canada segment net revenues increased 4%;

International segment net revenues decreased 14%, including an unfavorable foreign currency translation impact of $15.9 million;

Entertainment, Licensing and Digital segment net revenues decreased 14%;

eOne segment net revenues in 2020 were $956.5 million.

◦ Hasbro Gaming net revenues increased 15%;

Emerging Brands net revenues increased 27% Partner Brands net revenues decreased 12%;

Franchise Brands net revenues declined 5%;

TV, Film and Entertainment portfolio net revenues were $804.8 million and represented 15% of total net revenues in 2020.

The increase in net revenues includes a favorable foreign currency translation of $54.7 million.

◦ Net revenues in the Consumer Products segment increased 9% to $3,981.6 million;

Wizards of the Coast and Digital Gaming segment increased 42% to $1,286.6 million;

and Entertainment segment net revenues increased 27% to $1,152.2 million.

◦ Emerging Brands net revenues increased 29%;

TV/Film/Entertainment portfolio net revenues increased 24%;

Franchise Brands net revenues increased 22%;

Partner Brands net revenues increased 8%;

and Hasbro Gaming net revenues increased 4%.

◦ Hasbro’s total gaming portfolio, including the Hasbro Gaming portfolio as reported above, and all other gaming revenue, most notably MAGIC:

THE GATHERING and MONOPOLY, increased 19%, and totaled $2,098.9 million.

• Operating profit was $763.3 million, or 11.9% of net revenues in 2021 compared to operating profit of $501.8 million, or 9.2% of net revenues in 2020.

◦ 2020 operating profit was negatively impacted by acquisition and related expenses of $218.6 million ($188.6 million after-tax);

$97.9 million ($80.7 million after-tax) of eOne acquired intangible asset amortization;

and $8.5 million ($7.4 million after-tax) of restructuring charges associated with cost savings initiatives.

◦ 2019 operating profit was negatively impacted by $17.8 million ($16.4 million after-tax) of acquisition related costs associated with the eOne transaction.

◦ Operating Profit in the Consumer Products segment increased 30% to $401.4 million;

Wizards of the Coast and Digital Gaming segment increased 30% to $547.0 million;

Entertainment segment operating losses decreased 35% to $91.8 million and Corporate and Other operating losses increased 9% to $93.3 million.

• Net earnings attributable to Hasbro, Inc.

declined in 2020 to $222.5 million, or $1.62 per diluted share, compared to $520.5 million, or $4.05 per diluted share in 2019.

◦ In addition to the negative impacts to operating profit described above, 2020 net earnings were impacted by incremental income tax expense of $15.4 million, or $0.11 per diluted share, related to a change in the UK tax code.

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◦ 2019 net earnings included non-cash charges of $111.0 million ($86.0 million after-tax), or $0.67 per diluted share, related to the Company's settlement of its U.S.

defined benefit pension plan liability, partially offset by a net benefit of $75.7 million ($81.8 million after tax), or $0.64 per diluted share, from eOne transaction related costs including foreign currency gains related to hedging a portion of the eOne British Pound purchase price.

increased in 2021 to $428.7 million, or $3.10 per diluted share, compared to $222.5 million, or $1.62 per diluted share in 2020.

2020 highlights

• Net revenues of $5,465.4 million increased 16% from $4,720.2 million in 2019.

The increase in net revenues included an unfavorable foreign currency translation of $78.5 million.

and Canada segment net revenues increased 3%;

International segment net revenues decreased 1% and included an unfavorable foreign currency translation impact of $76.5 million;

Entertainment, Licensing and Digital segment net revenues increased 22%.

◦ Partner Brands net revenues increased 24%;

The increase in net revenues includes an unfavorable foreign currency translation of $15.9 million attributable to the Company’s legacy Hasbro business.

◦ Net revenues in the Wizards of the Coast and Digital Gaming segment increased 19% to $906.7 million;

Entertainment segment net revenues increased >100% to $909.2 million;

and Consumer Products segment net revenues decreased 6% to $3,649.6 million.

◦ Hasbro Gaming net revenues increased 15%;

Emerging Brands net revenues increased 27%;

Franchise Brands net revenues declined 1%;

Hasbro Gaming net revenues declined 10%.

TV/Film/Entertainment portfolio net revenues increased >100%;

Partner Brands net revenues decreased 12%;

and Franchise Brands net revenues declined 5%.

• Operating profit was $501.8 million, or 9.2% of net revenues in 2020 compared to operating profit of $652.1 million, or 13.8% of net revenues in 2019.

◦ 2019 operating profit was negatively impacted by $17.8 million ($16.4 million after-tax) of acquisition related costs associated with the eOne transaction.

◦ 2018 operating profit was negatively impacted by the Toys"R"Us bankruptcy, costs related to the Company’s 2018 restructuring program and impairment charges related to Backflip Studios and other intangible assets.

• Net earnings increased in 2019 to $520.5 million, or $4.05 per diluted share, compared to $220.4 million, or $1.74 per diluted share in 2018.

Share Repurchases and Dividends

The Company has a long history of returning cash to its shareholders through quarterly dividends and share repurchases.

In 2020, Hasbro maintained its quarterly dividend rate of $0.68 per share.

The Company has continued its quarterly dividend into 2021 with the first quarterly dividend paid in February and declaration of a second cash dividend of $0.68 per share scheduled for May 2021.

In addition to the dividend, the Company periodically returns cash to shareholders through its share repurchase program.

As part of this initiative, since 2005 the Company’s Board of Directors (the "Board") adopted numerous share repurchase authorizations with a cumulative authorized repurchase amount of $4,325.0 million.

The most recent authorization was approved in May 2018 for $500 million.

Since 2005, Hasbro has repurchased 108.6 million shares at a total cost of $3,961.2 million and an average price of $36.44 per share.

At December 27, 2020, Hasbro had $366.6 million remaining available under these share repurchase authorizations.

Share repurchases are subject to market conditions, the availability of funds and other uses of funds.

As a result of the financing activities related to the eOne Acquisition, the Company has suspended its current share repurchase program while it prioritizes deleveraging.

◦ Operating Profit in the Wizards of the Coast and Digital Gaming segment increased 43% to $420.4 million;

Consumer Products segment remained relatively flat at $308.1 million;

Entertainment segment operating losses increased >100% to $141.1 million and Corporate and Other operating losses increased >100% to $85.6 million.

• Net earnings attributable to Hasbro, Inc.

declined in 2020 to $222.5 million, or $1.62 per diluted share, compared to $520.5 million, or $4.05 per diluted share in 2019.

Summary of Financial Performance

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428.7 222.5 520.5

Diluted earnings per share attributable to Hasbro, Inc.

1.62 4.05 1.74

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Diluted earnings per share 3.10 1.62 4.05

Results of Operations — Consolidated

The fiscal years ended December 26, 2021, December 27, 2020 and December 29, 2019 were each fifty-two week periods.

The fiscal year ended December 27, 2020 results reflect the inclusion of the eOne business following the completion of the acquisition on December 30, 2019.

Beginning with the fiscal year ended December 27, 2020, the Company's results reflect the inclusion of the eOne business following the completion of the eOne acquisition on December 30, 2019.

Net earnings attributable to Hasbro, Inc.

decreased to $222.5 million for the fiscal year ended December 27, 2020 compared to $520.5 million for the fiscal year ended December 29, 2019, and were $220.4 million for the fiscal year ended December 30, 2018.

increased to $428.7 million for the fiscal year ended December 26, 2021 compared to $222.5 million for the fiscal year ended December 27, 2020, and were $520.5 million for the fiscal year ended December 29, 2019.

Diluted earnings per share attributable to Hasbro, Inc.

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for each fiscal year in the three years ended December 26, 2021 include certain charges and benefits as described below.

• A net charge of $116.1 million, or $0.84 per diluted share, comprised of a non-cash goodwill impairment charge of $108.8 million and transaction expenses of $7.3 million, associated with the closing of the sale of eOne Music.

The goodwill impairment charge of $108.8 million is based on revalued assets and liabilities of eOne music as of the second quarter of 2021 and finalized closing working capital adjustments made during the fourth quarter 2021.

• In association with the Company's acquisition of eOne, the Company incurred related expenses of $77.0 million, comprised of the following:

◦ Net expenses of $70.4 million, or $0.51 per diluted share, of incremental intangible amortization costs related to the intangible assets acquired in the eOne acquisition;

◦ A net charge of $6.6 million, or $0.05 per diluted share, of acquisition and related costs.

• Charges of $20.9 million, or $0.15 per diluted share, of stock compensation expense due to the contractual accelerated vesting of certain equity awards following the passing of the Company's former CEO in the fourth quarter of 2021.

• A net impairment charge of $41.3 million, or $0.30 per diluted share, associated with Hasbro's investment in the Discovery Family Channel, due to the impact of accelerating changes in the cable distribution industry.

This charge was comprised of a pre-tax impairment of the investment held in Discovery of $74.1 million, which resulted in a pre-tax reduction to the Company’s Discovery option agreement liability of $20.1 million.

See note 7 to the consolidated financial statements included in Part II, Item 8.

Financial Statements , of this Form 10-K for further information on the Company’s Discovery option.

• A net charge of $39.4 million or $0.28 per diluted share of income tax expense as a result of revaluation of Hasbro’s UK tax attributes in accordance with the Finance Act of 2021 enacted by the United Kingdom on June 10, 2021.

Effective April 1, 2023, the law increases the corporate income tax rate to 25% from 19%.

• In association with the Company's acquisition of eOne, the Company incurred related expenses of $269.3 million, comprised of the following:

◦ A net charge of $188.6 million, or $1.37 per diluted share, of acquisition and related costs;

◦ Net expenses of $80.7 million, or $0.59 per diluted share, of incremental intangible amortization costs related to the intangible assets acquired in the eOne acquisition.

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(i) hedge gains of $114.1 million related to the foreign exchange forward and option contracts to hedge a portion of the eOne purchase price and related costs;

(ii) financing transaction fees of $20.6 million, primary related to the Company’s bridge facility which was terminated unused in the fourth quarter of 2019;

(ii) financing transaction fees of $20.6 million, primarily related to the Company’s bridge facility which was terminated unused in the fourth quarter of 2019;

(iii) eOne acquisition costs of $17.8 million during the fourth quarter of 2019;

and (iv) tax benefits of $6.1 million for the full year 2019 related to the charges outlined in (ii) and (iii) above.

• A net charge of $96.9 million or $0.76 per diluted share associated with a fourth quarter 2018 non-cash goodwill impairment charge related to the Company’s Backflip Studios goodwill and impairment of certain other definite-lived intangible assets.

• A net charge of $77.9 million or $0.61 per diluted share of severance costs associated with organizational restructuring.

• A net charge of $52.8 million or $0.42 per diluted share related to the Toys“R”Us bankruptcy and liquidation of its U.S.

and other operations around the globe.

The Company recognized incremental expense for credit losses on outstanding Toys“R”Us receivables, royalty expense, inventory obsolescence as well as other related costs.

• A net charge of $40.7 million or $0.32 per diluted share related to U.S.

In 2018 the Company made adjustments to provisional U.S.

Tax Reform amounts recorded in the fourth quarter of 2017, based

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on additional guidance issued by the U.S.

Treasury Department and the Internal Revenue Service during 2018.

Consolidated net revenues for the year ended December 27, 2020 grew 16% to $5,465.4 million from $4,720.2 million for the year ended December 29, 2019.

Net revenues in 2020 include an unfavorable foreign currency translation of $15.9 million, which is the result of weakening currencies compared to the U.S.

dollar, primarily in the Company's Latin American region.

Consolidated net revenues for the year ended December 29, 2019 grew 3% to $4,720.2 million from $4,579.6 million for the year ended December 30, 2018 and included an unfavorable foreign currency translation of $78.5 million, which was the result of weakening currencies primarily in our International segment in 2019 compared to 2018.

As a result of the Company's acquisition of eOne in 2020, the Company's brand architecture reflects the addition of the TV, Film and Entertainment brand portfolio which consists of legacy eOne film and TV revenues.

Revenues related to eOne brands, including PEPPA PIG and PJ MASKS, are reported in the Emerging Brands portfolio.

The following chart presents net revenues expressed in millions of dollars, by brand portfolio for each year in the three years ended December 27, 2020.

Net Revenues %

Consolidated net revenues for the year ended December 26, 2021 grew 17% to $6,420.4 million from $5,465.4 million for the year ended December 27, 2020 and include a favorable foreign currency translation impact of $54.7 million as the result of strengthening foreign currencies against the US dollar across the Company's regions.

Consolidated net revenues for the year ended December 27, 2020 grew 16% to $5,465.4 million from $4,720.2 million for the year ended December 29, 2019 and included an unfavorable foreign currency translation of $15.9 million.

The following table presents net revenues expressed in millions of dollars, by brand portfolio for each year in the three years ended December 26, 2021.

Net Revenues %

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Emerging Brands 617.6 29 % 480.4 27 % 377.6

TV, Film and Entertainment 804.8 100.0 % — — % — — %

TV/Film/Entertainment 997.7 24 % 804.7 100 % —

2021 versus 2020

Hasbro Gaming and Emerging Brands net revenues grew in 2020 compared to 2019, while net revenues from Franchise Brands and Partner Brands declined.

TV, Film and Entertainment consists of the legacy eOne film and TV revenues.

Net revenues grew in all brand portfolios in 2021 compared to 2020.

Emerging Brands growth of 29%;

TV/Film/Entertainment growth of 24%;

Franchise Brands growth of 22%;

Partner Brands growth of 8%;

and Hasbro Gaming growth of 4% with Hasbro's total gaming category up 19%.

Franchise Brands:

The Franchise Brands portfolio decreased 5% in 2020 compared to 2019.

The Franchise Brands portfolio net revenues increased 22% in 2021 compared to 2020.

The majority of the 2021 increase was driven by higher net revenues from MAGIC:

THE GATHERING products, as a result of successful card sets released throughout the year, including multiple record setting releases and higher digital gaming net revenues from Magic:

The Gathering Arena .

To a lesser extent, higher net revenues from NERF products, most notably in the US, higher net revenues from the MY LITTLE PONY brand, due to the release of the film MY LITTLE PONY:

A NEW GENERATION and the launch of the associated product line, as well higher net revenues from TRANSFORMERS products supported by the release of the final chapter of the animated television series trilogy, TRANSFORMERS:

WAR FOR CYBERTRON in July 2021, contributed to the increase.

In addition to these increases, were higher net revenues from PLAY-DOH products.

Partner Brands:

The Partner Brands portfolio net revenues increased 8% in 2021 compared to 2020.

Within the Partner Brands portfolio, there are a number of brands which are reliant on related entertainment, including television and movie releases.

As such, net revenues fluctuate from year-to-year by brand, depending on entertainment popularity, release dates and the success of related product line offerings.

Historically these entertainment-based brands experience higher revenues during years in which major motion pictures are released.

Net revenue increases from the Company's products for MARVEL, DISNEY PRINCESS and STAR WARS drove growth in the Partner Brands portfolio, and to a lesser extent, GHOSTBUSTERS products contributed to net revenue growth during 2021.

The Company's products for MARVEL benefited from fan support, primarily in the U.S., across multiple properties including MARVEL LEGENDS, as well as from entertainment releases including the theatrical release of SPIDER-MAN:

NO WAY HOME in December 2021, the launch of the preschool product line supporting the children’s animated television series, SPIDEY and HIS AMAZING FRIENDS , and by the introduction of products supported by the theatrical release of SHANG-CHI and the LEGEND of the TEN RINGS w hich premiered in September 2021.

The Company's products for DISNEY PRINCESS and STAR WARS benefited throughout 2021 from supporting entertainment, including;

Disney's RAYA and THE LAST DRAGON, which premiered in March 2021;

the Disney Princess film library, available for streaming on Disney+;

and, the Disney+ streaming series STAR WARS:

THE MANDALORIAN, season two.

These increases were partially offset by net revenue declines from DISNEY FROZEN and TROLLS products in 2021 compared to 2020, as a result of entertainment support in the prior year from the November 2019 theatrical release of DISNEY’S FROZEN 2 and the TROLLS WORLD TOUR film, released in April 2020.

Hasbro Gaming:

The Hasbro Gaming portfolio net revenues increased 4% in 2021 compared to 2020.

Higher net revenues from DUNGEONS & DRAGONS products and digital game and to a lesser extent, higher net revenues from DUEL MASTERS products and several other Hasbro Gaming brands, were partially offset by lower net revenues from JENGA, OPERATION and certain other Hasbro Gaming products.

During 2020, due in part to the onset of the COVID-19 pandemic, the Hasbro Gaming portfolio experienced accelerated growth in sales of games, as families were playing more games while at home.

Net revenues for Hasbro’s total gaming category, including the Hasbro Gaming portfolio as reported above, and all other gaming revenue, most notably MAGIC:

THE GATHERING and MONOPOLY, which are included in the Franchise Brands portfolio, totaled $2,098.9 million in 2021, up 19%, from $1,763.8 million in 2020.

