What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-23 compared with 2021-02-24 · 618 added, 748 removed, 1169 unchanged (54% of the section changed)

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 26, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 23, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases as of December 31, 2018 due to the adoption of Accounting Standards Update 2016-02, Leases (Topic 842).

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Assessment of the carrying value of the investment in Discovery Family Channel

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment of the carrying value of the investment in Discovery Family Channel

As discussed in Note 7 to the consolidated financial statements, the Company’s equity method investment in Discovery Family Channel, Inc.

(DFC) at December 27, 2020 was $216,567 thousand.

The Company tests it equity

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method investment in DFC annually or whenever an event or circumstance occurs that indicates that the carrying value may not be recoverable.

We identified the assessment of the carrying value of the investment in DFC as a critical audit matter.

The forecasted revenue, discount rate, and terminal growth rate used to estimate the fair value of the investment involved a high degree of auditor subjectivity given the volatility in consumer interest when choosing entertainment media.

(DFC) at December 26, 2021 was $161.2 million.

During the fourth quarter ended December 26, 2021, the Company recorded an impairment loss of $74.1 million related to its investment with Discovery.

The Company tests it equity method investment in DFC annually or whenever an event or circumstance occurs that indicates that the carrying value may not be recoverable.

We identified the evaluation of the impairment of investment in DFC as a critical audit matter.

entertainment media.

The fair value is also sensitive to changes to the forecasted revenue, discount rate, and terminal growth rate assumptions.

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We involved a valuation professional with specialized skills and knowledge who assisted in:

– evaluating the discount rate by comparing it against a discount rate range that was independently developed using publicly available data for comparable entities

• evaluating the discount rate by comparing it against a discount rate that was independently developed using publicly available data for comparable entities

• evaluating the terminal growth rate by comparing it against publicly available industry reports and to DFC’s historical revenue growth

• developing an estimate of the fair value of the investment using (1) DFC’s forecasted cash flows and estimated terminal growth rate and (2) an independently developed discount rate, which was then compared to the Company’s fair value estimate.

Assessment of the initial fair value measurement of intangible and content assets acquired through the business combination of eOne

As discussed in Note 3 to the consolidated financial statements, on December 30, 2019 the Company completed its acquisition of eOne for total consideration of $4,587,642 thousand.

The Company measured the identifiable assets acquired and liabilities assumed at fair value, which resulted in the recognition of $1,056,000 thousand of intangible assets and $564,828 thousand of content assets.

The fair value of the acquired intangible and content assets was determined based on the estimated future cash flows to be generated from the acquired assets.

We identified the assessment of the initial fair value of the acquired intangible and content assets as a critical audit matter.

The forecasted revenue, attrition rates and discount rates used to estimate the fair value of the acquired intangible and content assets involved a high degree of auditor judgment and effort due to the significant measurement uncertainty in the assumptions.

The forecasted attrition rates are assumptions for which there was limited observable market information.

In addition, the estimated fair values were sensitive to possible changes to the above assumptions.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the valuation of the identified intangible and content assets.

This included controls related to the review of forecasted revenue, attrition rates, and discount rates.

We assessed the Company’s ability to accurately estimate forecasted revenue growth by comparing forecasted revenue growth to the acquiree’s historical revenue results and/or publicly available data.

To assess the Company’s forecasted attrition rates we compared them to publicly available data.

We also involved a valuation professional with specialized skills and knowledge who assisted in:

– evaluating the discount rates by comparing it against discount rates that were independently developed using publicly available data

– developing an estimate of the fair value of the acquired intangible and content assets using (1) the Company’s forecasted cash flows and (2) independently developed discount rates, which were then compared to the Company’s fair value estimate.

Assessment of the amortization of content assets

As discussed in Notes 1 and 8 to the consolidated financial statements, total investments in content assets were approximately $727,186 thousand at December 27, 2020.

These amounts are being amortized to program cost amortization using the individual film forecast method.

This method estimates amortization based on the ratio of current period revenues to the estimated remaining total revenues (“ultimate revenues”) over a period not exceeding 10 years.

The Company estimates ultimate revenues based on the historical performance of similar films and

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television programs, expected distribution platforms, and factors unique to the Company’s film and television content.

We identified the assessment of the amortization of investments in content assets as a critical audit matter.

The forecasted ultimate revenues used to estimate program cost amortization required a high degree of auditor judgment.

Evaluating the assumptions used to forecast ultimate revenues, including historical performance of similar film and television programs and expected distribution platforms, required subjective auditor judgment.

The following are the primary procedures we performed to address the critical audit matter.

We evaluated the design of certain internal controls related to the amortization of content assets.

This included controls related to forecasted ultimate revenue.

For a sample of content assets, we evaluated the assumptions noted above used to forecast ultimate revenues by comparing to contractual agreements and publicly available data, where available.

We have not been able to determine the specific year that we began serving as the Company’s auditor, however, we are aware that we have served as the Company’s auditor since at least 1968.

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February 23, 2022

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AND SUBSIDIARIES

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December 26, 2021 and December 27, 2020

(Thousands of Dollars Except Share Data)

(Millions of Dollars Except Share Data)

Current assets

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issued 220,286,736 shares as of 2021 and 2020

110,143 110,143

Additional paid-in capital 2,428.0 2,329.1

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See accompanying notes to consolidated financial statements.

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Fiscal Years Ended in December

(Thousands of Dollars Except Per Share Data)

(Millions of Dollars Except Per Share Data)

2021 2020 2019

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Selling, distribution and administration 1,432.7 1,252.1 1,037.0

Loss on disposal of business 108.8 — —

Acquisition and related costs — 218.6 —

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Interest income ( 5.4 ) ( 7.4 ) ( 30.1 )

Other income, net ( 13,954 ) ( 13,931 ) ( 7,819 )

Other expense (income), net 7.1 ( 14.0 ) ( 13.9 )

Total non-operating expense, net

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See accompanying notes to consolidated financial statements.

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Fiscal Years Ended in December

(Thousands of Dollars)

(Millions of Dollars)

2021 2020 2019

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Foreign currency translation adjustments, net of tax ( 61.9 ) 10.1 9.6

Unrealized holding gains (losses) on available-for-sale securities, net of tax 640 514 ( 2,000 )

Unrealized holding (losses) gains on available-for-sale securities, net of tax ( 0.1 ) 0.6 0.5

Net gains on cash flow hedging activities, net of tax 13.5 2.4 11.7

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Reclassifications to earnings, net of tax:

Net (gains) losses on cash flow hedging activities ( 19,252 ) ( 18,459 ) 1,929

Net losses (gains) on cash flow hedging activities 2.6 ( 19.3 ) ( 18.5 )

Amortization of unrecognized pension and postretirement amounts 2.2 2.0 6.2

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See accompanying notes to consolidated financial statements.

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Fiscal Years Ended in December

(Thousands of Dollars)

(Millions of Dollars)

2021 2020 2019

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Depreciation of property, plant and equipment 163.3 120.2 133.5

Impairment of goodwill — — 86,253

Asset Impairments 71,540 — 31,303

Loss on disposal of business 108.8 — —

Impairment of intangibles and production assets — 71.5 —

Loss on Discovery investment 74.1 — —

Fair value adjustment on Discovery Option ( 20.1 ) ( 1.5 ) ( 1.2 )

Non-cash pension settlement — — 111.0

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Changes in operating assets and liabilities, net of acquired and disposed balances:

Decrease (increase) in accounts receivable 210,823 ( 211,450 ) 180,113

Decrease (increase) in inventories 62,757 ( 4,631 ) ( 37,211 )

(Increase) decrease in accounts receivable ( 159.5 ) 210.8 ( 211.5 )

(Increase) decrease in inventories ( 173.9 ) 62.8 ( 4.6 )

(Increase) decrease in prepaid expenses and other current assets ( 30.6 ) ( 7.5 ) 18.1

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Investments and acquisitions, net of cash acquired — ( 4,412.9 ) ( 8.8 )

Proceeds from sale of business, net of cash 378.5 — —

Net gains on derivative contracts — — 80.0

Other ( 3.8 ) 38.5 1.5

Net cash utilized by investing activities ( 4,500,231 ) ( 60,955 ) ( 286,477 )

Net cash provided (utilized) by investing activities 242.0 ( 4,500.2 ) ( 60.9 )

Cash flows from financing activities

Net proceeds from borrowings with maturity greater than three months 1,112,640 2,354,957 —

Repayments of borrowings with maturity greater than three months ( 275,514 ) — —

Net proceeds from borrowings 144.0 1,112.6 2,355.0

Repayments of borrowings ( 1,220.1 ) ( 275.5 ) —

Net repayments of other short-term borrowings ( 5.6 ) ( 8.6 ) ( 8.8 )

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Proceeds from issuance of common stock — — 975.2

Debt extinguishment costs ( 9.1 ) — —

Debt acquisition costs — — ( 26.7 )

Other ( 11.4 ) ( 13.1 ) ( 4.8 )

Net cash provided (utilized) by financing activities 405,949 2,810,573 ( 737,101 )

Net cash (utilized) provided by financing activities ( 1,459.8 ) 405.9 2,810.6

Effect of exchange rate changes on cash ( 30.6 ) ( 12.7 ) ( 4.8 )

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See accompanying notes to consolidated financial statements.

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Consolidated Statements of Shareholders’ Equity and Redeemable Noncontrolling Interests

(Thousands of Dollars)

(Millions of Dollars)

Stock Additional

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Net earnings — 520.5 — — — 520.5 —

Impact of adoption of ASU 2018-02 — — 21,503 ( 21,503 ) — — — —

Issuance of shares for Saban purchase — 198,853 — — 81,544 — 280,397 —

Other comprehensive loss — — — ( 33,586 ) — — ( 33,586 ) —

Equity issuance, net of fees 5.3 969.9 — — — — 975.2 —

Other comprehensive earnings — — — 110.3 — — 110.3 —

Stock-based compensation transactions — 3.0 — — 15.7 — 18.7 —

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Balance, December 29, 2019 $ 110.1 2,275.8 4,354.7 ( 184.2 ) ( 3,560.7 ) — $ 2,995.7 $ —

Net earnings — — 520,454 — — — 520,454 —

Equity issuance, net of fees 5,296 969,889 — — — — 975,185

Other comprehensive earnings — — — 110,294 — — 110,294 —

Noncontrolling interests related to acquisition of eOne — — — — — 43.3 43.3 26.2

Net earnings attributable to Hasbro, Inc.