Emerging Brands:

The Emerging Brands portfolio net revenues grew 29% in 2021 compared to 2020.

Net revenue increases were primarily driven by the Company's launch of its first PEPPA PIG and PJ MASKS products during the second half of 2021, as well as demand for fan-oriented products.

TV/Film/Entertainment:

During 2021, net revenues from the TV/Film/Entertainment portfolio grew 24% compared to 2020.

In 2020, the shutdown of live action TV and film productions and theatrical releases, beginning late in the first quarter of 2020 as a result of the COVID-19 pandemic, had a significant impact on entertainment deliveries during the second half of 2020 and into 2021.

However, the Company's production studios were back to operating at pre-pandemic levels across all businesses by mid-2021.

Theatrical box office levels, and related film distribution, remained much lower than pre-pandemic levels throughout 2021.

The drivers of the net revenue increase during 2021 include higher scripted television production deliveries, most notably from YELLOWJACKETS, CRUEL SUMMER and THE ROOKIE television series, as well as contributions from the Netflix streaming series, GRAYMAIL , premiering in 2022.

In addition to these increases were higher deliveries from eOne's slate of unscripted programming, as well as higher film production revenues from 2021 releases that include CLIFFORD the BIG RED DOG, COME FROM AWAY and FINCH.

These increases were partially offset by lower 2021 film distribution revenues overall, due to the gap in available entertainment deliveries as described above, compared to 2020 which had a higher number of successful films which were released pre-pandemic.

2020 versus 2019

Net revenues from Hasbro Gaming, Emerging Brands and TV/Film/Entertainment grew in 2020 compared to 2019, while net revenues from Franchise Brands and Partner Brands declined.

Growth in TV/Film/Entertainment revenues during 2020 was primarily the result of the addition of eOne entertainment net revenues to legacy Hasbro Entertainment net revenues following the Company's acquisition of eOne in 2020.

Franchise Brands:

The Franchise Brands portfolio net revenues decreased 5% in 2020 compared to 2019.

Declines in net revenues from TRANSFORMERS and MY LITTLE PONY products were the primary drivers of the overall decline in Franchise Brands net revenues, while, to a lesser extent, NERF and PLAY-DOH products also contributed to segment net revenue declines.

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The Partner Brands portfolio declined 12% in 2020 compared to 2019.

Within the Partner Brands portfolio, there are a number of brands which are reliant on related entertainment, including television and movie releases.

As such, net revenues by partner brand, fluctuate from year-to-year depending on entertainment popularity, release dates and related product line offerings and success.

Historically these entertainment-based brands experience higher revenues during years in which major motion pictures are released.

Due to the impact of the COVID-19 pandemic on the entertainment industry during 2020, including the postponement of certain theatrical releases, such as MARVEL's BLACK WIDOW , previously planned as a 2020 MARVEL release, as well as other production delays during the year, sales of certain of the Company's Partner Brands products declined during 2020 compared to 2019.

Further, in 2019, Partner Brands products benefited from a successful entertainment slate that included MARVEL'S second quarter 2019 theatrical release, AVENGERS:

END GAME and the third quarter 2019 theatrical release, SPIDER-MAN:

Due to the impact of the COVID-19 pandemic on the entertainment industry during 2020, including the postponement of certain theatrical releases, and other production delays during the year, sales of certain of the Company's Partner Brands products declined during 2020 compared to 2019.

Further, in 2019, Partner Brands products benefited from a successful entertainment slate that included MARVEL'S theatrical release, AVENGERS:

END GAME and SPIDER-MAN:

FAR FROM HOME, as well as DISNEY’S FROZEN 2 and STAR WARS:

THE RISE OF SKYWALKER , released during the fourth quarter of 2019.

Despite the entertainment industry's challenges as a result of the COVID-19 pandemic, there were several Partner Brand entertainment releases during 2020 including TROLLS WORLD TOUR , which was released in the premium

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video-on-demand format in April and the Disney+ streaming series, STAR WARS:

THE MANDALORIAN , season two, released during the fourth quarter of 2020.

THE RISE OF SKYWALKER , released during 2019.

Overall, the decrease in Partner Brands net revenues during 2020 was largely driven by MARVEL products which are dependent on entertainment releases as described above, and to a lesser extent, DISNEY FROZEN products, also heavily reliant on supporting entertainment.

In addition to these net revenue declines were lower net revenues from BEYBLADE products.

These decreases were partially offset by net revenue increases from STAR WARS and TROLLS products, which were supported by the entertainment releases described above.

These decreases were partially offset by net revenue increases from STAR WARS and TROLLS products, which were supported by entertainment releases in 2020 despite the industry challenges described above.

To a lesser extent, the Partner Brands portfolio benefited from the introduction of select items from the Company's GHOSTBUSTERS product line in 2020, ahead of the release of the GHOSTBUSTERS:

AFTERLIFE film, previously planned as a 2020 release but postponed and expected in theaters during 2021 due to the COVID-19 pandemic.

AFTERLIFE film.

Hasbro Gaming:

The Hasbro Gaming portfolio increased 15% in 2020 compared to 2019.

The Hasbro Gaming portfolio net revenues increased 15% in 2020 compared to 2019.

Higher net revenues from DUNGEONS & DRAGONS products and higher net revenues from classic games including, JENGA, OPERATION and CLUE products were partially offset by lower net revenues from PIE FACE and certain other Hasbro Gaming products.

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Emerging Brands:

The Emerging Brands portfolio grew 27% in 2020 compared to 2019.

Contributing to the net revenue increases in 2020 were the inclusion of brands acquired through the eOne Acquisition such as PEPPA PIG and PJ MASKS and, to a lesser extent, net revenues from the Company's relaunch of the GI JOE product-line in 2020.

These net revenue increases were partially offset by net revenue declines from LITTLEST PET SHOP and LOST KITTIES products.

TV, Film and Entertainment:

Net revenues from the TV, Film and Entertainment portfolio were approximately 15% of total Company net revenues and included (i) theatrical and transactional net revenue contributions from the Amblin Partners film 1917 , released in December 2019;

The Emerging Brands portfolio net revenues grew 27% in 2020 compared to 2019.

Contributing to the net revenue increases in 2020 were the inclusion of brands acquired through the eOne acquisition such as PEPPA PIG and PJ MASKS.

TV/Film/Entertainment:

Net revenues from the TV/Film/Entertainment portfolio grew significantly in 2020 due to the inclusion of a full year of eOne results following the acquisition on December 30, 2019.

TV/Film/Entertainment net revenues were approximately 15% of total Company net revenues in 2020 and included (i) theatrical and transactional net revenue contributions from the Amblin Partners film 1917, released in December 2019;

(ii) broadcast and licensing contributions from key scripted deliveries including season two of THE ROOKIE and the fifth season of FEAR THE WALKING DEAD;

(iii) the Company's strong lineup of unscripted television programming that includes season one of THE PACK and the NAKED AND AFRAID television series which aired it's eleventh series in 2020;

and (iv) participations from the Company's television content library which includes well know titles such as GREY'S ANATOMY and CRIMINAL MINDS .

In addition to these entertainment driven revenues, the Company's music business benefited from both strong streaming and publishing revenues.

2019 versus 2018

Partner Brands and Emerging Brands net revenues grew in 2019 compared to 2018, while net revenues from Franchise Brands and the Hasbro Gaming portfolio declined.

The Company's 2019 and 2018 results are presented as reported and do not include eOne results.

Franchise Brands:

The Franchise Brands portfolio declined 1% in 2019 compared to 2018.

The primary drivers of the 2019 Franchise Brands net revenue declines were NERF and MY LITTLE PONY products and to a lesser extent, BABY ALIVE and TRANSFORMERS products.

These decreases were offset by net revenue increases from MAGIC:THE GATHERING, products and to a lesser extent MONOPOLY and PLAY-DOH products.

Partner Brands:

The Partner Brands portfolio increased 24% in 2019 compared to 2018.

In 2019, products related to three Partner Brands were supported by major theatrical releases – MARVEL products were supported by the 2019 theatrical releases, AVENGERS:

END GAME and SPIDER-MAN:

FAR FROM HOME , DISNEY’S FROZEN products were supported by the 2019 theatrical release, FROZEN 2 and STAR WARS products were supported by STAR WARS:

THE RISE OF SKYWALKER .

During 2019, the increase in net revenues was driven by DISNEY FROZEN and MARVEL products, and to a lesser extent DISNEY’S DECENDANTS and STAR WARS products.

These increases were partially offset by net revenue declines from DISNEY PRINCESS and DREAMWORKS’ TROLLS products during 2019.

Hasbro Gaming:

The Hasbro Gaming portfolio declined 10% in 2019 compared to 2018.

Lower net revenues from PIE FACE, SPEAK OUT and certain other Hasbro Gaming products were partially offset by net revenue increases from DUNGEONS & DRAGONS products.

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Net revenues for Hasbro’s total gaming category, including the Hasbro Gaming portfolio as reported above, and all other gaming revenue, most notably MAGIC:

THE GATHERING and MONOPOLY, which are included in the Franchise Brands portfolio, totaled $1,528.3 million in 2019, an increase of 6%, versus $1,443.2 million in 2018.

Emerging Brands:

The Emerging Brands portfolio grew 5% in 2019 compared to 2018.

Net revenues were positively impacted by the introduction of the Company's POWER RANGERS products, as well as net revenue increases from PLAYSKOOL products, which were partially offset by net revenue declines from LITTLEST PET SHOP and LOST KITTIES products.

and (iv) participations from the Company's television content library which included well know titles such as GREY'S ANATOMY and CRIMINAL MINDS.

SEGMENT RESULTS

The Company’s net revenues and operating profits are primarily derived from its four principal segments:

and Canada segment, the International segment, the Entertainment, Licensing and Digital segment, and, as a result of the 2020 eOne Acquisition, the eOne operating segment.

The chart below illustrates net revenues expressed in millions of dollars, derived from our principal operating segments in 2020, 2019 and 2018.

Effective for the first quarter of 2021, we realigned our reportable segment structure to correspond with the evolution of our company, including the integration of eOne, which reflects how we manage our business, and how we allocate resources and decision-making responsibilities for assessing the Company’s performance.

Our reportable segments are:

Consumer Products, Wizards of the Coast & Digital Gaming, Entertainment and Corporate and Other.

The table below illustrates net revenues expressed in millions of dollars, derived from our principal operating segments in 2021, 2020 and 2019.

Net Revenues %

Consumer Products $ 3,981.6 9 % $ 3,649.6 -6 % $ 3,881.2

Wizards of the Coast & Digital Gaming 1,286.6 42 % 906.7 19 % 761.2

Entertainment 1,152.2 27 % 909.1 >100% 77.8

Consumer Products Segment

The following table presents the Consumer Products segment net revenues by major geographic region for each fiscal year in the three years ended December 26, 2021.

Net Revenues %

and Canada * $ 2,556.1 4.4 % $ 2,449.3 3.1 % $ 2,375.7 -10.4 %

International 1,579.0 -14.0 % 1,836.4 -0.6 % 1,847.6 -17.3 %

Entertainment, Licensing and Digital * 373.9 -13.9 % 434.5 21.9 % 356.3 9.5 %

eOne 956.5 100.0 % — — % — — %

*As a result of the realignment of the Company’s financial reporting segments during the first quarter of 2019, net revenues of $57.7 million from 2018 were reclassified from the U.S.

and Canada segment to the Entertainment, Licensing and Digital segment, to conform to current year presentation.

2020 versus 2019

and Canada segment net revenues increased 4% in 2020 compared to 2019.

Revenues in the U.S.

and Canada segment were not materially impacted by foreign currency translation.

Segment net revenues increased from growth in Franchise Brands and Hasbro Gaming, partially offset by lower net revenues from Partner Brands and to a lesser extent, the Emerging Brands portfolio.

In the Franchise Brands portfolio, higher net revenues from MAGIC:

THE GATHERING and to a lesser extent, MONOPOLY products were partially offset by lower net revenues from TRANSFORMERS, MY LITTLE PONY and PLAY-DOH products which were impacted, in part, by disruptions to the business from the COVID-19 pandemic.

In the Partner brands portfolio, the decrease was driven by lower net revenues from MARVEL and DISNEY FROZEN products which did not have the benefit of 2020 entertainment releases, and to a lesser extent, from BEYBLADE products.

These decreases were partially offset by net revenue increases from STAR WARS and TROLLS products as a result of entertainment support from the Disney+ streaming series, STAR WARS:

THE MANDALORIAN , season two, released during the fourth quarter 2020 and TROLLS WORLD TOUR , which was released in the premium video-on-demand format in April.

In the Hasbro Gaming portfolio, higher net revenues were delivered across many of the Company's games brands, most notably from DUNGEON & DRAGONS, JENGA and OPERATION products.

In the Emerging Brands portfolio, net revenue declines from POWER RANGERS and FURREAL FRIENDS products were partially offset by net revenue contributions from the 2020 relaunch of the Company's GI JOE product line and higher net revenues from PLAYSKOOL products.

2019 versus 2018

and Canada segment net revenues increased 3% in 2019 compared to 2018.

Revenues in the U.S.

and Canada segment were not materially impacted by foreign currency translation.

Segment net revenues increased from growth in Partner Brands and Emerging Brands, partially offset by lower net revenues from Franchise Brands and the Hasbro Gaming portfolio.

In the Franchise Brands portfolio, higher net revenues from MAGIC:

THE GATHERING, PLAY-DOH and MONOPOLY products were more than offset by lower net revenues from NERF, MY LITTLE PONY, BABY ALIVE

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and TRANSFORMERS products.

In the Partner Brands portfolio, higher net revenues from DISNEY FROZEN, STAR WARS and BEYBLADE products were partially offset by lower net revenues from DREAMWORKS' TROLLS and DISNEY PRINCESS products during 2019.

In the Hasbro Gaming portfolio, lower net revenues from PIE FACE, SPEAK OUT and certain other Hasbro Gaming products were partially offset by net revenue increases from DUNGEONS & DRAGONS products.

In the Emerging Brands portfolio, the positive impact from the introduction of the Company’s POWER RANGERS products, as well as net revenue increases from PLAYSKOOL products, were partially offset by net revenue declines from LITTLEST PET SHOP and LOST KITTIES products.

International

To calculate the year-over-year percentage change in net revenues absent the impact of foreign currency translation, net revenues were recalculated using those foreign currency translation rates in place for the prior year comparable period.

Net Revenues %

North America $ 2,315.9 9 % $ 2,116.2 1 % $ 2,098.1

Europe 1,067.7 8 % 989.2 1 % 982.2

Asia Pacific 310.1 5 % 295.6 -18 % 359.4

Latin America 287.9 16 % 248.6 -44 % 441.5

Net Revenues $ 3,981.6 9 % $ 3,649.6 -6 % $ 3,881.2

2021 versus 2020

International segment net revenues decreased 14% in 2020 compared to 2019 which includes an unfavorable foreign currency translation of $15.6 million consisting of an unfavorable $32.7 million impact from Latin America, partially offset by a favorable $14.3 million and $2.8 million impact from the Company's European and Asia Pacific markets, respectively.

On a regional basis, net revenues from Europe grew slightly, while the Company's Latin America and Asia Pacific regions declined in part, due to disruptions to the business, and to consumer purchasing patterns, as a result of the COVID-19 pandemic, most notably in Latin America and, to a lesser extent, certain areas within the Company's Asia Pacific region.

Net Revenues in emerging markets decreased 30% during 2020.

Lower net revenues from the Franchise Brands, Partner Brands and Emerging Brands portfolios were partially offset by higher net revenues from the Hasbro Gaming portfolio.

In the Franchise Brands portfolio, the primary drivers of the net revenue declines include lower sales of NERF, TRANSFORMERS, PLAY-DOH and to a lesser extent, MY LITTLE PONY products.

These net revenue declines were partially offset by net revenue increases from MAGIC:

THE GATHERING products.

In the Partner Brands portfolio, the decrease was primarily driven by lower net revenues from MARVEL products which did not have the benefit of 2020 entertainment releases, as well as lower net revenues from the Company's BEYBLADE products.

These decreases were partially offset by higher net revenues from STAR WARS and DREAMWORKS’ TROLLS products, which were supported by 2020 entertainment.

In the Hasbro Gaming portfolio, the International segment realized higher net revenues from many of the Company's traditional games including CLUE, JENGA and OPERATION, in addition to higher net revenues from DUNGEONS & DRAGONS products.

These increases were partially offset by net revenue decreases from PIE FACE products and certain other Hasbro games.

In the Emerging Brands portfolio, the net revenue declines were driven primarily by LITTLEST PET SHOP, LOST KITTIES and PLAYSKOOL products.

Consumer Products segment net revenues increased 9% in 2021 compared to 2020 and included the impact of a favorable $23.8 million foreign currency translation.