— — 222.5 — — — 222.5 —

Net earnings attributable to noncontrolling interests — — — — — 2.5 2.5 0.4

Buyout of noncontrolling interest — 0.6 — — — — 0.6 —

Other comprehensive loss — — — ( 10.8 ) — — ( 10.8 ) —

Stock-based compensation transactions — 1.9 — — 8.7 — 10.6 —

Purchases of common stock — — — — ( 61,387 ) — ( 61,387 ) —

Stock-based compensation expense — 49.4 — — 0.3 — 49.7 —

Dividends declared — — ( 373.0 ) — — — ( 373.0 ) —

Distributions paid to noncontrolling owners and other foreign exchange — 1.4 — — — ( 5.8 ) ( 4.4 ) ( 2.2 )

Balance, December 27, 2020 $ 110.1 2,329.1 4,204.2 ( 195.0 ) ( 3,551.7 ) 40.0 $ 2,936.7 $ 24.4

Noncontrolling interests related to acquisition of Entertainment One Ltd.

— — — — — 43,341 43,341 26,241

Net earnings attributable to Hasbro, Inc.

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Net earnings attributable to noncontrolling interests — — — — — 3.3 3.3 3.3

Buyout of noncontrolling interest — 606 — — — — 606 —

Change in put option value — ( 1.3 ) — — — — ( 1.3 ) —

Other comprehensive loss — — — ( 40.3 ) — — ( 40.3 ) —

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Stock-based compensation expense — 96.4 — — 1.4 — 97.8 —

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Dividends declared — — ( 375.1 ) — — — ( 375.1 ) —

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Notes to Consolidated Financial Statements

(Thousands of Dollars and Shares Except Per Share Data)

(1) Summary of Significant Accounting Policies

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Under the Company's production financing facilities, certain of the Company's cash is restricted while the financing is outstanding.

At December 27, 2020, $ 73,168 of the Company's cash was restricted by such facilities.

See Production Financing below and note 11 for further details.

At December 26, 2021, $ 35.8 million of the Company's cash was restricted by such facilities.

See Production Financing below and notes 9 and 11 for further details.

Marketable Securities

Included in marketable securities at December 29, 2019 were investments in private investment funds.

These investments were included in prepaid expenses and other current assets in the accompanying consolidated balance sheets, and, due to the nature and business purpose of these investments, the Company had selected the fair value option which requires the Company to record the unrealized gains and losses on these investments in the consolidated statements of operations at the time they occur.

As part of its global cash management strategy, the Company sold all of its private investment fund positions during 2020.

Marketable securities also include common stock in a public company arising from a business relationship.

Included in marketable securities is common stock in a public company arising from a business relationship.

This type of investment is also included in prepaid expenses and other current assets in the accompanying consolidated balance sheets;

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Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

In June 2016, the 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 in current GAAP 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 became 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.

Inventories are valued at the lower of cost (first-in, first-out) or net realizable value.

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Equity Method Investment

For the Company’s equity method investments, only the Company’s investment in and amounts due to and from the equity method investment are included in the consolidated balance sheets and only the Company’s share of the equity method investment’s earnings (losses) is included in other (income) expense, net in the consolidated statements of operations.

For the Company’s equity method investments, only the Company’s investment in and amounts due to and from the equity method investment are included in the consolidated balance sheets and only the Company’s share of the equity method investment’s earnings (losses) is included in other expense (income), net in the consolidated statements of operations.

Dividends, cash distributions, loans or other cash received from the equity method investment, additional cash investments, loan repayments or other cash paid to the investee are included in the consolidated statements of cash flows.

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If it has been determined that the fair value of the equity investment is less than its related carrying value and that this decline is other-than-temporary, the carrying value of the investment is adjusted downward to reflect these declines in value.

The Company has one significant equity method investment, its 40 % interest in a joint venture with Discovery Communications, Inc.

The Company owns an interest in a joint venture, Discovery Family Channel (“the Network”), with Discovery Communications, Inc.

(“Discovery”).

The Company and Discovery are party to an option agreement with respect to this joint venture.

The Company has determined that it does not meet the control requirements to consolidate the Network and accounts for the investment using the equity method of accounting.

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, and as such, recorded an impairment loss of $ 74.1 million, which is included in other expense (income), net in the consolidated statements of operations for the year ended December 26, 2021.

This impairment was caused by the impact of accelerating changes in the cable distribution industry.

The Company and Discovery are also party to an option agreement with respect to the Network.

The Company has recorded a liability for this option agreement at fair value which is included in other liabilities in the consolidated balance sheets.

Unrealized gains and losses on this option are recognized in the consolidated statements of operations as they occur.

Unrealized gains and losses on this option are recognized in other expense (income), net in the consolidated statements of operations as they occur.

In 2021, as a result of the impairment loss recognized on the investment in the Network, the Company adjusted the option's fair value resulting in a $ 20.1 million gain.

See notes 7 and 14 for additional information.

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Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

Noncontrolling Interests

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Earnings (losses) attributable to the redeemable noncontrolling interests and non-redeemable noncontrolling interests are presented as a separate line on the consolidated statements of operations which is necessary to identify those earnings (losses) specifically attributable to Hasbro.

A breakout of the redeemable noncontrolling interests and non-redeemable noncontrolling interests acquired is listed below.

A breakout of the remaining redeemable noncontrolling interests and non-redeemable noncontrolling interests as of December 26, 2021 is listed below.

Name Country of Incorporation Ownership Interest Proportion Held Principal Activity

Astley Baker Davies Limited England and Wales Nonredeemable 70 % Ownership of intellectual property

Whizz Kid Entertainment Limited (1)

England and Wales Redeemable 100 % Production of television programs

MR Productions Holdings, LLC United States Redeemable 75 % Film development

Renegade Entertainment, LLC United States Redeemable 65 % Production of television programs

Round Room Live, LLC United States Nonredeemable 60 % Production of live events

(1) In the third quarter of 2020, Entertainment One U.K.

Holdings Ltd., a subsidiary of the Company, acquired the remaining 30 % of Whizz Kid Entertainment Limited that it did not already own, making it a wholly owned affiliate of the Company.

Property, Plant and Equipment, Net

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If the Company determines that a reporting unit has an indication of impairment based on the qualitative assessment, it is required to perform a quantitative assessment.

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.

Our assessment included the consideration of COVID-19 and the impact to our 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.

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 for details on the allocation of goodwill across the Company's new reporting structure.)

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Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

During the fourth quarter of 2018, the Company recorded a non-cash impairment charge of $ 86,253 within administrative expense and in the Company’s Entertainment, Licensing and Digital segment, which was the full amount of remaining goodwill associated with the Backflip reporting unit.

See further discussion in note 6.

Based on its qualitative assessment of goodwill for all reporting units with the exception of Backflip, the Company concluded there was no other impairment of goodwill during 2018.

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 2020.

Based on the value of the net assets held by eOne Music, which included certain goodwill and intangible assets allocated 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 for details on the eOne Music goodwill impairment.)

Prior to its 2021 annual impairment test, the Company had not performed a quantitative assessment of goodwill since 2013.

Given the length of time since the last quantitative analysis, as well as the changes that have occurred within its goodwill balances since that time, the Company elected to perform a quantitative assessment of goodwill for each reporting unit in the fourth quarter of 2021.

Based on the quantitative assessment with respect to each of its reporting units, the Company determined that the fair values of its reporting units exceeded their carrying values.

As a result of this assessment, the Company concluded that there was no impairment to any of its reporting units.

Accordingly, other than the Music goodwill impairment loss noted above, there was no goodwill impairment recorded for the year ended December 26, 2021.

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.

Our assessment included the consideration of COVID-19 and the impact to our business in 2020.

We determined that it was not necessary to perform a quantitative assessment for the goodwill of the reporting units in any of the years.

The remaining intangible assets having definite lives are being amortized over periods ranging from two to twenty-five years , primarily using the straight-line method.

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It was determined that the carrying values of these intangible assets exceeded their related future cash flows.

As a result, charges of $ 20,047 and $ 30,662 were recorded in the first and fourth quarters, respectively, within acquisition and related costs in the Company's Consolidated Statement of Operations.

In 2019 there were no intangible asset impairments recorded.

In the fourth quarter of 2018, the Company recorded non-cash impairments of $ 31,303 .

See further discussion in note 6.

As a result, charges of $ 20.0 million and $ 30.7 million were recorded in the first and fourth quarters, respectively, within acquisition and related costs in the Company's Consolidated Statement of Operations.

There were no other triggering events in 2021 or 2020 which would indicate the Company's intangible assets were impaired.

Financial Instruments

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In connection with the production of a television or film program, the Company records initial cash outflows within cash flows from operating activities due to its investment in the production and concurrently records cash inflows within cash flows from financing activities from the production financing it normally obtains.

Under these facilities, certain of the Company's cash is restricted while the financing is outstanding.

At December 27, 2020, $ 73,168 of the Company's cash was restricted by such facilities.

Under these facilities, certain of the Company's cash is restricted while the financing is

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Notes to Consolidated Financial Statements — (Continued)

At December 26, 2021, $ 35.8 million of the Company's cash was restricted by such facilities.

For further details, see note 11.

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The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable.

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Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

The majority of the Company’s revenues are derived from sales of finished products to customers.

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The Company enters into contracts to license its intellectual property, which consists of its brands, in various channels including but not limited to:

consumer products such as apparel or home goods, within formats such as on-line and digital games, within venues such as theme parks, or within formats such as motion picture films.

consumer products such as apparel or home goods, within formats such as on-line and digital games, within venues such as theme parks, or within formats such as television and film.

The licensees pay the Company either a sales-based or usage-based royalty, or a combination of both, for use of the brands, in some cases subject to minimum guaranteed amounts or fixed fees.

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When the arrangement includes a minimum guarantee, the Company records the minimum guarantee on a ratable basis over the term of the license period and does not record the sales-based or usage-based royalty revenues until they exceed the minimum guarantee.

The Company also produces, sells and licenses music, television and film content for distribution to third parties in formats that include broadcast, digital streaming, transactional and theatrical.

The Company also produces, sells and licenses television and film content for distribution to third parties in formats that include broadcast, digital streaming, transactional and theatrical.

These are intellectual property licenses where the licensees pay either a fixed fee for the content license or a variable fee in the form of a sales based royalty.

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The performance obligation is met and revenue is recorded, when the user accesses the Company’s content through the streaming platform.

The Company also develops application-based digital games featuring its brands within the games, such as Magic The Gathering:

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Notes to Consolidated Financial Statements — (Continued)

The Company develops digital games featuring its brands within the games, such as Magic:

The Gathering Arena .

The Company does not charge a fee to the end users for the download of the games or the ability to play the games.

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The Company controls all aspects of the digital goods delivered to the consumer.

In the case of Magic the Gathering:Arena, the Company hosts the game on its own platform and therefore is the principal and records the gross revenues within Net Revenues in our Consolidated Statements of Operations.

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Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

In the case of Magic the Gathering:

Arena, the Company hosts the game on its own platform and therefore is the principal and records the gross revenues within Net Revenues in our Consolidated Statements of Operations.

The Company also develops certain digital games available for online and offline play, such as Dungeons & Dragons:

Dark Alliance, which are delivered to customers through digital downloads or as physical discs compatible for play through various gaming platforms.

Initially these game purchases may come with future software updates to be delivered as needed, or additional downloadable content, delivered when made available by the Company.

For these games, the Company allocates the revenue to the identified performance obligations.

For the software license performance obligation, the Company recognizes revenue when control of the gaming license has been transferred to the customer, typically at the time of purchase.

If applicable, revenue related to future downloadable content or software updates is recognized ratably over the estimated service period.

Costs of Sales

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The Company incurs costs in connection with the production of television programming and motion pictures.

These costs are capitalized by the Company as they are incurred and amortized using the individual-film-forecast method, whereby these costs 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 such period related to the program.

The majority of these costs are capitalized by the Company as they are incurred and amortized using the individual-film-forecast method, whereby these costs 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 such period related to the program.

Ultimate revenue estimates are periodically reviewed and adjustments, if any, will result in changes to amortization rates and estimated accruals for residuals and participations.

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The current portion of MGs are recorded as Payables and Accrued Liabilities and the long-term portion are recorded as Other Liabilities.

In March 2019, the Financial Accounting Standards Board ("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.

The Company enters into license agreements with strategic partners, inventors, designers and others for the use of intellectual properties in its products.

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The costs of other advertising and promotion programs are expensed in the fiscal year incurred.

Shipping and Handling

Hasbro expenses costs related to the shipment and handling of goods to customers as incurred.

For 2020, 2019 and 2018, these costs were $ 227,969 , $ 218,742 and $ 206,307 , respectively, and are included in selling, distribution and administration expenses.

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Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

Shipping and Handling

Hasbro expenses costs related to the shipment and handling of goods to customers as incurred.

For 2021, 2020 and 2019, these costs were $ 264.1 million, $ 228.0 million and $ 218.7 million, respectively, and are included in selling, distribution and administration expenses.

Operating Leases

Prior to 2019 Hasbro recorded lease expense on a straight-line basis inclusive of rent concessions and increases.

Reimbursements from lessors for leasehold improvements were deferred and recognized as a reduction to lease expense over the remaining lease term.

In February 2016, the FASB issued Accounting Standards Update 2016-02 (ASU 2016-02), Leases (Topic 842) , which requires lessees to recognize a right-of-use asset and a lease liability for virtually all leases.

The liability is based on the present value of lease payments and the asset is based on the liability.

For income statement purposes, a dual model was retained requiring leases to be either classified as an operating lease or finance lease.

Operating leases result in straight-line expense while finance leases result in a front-loaded expense pattern.

The Company adopted ASU-2016-02 on December 31, 2018, the first day of fiscal 2019 .

For all leases, the terms were evaluated, including extension and renewal options as well as the lease payments associated with the leases.

As a result of the adoption of the standard, in the first quarter of 2019, the Company recorded right-of-use assets of $ 121,230 and lease liabilities of $ 139,520 .

The Company’s results of operations were not impacted by this standard.

The adoption of this standard did not have an impact on the Company’s cash flows.

For further details, see note 17.

The Company leases certain property, vehicles and other equipment through operating leases.

Operating lease right-of-use assets are recorded within Property, Plant and Equipment and the related liabilities recorded within Accrued Liabilities and Other Liabilities on the Company’s consolidated balance sheets.

The Company has no material finance leases.

Operating lease assets represent the Company’s right to use the underlying asset for the lease term and lease liabilities represent an obligation to make lease payments according to the terms of the lease.

Operating lease assets and liabilities are recognized at the inception of the lease agreement based on the estimated present value of lease payments over the lease term, using our incremental borrowing rate based on information available on the lease commencement date.

The Company capitalizes non-lease components for equipment leases, but expenses non-lease components as incurred for real estate leases.

Leases with an expected term of 12 months or less are not capitalized.

Lease expense under such leases is recorded straight line over the life of the lease.

For further details on the Company's operating leases, see note 17.

Hasbro uses the asset and liability approach for financial accounting and reporting of income taxes.

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We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized.

As of December 27, 2020, the valuation allowance of $ 174,185 was primarily related to net operating losses acquired as part of the eOne acquisition.

As of December 26, 2021, the valuation allowance of $ 171.2 million was primarily related to net operating losses acquired as part of the eOne acquisition.

If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

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Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

Pension Plans, Postretirement and Postemployment Benefits

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The cost of providing benefits on behalf of eligible employees who retire after 1992 is borne by the employee.

It also has several plans covering certain groups of employees, which may provide benefits to such employees following their period of employment but prior to their retirement.

The Company also has several plans covering certain groups of employees, which may provide benefits to such employees following their period of employment but prior to their retirement.

The Company measures the costs of these obligations based on actuarial computations.

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Pension Plan").

During the first quarter of 2018 the Company commenced the U.S.

Pension Plan termination process and received regulatory approval during the fourth quarter of 2018.

During the second quarter of 2019, the Company settled all remaining benefits directly with vested participants electing a lump sum payout, and purchased a group annuity contract from Massachusetts Mutual Life Insurance Company to administer all future payments to remaining U.S.

The Company commenced the U.S.

Pension Plan termination process and received regulatory approval during 2018 and settled all remaining benefits in 2019 directly with vested participants electing a lump sum payout, and purchased a group annuity contract from Massachusetts Mutual Life Insurance Company to administer all future payments to remaining U.S.

Pension Plan participants.

Upon settlement of the pension liability, which occurred in May 2019, the Company recognized a non-operating settlement charge of $ 110,777 , and an additional settlement charge of $ 185 in December 2019, related to pension losses, reclassified from accumulated other comprehensive loss to other (income) expense in the Company's consolidated statements of operations, adjusted for market conditions and settlement costs at benefit distribution.

Upon settlement of the pension liability, the Company recognized a non-operating settlement charge of $ 111.0 million in 2019 related to pension losses, reclassified from accumulated other comprehensive loss to other (income) expense in the Company's consolidated statements of operations, adjusted for market conditions and settlement costs at benefit distribution.

Stock-Based Compensation

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Hasbro uses foreign currency forward contracts to mitigate the impact of currency rate fluctuations on firmly committed and projected future foreign currency transactions.

These over-the-counter contracts, which hedge future purchases of inventory and other cross-border currency requirements not denominated in the functional currency of the business unit, are primarily denominated in United States, Canadian and Hong Kong dollars as well as Euros and British pound sterling.

These over-the-counter contracts, which hedge future purchases of inventory, product sales, television and film production costs and production financing as well as other cross-border currency requirements not denominated in the functional currency of the business unit, are primarily denominated in United States, Canadian and Hong Kong dollars as well as Euros and British pound sterling.

All contracts are entered into with a number of counterparties, all of which are major financial institutions.

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The Company formally documents all relationships between hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking various hedge transactions.

All hedges designated as

All hedges designated as cash flow hedges are linked to forecasted transactions and the Company assesses, both at the inception of the

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

cash flow hedges are linked to forecasted transactions and the Company assesses, both at the inception of the hedge and on an on-going basis, the effectiveness of the derivatives used in hedging transactions in offsetting changes in the cash flows of the forecasted transaction.

hedge and on an on-going basis, the effectiveness of the derivatives used in hedging transactions in offsetting changes in the cash flows of the forecasted transaction.

The Company records all derivatives, such as foreign currency exchange contracts, on the consolidated balance sheets at fair value.

Changes in the derivative fair values that are designated as cash flow hedges and are effective are deferred and recorded as a component of Accumulated Other Comprehensive Loss (“AOCE”) until the hedged transactions occur and are then recognized in the consolidated statements of operations.

The ineffective portion of a hedging derivative, if any, is recognized immediately in the consolidated statements of operations in other (income) expense.

Changes in the derivative fair values that are designated as cash flow hedges are deferred and recorded as a component of Accumulated Other Comprehensive Loss (“AOCE”) until the hedged transactions occur and are then recognized in the consolidated statements of operations.

The Company’s foreign currency contracts hedging anticipated cash flows are designated as cash flow hedges.

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For tax purposes these contracts qualified as nontaxable integrated tax hedges.

The Company recorded realized gains of $ 79,990 on matured contracts to other (income) expense, net for the year ended December 29, 2019.

The Company recorded realized gains of $ 80.0 million on matured contracts to other (income) expense, net for the year ended December 29, 2019.

These contracts matured on December 30, 2019 (the closing date of the transaction) and net gains or losses recognized on these contracts in 2020 were immaterial.

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Dilutive securities also include shares issuable under restricted stock unit award agreements.

Options and restricted stock unit awards totaling 2,842 , 928 and 1,077 for 2020, 2019, and 2018, respectively, were excluded from the calculation of diluted earnings per share because to include them would have been antidilutive.

Options and restricted stock unit awards totaling 2.2 million, 2.8 million and 0.9 million for 2021, 2020, and 2019, respectively, were excluded from the calculation of diluted earnings per share because to include them would have been antidilutive.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

A reconciliation of net earnings and average number of shares for each of the three fiscal years ended December 26, 2021 is as follows:

2021 2020 2019

Basic Diluted Basic Diluted Basic Diluted

(In millions, except per share data) Basic Diluted Basic Diluted Basic Diluted

Net earnings attributable to Hasbro, Inc.

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Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

(2) Revenue Recognition

In addition to the required disclosures below, please see further discussion of the Company's revenue recognition policy in note 1.