Segment net revenues increased from growth in Franchise Brands, Emerging Brands and to a lesser extent, Partner Brands and were partially offset by lower net revenues from the Hasbro Gaming portfolio.

The drivers of the net revenue increase include higher sales of NERF products, due to new and innovative product launches in 2021, higher sales of TRANSFORMERS products as well as higher sales of the Company's Partner Brands for MARVEL and DISNEY PRINCESS, which were supported by recent entertainment releases.

Also contributing to the increase were higher sales of PEPPA PIG and PJ MASKS products, following the launch of the Company's own product lines for these brands during the second half of 2021.

Partially offsetting these increases were lower sales of certain Partner Brands, notably, the Company's products for DISNEY FROZEN and TROLLS.

Revenue grew across all geographic regions in 2021, most notably in the U.S.

and Europe, and to a lesser extent, in the Company's Latin American and Asia Pacific markets.

2020 versus 2019

International segment net revenues decreased approximately 1% in 2019 compared to 2018 which includes an unfavorable foreign currency translation of $76.5 million (Europe — $44.9 million, Latin America — $19.5 million, Asia Pacific — $12.1 million).

Unfavorable foreign currency translation reflects the strengthening of the U.S.

dollar when compared to the Euro as well as compared to foreign currencies throughout the Latin America and Asia Pacific regions.

Absent the impact of foreign currency translation, International segment net revenues increased 4% in 2019 compared to 2018.

On a regional basis, net revenues from Europe remained flat, Latin America declined 4% while net revenues from the Company’s Asia Pacific region increased 3% in 2019 from 2018.

Net Revenues in emerging markets decreased 5% during 2019.

Higher net revenues from Partner Brands were wholly offset by lower net revenues from the Franchise Brands, Hasbro Gaming and Emerging Brands portfolios.

In the Franchise Brands portfolio, net revenue declines from MY LITTLE PONY, TRANSFORMERS and NERF products were partially offset by net revenue increases from MONOPOLY and MAGIC:

THE GATHERING products.

In the Partner Brands portfolio, higher net revenues from DISNEY FROZEN and MARVEL products were partially offset by lower net revenues from BEYBLADE, DISNEY PRINCESS and STAR WARS products.

In the Hasbro Gaming portfolio, lower net revenues from PIE FACE and SPEAK OUT products were partially offset by net revenue increases from CONNECT 4, OPERATION and DUNGEONS & DRAGONS products.

In the Emerging Brands portfolio, lower net revenues from LITTLEST PET SHOP and LOST KITTIES products were partially offset by net revenue contributions from POWER RANGERS products, as well as net revenue increases from PLAYSKOOL products.

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Entertainment, Licensing and Digital

Consumer Products segment net revenues decreased 6% in 2020 compared to 2019 and included an unfavorable $20.1 million foreign currency translation.

The decline in consumer products revenue in 2020 was primarily driven by the COVID-19 pandemic and its impact on supply chain and retail store closures.

Lower net revenues from Franchise Brands and Partner Brands were partially offset by growth in the Hasbro Gaming and Emerging Brands portfolios.

The primary drivers of the 2020 net revenue declines included lower sales of MARVEL products and to a lesser extent, lower sales of DISNEY FROZEN, TRANSFORMERS and MY LITTLE PONY products, all of which were impacted in part by the lack of 2020 entertainment releases in support of the Company's product sales, as a result of the COVID-19 pandemic.

These decreases were partially offset by net revenue increases from STAR WARS and TROLLS products and from the inclusion of licensed products for brands acquired through the eOne acquisition such as PEPPA PIG and PJ MASKS and, to a lesser extent, higher net revenues delivered across many of the Company's games brands, most notably from JENGA, OPERATION and CLUE products in 2020.

Wizards of the Coast and Digital Gaming Segment

2021 versus 2020

Entertainment, Licensing and Digital segment net revenues declined 14% in 2020 compared to 2019.

The net revenue declines during 2020 were primarily driven by lower film revenues due to the Company's share of revenue recognized in 2019 related to the TRANSFORMERS:

BUMBLEBEE film combined with lower net revenues associated with the closure of the Backflip business in the fourth quarter of 2019, and to a lesser extent, lower consumer product licensing revenues during 2020 due to disruptions in the markets as a result of the COVID-19 pandemic.

These declines were partially offset by an increase in digital gaming revenues in 2020 which benefited from the stay-at-home COVID-19 environment.

Wizards of the Coast and Digital Gaming segment net revenues increased 42% in 2021 compared to 2020 and included the impact of a favorable $10.7 million foreign currency translation.

The net revenue increase was attributable to higher net revenues from Wizards of the Coast tabletop and digital gaming products, most notably, MAGIC:

THE GATHERING, driven by the number of strong performing card set releases, and from DUNGEONS & DRAGONS and to a lesser extent, DUEL MASTERS tabletop games.

In total, 74% of segment net revenues were attributable to Wizards of the Coast tabletop games.

In addition to these increases were higher digital gaming sales from Magic:

The Gathering Arena, including the launch on mobile, and net revenue contributions associated with the launch of Dungeons & Dragons:

Dark Alliance during the second quarter 2021, as well as growth in certain other of the Company's licensed digital games.

2020 versus 2019

Entertainment, Licensing and Digital segment net revenues increased 22% in 2019 compared to 2018.

Net Revenue growth in 2019 was driven primarily by MAGIC:

THE GATHERING ARENA and the Company's share of revenues related to TRANSFORMERS:

BUMBLEBEE , the 2018 theatrical release produced jointly with Paramount Pictures.

Increased licensing revenues from the TRANSFORMERS and MONOPOLY brands during 2019 also contributed to the net revenue increase.

Partially offsetting these increases were lower net revenues related to streaming digital television content in 2019 compared to 2018.

eOne segment net revenues were $956.5 million during 2020.

The following table presents eOne segment net revenues by channel for the year ended December 27, 2020.

eOne Segment Net Revenues

In 2020, net revenues from the Wizards of the Coast and Digital Gaming segment increased 19% compared to 2019 and included the impact of a favorable $2.6 million foreign currency translation.

The net revenue increase in 2020 was driven by higher net revenues from tabletop gaming products, primarily MAGIC:

THE GATHERING, as a result of popular set releases throughout the year and to a lesser extent, higher revenues from DUNGEONS & DRAGONS products and licensed digital gaming revenues in 2020 which benefited from the stay-at-home COVID-19 environment.

These increases were partially offset by lower net revenues associated with the closure of the Backflip business in the fourth quarter of 2019.

Entertainment Segment

The following table presents Entertainment segment net revenues by category for each fiscal year in the three years ended December 26, 2021.

Net Revenues %

Film and TV $ 932.5 33 % $ 700.5 >100% $ 45.1

1 unchanged sentence

Music and Other 86.8 -29 % 122.1 >100% 0.9

Segment Total $ 956.5

The impact of the COVID-19 outbreak on the eOne segment was felt throughout 2020, but most significantly during the first half of the year.

Specifically, scheduled productions were and continue to be delayed or postponed due to the shutdown of live-action production work and the closure or limited reopening of studios.

In addition, theatrical releases have been delayed due to the closure or limited reopening of theaters, and in some cases, global film releases were moved from theaters to alternative media platforms such as on demand streaming services.

Beginning in the third quarter, the entertainment industry saw a gradual return of live action TV and film production activities with deliveries accelerating through the remainder of 2020.

In 2020, drivers of the eOne segment net revenues included:

(i) broadcast and licensing revenues associated with internationally recognized brands, PEPPA PIG and PJ MASKS and key scripted deliveries including season two of THE ROOKIE and the fifth season of FEAR THE WALKING DEAD (ii) theatrical and transactional net revenue contributions from the Amblin Partners film 1917 , released in December 2019;

(iii) the Company's strong lineup of unscripted television programming that includes season one of THE PACK and the NAKED AND AFRAID television series which aired it's eleventh season in 2020;

and (iv) the Company's television content library which includes well known titles such as GREY'S ANATOMY and CRIMINAL MINDS .

In addition to these entertainment driven revenues, the Company's music business benefited from both strong streaming and publishing revenues.

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Net Revenues $ 1,152.2 27 % $ 909.1 >100% $ 77.8

*Music and Other category net revenues for the periods ended December 26, 2021 and December 27, 2020 include $65.2 million and $116.7 million, respectively, from eOne Music, which was sold by the Company early in the third fiscal quarter of 2021.

2021 versus 2020

Entertainment segment net revenues grew 27% in 2021 compared to 2020 and included the impact of a favorable $20.1 million foreign currency translation.

The segment net revenue increase was primarily driven by higher scripted programming and film production deliveries and to a lesser extent, increased deliveries of unscripted programming following the return of live-action entertainment production in late 2020 and throughout 2021.

Also contributing to the increase were higher Family Brands net revenues from streaming content deals related to programming featuring the Company's brands, such as the Netflix release of MY LITTLE PONY:

A NEW GENERATION .

These increases were partially offset by the sale of the eOne Music business during the third quarter of 2021 and from lower film distribution revenues in 2021.

2020 versus 2019

In 2020, Entertainment segment net revenues were $909.1 million compared to $77.8 million in 2019.

Foreign currency exchange did not have a material impact on the Entertainment segment results in 2020.

The segment net revenue increase reflects the inclusion of eOne entertainment revenues following the acquisition of eOne in early fiscal 2020.

The drivers of Entertainment segment net revenues included television production revenues from key scripted programming deliveries, theatrical and transactional net revenue contributions from the Amblin Partners film 1917 , a strong lineup of unscripted television programming deliveries as well as distribution revenues from acquired content libraries.

These revenue contributions were partially offset by lower film revenues associated with the Company's share of revenue related to the 2018 theatrical release of TRANSFORMERS:

BUMBLEBEE film.

Operating Profit (Loss)

4 unchanged sentences

Change 2019 % Net

and Canada* $ 539.7 21.1 % 30 % $ 415.4 17.0 % 12 % $ 370.2 15.6 %

International 42.5 2.7 % -60 % 107.3 5.8 % >100% 39.5 2.1 %

Entertainment, Licensing and Digital* 93.0 24.9 % -7 % 99.7 22.9 % >100% 29.1 8.2 %

eOne (79.2) -8.3 % 100 % — — % — % — — %

*As a result of the realignment of the Company’s financial reporting segments during the first quarter of 2019, operating profit of $11.8 million from 2018 was reclassified from the U.S.

and Canada segment to the Entertainment, Licensing and Digital segment, to conform to 2020 and 2019 presentation.

Consumer Products $ 401.4 10 % 30 % $ 308.1 8 % — % $ 306.9 8 %

Wizards of the Coast & Digital Gaming 547.0 43 % 30 % 420.4 46 % 43 % 294.7 39 %

Entertainment (91.8) -8 % 35 % (141.1) -16 % >-100% 13.6 17 %

Consumer Products Segment

2021 versus 2020

and Canada segment operating profit increased $124.3 million to $539.7 million in 2020 compared to $415.4 million in 2019.

Consumer Products segment operating profit increased $93.3 million to $401.4 million in 2021, compared to $308.1 million in 2020.

Operating profit margin increased to 10% of net revenues in 2021 from 8% of net revenues in 2020.

The increase in operating profit and profit margin in 2020 was driven by higher segment net revenues, favorable brand mix, lower royalty expense associated with lower sales of the Company's Partner Brand products and lower marketing and advertising costs.

These favorable effects were partially offset by higher freight costs as a result of greater domestic shipments and increased direct-to-customer shipments which carry higher fulfillment costs as well as higher product development expenses associated with the Company's Wizards of the Coast business.

The increase in segment operating profit and profit margin was driven by higher segment net revenues as a result of increased sales volumes, product price increases and lower sales allowances and obsolescence charges.

These benefits were partially offset by higher freight costs, increased royalty expenses from higher sales of the Company's Partner Brand products and higher advertising costs in support of the sales increase within the segment.

2020 versus 2019

and Canada segment operating profit increased $45.2 million to $415.4 million in 2019 compared to $370.2 million in 2018.

Absent the impact of the Toys"R"Us bankruptcy filing and subsequent liquidation included within 2018 operating profit, the operating profit for 2019 increased $60.2 million.

Operating profit margin increased to 17.0% of net revenues in 2019 from 15.6% of net revenues in 2018.

Operating profit in 2018 was negatively impacted by charges of $45.8 million related to the bankruptcy filing and subsequent liquidation of Toys"R"Us.

Absent these charges, operating profit declined slightly as higher partner brand sales generated higher royalty expense, and lower advertising and administrative expense was largely offset by increased warehousing costs as a result of higher domestic shipments and higher intangible amortization expense as a result of a full year of amortization from the Power Rangers Acquisition in 2018.

International

Consumer Products segment operating profit increased $1.2 million to $308.1 million in 2020, compared to $306.9 million in 2019.

Operating profit margin remained flat at 8% of net revenues in 2020 compared to 2019.

The increase in segment operating profit was primarily due to a favorable brand mix, lower royalty expense associated with lower sales of the Company's Partner Brand products and lower marketing and advertising costs.

These increases were mostly offset by lower net revenues related to disruptions to the business as a result of the COVID-19 pandemic, most notably from within the Company's international geographies and from higher freight costs as a result of greater domestic shipments and increased direct-to-customer shipments which carry higher fulfillment costs.

Wizards of the Coast and Digital Gaming Segment

2021 versus 2020

International segment operating profit decreased $64.8 million to $42.5 million in 2020 compared to $107.3 million in 2019.

Wizards of the Coast and Digital Gaming segment operating profit increased $126.6 million to $547.0 million in 2021, compared to $420.4 million in 2020.

Operating profit margin decreased to 43% in 2021 from 46% in 2020.

The decrease in operating profit and operating profit margin is due to lower net revenues, most notably from disruptions to the business, as a result of the COVID-19 pandemic, as discussed above.

This decline in net revenues was partially offset by lower royalty expenses due to lower sales of the Company's Partner Brand products combined with reduced advertising, sales and marketing costs as well as lower distribution expenses.

The increase in segment operating profit in 2021 is due to higher net revenue volumes, partially offset by higher product development costs and higher advertising and marketing costs in support of segment digital gaming initiatives and tabletop set releases, as well as increased administrative expenses, including digital game depreciation expense and personnel costs.

The decrease in segment operating profit margin is primarily due to higher expenses associated with the support of certain digital gaming initiatives and tabletop set releases during 2021.

2020 versus 2019

International segment operating profit increased $67.8 million to $107.3 million in 2019 compared to $39.5 million in 2018.

Absent the impact of the Toys"R"Us bankruptcy filing and subsequent liquidation to 2018 operating profit, operating profit in 2019 increased $60.2 million.

Wizards of the Coast and Digital Gaming segment operating profit increased $125.7 million to $420.4 million in 2020, compared to $294.7 million in 2019.

Operating profit margin increased to 46% in 2020 from 39% in 2019.

The increase in operating profit and operating profit margin, as reported, is due to increased revenues, lower cost of sales due to improved inventory management, lower advertising costs and lower administrative costs.

These decreases were partially offset by increased royalty expenses associated with higher sales of partner brand

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products and higher intangible amortization expense in 2019 as a result of a full year of amortization from the Power Rangers Acquisition in 2018.

Entertainment, Licensing and Digital

The increase in segment operating profit and operating profit margin in 2020 was driven by higher net revenues, a favorable mix from growth in Wizards tabletop gaming and licensed digital gaming, and reduced operating expenses associated with the closure of the Backflip business in the fourth quarter of 2019.

These increases were partially offset by higher administrative expenses including higher compensation expense and higher shipping and warehousing costs during 2020.

Entertainment Segment

2021 versus 2020

Entertainment and Licensing segment operating profit decreased $6.7 million to $93.0 million in 2020 compared to $99.7 million in 2019.

Operating profit margin increased to 24.9% of net revenues in 2020 compared to 22.9% in 2019.

The decrease in operating profit in the Entertainment, Licensing and Digital segment was driven by lower net revenues as well as asset impairment charges including $20.8 million in production assets, driven by a change in entertainment strategy as a result of the eOne Acquisition in 2020.

These decreases were partially offset by lower program costs and amortization costs, reduced operating expenses associated with the closure of the Backflip business in the fourth quarter of 2019, lower royalty expense due to a favorable mix from growth in licensed digital gaming, as well as lower digital gaming advertising and development costs during 2020.

Entertainment segment operating losses were $91.8 million, or 8% of segment net revenues in 2021, compared to operating losses of $141.1 million, or 16% of segment net revenues in 2020.

The 2021 results were negatively impacted by a non-cash impairment charge of $108.8 million associated with the sale of eOne Music and $85.0 million of intangible amortization costs related to the intangible assets acquired in the eOne acquisition.