Contract Assets and Liabilities

A contract asset is defined as an entity’s right to consideration for goods or services that the entity has transferred to a customer.

A contract liability is defined to occur if the customer’s payment of consideration precedes the entity’s performance and represents the entity’s obligation to transfer goods or services to a customer for which the entity has received consideration.

The Company occasionally will require payment from customers for finished product in advance of the customer receiving control of the finished product.

In these situations, the Company defers revenue on the advanced payment until the customer has control of the finished product, generally within the next month.

Within our Entertainment, Licensing and Digital segment and our eOne segment the Company may receive royalty payments from licensees in advance of the licensees’ subsequent sales to their customers, or in advance of the Company’s performance obligation being satisfied.

In addition, the Company may receive payments from its digital gaming business in advance of the recognition of the revenues.

The Company defers revenues on these advanced payments until its performance obligation is satisfied and records the aggregate deferred revenues as contract liabilities.

The current portion of contract liabilities were recorded within Accrued Liabilities and the long-term portion were recorded as Other Non-current Liabilities in the Company’s consolidated balance sheets.

The Company records contract assets in the case of minimum guarantees that are being recognized ratably over the term of the respective license periods which varies based on sales over and above the contracts’ minimum guarantee.

The current portion of contract assets were recorded in Prepaid Expenses and Other Current Assets, respectively, and the long-term portion were recorded as Other Long-Term Assets.

In the ordinary course of business, the Company’s Consumer Products and Entertainment segments enter into contracts to license certain of the Company’s intellectual property, providing licensees right-to-use access for use in the production and sale of consumer products and digital game development, and for use within content for distribution over streaming platforms and for television and film.

The Company also licenses owned television and film content for distribution to third parties in formats that include broadcast, digital streaming and theatrical.

Through these arrangements, the Company may receive advanced royalty payments from licensees, either in advance of a licensees’ subsequent sales to customers or, prior to the completion of the Company’s performance obligation.

In addition, the Company’s Wizards of the Coast and Digital Gaming segment may receive advanced payments from end users of its digital games at the time of the initial purchase or through in-application purchases.

These digital gaming revenues are recognized over a period of time, determined based on player usage patterns or the estimated playing life of the user or when additional downloadable content is made available.

The Company defers revenues on all licensee and digital gaming advanced payments until the respective performance obligations are satisfied.

The Company records the aggregate deferred revenues as contract liabilities, with the current portion recorded within Accrued Liabilities and the long-term portion recorded as Other Non-current Liabilities in the Company’s consolidated balance sheets.

The Company records contract assets in the case of (1) minimum guarantees being recognized in advance of contractual invoicing, which are recognized ratably over the terms of the respective license periods, and (2) film and television distribution revenues recorded for content delivered, where payment will occur over the license term.

The current portion of contract assets is recorded in Prepaid Expenses and Other Current Assets, respectively, and the long-term portion is recorded within Other Long-Term Assets.

At December 26, 2021 and December 27, 2020, the Company had the following contract assets and liabilities in its consolidated balance sheets:

December 27, 2020

(In millions) December 26, 2021

December 27, 2020

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Total $ 121.2 179.2

For the year ended December 27, 2020, the Company recognized all of the contract assets and $ 14,507 of contract liabilities that were included in the December 29, 2019 balances.

In connection with the Company’s acquisition of eOne, the Company acquired $ 267,566 of contract assets, of which $ 223,901 were recorded in Prepaid Expenses and Other Current Assets and $ 43,665 were recorded in Other Long-term Assets, within the Company’s consolidated balances sheets.

In addition, the Company acquired deferred revenues from eOne in the amount of $ 112,578 , of which $ 105,161 were recorded in Accrued Liabilities and $ 7,417 were recorded in Other Non-current Liabilities within the Company's consolidated balance sheets.

For the year ended December 27, 2020, the Company recognized all revenues related to the acquired current contract liabilities.

Contract assets and liabilities attributable to eOne represent approximately 78 % and 59 % of total contract asset balances and total contract liability balances, respectively, as of December 27, 2020.

For the year ended December 26, 2021, the Company recognized $ 49.4 million of the contract assets and $ 123.2 million of contract liabilities that were included in the December 27, 2020 balances.

Unsatisfied Performance Obligations

Unsatisfied performance obligations relate primarily to in-production television content to be delivered in the future under existing agreements with partnering content providers such as broadcasters, distributors, television networks and subscription video on demand services.

As of December 27, 2020, unrecognized revenue attributable to unsatisfied performance obligations expected to be recognized in the future was $ 314,164 .

Of this amount, we expect to recognize approximately $ 280,197 in 2021, $ 17,871 in 2022, and $ 16,096 in 2023.

As of December 26, 2021, unrecognized revenue attributable to unsatisfied performance obligations expected to be recognized in the future was $ 304.1 million.

Of this amount, we expect to recognize approximately $ 238.1 million in 2022, $ 53.9 million in 2023, and $ 12.1 million in 2024.

These amounts include only fixed consideration.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

Accounts Receivable and Allowance for Credit Losses

The Company’s accounts receivable on the consolidated balance sheets as of December 27, 2020 and December 29, 2019 are primarily from contracts with customers.

In the year ended December 30, 2018, the Company recorded a charge for credit losses for accounts receivable of approximately $ 49,000 related to Toys“R”Us.

The Company’s balance for accounts receivable on the consolidated balance sheets as of December 26, 2021 and December 27, 2020 are primarily from contracts with customers.

In the year ended December 29, 2019, the Company recorded a charge for credit losses for accounts receivable of approximately $ 49.0 million related to Toys“R”Us.

The Company had no other material expense for credit losses in the years ended December 26, 2021, December 27, 2020, or December 29, 2019.

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Notes to Consolidated Financial Statements — (Continued)

Disaggregation of revenues

The Company disaggregates its revenues from contracts with customers by segment:

US and Canada, International, Entertainment, Licensing and Digital, eOne and Global Operations.

The Company further disaggregates revenues within its International segment by major geographic region:

Europe, Latin America, and Asia Pacific.

The Company disaggregates its revenues from contracts with customers by reportable segment:

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

The Company further disaggregates revenues within its Consumer Products segment by major geographic region:

North America, Europe, Latin America, and Asia Pacific;

and within its Entertainment segment by category:

Film & TV, Family Brands, and Music and Other.

Finally, the Company disaggregates its revenues by brand portfolio into five brand categories:

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We believe these collectively depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

See note 21 for further information.

See note 21 for additional information on disaggregation of revenues.

In addition to the required disclosures below, see further discussion of the Company's revenue recognition policy in note 1.

(3) Business Combination

On December 30, 2019, the Company completed its acquisition of eOne, a global independent studio that specializes in the development, acquisition, production, financing, distribution and sales of entertainment content.

eOne's principal brand, PEPPA PIG, which was launched in the United Kingdom in May 2004, entertains preschool children worldwide with much of its historical revenue generated through licensing and merchandising programs across multiple retail categories.

eOne’s portfolio of preschool brands also includes PJ MASKS.

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.

The all-cash transaction was valued at approximately £ 2,900,000 based on the consideration of £ 5.60 per common share of eOne.

Converted at the rate of $ 1.31 USD/GBP on December 30, 2019, the cash consideration for shares outstanding was approximately $ 3,658,000 .

The Company also redeemed eOne's outstanding senior secured notes and paid off the debt outstanding under eOne's revolving credit facility, which together represented approximately $ 831,000 of eOne's indebtedness.

The total cash consideration transferred by the Company was approximately $ 4,635,000 .

The total consideration transferred, in thousands of dollars except per share data, was as follows:

Acquisition Consideration

eOne common shares outstanding as of December 30, 2019 498,040

Cash consideration per share $ 7.35

Total consideration for shares outstanding 3,658,345

Cash consideration for employee share based payment awards outstanding 145,566

Cash consideration for extinguishment of debt 831,130

Total cash consideration 4,635,041

Employee awards to be recorded as future stock compensation expense 47,399

Total consideration transferred $ 4,587,642

On December 30, 2019, the Company completed its acquisition of eOne, a global independent studio that specializes in the development, acquisition, production, distribution and sales of entertainment content.

The aggregate purchase price of $ 4.6 billion was 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 with proceeds from the following debt and equity financings:

(1) the issuance of senior unsecured Notes in an aggregate principal amount of $ 2,375,000 in November 2019, (2) the issuance of 10,592 shares of common stock at a public offering price of $ 95.00 per share in November 2019 (resulting in net proceeds of $ 975,185 ) and (3) $ 1,000,000 in term loans provided by a term loan agreement, which were borrowed on the date of closing.

(1) the issuance of senior unsecured notes in an aggregate principal amount of $ 2.4 billion in November 2019, (2) the issuance of 10.6 million shares of common stock at a public offering price of $ 95.00 per share in November 2019 (resulting in net proceeds of $ 975.2 million) and (3) $ 1.0 billion in term loans provided by a term loan agreement, which were borrowed on the date of closing.

See note 11 for further discussion of the issuance of the senior unsecured notes and term loan agreement.

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Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

eOne's results of operations and financial position have been included in the Company's consolidated financial statements and accompanying footnotes since the date of the acquisition, which was the beginning of the Company's fiscal year 2020.

The acquisition was accounted for as a business combination under FASB Accounting Standards Codification Topic 805, Business Combinations (“Topic 805”).

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The excess of the purchase price over those fair values was recorded to goodwill.

The Company's evaluations of the facts and circumstances available as of December 30, 2019, to assign fair values to assets acquired and liabilities assumed, including income tax related amounts, continued throughout 2020.

As we completed further analysis of assets including program rights, investment in films and television content, intangible assets, as well as deferred revenue, noncontrolling interest, tax and certain other liabilities, additional information impacting the assets acquired, liabilities assumed and the related allocation thereof, became available.

As a result, changes in information related to the net assets acquired, impacted the amount of the purchase price assigned to goodwill resulting in adjustments to the preliminary fair values set forth below, as additional information was obtained and valuations were completed.

Provisional adjustments were recognized during the reporting period in which the adjustments were determined and are identified as measurement period adjustments below.

The adjustments made to the fair value of acquired investments in productions and content and intangible assets did not result in material changes to the amortization expense recorded in previous quarters.

The following table summarizes our allocation of the December 30, 2019 eOne purchase price (in thousands of dollars), as adjusted during the year ended December 27, 2020:

Initial Fair Value Measurement Period Adjustments Updated Fair Value

Cash, cash equivalents and restricted cash $ 183,713 $ ( 9,019 ) $ 174,694

Accounts receivable, net 259,061 ( 622 ) 258,439

Inventories 7,029 — 7,029

Other current assets 286,270 ( 12,968 ) 273,302

Property, plant and equipment (including right of use assets) 90,339 35,333 125,672

Intangible assets 1,055,249 751 1,056,000

Content assets - IIC and IIP 751,524 ( 186,696 ) 564,828

Other assets 183,209 ( 58,688 ) 124,521

Short-term borrowings ( 11,011 ) ( 4,377 ) ( 15,388 )

Current portion of long-term debt ( 60,533 ) ( 60,498 ) ( 121,031 )

Accounts payable, and accrued liabilities ( 761,086 ) 100,244 ( 660,842 )

Long-term debt ( 149,118 ) 67,279 ( 81,839 )

Other liabilities ( 262,644 ) 19,087 ( 243,557 )

Noncontrolling interests ( 63,541 ) ( 6,041 ) ( 69,582 )

Estimated fair value of net assets acquired 1,508,461 ( 116,215 ) 1,392,246

Goodwill 3,079,181 116,215 3,195,396

Total purchase price $ 4,587,642 $ — $ 4,587,642

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Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

Intangible assets consist of intellectual property associated with established brands, eOne artist relationships, eOne music catalogs and trademarks and tradenames with estimated useful lives ranging from 7 to 15 years, determined based on when the related cash flows are expected to be realized.

The fair value of the intangible assets acquired was determined based on the estimated future cash flows to be generated from the acquired assets, considering assumptions related to contract renewal rates and estimated brand franchise revenue growth.

The following table summarizes the intangible assets acquired as part of the eOne Acquisition for the year ended December 27, 2020:

Intangible assets acquired Weighted Average Amortization Period Fair value

The following table summarizes the intangible assets acquired as part of the eOne acquisition:

Intangible assets acquired Weighted Average Amortization Period Fair value (In millions)

Established brands 10 years $ 615.0

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Total intangible assets acquired 11 years $ 1,056.0

Investments in productions and content, or IIP and IIC, includes the fair value of completed films and television programs which have been produced by eOne or for which eOne has acquired distribution rights, as well as the fair value of films and television programs in production, pre-production and development.

Intangible assets consisted of intellectual property associated with established brands, eOne artist relationships, eOne music catalogs and trademarks and trade names with estimated useful lives ranging from 7 to 15 years, determined based on when the related cash flows are expected to be realized.

eOne acquired intangible asset amortization expense was $ 85.0 million and $ 97.9 million for the years ended December 26, 2021 and December 27, 2020, respectively.

Deferred tax liabilities within other liabilities were adjusted to record the deferred tax impact of purchase price accounting adjustments, primarily related to intangible assets.

Investments in productions and content, or IIP and IIC, were valued at $ 564.8 million on the acquisition date, and include the fair value of completed films and television programs which have been produced by eOne or for which eOne has acquired distribution rights, as well as the fair value of films and television programs in production, pre-production and development.

For films and television programs, fair values were estimated based on forecasted cash flows, discounted to present value.

For titles less than 3 years old and titles in development, the content assets will be amortized using the individual film forecast method, wherein the amortization will phase to the revenues recognized.

For titles over 3 years old, the estimated useful life is 10 years, and will be amortized straight-line over that period.

Deferred tax liabilities within other liabilities were adjusted to record the deferred tax impact of purchase price accounting adjustments, primarily related to intangible assets.

Other fair value adjustments were made to accounts, such as deferred revenue within accrued liabilities to reflect the fair value of the liability upon acquisition.

The former eOne senior notes were adjusted to fair value prior to extinguishment using quoted market values, and the fair value of the outstanding amounts under eOne's credit facility were estimated to approximate their carrying values.

Goodwill of $ 3,195,396 represents the excess of the purchase price over the fair value of the underlying tangible and identifiable intangible assets acquired and liabilities assumed.

Goodwill of $ 3.2 billion represents the excess of the purchase price over the fair value of the underlying tangible and identifiable intangible assets acquired and liabilities assumed.

The acquisition goodwill represents the value placed on the combined company’s brand building capabilities, storytelling capabilities and franchise economics in TV, film and other mediums to strengthen Hasbro brands.

In addition, the acquisition goodwill depicts added benefits of long-term profitable growth through in-sourcing toy and game production for the acquired preschool brands and cost-synergies, as well as future revenue growth opportunities.

The goodwill recorded as part of this acquisition was allocated to the Company's reportable segments as follows:

$ 2,241,396 , U.S.

$ 521,217 , International:

$ 329,612 , and Entertainment, Licensing and Digital:

The goodwill recorded as part of this acquisition was included within the Entertainment and Consumer Products segments for the year ended December 27, 2020.

The goodwill associated with the acquisition will not be amortized for financial reporting purposes and will not be deductible for federal tax purposes.

See note 6 for further information on the Company's goodwill.

The following table summarizes net revenues and loss before income taxes, of eOne included in the Company's Consolidated Statement of Operations since the date of acquisition for the year ended December 27, 2020 (in thousands of dollars).

December 27, 2020

Net revenues $ 957,471

Loss before income taxes ( 112,378 )

See note 6 for information on the Company's goodwill reallocation during the first quarter of 2021 and the goodwill impairment charge recorded in the second quarter of 2021 as a result of the sale of the eOne music business, which was completed during the third quarter of 2021.

In 2020, the Company incurred charges of $ 218.6 million related to the eOne acquisition, which were recorded in acquisition and related costs within the Company’s Consolidated Statement of Operations.

Included within the Entertainment segment results for the year ended December 27, 2020 were $ 133.2 million of acquisition and related charges.

The remaining charges were included in Corporate and Other.

The acquisition and related costs for the year ended December 27, 2020 consisted of the following:

• Acquisition and integration costs of $ 145.2 million, including expense associated with the acceleration of eOne stock-based compensation and advisor fees settled at the 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;

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Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

In 2020 the Company incurred charges of $ 218,566 related to the eOne Acquisition, which are recorded in acquisition and related costs within the Company’s Consolidated Statement of Operations.

The acquisition and related costs for the year ended December 27, 2020 consist of the following:

• Acquisition and integration costs of $ 145,169 including expense associated with the acceleration of eOne stock-based compensation and advisor fees settled at the closing of the acquisition, integration costs and impairment charges in the fourth quarter of 2020 for certain definite-lived intangible and other assets;

• Restructuring and related costs of $ 73,397 which includes severance and retention costs, as well as impairment charges in the first quarter of 2020 for certain definite-lived intangible and production assets.

Of the $ 218,566 a cquisition and related charges recorded in 2020, $ 112,417 were included within the eOne segment and $ 20,831 were included within the Entertainment, Licensing and Digital segment.

The remaining charges were included in Corporate and Eliminations.

In addition to the acquisition and related costs, the eOne loss before income taxes for the year ended December 27, 2020 includes $ 97,856 of amortization expense related to the acquired intangible assets noted above.

Pursuant to Topic 805, unaudited supplemental pro forma results of operations for the year ended December 29, 2019, as if the acquisition of eOne had occurred on December 31, 2018, the first day of the Company’s 2019 fiscal year are presented below (in thousands, except per share amounts):

December 29, 2019

• Restructuring and related costs of $ 73.4 million which includes severance and retention costs, as well as $ 40.9 million in impairment charges for certain definite-lived intangible and production assets.

The impairment charges of $ 40.9 million were driven by the change in strategy for the combined company's entertainment assets.

(In millions, except per share data) December 29, 2019

Revenues $ 5,936.0

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Diluted $ 2.51

The Company acquired eOne on the first day of fiscal year 2020, as such our actual results reflect the acquisition occurring on the first day of the current period.

These pro forma results do not represent financial results that would have been realized had the acquisition occurred on December 31, 2018, nor are they intended to be a projection of future results.

These pro forma results do not represent financial results that would have been realized had the acquisition occurred on December 31, 2018.

The unaudited pro forma results include certain pro forma adjustments to net earnings that were directly attributable to the acquisition, as if the acquisition had occurred on December 31, 2018, including the following:

• elimination of transaction costs of $ 24,267 for the year ended December 29, 2019, incurred by Hasbro and eOne related to the eOne Acquisition, included in Selling, Distribution and Administration;

• additional amortization expense of $ 38,823 for the year ended December 29, 2019, that would have been recognized as a result of the allocation of purchase consideration to definite-lived intangible assets subject to amortization;

• estimated differences in interest expense of $ 75,351 for the year ended December 29, 2019, as a result of incurring new debt and extinguishing historical eOne debt;

• elimination of transaction costs of $ 24.3 million for the year ended December 29, 2019, incurred by Hasbro and eOne related to the eOne Acquisition, included in Selling, Distribution and Administration;

• additional amortization expense of $ 38.8 million for the year ended December 29, 2019, that would have been recognized as a result of the allocation of purchase consideration to definite-lived intangible assets subject to amortization;

• estimated differences in interest expense of $ 75.4 million for the year ended December 29, 2019, as a result of incurring new debt and extinguishing historical eOne debt;

• total adjustments to Other (Income) Expense of $ 74.8 million for the year ended December 29, 2019, consisting of:

◦ elimination of a gain of $ 94.6 million for the year ended December 29, 2019, related to the mark to market of foreign exchange forward and option contracts, which the Company entered into in order to hedge a portion of the British pound sterling purchase price for the eOne Acquisition;

◦ elimination of a charge of $ 19.8 million for the year ended December 29, 2019, related to premiums paid by eOne in connection with the 2019 early redemption and refinancing of its senior secured notes and the related write-off of unamortized deferred finance charges associated with the senior secured notes;

• the income tax effect of the pro forma adjustments resulted in income tax benefits of $ 12.3 million for the year ended December 29, 2019, calculated using a blended statutory income tax rate of 22.5 % for the eOne adjustments, and a blended statutory tax rate of 21% for the Hasbro adjustments.