The 2020 results were impacted by $133.2 million of acquisition and related costs including expense associated with the acceleration of eOne stock-based compensation and advisor fees settled at closing of the acquisition, as well as integration costs and impairment charges for certain definite-lived intangible and production assets driven by a change in entertainment strategy as a result of the eOne acquisition;

combined with $97.9 million of intangible amortization costs related to the intangible assets acquired in the eOne acquisition.

Absent these charges, the 2021 results reflect increased deliveries compared to 2020, offset by higher content amortization and increased compensation expense.

2020 versus 2019

Entertainment and Licensing segment operating profit increased $70.6 million to $99.7 million in 2019 compared to $29.1 million in 2018.

Operating profit margin increased to 22.9% of net revenues in 2019 compared to 8.2% in 2018.

Absent the impact of an $86.3 million goodwill impairment charge related to Backflip Studios on 2018 operating profit, operating profit in 2019 decreased 14%.

This decrease was primarily due to higher program production expense and amortization costs, as well as increased development and administrative costs for MAGIC:

THE GATHERING ARENA and other future digital gaming initiatives during 2019.

eOne segment operating losses were $79.2 million, or -8.3% of segment net revenues in 2020.

This loss was driven by $112.4 million of acquisition and related costs including expense associated with the acceleration of eOne stock-based compensation and advisor fees settled at closing of the acquisition as well as integration costs and impairment charges in the fourth quarter of 2020 for certain definite-lived intangible and other assets.

In addition, the operating loss included $97.9 million of incremental intangible amortization costs associated with the fair value of acquired intangible assets.

Segments and Corporate and Eliminations

In the Global Operations segment, the operating loss was $8.7 million in 2020 compared to operating losses of $7.2 million and $8.4 million in 2019 and 2018, respectively.

In Corporate and eliminations, the operating loss was $85.5 million in 2020 compared to operating profit of $36.9 million in 2019 and an operating loss of $99.3 million in 2018.

The Corporate and Eliminations operating loss in 2020 was driven primarily by charges related to the eOne Acquisition;

including acquisition and integration costs of $32.8 million and restructuring and related costs of $52.6 million, comprised of severance and retention costs, as well as impairment charges for certain definite-lived intangible assets driven by the change in strategy for the combined company’s entertainment assets.

In addition to the charges associated with the eOne Acquisition, the Company incurred $8.5 million of severance charges associated with cost-savings initiatives within the Company’s commercial and Film and TV businesses.

Corporate and Eliminations operating profit in 2019 includes $17.8 million of transaction costs associated with the eOne acquisition.

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Entertainment segment operating losses were $141.1 million, or 16% of segment net revenues in 2020, compared to operating profit of $13.6 million, or 17% of segment net revenues in 2019.

The decrease in 2020 operating profit in the Entertainment segment was driven by the acquisition and integration costs and intangible amortization costs described above and reflects the addition of the eOne entertainment business results, following the Company's acquisition of eOne in fiscal 2020.

Operating profit in 2019 reflects the Company's share of revenues related to TRANSFORMERS:

BUMBLEBEE , the 2018 theatrical release produced jointly with Paramount Pictures, partially offset by related program production cost amortization.

Corporate and Other Segment

In the Corporate and Other segment, the operating losses were $93.3 million in 2021 compared to operating losses of $85.6 million in 2020 and operating profit of $36.9 million in 2019.

Segment operating losses in 2021 were primarily driven by stock compensation expense of $20.9 million associated with the contractual accelerated vesting of certain equity awards as a result of the passing of the Company's former CEO, higher administrative expenses and advertising costs;

including $9.5 million of transaction costs associated with the sale of eOne Music and higher compensation expense as well as retention costs of $7.6 million in relation to the eOne acquisition.

The Corporate and Other operating loss in 2020 was driven by charges related to the eOne acquisition;

including acquisition and integration costs of $32.8 million and restructuring costs of $52.6 million, including impairment charges for certain definite-lived intangible assets driven by the change in strategy for the combined company’s entertainment assets.

In addition to the charges associated with the eOne acquisition, the

Company incurred $8.5 million of severance charges associated with cost-savings initiatives within the Company’s commercial and Film and TV businesses.

Corporate and Other segment operating profit in 2019 includes $17.8 million of transaction costs associated with the eOne acquisition.

OPERATING COSTS AND EXPENSES

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Selling, distribution and administration 22.3 22.9 22.0

Loss on disposal of business 1.7 — —

Acquisition and related costs — 4.0 —

Operating expenses for 2021, 2020 and 2019 include benefits and expenses related to the following events:

• During 2020, in association with the Company's acquisition of eOne, the Company incurred related expenses of $218.6 million, comprised of 145.2 million of acquisition and integration costs and restructuring and related costs of $73.4 million.

• During 2021, in association with the sale of the eOne Music business, the Company incurred a loss of $118.3 million comprised of a goodwill impairment charge of $108.8 million included within Loss on Disposal of Business, and transaction costs of $9.5 million included within Selling, Distribution and Administration.

• During 2021, the Company incurred incremental intangible amortization costs of $85.0 million related to the intangible assets acquired in the eOne acquisition.

• The Company incurred $8.5 million of severance charges, associated with cost-savings initiatives recorded within selling, distribution and administration ("SD&A") expenses in the Company's Corporate and Eliminations segment.

• During 2019, the Company incurred acquisition costs related to eOne of $17.8 million within administrative expenses in the Corporate and Eliminations segment.

• During 2018, the Company recognized charges of $60.4 million consisting of incremental expense for credit losses on outstanding Toys“R”Us receivables, royalty expense, inventory obsolescence as well as other costs related to the Toys“R”Us bankruptcy.

• During 2018, the Company incurred $89.3 million of severance charges, related to the 2018 restructuring program.

These charges were recorded within SD&A expenses and included in Corporate and Eliminations.

• During 2018, the Company recorded $117.6 million in goodwill impairment and other intangible asset impairment charges, all within administrative expenses in the Entertainment, Licensing & Digital segment and the Corporate and Eliminations segment.

• During 2021, the Company incurred $20.9 million of stock compensation expense associated with the accelerated vesting of certain equity awards as a result of the passing of its former CEO included within Selling, Distribution and Administration.

• During 2021, in association with the Company's acquisition of eOne, the Company incurred stock compensation expense of $7.7 million for acquisition related equity grants, included within Selling, Distribution and Administration.

• During 2020, in association with the Company's acquisition of eOne, the Company incurred related expenses of $218.6 million, comprised of $145.2 million of acquisition and integration costs and restructuring and related costs of $73.4 million, included within Acquisition and related costs.

• During 2020, the Company incurred incremental intangible amortization costs of $97.9 million related to the intangible assets acquired in the eOne acquisition.

• During 2020 the Company incurred $8.5 million of severance charges, associated with cost-savings initiatives recorded within Selling, Distribution and Administration.

• During 2019, the Company incurred acquisition costs related to eOne of $17.8 million within Selling, Distribution and Administrative.

Cost of Sales

Cost of sales primarily consists of purchased materials, labor, manufacturing overhead and other inventory-related costs such as obsolescence.

Cost of sales decreased 5% to $1,718.9 million, or 31.5% of net revenues, for the year ended December 27, 2020 compared to $1,807.8 million, or 38.3% of net revenues, for the year ended December 29, 2019.

Cost of sales increased 12% to $1,927.5 million, or 30.0% of net revenues, for the year ended December 26, 2021 compared to $1,718.9 million, or 31.5% of net revenues, for the year ended December 27, 2020.

The cost of sales increase in dollars was primarily due to higher sales volumes and higher inventory costs as a result of increased freight costs and, to a lesser extent, the impact of $10.0 million of foreign currency exchange.

As a percent of net revenues, the cost of sales decrease was the result of a favorable product mix due to higher sales of Wizards of the Coast tabletop games and higher entertainment revenues, as well as lower sales allowances and obsolescence charges compared to 2020.

In 2020, cost of sales decreased 5% to $1,718.9 million, or 31.5% of net revenues, for the year ended December 27, 2020 compared to $1,807.8 million, or 38.3% of net revenues, for the year ended December 29, 2019.

The cost of sales decrease as a percent of net revenues is primarily related to the acquisition of eOne, which experiences lower cost of sales as a percentage of net sales, and to a lesser extent, the decrease was due to the impact of $14.4 million of foreign exchange translation.

The cost of sales decrease in dollars was driven by a favorable brand mix including an increase in net sales of MAGIC:

THE GATHERING products, and improved inventory costing, partially offset by higher markdowns to address excess retail inventory within the International Segment.

In 2019, cost of sales decreased 2% to $1,807.8 million, or 38.3% of net revenues, for the year ended December 29, 2019 compared to $1,850.7 million, or 40.4% of net revenues, for the year ended December 30, 2018.

The cost of sales decrease in dollars and as a percent of net revenues was the result of favorable product mix from higher Entertainment, Licensing and Digital revenues combined with higher Partner Brand products, such as DISNEY FROZEN, MARVEL and STAR WARS, and additional savings related to favorable obsolescence expense and sales allowances.

These savings were partially offset by increased costs to bring products into the U.S.

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THE GATHERING products, and improved inventory costing, partially offset by higher markdowns to address excess retail inventory, primarily across certain international markets.

Program Cost Amortization

Program cost amortization totaled $628.6 million, or 9.8% of net revenues in 2021, compared to $387.1 million, or 7.1% of net revenues in 2020 and $85.6 million, or 1.8% of net revenues, in 2019.

Program costs are capitalized as incurred and amortized using the individual-film-forecast method.

The majority of the Company's program costs are capitalized as incurred and amortized using the individual-film-forecast method.

The Company also utilizes the percentage of completion methodology, primarily related to unscripted content.

Program cost amortization reflects both the phasing of revenues associated with films and television programming, as well as the type of content being produced and distributed.

The increase in dollars and as a percentage of net revenues is related to the addition of eOne's business in 2020, which experiences higher program cost amortization as a percentage of net sales.

Program production cost amortization increased in dollars and as a percent of net revenues in 2021 as a result of the increase in TV and Film deliveries overall, and from the mix of programs delivered, some of which carry higher programming costs.

In addition to these increases was amortization of film production costs associated with the MY LITTLE PONY:

A NEW GENERATION film released on Netflix in 2021.

Program production cost amortization increased in dollars and as a percent of net revenues in 2020 as a result of the addition of eOne's business, which experiences higher program cost amortization as a percentage of net sales.

Program cost amortization attributable to eOne was 6.2% of net revenues in 2020.

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BUMBLEBEE theatrical release, which the Company began to amortize during the third quarter of 2019.

Program production cost amortization increased in dollars and as a percent of net revenues in 2019 compared to 2018 reflecting amortization of production expenses attributable to certain film production assets, most notably TRANSFORMERS:

BUMBLEBEE , partially offset by lower amortization of production expenses related to MY LITTLE PONY:

THE MOVIE in 2019.

Royalty Expense

Royalty expense of $570.0 million, or 10.4% or net revenues, in 2020 compared to $414.5 million, or 8.8% of net revenues, in 2019 and $351.7 million, or 7.7% of net revenues, in 2018.

Royalty expense of $620.4 million, or 9.7% of net revenues, in 2021 compared to $570.0 million, or 10.4% of net revenues, in 2020 and $414.5 million, or 8.8% of net revenues, in 2019.

Fluctuations in royalty expense generally relate to the volume of entertainment-driven products sold in a given period, especially if the Company is selling product tied to one or more major motion picture releases in the period.

Product lines related to Hasbro-owned or controlled brands supported by entertainment generally do not incur the same level of royalty expense as licensed properties, particularly DISNEY FROZEN, STAR WARS and MARVEL, as well as DREAMWORKS and BEYBLADE products and certain other licensed properties which carry higher royalty rates than other licensed properties.

Product lines related to Hasbro-owned or controlled brands supported by entertainment generally do not incur the same level of royalty expense as licensed properties, particularly DISNEY FROZEN and DISNEY PRINCESS, STAR WARS and MARVEL, as well as DREAMWORKS products and certain other licensed properties which carry higher royalty rates than other licensed properties.

In 2021, higher royalty expense in dollars was driven primarily by higher sales of Partner Brand products as compared to 2020, and to a lesser extent, higher expense for guaranteed minimum royalty payments for certain brands.

The decrease in royalty expense as a percentage of net revenues was due to product mix, most notably, higher sales of Wizards of the Coast products, Franchise Brands and higher sales of certain of the Company's Emerging Brands during 2021.

Higher royalty expense in dollars and as a percentage of net revenues in 2020 compared to 2019, was driven by the addition of eOne royalty expenses in 2020 which represented 3.2% of net revenues, partially offset by lower sales of Partner Brand products.

Higher royalty expense in dollars and as a percentage of net revenues in 2019 compared to 2018, reflects higher revenues from Partner Brand products as well as the mix of entertainment-driven product sold.

In particular, higher royalty expense in 2019 reflects the higher net sales of DISNEY FROZEN and MARVEL products, and to a lesser extent, higher net sales of DISNEY'S DESCENDANTS and STAR WARS products.

See note 20 to the Company’s consolidated financial statements in Part II, Item 8.

Financial Statements, of this Form 10-K for information on the Company's future royalty commitments as of December 26, 2021.

Product Development

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Product development expenditures reflect the Company’s investment in innovation and anticipated growth across our brand portfolio.

The increase in 2021 was primarily related to investments in the Wizards of the Coast & Digital Gaming segment, for both tabletop and digital gaming initiatives, such as for the development of MAGIC:

THE GATHERING tabletop set releases and for the development of digital games such as Dungeons & Dragons:

Dark Alliance , and to a lesser extent, increased investments in certain other mobile gaming projects and other product lines currently in development.

Product development expense in 2020 totaled $259.5 million, or 4.7% of net revenues, compared to $262.2 million, or 5.6% of net revenues, in 2019.

The decrease as a percentage of net revenues was primarily related to the addition of eOne revenues, with no associated product development costs.

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These decreases were partially offset by increased investments in the Company's Wizards of the Coast business.

Product development expense in 2019 totaled $262.2 million, or 5.6% of net revenues, compared to $246.2 million, or 5.4% of net revenues, in 2018.

In dollars, the increase in product development expense was the result of increased investments in digital gaming, most notably, to MAGIC:

THE GATHERING ARENA, which launched out of open beta in the third quarter of 2019, and other digital gaming initiatives.

As a percentage of net revenues, product development was consistent with 2018.

Advertising Expense

Advertising expense in 2021 totaled $506.6 million, or 7.9% of net revenues, compared to $412.7 million or 7.6% of net revenues in 2020 and $413.7 million or 8.8% in 2019.

The level of the Company’s advertising expense is generally impacted by revenue mix, the amount and type of theatrical releases and television programming.

The decrease in dollars was driven by lower advertising costs related to the Company’s digital gaming initiatives due to the timing of launch dates and reduced advertising levels across substantially all of the Company's regions, most notably in Latin America, reflecting the current environment due to the impact of COVID-19.

The level of the Company’s advertising expense is generally impacted by revenue mix, the amount and type of theatrical releases and television programming delivered.

The advertising expense increase in 2021 reflects growth in revenues compared to 2020 and higher advertising costs in support of MAGIC:

THE GATHERING tabletop gaming releases, higher advertising costs in support of the feature length film, MY LITTLE PONY:

A NEW GENERATION , and for the Company’s digital gaming initiatives, most notably, Magic:

The Gathering Arena and Dungeons & Dragons:

Dark Alliance .

These increases were partially offset by reduced promotional spend in the Entertainment segment due to fewer theatrical releases in 2021 compared to 2020.

The decrease in dollars in 2020 was driven by lower advertising costs related to the Company’s digital gaming initiatives due to the timing of launch dates and reduced advertising levels across substantially all of the Company's regions, most notably in Latin America, reflecting the impact of COVID-19.

These decreases were partially offset by increased advertising expenses as a result of the addition of eOne operations in 2020.

Advertising expense attributable to eOne was 1.5% of net revenues in 2020.

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In 2019, the decrease in dollars and as a percentage of net revenues, was related to higher entertainment backed revenues which require lower advertising expense combined with greater efficiency in advertising programs.

Advertising expense attributable to eOne was 1.5% of net revenues in 2020, as early 2020 included the advertising behind the film 1917 prior to Covid-related shutdown of theaters.

Amortization of Intangible Assets

Amortization of intangible assets increased to $144.7 million, or 2.6% of net revenues, in 2020 compared to $47.3 million, or 1.0% of net revenues, in 2019 and $28.7 million, or 0.6% of net revenues in 2018.

The increase in dollars and as a percentage of net revenues is primarily related to the acquisition of eOne, which contributed intangible asset amortization of $97.9 million, or 1.8% of net revenues in 2020.

In 2019, the increase in amortization of intangible assets in both dollars, and as a percent of net revenues reflects amortization related to the POWER RANGERS property rights acquired during the second quarter of 2018 as well as other licensed property rights, which began amortizing in 2019.

Amortization of intangible assets decreased to $116.8 million, or 1.8% of net revenues, in 2021 compared to $144.7 million, or 2.6% of net revenues, in 2020 and $47.3 million, or 1.0% of net revenues in 2019.