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Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

• total adjustments to Other (Income) Expense of $ 74,752 for the year ended December 29, 2019, consisting of:

◦ elimination of a gain of $ 94,564 for the year ended December 29, 2019, related to the mark to market of foreign exchange forward and option contracts, which the Company entered into in order to hedge a portion of the British pound sterling purchase price for the eOne Acquisition;

◦ elimination of a charge of $ 19,812 for the year ended December 29, 2019, related to premiums paid by eOne in connection with the 2019 early redemption and refinancing of its senior secured notes and the related write-off of unamortized deferred finance charges associated with the senior secured notes;

• the income tax effect of the pro forma adjustments resulted in income tax benefits of $ 12,250 for the year ended December 29, 2019, calculated using a blended statutory income tax rate of 22.5 % for the eOne adjustments, and a blended statutory tax rate of 21 % for the Hasbro adjustments.

(4) Other Comprehensive Earnings (Loss)

Components of other comprehensive earnings (loss) are presented within the consolidated statements of comprehensive earnings.

Components of other comprehensive earnings (loss) are presented within the consolidated statements of comprehensive earnings (loss).

The following table presents the related tax effects on changes in other comprehensive earnings (loss) for each of the three fiscal years ended December 26, 2021.

2020 2019 2018

(In millions) 2021 2020 2019

Other comprehensive earnings (loss), tax effect:

Tax (expense) benefit on unrealized holding (losses) gains $ ( 185 ) $ ( 150 ) 581

Tax (expense) on unrealized holding (losses) gains $ — $ ( 0.2 ) ( 0.2 )

Tax (expense) benefit on cash flow hedging activities ( 1.0 ) ( 3.4 ) 0.2

Tax benefit on foreign currency translation amounts

Tax benefit (expense) on changes in unrecognized pension amounts 2,559 ( 3,518 ) 6,085

( 7.2 ) 2.1 —

Tax (expense) benefit on changes in unrecognized pension amounts ( 1.5 ) 2.6 ( 3.5 )

Reclassifications to earnings, tax effect:

Tax expense on cash flow hedging activities 4,332 2,269 817

Tax (benefit) expense on cash flow hedging activities ( 0.5 ) 4.3 2.3

Tax benefit on amortization of unrecognized pension and postretirement amounts reclassified to the consolidated statements of operations ( 0.6 ) ( 0.8 ) ( 2.0 )

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Total tax effect on other comprehensive earnings (loss) $ ( 10.8 ) 4.6 ( 28.1 )

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

Changes in the components of accumulated other comprehensive earnings (loss), net of tax for each of the three fiscal years ended December 26, 2021 are as follows:

(In millions) Pension and

Postretirement

15 unchanged sentences

Balance at December 30, 2018 $ ( 143.1 ) 1.5 ( 0.9 ) ( 152.2 ) ( 294.7 )

Adoption of ASU 2018-02

( 18,065 ) ( 3,660 ) 222 — ( 21,503 )

Current period other comprehensive earnings (loss) 14.8 11.7 0.6 9.6 36.7

1 unchanged sentence

Balance at December 29, 2019 $ ( 36.1 ) ( 5.2 ) ( 0.3 ) ( 142.6 ) ( 184.2 )

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Gains (Losses) on Derivative Instruments

At December 27, 2020, the Company had remaining net deferred losses on foreign currency forward contracts, net of tax, of $ 5,581 in AOCE.

These instruments hedge payments related to inventory purchased in the fourth quarter of 2020 or forecasted to be purchased from 2021 through 2022, intercompany expenses expected to be paid or received during 2021, television and movie production costs paid in 2020 or expected to be paid in 2021, and cash receipts for sales made at the end of the fourth quarter of 2020 or forecasted to be made in 2021 through 2022.

At December 26, 2021, the Company had remaining net deferred gains on foreign currency forward contracts, net of tax, of $ 9.6 million in AOCE.

These instruments hedge payments related to inventory purchased in the fourth quarter of 2021 or forecasted to be purchased in 2022, intercompany expenses expected to be paid or received during 2022, television and movie production costs paid in 2021 or expected to be paid in 2022 or 2023, and cash receipts for sales made at the end of the fourth quarter of 2021 or forecasted to be made in 2022.

These amounts will be reclassified into the consolidated statements of operations upon the sale of the related inventory or recognition of the related sales expenses.

In addition to foreign currency forward contracts, the Company entered into hedging contracts on future interest payments related to the long-term notes due 2021 and 2044.

In addition to foreign currency forward contracts, the Company entered into hedging contracts on future interest payments related to the 3.15 % Notes, that were repaid in full in the aggregate principal amount of $ 300.0 million during the first quarter of 2021 (See note 11), and the 5.10 % Notes due 2044.

At the date of debt issuance, these contracts were terminated and the fair value on the date of settlement was deferred in AOCE and is being amortized to interest expense over the life of the related notes using the effective interest rate method.

At December 27, 2020, deferred losses, net of tax, of $ 16,523 related to these instruments remained in AOCE.

For the year ended December 27, 2020, losses, net of tax of $ 1,394 related to these hedging instruments were reclassified from AOCE to net earnings.

For each of the years ended December 29, 2019 and December 30, 2018, losses, net of tax of $ 1,394 , related to these hedging instruments were reclassified from AOCE to net earnings.

Of the net deferred losses included in AOCE at December 27, 2020, the Company expects approximately $ 7,502 to be reclassified to the consolidated statements of operations within the next 12 months.

At December 26, 2021, deferred losses, net of tax, of $ 15.6 million related to these instruments remained in AOCE.

For the year ended December 26, 2021, losses, net of tax of $ 1.0 million related to these hedging instruments were reclassified from AOCE to net earnings.

For each of the years ended December 27, 2020 and December 29, 2019, losses, net of tax of $ 1.4 million, related to these hedging instruments were reclassified from AOCE to net earnings.

Of the net deferred gains included in AOCE at December 26, 2021, the Company expects net gains of approximately $ 8.0 million to be reclassified to the consolidated statements of operations within the next 12 months.

However, the amount ultimately realized in earnings is dependent on the fair value of the hedging instruments on the settlement dates.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

See notes 16 and 18 for additional discussion on reclassifications from AOCE to earnings.

(5) Property, Plant and Equipment

(In millions) 2021 2020

Land and improvements $ 3.2 3.4

1 unchanged sentence

Machinery, equipment and software 604.7 559.2

782,213 690,839

Less accumulated depreciation 630.0 553.0

229,213 184,955

Tools, dies and molds, net of accumulated depreciation 63.6 68.0

297,255 255,568

Right of use assets 256.4 255.1

2 unchanged sentences

Expenditures for maintenance and repairs which do not materially extend the life of the assets are charged to operations as incurred.

In 2020, 2019 and 2018 the Company recorded $ 120,229 , $ 133,528 and $ 139,255 , respectively, of depreciation expense.

In 2021, 2020 and 2019 the Company recorded $ 163.3 million, $ 120.2 million and $ 133.5 million, respectively, of depreciation expense.

See note 17 for additional discussion on right of use assets.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(6) Goodwill and Intangible Assets

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.

In our realignment, some, but not all, of our reporting units were changed.

As a result of these changes, the Company reallocated its goodwill among the revised reporting units based on the changes in relative fair values of the respective reporting units.

Changes in the carrying amount of goodwill, by operating segment, for the years ended December 26, 2021 and December 27, 2020 are as follows:

and Canada International Entertainment, Licensing and Digital eOne Total

(In millions) Consumer Products Wizards of the Coast and Digital Gaming Entertainment Total

Balance at December 27, 2020 $ 1,385.7 53.1 2,252.9 3,691.7

Acquired during the period — 353 — 3,079,181 3,079,534

Measurement period adjustments — — — 116,215 116,215

Allocation of eOne acquired Goodwill 521,217 329,612 103,171 ( 954,000 ) —

Goodwill allocation 199.4 254.2 ( 453.6 ) —

Goodwill associated with disposal of business — — ( 162.2 ) ( 162.2 )

Impairment during the period — — ( 108.8 ) ( 108.8 )

Foreign exchange translation ( 0.2 ) — ( 0.9 ) ( 1.1 )

2 unchanged sentences

Acquired during the period 0.4 — 3,195.4 3,195.8

Wizards of the Coast Digital Reclassification ( 5,401 ) — 5,401 — —

Allocation of eOne acquired Goodwill 954.0 — ( 954.0 ) —

Foreign exchange translation 1.2 0.4 ( 0.3 ) 1.3

Balance at December 27, 2020 $ 1,385.7 53.1 2,252.9 3,691.7

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

The $ 3,195,749 of goodwill acquired during 2020 is attributable to the eOne acquisition and represents the value placed on the combined company’s brand building capabilities, our storytelling capabilities and franchise economics in TV, film and other mediums to strengthen Hasbro brands.

The $ 3.2 billion of goodwill acquired during 2020 is attributable to the eOne acquisition and represents the value placed on the combined company’s brand building capabilities, our storytelling capabilities and franchise economics in TV, film and other mediums to strengthen Hasbro brands.

1 unchanged sentence

See note 3 for more information about the acquisition of eOne.

Goodwill in the amount of $ 9,117 acquired during 2019 is attributable to the Company's acquisition of Tuque Games ("Tuque") during October 2019.

Tuque is a digital game development studio based in Montreal, Canada that will develop digital games for Wizards of the Coast brands.

During the first quarter of 2019, the Company realigned its financial reporting segments to include all digital gaming businesses within the re-named Entertainment, Licensing and Digital reporting segment.

As a result of the realignment, a portion of the U.S.

and Canada goodwill was reclassified to the Entertainment, Licensing and Digital segment based on the relative fair values of the reporting units.

A portion of the Company’s goodwill and other intangible assets reside in the Corporate segment of the business.

3 unchanged sentences

In addition, if an event occurs or circumstances change that indicate that the carrying value may not be recoverable, the Company will perform an interim impairment test at that time.

Although COVID-19 has had and will continue to have an impact to our business and the economies in which we operate, the impact of COVID-19 did not constitute a triggering event for purposes of goodwill testing in 2020.

During the fourth quarter of 2020 the Company performed a qualitative goodwill assessment with respect to its reporting units including eOne, and determined that it was not necessary to perform a quantitative assessment for the goodwill of the reporting units.

During the fourth quarter of 2019, the Company performed a qualitative goodwill assessment with respect to its reporting units and determined that it was not necessary to perform a quantitative assessment for the goodwill of the reporting units.

In conjunction with the goodwill reallocation described above, during the first quarter of 2021, the Company performed an 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.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

During the second quarter of 2021, the Company entered into a definitive agreement to sell the Entertainment One Music business ("eOne Music") for an aggregate sales price of $ 385.0 million, subject to certain closing adjustments related to working capital and net debt.