The decrease in 2021 is primarily related to certain licensed property rights which became fully amortized in the fourth quarter of 2020 combined with the discontinuation of amortization related to the eOne Music intangible assets in the second quarter of 2021, upon being classified as held for sale assets and subsequently sold in the third quarter of 2021.

In 2020, the increase in dollars and as a percentage of net revenues is primarily related to the acquisition of eOne, which contributed intangible asset amortization of $97.9 million, or 1.8% of net revenues in 2020.

Selling, Distribution and Administration Expenses

Selling, distribution and administration ("SD&A") expenses increased to $1,252.1 million, or 22.9% of net revenues in 2020 from $1,037.1 million, or 22.0% of net revenues, in 2019.

In 2020, the increase in SD&A expenses was driven primarily by the inclusion and consolidation of eOne's operations, accounting for 3.9% of net revenues.

Also contributing to the increase was higher freight costs and higher expense for credit losses due to the impacts of the COVID-19 pandemic, as well as $8.5 million of restructuring charges.

In addition to the following drivers, Selling, Distribution and Administration ("SD&A") expenses include certain charges noted under the Operating Costs and Expenses table above.

SD&A expenses increased to $1,432.7 million, or 22.3% of net revenues in 2021, from $1,252.1 million, or 22.9% of net revenues, in 2020.

In 2021, the increase reflects higher marketing and sales costs consistent with the increase in net revenues, higher compensation expense and increased freight and warehousing costs, primarily due to ongoing global supply chain disruptions.

In addition, 2021 included higher depreciation expense associated with capitalized games held and used within the Wizards of the Coast business.

These increases were partially offset by the divestiture of eOne Music and lower expense for credit losses during 2021.

In 2020, SD&A increased to $1,252.1 million, or 22.9% of net revenues, from $1,037.0 million or 22.0% of net revenues in 2019.

The increase in SD&A expenses was driven primarily by the inclusion of eOne's operations, accounting for 3.9% of net revenues.

Also contributing to the increase was higher freight costs and higher expense for credit losses due to the impacts of the COVID-19 pandemic.

This increase was partially offset by lower marketing, sales and warehousing expenses across the regions during the year.

Selling, distribution and administration expenses were $1,037.1 million, or 22.0% of net revenues, in 2019 compared to $1,287.6 million, or 28.1% of net revenues, in 2018.

SD&A expenses in 2019 included $17.8 million of transaction expenses related to the eOne acquisition while 2018 administrative expenses include the $117.6 million in goodwill impairment and other intangible asset charges, $89.3 million of severance charges, and $50.2 million of incremental expenses related to the Toys"R"Us bankruptcy.

Absent these charges, the remaining decrease reflects lower spending due to the Company’s cost-reduction efforts and lower compensation expense, partially offset by increased expenses related to opening a new Midwestern U.S.

warehouse and higher domestic shipping and warehousing costs to support higher sales.

Loss on Disposal of Business

The loss on disposal of business of $108.8 million, or 1.7% of net revenues, represents a non-cash impairment charge associated with the disposition of eOne Music during 2021.

Acquisition and Related Costs

During 2020, the Company incurred $218.6 million of acquisition and related costs in connection with the eOne Acquisition.

During 2020, the Company incurred charges of $218.6 million, or 4.0% of net revenues, of acquisition and related costs in connection with the eOne acquisition.

These expenses were comprised of $145.2 million of acquisition and integration costs and $73.4 million of restructuring and related costs.

Most notably, $47.4 million of expenses associated with the acceleration of eOne stock-based compensation and $38.2 million of advisor fees, substantially all of which were settled at the closing of the acquisition as well as certain other integration costs.

NON-OPERATING (INCOME) EXPENSE

NON-OPERATING EXPENSE (INCOME)

Interest Expense

Interest expense totaled $179.7 million in 2021 compared to $201.1 million in 2020 and $101.9 million in 2019.

In connection with the financing of the eOne Acquisition, the Company issued an aggregate of $2.4 billion of senior unsecured debt securities in November 2019, and in the first quarter of 2020, borrowed $1.0 billion in term loans provided by a term loan agreement.

The increase in interest expense in 2020 compared to 2019 reflects interest related to these notes and other borrowings associated with the eOne Acquisition, partially offset by lower average short-term borrowings during 2020.

The decrease in interest expense during 2021 primarily reflects long-term debt repayments made throughout the year primarily related to borrowings utilized for the eOne acquisition, and lower interest rates.

These decreases were partially offset by higher production financing borrowings compared to 2021.

The increase in interest expense in 2020 compared to 2019 reflects interest related to long-term debt issued in connection with the financing of the eOne acquisition, partially offset by lower average short-term borrowings during 2020.

Interest Income

Interest income was $5.4 million in 2021 compared to $7.4 million in 2020 and $30.1 million in 2019.

In 2019, the Company had higher cash balances driven by the long-term debt and equity financings completed in November 2019, resulting in proceeds of approximately $3.3 billion which were used in the December 30, 2019 acquisition of eOne.

Lower interest income in 2021 is primarily the result of lower cash balances due to long-term debt repayments and lower average interest rates in 2021 compared to 2020.

In 2019, the Company's cash balances were higher due to the long-term debt and equity financings completed in November 2019, resulting in proceeds of approximately $3.3 billion which were used in the December 30, 2019 acquisition of eOne.

In 2020, the decrease in interest income was primarily the result of lower cash balances and lower average interest rates compared to 2019.

The increase in interest income is 2019 was the result of the higher cash balances described above, partially offset by lower average interest rates compared to 2018.

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Other (Income) Expense, Net

Other (income) expense, net was $(14.0) million, $(13.9) million and $(7.8) million in 2020, 2019 and 2018, respectively.

The following table outlines major contributors to other (income) expense, net, expressed in millions of dollars.

Other Expense (Income), Net

Other expense (income), net was $7.1 million, $(14.0) million and $(13.9) million in 2021, 2020 and 2019, respectively.

The following table outlines major contributors to other expense (income), net, expressed in millions of dollars.

2021 2020 2019

Foreign currency losses (gains) $ 2.1 $ (124.3) 10.8

Foreign currency (gains) losses $ (5.1) $ 2.1 $ (124.3)

Earnings from Discovery Family Channel (20.8) (21.8) (23.6)

Discovery Family Channel impairment 74.1 — —

Discovery Family Channel option (20.1) (1.5) (1.2)

Pension expense 1.7 1.2 119.5

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Loss (gain) on investments (3.8) 7.3 (6.1)

Legal settlement (26.7) (3.2) —

Other 8.0 5.8 2.6

$ 7.1 (14.0) (13.9)

• Foreign currency losses reflect the strengthening of the U.S.

dollar against certain currencies, primarily across the Company's Latin American markets.

• Foreign currency (gains) losses reflect fluctuations of foreign currency translation across the Company's international markets against the U.S.

Foreign currency gains in 2019 reflect realized and unrealized gains of approximately $114.1 million on the foreign exchange forward and option contracts entered to hedge a portion of the British pound sterling purchase price in relation to the eOne acquisition.

• Earnings from the Discovery joint venture are comprised of the Company’s share in the results of the Network.

• During 2021, the Company recorded an impairment loss of $74.1 million related to its investment in Discovery Family Channel.

The Network projected a significant decline in affiliate revenue driven by changes in the cable distribution industry due to a decline in linear subscribers.

• In relation to the Discovery joint venture, Hasbro and Discovery have a put/call option on the share of the Discovery Family Channel.

The option’s fair value is periodically re-measured and in 2021, as a result of the Discovery Family Channel impairment, the adjustment of the option's fair value resulted in a $20.1 million gain.

In 2020 and 2019, the Company recorded gains of $1.5 million and $1.3 million, respectively, due to the option’s value decrease.

• During 2019, the Company incurred $111.0 million of settlement charges related to the termination of its U.S.

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With the termination of the bridge facility, the Company wrote off the associated financing costs in the fourth quarter of 2019.

• During 2020, the loss on investments was driven by a partial write off of an investment in Quibi, a mobile streaming service, which was obtained as part of the eOne acquisition.

The 2019 and 2018 gain on investments primarily reflects proceeds from the sale of certain long-term investments sold during the year.

• In relation to their joint venture, Discovery owns an option to purchase Hasbro’s share of the Discovery Family Channel.

The option’s fair value is periodically re-measured and represents a $1.5 million gain in 2020, a $1.3 million gain in 2019 and a $0.5 million gain in 2018 (included in other in the table above) due to the option’s value decrease.

• During 2021, the gain on investments primarily reflects a recoupment of the 2020 loss on investments, which was driven by a partial write off of an investment in Quibi, a mobile streaming service, which was obtained as part of the eOne acquisition.

The 2019 gain on investments primarily reflects proceeds from the sale of certain long-term investments sold during the year.

• During the 2021, the Company realized a gain of $26.7 million from a legal settlement related to a historical eOne dispute.

Income tax expense totaled 25.2% of pre-tax earnings in 2021 compared with 30.0% in 2020 and 12.4% in 2019.

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It is also affected by discrete items that may occur in any given year but are not consistent from year to year.

Income tax expense for 2020 includes a discrete net tax benefit of $14.5 million primarily related to eOne acquisition and related costs, revaluation of tax attributes as a result of United Kingdom’s enactment of the Finance Act of 2020, increase of uncertain tax positions based on changes in management judgment and tax planning, including planning directly related to the eOne integration.

Income tax expense for 2019 includes a net discrete tax benefit of $33.5 million primarily relating to the settlement of the U.S.

defined benefit pension plan liability and the acquisition of eOne, specifically the nontaxable integrated hedging gains and nondeductible transaction costs.

Income tax expense for 2018 includes a discrete net tax expense of $40.7 million relating to the Tax Cuts and Jobs Act (the “Tax Act”) and net tax benefits of approximately $50.0 million primarily due to reassessment of prior period tax positions and excess tax benefits relating to share-based compensation.

Subsequent to the Tax Act, the Company has greater flexibility to manage cash globally.

Income tax expense for 2021 includes a discrete expense primarily related to:

(i) a non-deductible impairment charge from the sale of eOne Music and;

(ii) the remeasurement of UK net deferred tax liability as a result of the United Kingdom’s enactment of the Finance Act of 2021;

offset by (iii) a benefit from the release of uncertain tax positions resulting from a change in management judgement;

and (iv) discrete tax planning benefits.

Income tax expense for 2020 includes a discrete net tax benefit primarily related to:

(i) eOne acquisition and related costs;

(ii) the remeasurement of UK net deferred tax liability as a result of the United Kingdom’s enactment of the Finance Act of 2020;

and (iii) an increase of uncertain tax positions based on changes in management judgment;

offset by (iv) tax planning, including planning directly related to the eOne integration.

Income tax expense for 2019 includes discrete tax benefits primarily related to:

(i) the settlement of the U.S.

defined benefit pension plan liability;

and (ii) the acquisition of eOne, specifically the nontaxable integrated hedging gains and nondeductible transaction costs.

Subsequent to the United States passing the Tax Cuts and Jobs Act (the Tax Act), the Company has greater flexibility to manage cash globally.

The Company intends to repatriate the accumulated foreign earnings as needed from time to time.

The Company still has significant cash

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needs outside the United States and continues to consistently monitor and analyze its global working capital and cash requirements.

In 2020, the Company recorded approximately $1.2 million of foreign withholding and U.S.

state taxes that will be incurred due to future cash distributions.

The Company still has significant cash needs outside the United States and continues to consistently monitor and analyze its global working capital and cash requirements.

As of 2021, we have recorded $3.4 million of foreign withholding and U.S.

state income tax liability.

The Company will continue to record additional tax effects, if any, in the period that the on-going distribution analysis is completed and is able to make reasonable estimates.

NEW ACCOUNTING PRONOUNCEMENTS

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No.

2016-13 (ASU 2016-13) Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments .

The amendments in this update provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.

The standard update replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

For public companies, this standard is effective for annual reporting periods beginning after December 15, 2019, and early adoption was permitted.

The Company adopted the standard in the first quarter of 2020 and the adoption of the standard did not have a material impact on its consolidated financial statements.

In August 2018, the FASB issued Accounting Standards Update No.

2018-13 (ASU 2018-13), Fair Value Measurement (Topic 820):

Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement .

The amendments in this update modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, specifically related to disclosures surrounding Level 3 asset balances, fair value measurement methods, related gains and losses and fair value hierarchy transfers.

For public companies, this standard is effective for annual reporting periods beginning after December 15, 2019, and early adoption was permitted.

The Company adopted the standard in the first quarter of 2020 and the adoption of the standard did not have a material impact on its consolidated financial statements.

In March 2019, the FASB issued Accounting Standards Update No.

2019-02 (ASU 2019-02) Entertainment-Films-Other Assets-Film Costs (Subtopic 926-20) and Entertainment-Broadcasters-Intangibles-Goodwill and Other (Subtopic 920-350):

Improvements to Accounting for Costs of Films and License Agreements for Program Materials .

The amendments in this update align cost capitalization of episodic television series production costs with that of film production cost capitalization.

In addition, this update addresses impairment testing procedures with regard to film groups, when a film or license agreement is expected to be monetized with other films and/or license agreements.

The intention of this update is to align accounting treatment with changes in production and distribution models within the entertainment industry and to provide increased transparency of information provided to users of financial statements about produced and licensed content.

For public companies, this standard is effective for annual reporting periods beginning after December 15, 2019, and early adoption was permitted.

The Company adopted the standard in the first quarter of 2020 and the adoption of the standard did not have a material impact on its consolidated financial statements.

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued Accounting Standards Update No.

2018-14 (ASU 2018-14) Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20) - Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans .

The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

For public companies, this standard is effective for annual reporting periods beginning after December 15, 2020, and early adoption is permitted.

The standard relates to financial statement disclosure only and will not have an impact on the Company's statement of financial position, statement of operations or statement of cash flows.

For public companies, this standard is effective for annual reporting periods beginning after December 15, 2020.

The Company adopted the standard in the first quarter of 2021 and the adoption of the standard did not have a material impact on its consolidated financial statements.

In December 2019, the FASB issued Accounting Standards Update No.

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Simplifying the Accounting for Income Taxes .

The amendments in this update remove certain exceptions for performing intraperiod tax allocations, recognizing deferred taxes for investments, and calculating income taxes in interim periods.

The amendments in this update remove certain exceptions for performing intra-period tax allocations, recognizing deferred taxes for investments, and calculating income taxes in interim periods.

The guidance also simplifies the accounting for franchise taxes, transactions that result in a step-up in the tax basis of goodwill, and the effect of enacted changes in tax laws or rates in interim periods.

ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and early adoption is permitted.

While the Company is continuing to assess the potential impacts of ASU 2019-12, it does not expect ASU 2019-12 to have a material effect on its consolidated financial statements.

In March 2020, the FASB issued Accounting Standards Update No.

ASU 2019-12 is effective for fiscal years beginning after December 15, 2020.

The Company adopted the standard in the first quarter of 2021 and the adoption of the standard did not have a material impact on its consolidated financial statements.

Recently Issued Accounting Pronouncements

In March of 2020, the FASB issued Accounting Standards Update No.

2020-04 (ASU 2020-04) Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

The amendments

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in this update provide optional expedients and exceptions for applying generally accepted accounting principles ("GAAP") to contracts, hedging relationships, and other transactions, for a limited period of time, to ease the potential burden of recognizing the effects of reference rate reform on financial reporting.

The amendments in this update provide optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions, for a limited period of time, to ease the potential burden of recognizing the effects of reference rate reform on financial reporting.

The amendments in this update apply to contracts, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued due to the global transition away from LIBOR and certain other interbank offered rates.

An entity may elect to apply the amendments provided by this update beginning March 12, 2020 through December 31, 2022.

The Company does not expect the change from LIBOR to an alternate rate to have a material impact on its consolidated financial statements however, unlike other standard updates, the provisions of this update are only available until December 31, 2022, as such, the Company continues to evaluate the standard's potential impact to its consolidated financial statements.

OTHER INFORMATION

Brexit Referendum

On June 23, 2016, the United Kingdom voted in a referendum to leave the European Union (“EU”), referred to as Brexit.

The UK government triggered the formal two-year period to negotiate the terms of the UK’s exit on March 29, 2017.

These events resulted in an immediate weakening of British pound sterling against the US dollar, and increased volatility in the foreign currency markets which continued through 2019.

These fluctuations initially affected Hasbro’s financial results, although the impact was partially mitigated by the Company’s hedging strategy.

On January 31, 2020, the UK formally withdrew from the EU and entered a transitional period which ended on December 31, 2020.

In December 2020 the UK and the EU agreed on a trade and cooperation agreement, under which the EU and the UK will now form two separate markets governed by two distinct regulatory and legal regimes.

The trade and cooperation agreement covers the general objectives and framework of the relationship between the UK and the EU, including as it relates to trade, transport and visas.