Based on the value of the net assets held by eOne Music, which included goodwill and intangible assets allocated to eOne Music as part of the eOne acquisition, the Company recorded a pre-tax non-cash goodwill impairment charge of $ 108.8 million, during 2021, within Loss on Disposal of Business in the Consolidated Statements of Operations, and within the Entertainment segment.

On June 29, 2021, during the Company's fiscal third quarter, the eOne Music sale was completed and associated goodwill and intangible assets were removed from the consolidated financial statements.

There were no underlying business conditions that provided an indication of the existence of impairment.

During the fourth quarter of 2021 the Company performed a quantitative goodwill assessment with respect to each of its reporting units and determined that the fair values of the Company’s reporting units exceeded their carrying values.

As a result of this assessment, the Company concluded that, other than the Music goodwill impairment loss noted above, there was no other impairment to any of its reporting units.

Accordingly, no goodwill impairment was recorded as a result of the quantitative test for the year ended December 26, 2021.

During the fourth quarter of 2020 the Company performed a qualitative goodwill assessment with respect to its reporting units, including eOne, and determined that it was not necessary to perform a quantitative assessment for the goodwill of the Company's reporting units.

During the fourth quarter of 2019, 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 game currently in or planned for development and the addition of partners for the development of future games releases.

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 games releases.

The modifications resulted in changes to the long-term projections for the Backflip business.

6 unchanged sentences

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.

Based on this assessment, the Company recorded an impairment charge of $ 86,253 in the fourth quarter of 2018, in the Company’s Entertainment, Licensing and Digital segment, which was the full amount of remaining goodwill associated with the Backflip reporting unit.

Based on this assessment, the Company recorded an impairment charge of $ 86.3 million in the fourth quarter of 2019, in the Company’s Wizards of the Coast & Digital Gaming segment, which was the full amount of remaining goodwill associated with the Backflip reporting unit.

Based on its qualitative assessment of goodwill for all reporting units with the exception of Backflip in 2019, the Company concluded there was no other impairment of goodwill during 2019.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

Other Intangible Assets, Net

The following table represents a summary of t he Company’s other intangible assets, net at December 27, 2020 and December 29, 2019:

The following table represents a summary of the Company’s other intangible assets, net at December 26, 2021 and December 27, 2020:

(In millions) 2021 2020

Acquired product rights $ 2,101.7 2,374.7

6 unchanged sentences

These rights were determined to have indefinite lives and are included as product rights with indefinite lives in the table above.

The Company tests these assets for impairment on an annual basis in the fourth quarter of each year or when an event occurs or circumstances change that indicate that the carrying value may not be recoverable.

The Company tests these assets for impairment on an annual basis in the fourth quarter of each year or when an event occurs or circumstances change that indicate that the

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

carrying value may not be recoverable.

The Company completed its annual impairment tests of indefinite-lived intangible assets in the fourth quarter of 2021, 2020, and 2019 concluding that there was no impairment of these assets.

3 unchanged sentences

It was determined that the carrying values of these intangible assets exceeded their related future cash flows.

As a result, charges of $ 20,047 and $ 30,662 were recorded in the first and fourth quarters, respectively, within acquisition and related costs in the Company's Consolidated Statement of Operations.

There were no other triggering events in 2021 or 2020 which would indicate the Company's intangible assets were impaired.

1 unchanged sentence

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 assets were impaired.

The Company calculated the fair value of the intangible assets based on a discounted cash flow, which resulted in a charge of $ 31,303 recorded within administrative expense and in the Company’s Corporate and Eliminations segment.

The Company calculated the fair value of the intangible assets based on a discounted cash flow, which resulted in a charge of $ 31.3 million recorded within administrative expense and in the Company’s Corporate and Eliminations segment.

Other than the intangible assets discussed above, no other indications of impairment existed.

2 unchanged sentences

The Company currently estimates amortization expense related to the above intangible assets for the next five years to be approximately:

2021 $ 126,711

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

(In millions)

(7) Equity Method Investment

2 unchanged sentences

The Network was established to create a cable television network in the United States dedicated to high-quality children’s and family entertainment.

In October 2009, the Company purchased an initial 50 % share in the Network for a payment of $ 300,000 and certain future tax payments based on the value of certain tax benefits expected to be received by the Company.

In October 2009, the Company purchased an initial 50 % share in the Network for a payment of $ 300.0 million and certain future tax payments based on the value of certain tax benefits expected to be received by the Company.

On September 23, 2014, the Company and Discovery amended their relationship with respect to the Network and Discovery increased its equity interest in the Network to 60 % while the Company retained a 40 % equity interest in the Network.

As of December 26, 2021 and December 27, 2020, the Company’s investment in the Network totaled $ 161.2 million and $ 216.6 million, respectively.

During the fourth quarter of 2021, the Company reviewed its investment with Discovery for impairment and concluded that the fair value of the Company's interest in the joint venture was less than its carrying value, and as such, recorded an impairment loss of $ 74.1 million, which is included in other (income) expense, net in the consolidated statements of operations for the year ended December 26, 2021.

The Company utilized the discounted cash flow method under the income approach to estimate the fair value of the

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Network, which requires assumptions and estimates that include:

future annual cash flows, income tax rates, discount rates, estimated growth rates, and other market factors.

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 the lower valuation of the Network as compared to its carrying value.

The Company’s share in the earnings of the Network for the years ended December 26, 2021, December 27, 2020 and December 29, 2019 totaled $ 20.8 million, $ 21.8 million and $ 23.6 million, respectively, and is included as a component of other expense (income), net in the consolidated statements of operations.

The Company also enters into certain other transactions with the Network.

During 2021, 2020 and 2019, these transactions were not material.

In connection with the amendment, the Company and Discovery entered into an option agreement to acquire the Company’s remaining 40 % ownership in the Network, exercisable during the one-year period following December 31, 2021.

The exercise price of the option agreement is based upon 80 % of the then fair market value of the Network, subject to a fair market value floor.

At December 27, 2020 and December 29, 2019, the fair market value of this option was $ 20,602 and $ 22,145 , respectively, and was included as a component of other liabilities.

During 2020, 2019 and 2018, the Company recorded (gains) losses of $ 1,543 , $ 1,295 and $( 540 ) in other (income) expense, net relating to the change in fair value of this option.

At December 26, 2021 and December 27, 2020, the fair market value of this option was $ 1.7 million and $ 20.6 million, respectively, and was included as a component of other liabilities.

The change in the option's value was driven by the impairment loss recorded on the Company's investment in the Network.

During 2021, 2020 and 2019, the Company recorded gains of $ 20.1 million, $ 1.5 million and $ 1.3 million in other (income) expense, net relating to the change in fair value of this option.

The Company also has a related liability due to Discovery under the existing tax sharing agreement.

The balance of the associated liability, including imputed interest, was $ 19,880 and $ 22,755 at December 27, 2020 and December 29, 2019, respectively, and is included as a component of other liabilities in the accompanying consolidated balance sheets.

During 2020, 2019 and 2018, the Company made payments under the tax sharing agreement to Discovery of $ 4,692 , $ 4,760 and $ 7,087 , respectively.

The balance of the associated liability, including imputed interest, was $ 18.3 million and $ 19.9 million at December 26, 2021 and December 27, 2020, respectively, and is included as a component of other liabilities in the accompanying consolidated balance sheets.

The Company recognized a loss of $ 2.1 million in the fourth quarter of 2021 related to an increase of this liability.

This was caused by a change in the Company's 2020 tax rate that resulted in future payments owed to the Network.

During 2021, 2020 and 2019, the Company made payments under the tax sharing agreement to Discovery of $ 5.3 million, $ 4.7 million and $ 4.8 million, respectively.

See note 20 for more information on estimated future payments in relation to the Company's Discovery tax sharing agreement.

The Company has a license agreement with the Network that requires the payment of royalties by the Company to the Network based on a percentage of revenue derived from products related to television shows broadcast by the joint venture.

The license includes a minimum royalty guarantee of $ 125,000 , which was paid in five annual installments of $ 25,000 per year, commencing in 2009, which can be earned out over approximately a 12-year period.

As of December 27, 2020 the Company had $ 15,063 of prepaid royalties related to this agreement, all of which are included in prepaid expenses and other current assets as the licensing agreement in place as of December 27, 2020 is ending in 2021.

As of December 29, 2019 the Company's prepaid royalties related to this agreement were $ 26,941 , of which $ 12,236 were included in prepaid expenses and other current assets and $ 14,705 of which were included in other assets.

The Company and the Network are also parties to an agreement under which the Company will provide the Network with an exclusive first look in the U.S.

The license includes a minimum royalty guarantee of $ 125.0 million, which was paid in five annual installments of $ 25.0 million per year, commencing in 2009, which can be earned out over approximately a 12 -year period.

As of December 26, 2021 the Company did not have a prepaid royalty balance related to this agreement as the licensing agreement ended in 2021.

As of December 27, 2020 the Company's prepaid royalties related to this agreement were $ 15.1 million, all of which were included in prepaid expenses and other current assets.

Beginning in 2021, the Company and the Network agreed that Hasbro would no longer provide the Network with new content.

Previous to this amendment, the parties were subject to an agreement under which the Company would provide the Network with an exclusive first look in the U.S.

to license certain types of programming developed by the Company based on its intellectual property.

In the event the Network licenses the programming from the Company to air, it is required to pay the Company a license fee.

As of December 27, 2020 and December 29, 2019 the Company’s investment in the Network totaled $ 216,567 and $ 223,769 , respectively.

The Company’s share in the earnings of the Network for the years ended December 27, 2020, December 29, 2019 and December 30, 2018 totaled $ 21,841 , $ 23,642 and $ 21,145 , respectively, and is included as a component of other (income) expense, net in the consolidated statements of operations.

The Company also enters into certain other transactions with the Network including the licensing of television programming and the purchase of advertising.

During 2020, 2019 and 2018, these transactions were not material.

(8) Investments in Productions and Investments in Acquired Content Rights

In connection with the Company's acquisition of eOne, the Company acquired eOne's library of television and film and music content rights, which amounted to $ 627,873 as of December 27, 2020 and was recorded in other assets within the Company's consolidated balance sheets.

Investments in productions and investments in acquired content rights are predominantly monetized on a title-by-title basis and are recorded in the consolidated balance sheets to the extent they are considered recoverable against future revenues.

These amounts are being amortized to program cost amortization using a model that reflects the consumption of the assets as they are released through various channels including broadcast licenses, theatrical release and home entertainment.

Amounts capitalized are to be reviewed periodically on an individual film basis and if it appears that any portion of the unamortized amount is unrecoverable from future expected net

Investments in productions and investments in acquired content rights are predominantly monetized on a title-by-title basis and are recorded within other assets in the Company's consolidated balance sheets, to the extent they are considered recoverable against future revenues.

These amounts are being amortized to program cost amortization using a model that reflects the consumption of the asset as it is released through various channels including broadcast licenses, theatrical release and home entertainment.

Amounts capitalized are reviewed periodically on an individual film basis and any portion of the unamortized amount that appears not to be recoverable from future net revenues is expensed as part of program cost amortization during the period the loss becomes evident.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

revenues, the unamortized balance will be expensed as part of program cost amortization during the period the loss becomes evident.

Programming costs are included in other assets and consist of the following at December 26, 2021 and December 27, 2020:

Film and television programming

Released, less amortization $ 428,020 43,625

Completed, not released 17,251 —

(In millions) 2021 2020

Investment in Films and Television Programs:

Individual Monetization

Released, net of amortization $ 481.7 $ 428.0

Completed and not released 18.5 17.3

In production 151.6 185.5

In development 67,611 7,111

Other programming

Released, less amortization 13,664 —

Completed, not released 2,131 —

Pre-production 84.0 67.6

Film/TV Group Monetization (1)

Released, net of amortization 32.2 —

In production 13.0 —

In development 7,571 —

Total program production costs $ 727,186 117,749

Investment in Other programming:

Released, net of amortization 5.3 13.7

Completed and not released 0.4 2.1

In production 12.6 5.4

Pre-production 1.7 7.6

Total Program Investments $ 801.0 $ 727.2

(1) Due to a monetization strategy change, during 2021 the Company began monetizing certain content assets as a film/TV group.

The Company recorded $ 628.6 million of program cost amortization related to released programming during 2021, consisting of the following:

(In millions) Investment in Production Investment in Content Other Total

Program cost amortization $ 541.8 $ 78.3 $ 8.5 $ 628.6

Based on management’s total revenue estimates at December 26, 2021, the Company's expected future amortization expenses for capitalized programming costs over the next five years are as follows:

2021 2022 2023 2024 2025

Completed, not released $ 8,615 — — — —

(In millions) 2022 2023 2024 2025 2026

Completed and not released $ 19.6 0.4 0.4 0.3 0.3

Released 102.2 71.0 65.0 72.5 60.1

In production 46.6 49.2 8.7 7.9 7.1

In development 4,750 6,000 6,000 — —

Pre-production 6.0 8.0 10.0 — —

Total $ 174.4 128.6 84.1 80.7 67.5

In the normal course of its business, the Company also enters into contracts related to obtaining right of first refusal ("first look deals") to purchase, distribute, or license certain entertainment projects or content.

See note 20 for more information on the Company's expected future payments for first look deals.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(9) Financing Arrangements

At December 27, 2020, Hasbro had available an unsecured revolving credit agreement (see Amended Revolving Credit Agreement below) in the amount of $ 1,500,000 and unsecured uncommitted lines of credit from various banks approximating $ 147,000 .

At December 26, 2021, Hasbro had available an unsecured revolving credit agreement (see Amended Revolving Credit Agreement below) in the amount of $ 1.5 billion and unsecured uncommitted lines of credit from various banks approximating $ 139.8 million.

Substantially all of the short term borrowings outstanding at the end of 2021 and 2020 represent borrowings made under, or supported by, these lines of credit.

Borrowings under the lines of credit as of December 27, 2020 were made by eOne in the form of production demand loans at various interest rates.

Borrowings under the lines of credit as of December 29, 2019 were made by certain international affiliates of the Company on terms and at interest rates generally extended to companies of comparable creditworthiness in those markets.

Borrowings under the lines of credit as of December 26, 2021 and December 27, 2020 were made in the form of production demand loans at various interest rates.

The weighted average interest rates of the outstanding borrowings under the uncommitted lines of credit as of December 26, 2021 and December 27, 2020 were 3.9 % and 3.8 %, respectively.

The Company had no borrowings outstanding under its committed line of credit at December 27, 2020.

During 2020, Hasbro’s working capital needs were fulfilled by cash available and cash generated from operations.

The Company had no borrowings outstanding under its committed line of credit at December 26, 2021 and December 27, 2020.

During 2021 and 2020, Hasbro’s working capital needs were fulfilled by cash available and cash generated from operations.

During the second half of 2019, in preparation for the Company's acquisition of eOne, the Company completed the following debt and equity financings:

(i) the issuance of senior unsecured Notes in an aggregate principal amount of $ 2,375,000 , (ii) the issuance of 10,592 shares of common stock at a public offering price of $ 95.00 per share and (iii) $ 1,000,000 in term loans provided by a Term Loan Agreement (the “Term Loan Agreement”) entered into with Bank of America, N.A., as administrative agent, and certain financial institutions, as lenders, pursuant to which such lenders committed to provide, contingent on completion of the eOne acquisition and certain other customary conditions to funding, facilities consisting of a three-year senior unsecured term loan facility in an aggregate principal amount of $ 400,000 and a five-year senior unsecured term loan facility in an aggregate principal amount of $ 600,000 .

On December 30, 2019, the Company completed the acquisition of eOne and on that

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

date, borrowed the full amount of $ 1.0 billion under the Term Loan Facilities.

(i) the issuance of senior unsecured Notes in an aggregate principal amount of $ 2.4 billion, (ii) the issuance of 10.6 million shares of common stock at a public offering price of $ 95.00 per share and (iii) $ 1.0 billion in term loans provided by a Term Loan Agreement (the “Term Loan Agreement”) entered into with Bank of America, N.A., as administrative agent, and certain financial institutions, as lenders, pursuant to which such lenders committed to provide, contingent on completion of the eOne acquisition and certain other customary conditions to funding, facilities consisting of a three-year senior unsecured term loan facility in an aggregate principal amount of $ 400.0 million and a five-year senior unsecured term loan facility in an aggregate principal amount of $ 600.0 million.

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.

As of December 26, 2021, the Company has repaid the full aggregate principal amount of $ 400.0 million on the three-year term loan facility and $ 180.0 million of the aggregate principal amount on the five-year term loan facility.

See note 11 for further discussion on the Term Loan Agreement and note 3 for further discussion on the eOne acquisition.

The Company has a second amended and restated revolving credit agreement with Bank of America, 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 $ 1,500,000 .

The Amended Revolving Credit Agreement also provides for a potential additional incremental commitment increase of up to $ 500,000 subject to agreement of the lenders.

The Amended Revolving Credit Agreement also provides for a potential additional incremental commitment increase of up to $ 500.0 million subject to agreement of the lenders.

The Amended Revolving Credit Agreement contains certain financial covenants setting forth leverage and coverage requirements, and certain other limitations typical of an investment grade facility, including with respect to liens, mergers and incurrence of indebtedness.

6 unchanged sentences

At December 26, 2021, the interest rate under the revolving credit facility was equal to Eurocurrency Rate plus 1.125 %.

The Company has an agreement with a group of banks providing a commercial paper program (the “Program”).

The Company also has an agreement with a group of banks providing a commercial paper program (the “Program”).

Under the Program, at the Company’s request 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.

Borrowings under the Program are supported by the aforementioned unsecured committed line of credit and the Company may issue notes from time to time up to an aggregate principal amount outstanding at any given time of $ 1,000,000 .

The maturities of the notes may vary but may not exceed 397 days.

2 unchanged sentences

At December 26, 2021 and December 27, 2020, the Company did not have any notes outstanding under the Program.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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.

(10) Accrued Liabilities

Components of accrued liabilities for the fiscal years ended on December 26, 2021 and December 27, 2020 are as follows:

(In millions) 2021 2020

Participations and residuals $ 299.1 $ 327.3

2 unchanged sentences

Payroll and management incentives 183.6 132.4

Freight 107.5 32.3

Dividends 94.0 93.4

Other Taxes 95.0 81.9

Accrued expenses IIC & IIP 74.9 29.7

Advertising 60.4 58.6

Severance 32.0 49.7

Accrued income taxes 30.9 29.7

Other 330.3 313.4

2 unchanged sentences

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

(11) Long-Term Debt

Components of long-term debt for the fiscal years ended on December 26, 2021 and December 27, 2020 are as follows:

(In millions) 2021 2020

Cost Fair Value Carrying

19 unchanged sentences

Variable % Notes Due December 30, 2022 (3)

— — 300.0 300.0

Variable % Notes Due December 30, 2024 (4)

397.5 397.5 577.5 577.5

Production Financing Facilities 170.1 170.1 165.5 165.5

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Long-term debt $ 3,824.2 4,549.3 $ 4,660.0 5,617.7

In November 2019, in conjunction with the Company's acquisition of eOne, the Company issued an aggregate of $ 2,375,000 of senior unsecured debt securities (the "Notes") consisting of the following tranches:

$ 300,000 of notes due 2022 (the "2022 Notes") that bear interest at a fixed rate of 2.60 %, $ 500,000 of notes due 2024 (the "2024 Notes") that bear interest at a fixed rate of 3.00 %, $ 675,000 of notes due 2026 (the "2026 Notes") that bear interest at a fixed rate of 3.55 % and $ 900,000 of notes due 2029 (the "2029 Notes") that bear interest at a fixed rate of 3.90 %.

Net proceeds from the issuance of the Notes, after deduction of $ 20,043 of underwriting discount and fees, totaled $ 2,354,957 .

These costs are being amortized over the life of the Notes, which range from three to ten years .

(1) During the third quarter of 2021, the Company repaid in full its 2.60 % Notes, in the aggregate principal amount of $ 300.0 million due in November 2022.

(2) 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.

(3) During the second quarter of 2021, the Company repaid $ 250.0 million of the Variable % Notes Due December 30, 2022 and during the third quarter of 2021, the Company repaid the remaining balance of $ 50.0 million of the Variable % Notes Due December 30, 2022.

(4) During the third quarter of 2021, the Company repaid $