The Company continues to monitor the impact to foreign currency markets, taking appropriate actions to support the Company’s long-term strategy and to mitigate risks in its operational and financial activities.

However, the Company cannot predict the direction of Brexit-related developments nor the impact of those developments on our European operations and the economies of the markets in which they operate.

The change from LIBOR to an alternate rate has not had a material impact on the Company's consolidated financial statements and the Company is continuing to evaluate the standard's potential impact to its consolidated financial statements.

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically generated a significant amount of cash from operations.

In 2020, the Company funded its operations and liquidity needs through available cash and from cash flows from operations, and when needed, used borrowings under its available lines of credit.

In addition, the Company’s eOne operating segment used production financing to fund certain of its television and film productions which are arranged on an individual production basis by special purpose production subsidiaries.

During 2021, the Company expects to continue to fund its working capital needs primarily through available cash and cash flows from operations and from production financing facilities and, if needed, by issuing commercial paper or borrowing under its revolving credit agreement.

In 2021, the Company primarily funded its operations and liquidity needs through cash on hand and from cash flows from operations, and when needed, used borrowings under its available lines of credit.

In addition, the Company’s Entertainment operating segment used production financing to fund certain of its television and film productions which are typically arranged on an individual production basis by special purpose production subsidiaries.

For more information on the Company's production financing facilities, including expected future repayments, see notes 9 and 11 to the consolidated financial statements included in Part II, Item 8.

Financial Statements, of this Form 10-K.

During 2022, the Company expects to continue to fund its working capital needs primarily through available cash, cash flows from operations and from production financing facilities and, if needed, by issuing commercial paper or borrowing under its revolving credit agreement.

In the event that the Company is not able to issue commercial paper, the Company intends to utilize its available lines of credit.

The Company believes that the funds available to it, including cash expected to be generated from operations, funds available through its commercial paper program or its available lines of credit and production financing, are adequate to meet its working capital needs for 2021, including the repayment of the current portion of our long-term debt of $432.6 million, as shown on the consolidated balance sheets which represents the $300.0 million of 3.15% Notes that mature during the second quarter of 2021, as well as the current portion of required quarterly principal amortization payments for our term loan facilities and other production financing facilities, each as described below.

The Company believes that the funds available to it, including cash expected to be generated from operations, funds available through its commercial paper program or its available lines of credit and production financing, are adequate to meet its working capital needs for 2022, including the repayment of the current portion of long-term debt of $200.1 million, as shown on the consolidated balance sheets which represents the current portion of required quarterly principal amortization payments for our term loan facilities and other production financing facilities, each as described below.

The Company may also issue debt or equity securities from time to time, to provide additional sources of liquidity when pursuing opportunities to enhance our long-term competitive position, while maintaining a strong balance sheet.

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Accordingly, such international cash balances were not available to fund cash requirements in the United States unless the Company was to change its reinvestment policy.

The Company has

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maintained sufficient sources of cash in the United States to fund cash requirements without the need to repatriate any funds.

The Company has maintained sufficient sources of cash in the United States to fund cash requirements without the need to repatriate any funds.

The Tax Act provided significant changes to the U.S.

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income tax on unrepatriated earnings by imposing a one-time mandatory deemed repatriation tax on undistributed foreign earnings.

As of December 27, 2020, the Company had a total liability of $174.5 million related to this tax, $18.4 million is reflected in current liabilities while the remaining long-term payable related to the Tax Act of $156.1 million is presented within other liabilities, non-current on the consolidated balance sheets included in Part II, Item 8.

As of December 26, 2021, the Company had a total liability of $156.1 million related to this tax, $18.4 million is reflected in current liabilities while the remaining long-term payable related to the Tax Act

of $137.7 million is presented within other liabilities, non-current on the consolidated balance sheets included in Part II, Item 8.

Financial Statements , of this Form 10-K.

As permitted by the Tax Act, the Company will pay the transition tax in annual interest-free installments through 2025.

As permitted by the Tax Act, the Company will pay the transition tax in annual interest-free installments through 2025 as follows:

$18.4 million;

$34.4 million;

$45.9 million;

$57.3 million.

As a result, in the future, the related earnings in foreign jurisdictions will be made available with greater investment flexibility.

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Other liabilities 670.7 -16 % 794.0 43 % 556.6

Accounts receivable, net decreased 1% in 2020 compared to 2019.

Foreign currency translation did not have a significant impact on account receivable balances in 2020.

Absent eOne, accounts receivable balances decreased 15% due to improved collections and fewer sales to customers that carry longer payment terms.

Accounts receivable, net increased 8% in 2021 compared to 2020.

The increase in accounts receivable was driven primarily by higher sales during 2021, partially offset by improved collections, most notably in the Company's European and Latin American markets.

Days sales outstanding decreased from 74 days at December 27, 2020 to 68 days at December 26, 2021, primarily due to the increase in revenues and mix of sales during 2021 as well as from the improved collections described above.

In 2020, absent eOne, accounts receivable balances decreased 15% due to improved collections and fewer sales to customers that carry longer payment terms.

Days sales outstanding decreased to 74 days at December 27, 2020 from 90 days at December 29, 2019.

The days sales outstanding primarily reflects improved collections throughout 2020 as well as the mix of sales.

Accounts receivable, net increased 19% in 2019 compared to 2018.

Days sales outstanding increased to 90 days at December 29, 2019 from 78 days at December 30, 2018.

The days sales outstanding increase was the result of higher sales in jurisdictions with longer payment terms as well as the timing of shipments during the fourth quarter of 2019.

Inventories decreased 11% in 2020 compared to 2019 reflecting lower levels, primarily in the US, and across all regions, due to improved inventory management and lower sales.

Inventories increased 1% in 2019 compared to 2018.

Foreign currency translation did not have a significant impact on 2020 inventory balances.

Inventories increased 40% in 2021 compared to 2020 reflecting increased lead-times from supply chain disruptions, as well as higher freight-in costs, primarily in the U.S.

and Europe, impacting the Company's Consumer Products and Wizards of the Coast tabletop gaming businesses.

This increase was partially offset by lower inventory levels in the Company's Asia Pacific and Latin American markets.

In 2020, inventories decreased 11% compared to 2019 reflecting lower levels, primarily in the U.S., and across all regions, due to improved inventory management and lower sales.

Prepaid expenses and other current assets increased 8% in 2021 compared to 2020.

The increase was due to higher accrued royalty and licensing income, primarily attributable to accrued revenue balances of $236.9 million associated with eOne's properties and content, higher prepaid royalty amounts due to payments made in the first quarter of 2020 for the extension of the Company’s Marvel and Lucas agreements, higher accrued tax credits related to film and television production costs, the majority of which are attributable to eOne productions, and higher prepaid tax balances as a result of lower earnings relative to estimated tax payments.

The increase was driven by higher accrued tax credit balances related to film and television production costs, due to increased productions and timing of tax credit claims, as well as higher unrealized gains on foreign exchange contracts.

These increases were partially offset by lower accrued income and prepaid expense balances associated with the sale of eOne Music, lower prepaid royalty balances in relation to the 2020 extension of Company’s Marvel and Lucasfilm royalty agreements and lower prepaid tax balances.

In 2020, prepaid expenses and other current assets increased 96% compared to 2019 due to higher accrued royalty and licensing income, primarily attributable to accrued revenue balances of $236.9 million associated with eOne's properties and content, higher prepaid royalty amounts due to payments made in the first quarter of 2020 in relation to the Company’s Marvel and Lucas agreements, higher accrued tax credits related to film and television production costs and higher prepaid tax balances as a result of lower earnings relative to estimated tax payments.

These 2020 increases were partially offset by lower unrealized gains on foreign exchange contracts and lower short-term investment balances as a result of the Company's global cash management strategy.

Prepaid expenses and other current assets increased 16% in 2019 compared to 2018.

The increase was due to higher unrealized gains on foreign exchange contracts, including $34.1 million of unrealized gains from hedges in relation to the eOne acquisition purchase price and other related transaction costs.

In addition, the increase in prepaid expenses and other current assets was due to higher accrued and prepaid royalty and licensing balances in 2019.

As a result of the settlement of the Company's U.S.

defined benefit pension plan liability, the Company had remaining excess assets of approximately $20.2 million of which $8.6 million was recorded as a current asset to be used to fund Company contributions to the Company's 401(k) plan in the U.S.

These increases were partially offset by lower prepaid tax balances.

Other assets increased 3% in 2021 compared to 2020.

The increase was primarily due to eOne's investments in acquired content and production for film, television and music content of $627.9 million.

The increase was driven by higher investments in film and television productions, higher investments in content development and higher long-term accrued income balances related to certain of the Company's content distribution arrangements.

These increases were partially offset by a lower balance for the Company's investment in Discovery Family Channel, due to impairment charges recorded in the fourth quarter of 2021.

Other assets increased 115% in 2020 compared to 2019.

The increase was primarily due to the addition of eOne's investments in acquired content and production for film, television and music content of $627.9 million.

Also contributing to the increase in 2020 are higher long-term accrued income balances primarily driven by eOne and higher deferred tax balances resulting from the eOne acquisition.

These increases were partially offset by lower capitalized television production costs in the legacy Hasbro business and lower non-current royalty advances which have been reclassified from non-current to current.

Other assets decreased 21% in 2019 compared to 2018.

Lower balances in

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2019 included:

lower deferred tax asset balances as a result of a reclassification of certain deferred tax assets to reduce the Company's transition tax liability, lower long-term receivable balances related to third-party production studio rebates, lower capitalized movie production costs as a result of higher amortization of certain production assets during 2019, as well as decreases in non-current royalty advance balances.

These decreases were partially offset by the pension surplus remaining following the settlement of the Company's U.S.

defined benefit pension plan liability during 2019, of which approximately $11.6 million was recorded in other assets and higher long-term contract assets balances in 2019.

These increases were

partially offset by lower capitalized television production costs in the legacy Hasbro business and lower non-current royalty advances which have been reclassified from non-current to current.

Accounts payable and accrued liabilities increased 15% in 2021 compared to 2020.

The drivers of the increase include higher account payable balances driven by an extension of payable terms, higher accrued expenses for investments in content and productions, higher accrued freight balances due to increased costs as a result of supply chain disruptions and higher incentive compensation accruals.

These increases were partially offset by lower accrued participations and residuals, lower balances of certain accounts payable and accrued liabilities associated with the sale of eOne Music and lower severance accruals from payments made in relation to restructuring actions taken in 2018 and eOne integration severance in 2020.

Accounts payable and accrued liabilities increased 56% in 2020 compared to 2019.

The increase was primarily attributable to accrued participation and deferred revenue balances attributable to eOne.

In addition, increases included higher account payable balances, higher accrued royalty balances, and higher accrued salaries and incentive compensation balances.

Accounts payable and accrued liabilities were essentially flat in 2019 compared to 2018.

Increases included higher accrued royalty balances as a result of higher sales of partner brand products, higher accrued incentive compensation balances, the Company’s current lease liability balance of $30.7 million included in accrued liabilities as the result of the adoption of ASU 2016-02, higher accrued dividends resulting from the higher level of shares outstanding and the higher dividend rate, and higher accrued interest as a result of higher debt levels in 2019 from the issuance of notes in November 2019.

These increases were primarily offset by the payment of remaining amounts due to Saban Properties for the POWER RANGERS brand acquisition and lower severance accruals from payments made in relation to restructuring actions taken in 2018.

Other liabilities increased to 43% in 2020 compared to 2019.

Other liabilities decreased 16% in 2021 compared to 2020.

The decrease was driven by lower long-term lease liability balances and a lower transition tax liability balance reflecting the reclassification of the 2022 installment payment, lower tax reserves and a lower Discovery option agreement balance due to a revaluation of the Discovery Family Channel investment during the fourth quarter of 2021.

These decreases were partially offset by higher deferred compensation reserve balances.

Other liabilities increased 43% in 2020 compared to 2019.

The increase was primarily driven by deferred tax liabilities recorded as a result of the eOne acquisition, higher long-term lease liability balances resulting from the eOne acquisition and higher reserves for uncertain tax positions.

In addition, the balance in 2020 includes the inclusion of long-term deferred revenue balances related to eOne.

These increases were offset by a lower transition tax liability balance reflecting the reclassification of the 2021 installment payment.

Other liabilities increased 3% in 2019 compared to 2018.

The increase was primarily due to the adoption of Accounting Standards Update 2016-02, Leases (Topic 842) ("ASU 2016-02") in 2019 which requires the recognition of long-term lease liability balances, which were $113.4 million at December 29, 2019, partially offset by a decrease in the transition tax liability reflecting the reclassification of certain deferred tax assets to reduce the transition tax liability as well as the reclassification of the 2020 installment payment, and the elimination of deferred rent balances which were netted with their corresponding right of use assets as a result of the adoption of ASU 2016-02 in 2019.

These increases were partially offset by a lower transition tax liability balance reflecting the reclassification of the 2021 installment payment.

The following table summarizes the changes in the consolidated statement of cash flows included in Part II, Item 8.

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Operating cash flows in 2021, 2020 and 2019 included $697.3 million, $438.9 million and $33.9 million, respectively, of cash used for television program and film production.

The $323.2 million increase in net cash provided by operating activities was primarily attributable to higher collections of accounts receivable balances in 2020 and higher earnings excluding non-cash charges.

The decrease in net cash provided by operating activities during 2021, was primarily attributable to the increased spend for television program and film production, as well as an increase in working capital cash outflows associated with increased accounts receivable and inventory balances as noted above.

These outflows were partially offset by higher earnings in 2021 and favorable changes in accounts payable terms in certain markets.

The increase in operating cash flows in 2020 was primarily attributable to higher collections of accounts receivable balances and higher earnings excluding non-cash charges.

These increases were partially offset by higher film and television production spend as a result of the inclusion of eOne operations during 2020.

The increase in operating cash flows in 2019 compared to 2018 primarily reflects higher earnings offset by higher levels of accounts receivable at December 2019.

Cash flows utilized by investing activities were $4,500.2 million, $61.0 million and $286.5 million in 2020, 2019 and 2018, respectively.

2020 cash utilized by investing activities reflects $4.4 billion of cash utilized to acquire eOne, net of cash acquired.

Additions to property, plant and equipment decreased in 2020 to $125.8 million from $133.6 million and $140.4 million in 2019 and 2018, respectively.

Cash flows provided by investing activities were $242.0 million in 2021 compared to cash flows utilized by investing activities of $4,500.2 million in 2020 and $60.9 million in 2019.

Investing activities in 2021 include $378.5 million of proceeds, net of cash sold, from the sale of eOne Music.

Investing activities in 2020 reflect $4.4 billion of cash utilized to acquire eOne, net of cash acquired.

Additions to property, plant and equipment were $132.7 million, $125.8 million and $133.6 million in 2021, 2020 and 2019, respectively.

Of these additions, 52% in 2021, 51% in 2020 and 54% in 2019 were for purchases of tools, dies and molds related to the Company’s products.

During the fiscal years ended December 26, 2021, December 27, 2020 and December 29, 2019, the depreciation of plant and equipment was $163.3 million, $120.2 million and $133.5 million, respectively.

Fluctuations in depreciation of plant and

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equipment correlate with the percentage of additions to property, plant and equipment relating to tools, dies and molds which have shorter useful lives and accelerated depreciation.

The cash used for the purchase of eOne consisted of the net proceeds from the issuance of an aggregate principal amount of $2.4 billion in senior secured notes in November 2019, net proceeds $975.2 million from of the issuance of approximately 10.6 million shares of common stock in November 2019 and $1.0 billion in term loans drawn in the first quarter of 2020.

Fluctuations in depreciation of plant and equipment correlate with the percentage of additions to property, plant and equipment relating to tools, dies and molds which have shorter useful lives and accelerated depreciation.

The net proceeds received from the sale of eOne Music during the third quarter of 2021, were used for long-term debt repayments as part of the Company's plan to accelerate deleveraging, and for general corporate purposes to run the business.

The cash used for the

purchase of eOne in 2020 consisted of the net proceeds from the issuance of an aggregate principal amount of $2.4 billion in senior secured notes in November 2019, net proceeds $975.2 million from of the issuance of approximately 10.6 million shares of common stock in November 2019 and $1.0 billion in term loans drawn in the first quarter of 2020.

Excluding capital expenditures, 2019 cash utilized for investing activities reflects a cash payment net of cash acquired of $8.8 million related to the acquisition of Tuque Games in October of 2019 as well as offsetting realized gains of $80.0 million from hedges in relation to the Company's exposure to fluctuations in the British pound sterling associated with the eOne acquisition purchase price and other transaction related costs.

The Company's 2019 investing activities also included $6.4 million received from the installment note relating to the sale of the Company’s manufacturing operations in 2015.

Net cash provided (utilized) by financing activities was $405.9 million, $2,810.6 million, and $(737.1) million in 2020, 2019 and 2018, respectively.

Cash provided by financing activities in 2020 included the drawdown of the Company's $1.0 billion in term loans, as well as drawdowns of $115.6 million related to eOne production financing loans.

Net cash (utilized) provided by financing activities was $(1,459.8) million, $405.9 million, and $2,810.6 million in 2021, 2020 and 2019, respectively.

Cash utilized by financing activities in 2021 included repayment of $300.0 million aggregate principal amount of 3.15% Notes due 2021, during the first quarter;

early repayment of $300.0 million aggregate principal of 2.60% Notes due 2022 and related debt extinguishment costs of $9.1 million during the third quarter;

payments totaling $480 million related to the $1.0 billion in term loans consisting of $300.0 million for the remaining principal balance of the Three-Year Tranche loans and $150.0 million principal and quarterly principal amortization payments totaling $30 million toward the Five-Year Tranche loan;

and drawdowns of $144.0 million and repayments of $140.1 million related to production financing loans.

Cash provided by financing activities in 2020 included the drawdown of the Company's $1.0 billion in term loans, as well as drawdowns of $115.6 million related to production financing loans.

Partially offsetting these cash inflows were production financing loan repayments of $159.8 million, payments of $47.4 million associated with the redemption of eOne stock awards that were accelerated as a result of the acquisition and payments totaling $122.5 million towards the $1.0 billion term loans described above.

In 2019, net cash provided by financing activities included the following financing activities associated with the Company's acquisition of eOne:

net proceeds of $2,355.0 million from the November 2019 issuance of senior unsecured long-term debt securities, net proceeds of $975.2 million from the issuance of 10,592,106 shares of common stock and debt acquisition costs of $26.7 million paid in relation to eOne acquisition financing arrangements.

net proceeds of $2,355.0 million from the November 2019 issuance of senior unsecured long-term debt securities, net proceeds of $975.2 million from the issuance of 10.6 million shares of common stock and debt acquisition costs of $26.7 million paid in relation to eOne acquisition financing arrangements.

In addition, net cash from 2019 financing activities included the Company's remaining payment of $100.0 million related to the 2018 POWER RANGERS brand acquisition.

Financing activities in 2019 and 2018, also reflect $61.4 million and $250.1 million, respectively, of cash paid, including transaction costs, to repurchase the Company’s Common Stock.

There were no repurchases of the Company’s common stock in 2020 as the Company suspended its share repurchase program while it prioritizes deleveraging.

During 2019 and 2018, the Company repurchased 0.7 million and 2.7 million shares, respectively, at an average price of $87.41and $94.15, respectively.

A portion of the 2018 share repurchases were executed to offset the issuance of 3.1 million shares to Saban Properties included as part of the POWER RANGERS asset acquisition.

Financing activities in 2019 also reflect $61.4 million of cash paid, including transaction costs, to repurchase the Company’s Common Stock.

There were no repurchases of the Company’s common stock in 2021 or 2020 as the Company suspended its share repurchase program while it prioritizes deleveraging.

During 2019, the Company repurchased 0.7 million shares at an average price of $87.41.

At December 26, 2021, $366.6 million remained for share repurchases under the May 2018 Board authorization.

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The increase in dividends from 2019 to 2020 reflects higher shares outstanding as a result of the November 2019 stock issuance.

Net repayments of short-term borrowings were $8.6 million and $8.8 million in 2020 and 2019, respectively.

Net proceeds from short term borrowings were $142.4 million in 2018.

Net repayments of short-term borrowings were $5.6 million, $8.6 million and $8.8 million in 2021, 2020 and 2019, respectively.

The Company generated cash from employee stock option transactions of $30.6 million, $16.6 million, and $31.8 million in 2021, 2020 and 2019, respectively.

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Sources and Uses of Cash

The Company commits to inventory production, advertising and marketing expenditures prior to the peak fourth quarter retail selling season.

In relation to the Company's consumer products business, the Company commits to inventory production, advertising and marketing expenditures prior to the peak fourth quarter retail selling season.

Accounts receivable increase during the third and fourth quarter as customers increase their purchases to meet expected consumer demand in their holiday selling season.

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This timing difference between expenditures and cash collections on accounts receivable sometimes makes it necessary for the Company to borrow amounts during the latter part of the year.

During 2020, 2019 and 2018 the Company primarily used cash from operations and, to a lesser extent, borrowings under available lines of credit to fund its working capital.

The entertainment business often expends cash for production well in advance of sale and delivery of the content.

Trading card and digital gaming revenues have shorter collection periods, but development expense occurs often years prior to release and revenue generation.

During 2021, 2020 and 2019 the Company primarily used cash from operations and, to a lesser extent, borrowings under available lines of credit, in particular production financing vehicles, to fund its working capital.

The Company has an agreement with a group of banks which provides for a commercial paper program (the "Program").

Under the Program, at the request of the Company and subject to market conditions, the banks may either purchase from the Company, or arrange for the sale by the Company, of unsecured commercial paper notes.

The Company may issue notes from time to time up to an aggregate principal amount outstanding at any given time of $1,000.0 million.

The Company may issue notes from time to time up to an aggregate principal amount outstanding at any given time of $1.0 billion.

The maturities of the notes may vary but may not exceed 397 days.

The notes are sold under customary terms in the commercial paper market and are issued at a discount to par, or alternatively, sold at par and bear varying interest rates based on a fixed or floating rate basis.

The interest rates vary based on market

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conditions and the ratings assigned to the notes by the credit rating agencies at the time of issuance.

The interest rates vary based on market conditions and the ratings assigned to the notes by the credit rating agencies at the time of issuance.

Subject to market conditions, the Company intends to utilize the Program as its primary short-term borrowing facility and does not intend to sell unsecured commercial paper notes in excess of the available amount under the revolving credit agreement discussed below.

If, for any reason, the Company is unable to access the commercial paper market, the Company intends to use the revolving credit agreement to meet the Company's short-term liquidity needs.

At December 27, 2020, the Company had no outstanding borrowings related to the Program.

At December 26, 2021, the Company had no outstanding borrowings related to the Program and has not borrowed under the program in 2021 or 2020.

The Company has a second amended and restated revolving credit agreement with Bank of America, N.A., as administrative agent, swing line lender and a letter of credit issuer and lender and certain other financial institutions, as lenders thereto (the "Amended Revolving Credit Agreement"), which provides the Company with commitments having a maximum aggregate principal amount of $1,500.0 million.

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On December 30, 2019, the Company completed the acquisition of eOne and on that date, borrowed the full amount of $1.0 billion under the Term Loan Facilities.

Of the Three-Year Tranche $400 million principal balance, the Company repaid $100 million during the fourth quarter 2020 and the remaining $300 million balance during 2021.

Of the Five-Year Tranche $600.0 million principal balance, the Company repaid $22.5 million and $180.0 million during 2020 and 2021, respectively.

The Company is subject to certain financial covenants contained in this agreement and, as of December 26, 2021, the Company was in compliance with these covenants.

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and $900 million of notes due 2029 (the "2029 Notes") that bear interest at a fixed rate of 3.90%.

During the third quarter of 2021, the Company repaid in full, its 2022 Notes in the aggregate principal amount of $300.0 million, including early redemption premiums and accrued interest of $10.8 million.

The terms of the Notes are described in note 11 to the consolidated financial statements in Part II, Item 8.

Financial Statements, of this Form 10-K.

During 2021 and 2020, the Company used production financing to fund certain of its film and television productions which were typically arranged on an individual production basis by special purpose production subsidiaries.

Production financing facilities were secured by the assets and future revenue of the individual production

subsidiaries and were non-recourse to the Company's assets.

During 2021, the Company had drawdowns of $144.0 million and repayments of $140.1 million towards its production financing facilities.

As of December 26, 2021 the Company outstanding production financing borrowings related to these facilities were $170.1 million, all of which are recorded within the current portion of long-term debt in the Company's consolidated balance sheets, included in Part II, Item 8.

Financial Statements, of this Form 10-K.

During November 2021, the Company secured a senior revolving film and television production credit facility (the “RPCF”) with MUFG Union Bank, N.A., as administrative agent and lender and certain other financial institutions, as lenders thereto (the “Revolving Production Financing Agreement”) which provides the Company with commitments having a maximum aggregate principal amount of $250.0 million.

The Revolving Production Financing Agreement also provides the Company the option to request a commitment increase up to an aggregate additional amount of $150.0 million subject to agreement of the lenders.

The Revolving Production Financing Agreement extends through November 22, 2024.

The Company will use the RPCF to fund certain of the Company’s original film and TV production costs.

Borrowings under the RPCF will be non-recourse to the Company's assets .

The Company has principal amounts of long-term debt at December 26, 2021 of $4.1 billion due at varying times from 2022 through 2044.

Of the total principal amount of long-term debt, $432.6 million is current at December 27, 2020 of which $300.0 million is related to the 3.15% 2021 Notes and $30.0 million is related to principal amortization of the 5-year term loans due December 2024.

Additionally, the Company has outstanding production financing facilities at December 27, 2020 of $165.5 million of which $62.9 million is included in long-term debt and $102.6 million is reported as the current portion of long-term debt within the Company's consolidated financial statements.

See note 11 to the Company’s consolidated financial statements in Part II, Item 8.

Financial Statements, of this Form 10-K for additional information.

In November of 2019, the Company completed an underwritten public offering of 10,592,106 shares of common stock, par value $0.50 per share, at a public offering price of $95.00 per share.

Of the total principal amount of long-term debt, $200.1 million is current at December 26, 2021 of which $30.0 million is related to principal amortization of the 5-year term loans due December 2024 and $170.1 million represents the Company's outstanding production financing facilities at December 26, 2021.

In addition to the early repayment of the 2022 Notes described above, during the first quarter of 2021, the Company repaid in full, its 3.15% Notes in the aggregate principal amount of $300.0 million due in May 2021, including accrued interest.

See note 11 and note 20 to the Company’s consolidated financial statements in Part II, Item 8.

Financial Statements, of this Form 10-K for additional information on long-term debt and long-term debt interest repayment, respectively.

In November of 2019, the Company completed an underwritten public offering of 10.6 million shares of common stock, par value $0.50 per share, at a public offering price of $95.00 per share.

Net proceeds from this public offering were approximately $975.2 million, after deducting underwriting discounts and commissions and offering expenses of approximately $31.1 million.

The net proceeds were used to finance, in part, the acquisition of eOne and to pay related costs and expenses.

See Note 9 for more information on the Company's eOne acquisition financing.

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See note 9 to the consolidated financial statements in Part II, Item 8.

Financial Statements, of this Form 10-K for more information on the Company's eOne acquisition financing.

Under a multi-year game production agreement entered with Cartamundi, the Company has purchase commitments of $95.0 million in 2022 and $85.0 million in 2023.

The Company also has various third-party, inventory and tooling purchase commitments related primarily to the Company's Consumer Products segment which may total approximately $441.7 million in 2022.

These payments exclude inventory and tooling purchase liabilities included in accounts payable or accrued liabilities on the consolidated balance sheets as of December 26, 2021.

Share Repurchases and Dividends

The Company has a long history of returning cash to its shareholders through quarterly dividends and share repurchases.

In 2021, Hasbro maintained its quarterly dividend rate of $0.68 per share.

In February 2022 the Company’s Board announced a 3% increase in the Company’s quarterly dividend rate to $0.70 per share for the quarterly dividend scheduled to be paid in May 2022.

In addition to the dividend, the Company periodically returns cash to shareholders through its share repurchase program.

The most recent authorization was approved in May 2018 for $500 million.

Since 2005, Hasbro has repurchased 108.6 million shares at a total cost of $4.0 billion and an average price of $36.44 per share.

At December 26, 2021, Hasbro had $366.6 million remaining available under these share repurchase authorizations.

Share repurchases are subject to market conditions, the availability of funds and other uses of funds.

As a result of the financing activities related to the eOne acquisition, the Company has suspended its current share repurchase program while it prioritizes deleveraging.

There were no share repurchases made in 2020 or 2021, however a share repurchase program continues to be an important long-term component of Hasbro’s capital allocation strategy and Hasbro has $367 million available under its authorized share repurchase programs.

We anticipate resuming share repurchase when it is not expected to materially impact the timeline to reach our deleverage targets.

The Company believes this could be in the second half of 2023 or sooner, depending on business performance and other factors.

The Company believes that cash from operations, and, if necessary, its committed line of credit and other borrowing facilities, will allow the Company to meet its obligations over the next twelve months.

The Company intends to resume this program when it will not materially impact its ability to de-lever.

Critical Accounting Policies and Significant Estimates

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These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the periods presented.

The significant accounting policies which management believes are the most critical to aid in fully understanding and evaluating the Company’s reported financial results include film and television production costs, recoverability of goodwill, intangible assets, income taxes and business combinations.

The critical accounting policies which management believes are the most critical to aid in fully understanding and evaluating the Company’s reported financial results include film and television production costs, recoverability of goodwill, intangible assets, income taxes and business combinations.

Additionally, the Company identified the valuation of the Company’s equity method investment in Discovery Family Channel as a significant accounting estimate.

Film and Television Production Costs

The Company incurs certain costs in connection with the production of television programs and films which are capitalized as they are incurred and amortized using the individual-film-forecast method.

The Company incurs certain costs in connection with the production of television programs and films which are capitalized as they are incurred, the majority of which are amortized using the individual-film-forecast method.

These costs, which include direct production costs, development costs, acquisition and inventory costs as well as residuals and participations, are amortized in the proportion that the current year’s revenues bear to management’s estimate of total ultimate revenues as of the beginning of each fiscal year related to the film or television program.

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toy, game and other consumer product licensing fees;

and other revenue sources, such as secondary market home entertainment formats and subscription video on demand ("SVOD") services.

and other revenue sources, such as secondary market home entertainment formats and subscription video on demand services.

Our ultimate revenue estimates for each film or television program are developed based on our estimates of expected future results.

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The excess of the purchase price over those fair values amounted to $3.2 billion and was recorded to goodwill and allocated to the Company's reportable segments as follows:

$2.241 million;

$521.2 million;

International:

$329.6 million;

and Entertainment, Licensing and Digital:

Entertainment:

$2.241 million and Consumer Products:

$954.0 million.

During the first quarter of 2021, the Company realigned its financial reporting structure creating the following three principal reporting segments:

Consumer Products, Wizards of the Coast and Digital Gaming and Entertainment.

As a result of these changes, the Company reallocated its goodwill among the revised reporting units based on the change in relative fair values of the respective reporting units.

See note 6 to the Company's consolidated financial

statements in Part II, Item 8.

Financial Statements, of this Form 10-K for details on the allocation of goodwill across the Company's new reporting structure.

In conjunction with the goodwill reallocation described above, during the first quarter of 2021, the Company performed a qualitative impairment test of goodwill balances held by the reporting units impacted by the segment realignment.

The reporting units were tested as of December 28, 2020 and included our Europe, Asia Pacific, Global Consumer Products Licensing, Wizards of the Coast and Family Brands reporting units.

Based on the results of the goodwill assessment, we determined that the fair values of each of these reporting units exceeded their carrying values, and as such, we concluded that there was no indication of goodwill impairment for these reporting units as of December 28, 2020.

In the third quarter 2021, the Company sold eOne Music for net proceeds of $397.0 million.

The Company acquired eOne Music through its acquisition of eOne in fiscal 2020.

Based on the value of the net assets held by eOne Music, which included certain goodwill and intangible assets allocated as described above, to the eOne reportable segment and attributable to eOne Music, the Company recorded a pre-tax non-cash goodwill impairment charge of $108.8 million within Loss on Disposal of Business on the Consolidated Statements of Operations for the year ended December 26, 2021.

See note 6 to the Company's consolidated financial statements in Part II, Item 8.

Financial Statements, of this Form 10-K for details on the allocation of acquired goodwill.

During the fourth quarters of 2020 and 2019, the Company performed a qualitative goodwill assessment with respect to each of its reporting units, including an assessment of eOne in 2020.

Our assessment included the consideration of COVID-19 and the impact to the business in 2020.

We determined that it was not necessary to perform a quantitative assessment for the goodwill of the reporting units in either year.

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During the fourth quarter of 2018, the Company took a number of actions to react to a rapidly changing mobile gaming industry that resulted in a modification to the Company’s long-term plan for its Backflip business.

These modifications included organizational actions and related personnel changes, the extension of launch dates for games currently in or planned for development and the addition of partners for the development of future game releases.

The modifications resulted in changes to the long-term projections for the Backflip business which led the Company to conclude the goodwill associated with the Backflip reporting unit was impaired.

The goodwill impairment analysis involved comparing the Backflip carrying value to its estimated fair value, which was calculated based on the Income Approach.

To calculate the fair value of the future cash flows under the Income Approach, a discount rate of 19% was utilized, representing the reporting unit’s estimated weighted-average cost of capital.

Based on the results of the impairment test, the Company determined that the carrying value of the Backflip reporting unit exceeded its estimated fair value.

The Company recorded an impairment charge of $86.3 million within administrative expense and in the Company’s Entertainment, Licensing and Digital segment, during the fourth quarter of 2018, which was the full amount of remaining goodwill associated with the Backflip reporting unit.

Subsequently, during 2019 the Company made the decision to close the Backflip business.

Financial Statements, of this Form 10-K for details on the eOne Music goodwill impairment.

During the fourth quarter of 2021, the Company performed a quantitative goodwill analysis with respect to each of its reporting units to determine the existence and extent of any impairment.

The quantitative analysis concluded that the fair values of the Company’s reporting units exceeded their carrying values.

As a result of this assessment, the Company concluded there was no impairment to any of its reporting units as of December 26, 2021 other than the Music impairment loss noted above.

During the fourth quarter of 2020 the Company performed a qualitative goodwill assessment with respect to each of its reporting units, including an assessment of eOne.

The assessment included the consideration of COVID-19 and the impact to the business in 2020.

Based on the conclusions reached, the Company determined that it was not necessary to perform a quantitative assessment for the goodwill of the reporting units in 2020.

The estimation of future cash flows utilized in the evaluation of the Company’s goodwill requires significant judgments and estimates with respect to future revenues related to the respective asset and the future cash outlays related to those revenues.

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There were no other triggering events in 2021 or 2020 which would indicate the Company's intangible assets were impaired.

As part of its assessment of intangible assets in the fourth quarter of 2018, the Company completed impairment testing relating to certain property rights, both owned or related to license agreements.

Specifically, the Company reviewed intangible assets recorded in connection with licensed property rights and owned technology.

Due to a decline in revenue and revised projections for future revenue, it was determined that the intangible asset carrying values exceeded expected future cash flows, indicating that the intangible asset was impaired, and resulted in a charge of $31.3 million recorded within administrative expense.

The Company’s annual income tax rate is based on its income, statutory tax rates, changes in prior tax positions and tax planning opportunities available in the various jurisdictions in which it operates.

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These estimated liabilities, as well as the related interest, are adjusted in light of changing facts and circumstances such as the progress of a tax audit.

In addition, on December 22, 2017, the U.S.

government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”).

The Tax Act makes broad and complex changes to the U.S.

tax code that established new tax laws in 2018, including, but not limited to, reducing the U.S.

statutory tax rate from 35% to 21% and creating new taxes on certain foreign-sourced earnings and certain related-party payments.

In May 2019, a public referendum held in Switzerland approved the Swiss Federal Act on Tax Reform and AHV Financing (TRAF) proposals previously approved by the Swiss Parliament.

The Swiss tax reform measures were effective on January 1, 2020.

Changes in tax reform include the abolishment of preferential tax regimes for holding companies, domicile companies and mixed companies at the cantonal level.

The enacted changes in Swiss federal tax were not material to the Company's consolidated financial statements.

Swiss cantonal tax was enacted in

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December 2019.

The Company is still assessing the transitional provision options it may elect;

however, the legislation is not expected to have a material effect on the Company’s consolidated financial statements.

Changes in tax reform include the abolishment of preferential tax regimes for holding

companies, domicile companies and mixed companies at the cantonal level.

The enacted changes in Swiss federal and cantonal tax, including cantonal transitional provisions adopted in 2021, were not material to the Company’s financial statements.

In certain cases, tax law requires items to be included in the Company’s income tax returns at a different time than when these items are recognized in the consolidated financial statements or at a different amount than that which is recognized in the consolidated financial statements.

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Changes in the information related to the net assets acquired changed the amount of the purchase price assigned to goodwill, and as a result, the preliminary fair values disclosed were adjusted as additional information was obtained and valuations were finalized.

Provisional adjustments, if any, were recognized during the reporting periods in which the adjustments were determined.

Provisional adjustments were recognized during the reporting periods in which the adjustments were determined.

For more information on the eOne acquisition see note 3 to the consolidated financial statements included in Part II, Item 8.

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The Company’s valuation of its equity method investment in the Network includes assumptions surrounding forecasted revenue and expenses, a discount rate and a terminal growth rate, which are used to estimate the fair value of the investment and involve a high degree of subjectivity given the volatility in consumer interest when choosing entertainment media.

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During the fourth quarter of 2021, the Company reviewed its investment in the Network for impairment and concluded that the fair value of the Company's interest in the joint venture was less than its carrying value.

Recent accelerating changes in the cable distribution industry, including technological changes and expanding options for digital content offerings, has resulted in the fragmentation of viewership, declines in subscribers to the traditional cable bundle, and pricing pressure.

These factors led to a lower valuation of the Network as compared to its carrying value.

As a result, the Company recorded an impairment loss of $74.1 million, related to its investment in the Network, which is included in other (income) expense, net in the consolidated statements of operations for the year ended December 26, 2021.

As result of the Network's revaluation, the Company recorded a gain of $20.1 million in relation to the Company's Discovery option agreement described above.

Contractual Obligations and Commercial Commitments

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In addition, the Company has $3,824.2 million in principal amount of long-term debt outstanding at December 26, 2021.

Future payments required under these and other obligations, expressed in millions of dollars as of December 27, 2020, are as follows:

Payments due by Fiscal Year

Certain Contractual Obligations 2021 2022 2023 2024 2025 Thereafter Total

Long-term debt $ 330.0 353.0 360.0 560.0 375.0 2,984.9 4,962.9

Interest payments on fixed-rate long-term debt 158.4 153.7 145.9 145.9 130.9 953.9 1,688.7

Operating lease commitments 50.5 46.2 38.2 26.6 21.5 48.2 231.2

Future minimum guaranteed contractual royalty payments 380.5 121.4 52.7 32.7 32.7 32.8 652.8

Transition Tax a

18.4 18.4 34.4 45.9 57.3 — 174.4

Tax sharing agreement b

4.9 5.1 5.4 6.0 2.8 0.4 24.6

Purchase commitments c

394.3 95.0 85.0 — — — 574.3

Production financing repayments 48.2 71.5 7.8 23.8 — — 151.3

First look deals d

20.9 8.5 — — — — 29.4

$ 1,406.1 $ 872.8 $ 729.4 $ 840.9 $ 620.2 $ 4,020.2 $ 8,489.6

a As discussed above, the Tax Act requires the Company to pay a one-time mandatory deemed repatriation tax on undistributed foreign earnings of $308.0 million.

The Company utilized $78.5 million of existing tax credits to reduce the $308.0 million U.S.

federal income tax liability, which resulted in $229.5 million to be paid in interest-free installments through 2025, of which $55.1 million was paid through 2020.

See note 20 to the consolidated financial statements included in Part II, Item 8.

Financial Statements, of this Form 10-K for further discussion.

b In connection with the Company’s agreement to form a joint venture with Discovery, the Company is obligated to make future payments to Discovery under a tax sharing agreement.

These payments are contingent upon the Company having sufficient taxable income to realize the expected tax deductions of certain amounts related to the joint venture.

Accordingly, estimates of these amounts are included in the table above.

c Purchase commitments represent agreements (including open purchase orders) to purchase inventory and tooling in the ordinary course of business as well as purchase commitments under a manufacturing agreement.

The reported amounts exclude inventory and tooling purchase liabilities included in accounts payable or accrued liabilities on the consolidated balance sheets as of December 27, 2020.

d First look deals represent agreements which give the Company right of first refusal to purchase, distribute, or license certain entertainment projects or content.

Not included in the table above, are certain unsatisfied performance obligations primarily related to in-production television content to be delivered in the future, under existing agreements.

As of December 27, 2020, unrecognized revenue attributable to these obligations was $314.2 million.

Of this amount, the Company expects to recognize approximately $280.2 million in 2021, $17.9 million in 2022, and $16.1 million in 2023.

These amounts include only fixed consideration.

Financial Statements, of this Form 10-K for further information on the Company 's contractual obligations and commercial commitments.

Other Expected Future Payments

From time to time, the Company may be party to arrangements, contractual or otherwise, whereby the Company may not be able to estimate the ultimate timing or amount of the related payments.

As such, these amounts have been excluded from the table above and described below:

These amounts are described below:

• Included in other liabilities in the consolidated balance sheets at December 26, 2021, the Company has a liability of $41.4 million of potential tax, interest and penalties for uncertain tax positions that have been taken or are expected to be taken in various income tax returns.

The Company does not know the ultimate

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resolution of these uncertain tax positions and as such, does not know the ultimate amount or timing of payments related to this liability.

The Company does not know the ultimate resolution of these uncertain tax positions and as such, does not know the ultimate amount or timing of payments related to this liability.

• At December 26, 2021, the Company had letters of credit and related instruments of approximately $13.6 million.

The Company believes that cash from operations and funds available through its commercial paper program or lines of credit will allow the Company to meet these and other obligations described above.

The Company believes that cash from operations and funds available through its commercial paper program or lines of credit, as described above under "Liquidity and Capital Resources", will allow the Company to meet these and the other contractual obligations and commercial commitments described above.

Financial Risk Management

The Company is exposed to market risks attributable to fluctuations in foreign currency exchange rates primarily as the result of sourcing products priced in U.S.

dollars and Hong Kong dollars while marketing and selling those products in more than twenty currencies.

dollars, Hong Kong dollars and Euros while marketing and selling those products in more than twenty currencies.

Results of operations may be affected primarily by changes in the value of the U.S.

dollar, Hong Kong dollar, Euro, British pound sterling, Canadian dollar, Brazilian real, Russian ruble and Mexican peso and, to a lesser extent, other currencies in Latin American and Asia Pacific countries.

dollar, Euro, British pound sterling, Canadian dollar, Brazilian real, Russian ruble and Mexican peso and, to a lesser extent, other currencies in Latin American and Asia Pacific countries.

To manage this exposure, the Company has hedged a portion of its forecasted foreign currency transactions using foreign exchange forward contracts.

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dollar against all foreign currencies included in these foreign exchange forward contracts could result in an approximate $24.3 million decrease in the fair value of these instruments.

A decrease in the fair value of these instruments would be substantially offset by decreases in the value of the forecasted foreign currency transactions.

A decrease in the fair value of these instruments would be substantially offset by increases in the value of the forecasted foreign currency transactions.

The Company is also exposed to foreign currency risk with respect to its net cash and cash equivalents or short-term borrowing positions in currencies other than the U.S.

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The Company does not hedge against translation impacts of foreign exchange.

From time to time, affiliates of the Company may make or receive intercompany loans in currencies other than their functional currency.

From time to time, affiliates of the Company may make or receive intercompany loans in currencies other

than their functional currency.

The Company manages this exposure at the time the loan is made by using foreign exchange contracts.

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The Company does not speculate in foreign currency exchange contracts.

At December 27, 2020, these contracts had net unrealized losses of $7.9 million, of which $3.7 million are recorded in prepaid expenses and other current assets, $1.1 million are recorded in other assets, $12.5 million are recorded in accrued liabilities and $0.2 million are recorded in other non-current liabilities.

Included in accumulated other comprehensive earnings at December 27, 2020 are deferred losses of $5.6 million, net of tax, related to these derivatives.

At December 26, 2021, these contracts had net unrealized gains of $8.3 million, of which $10.7 million are recorded in prepaid expenses and other current assets, $0.2 million are recorded in other assets, $2.6 million are recorded in accrued liabilities.

Included in accumulated other comprehensive earnings at December 26, 2021 are deferred gains of $9.6 million, net of tax, related to these derivatives.

In addition, during the third quarter of 2019 the Company hedged a portion of its exposure to fluctuations in the British pound sterling in relation to the eOne acquisition purchase price and other transaction related costs using a series of both foreign exchange forward and option contracts.

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At December 26, 2021, the Company had fixed rate long-term debt of $3,484.9 million.

Of this long-term debt, $600.0 million represents the aggregate issuance of long-term debt in May 2014 which consists of $300.0 million of 3.15% Notes due 2021 and $300.0 million of 5.10% Notes due 2044.

In May 2014 the Company issued an aggregate $600.0 million of long-term debt which consisted of $300.0 million of 3.15% Notes, subsequently repaid in 2021, and $300.0 million of 5.10% Notes due 2044.

Prior to the May 2014 debt issuance, the Company entered into forward-starting interest rate swap agreements with a total notional value of $500.0 million to hedge the anticipated underlying U.S.

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Included in accumulated other comprehensive loss at December 26, 2021 are deferred losses, net of tax, of $15.6 million related to these derivatives.

On June 23, 2016, the United Kingdom voted in a referendum to leave the European Union (“EU”), commonly referred to as Brexit.

The UK government triggered the formal two-year period to negotiate the terms of the UK’s exit

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on March 29, 2017.

These events resulted in an immediate weakening of British pound sterling against the US dollar, and increased volatility in the foreign currency markets which continued through 2019.

These fluctuations initially affected Hasbro’s financial results, although the impact was partially mitigated by the Company’s hedging strategy.

On January 31, 2020, the UK formally withdrew from the EU and entered a transitional period which ended on December 31, 2020.

In December 2020 the UK and the EU agreed on a trade and cooperation agreement, under which the EU and the UK will now form two separate markets governed by two distinct regulatory and legal regimes.

The trade and cooperation agreement covers the general objectives and framework of the relationship between the UK and the EU, including as it relates to trade, transport and visas.

The Company continues to closely monitor the negotiations and the impact to foreign currency markets, taking appropriate actions to support the Company’s long-term strategy and to mitigate risks in its operational and financial activities.

The Economy and Inflation

Industry Trends, the Economy and Inflation

The principal market for the Company’s toys and games and licensed consumer products, is the retail sector.

Revenues from the Company’s top five retail customers, accounted for approximately 35% of its consolidated net revenues in 2020 and 38% of its consolidated net revenues in 2019 and 2018.

Revenues from the Company’s top five retail customers, accounted for approximately 36% of its consolidated net revenues in 2021, 35% in 2020 and 38% of its consolidated net revenues in 2019.

The Company monitors the creditworthiness of its customers and adjusts credit policies and limits as it deems appropriate.

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To the extent that retailers do not sell as much of their year-end inventory purchases during this holiday selling season as they had anticipated, their demand for additional product earlier in the following fiscal year may be curtailed, thus negatively impacting the Company’s future revenues.

In addition, the bankruptcy or other lack of success of one of the Company’s significant retailers could negatively impact the Company’s future revenues.

However, in 2021, the Company's inventory levels increased 40% compared to 2020.

This increase is the result of ongoing global supply chain disruptions, which began in late 2020 as economies slowly recovered from COVID-19 shutdowns, while consumer demand began to outpace the capacity of the global supply chain infrastructure.

Supply chain inefficiencies including overcrowding of cargo ports and shipping container and truck transportation shortages, have led to higher costs for ocean, air and over the road freight and delays in the availability of products, as inventory remains in transit for extended periods of time.

These and other disruptions are expected to continue throughout 2022.

In addition to these inventory management challenges, the bankruptcy or other lack of success of one of the Company’s significant retailers could negatively impact the Company’s future revenues.

Unlike the Company's retail sales patterns, revenue patterns from the Company's entertainment businesses fluctuate based on the timing and popularity of television, film, streaming and digital content releases.

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In addition, entertainment business operating results fluctuate due to expenses recorded in relation to film and television productions and content such as program amortization costs and advertising expenses, which are incurred and recognized, beginning prior to initial releases and then continue throughout the related distribution windows.

The effect of inflation on the Company’s operations during 2020 was not significant and the Company will continue its practice of monitoring costs and adjusting prices, accordingly.

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Coronavirus Outbreak

The global outbreak of COVID-19 currently being experienced in markets in which we, our employees, consumers, customers, suppliers and manufacturers operate, had a significant negative impact on our revenues, profitability and overall business operations during 2020.

While we have responded by developing and executing plans to help mitigate the negative impact of COVID-19 to our business, the efforts will not completely prevent our business from being adversely affected.

At this time, we are planning for a return to the office later in 2021 and are designing safety protocols intended to protect the health and well-being of our employees upon their return.

The coronavirus outbreak continues to be fluid and uncertain, making it difficult to forecast the final impact it could have on our future operations.

Please see Part I, Item 1A.

Risk Factors , of this Form 10-K for further information.

The impact of inflation on the Company's business operations has been significant during 2021 compared to prior years.

However, due to mitigating actions taken by the Company, such as modest price increases when deemed necessary, the impact of general price inflation on our 2021 financial position and results of operations has not been significant.

The Company continues to monitor the impact of inflation to its business operations on an ongoing basis and may need to adjust its prices further to mitigate the impacts of changes to the rate of inflation during 2022 or in future years.

However, future volatility of general price inflation and the impact of inflation on costs and availability of materials, costs for shipping and warehousing and other operational overhead could adversely affect the Company's financial results.

Other Information

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Management’s Discussion and Analysis of Financial Condition and Results of Operation, of this Form 10-K and is incorporated herein by reference.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis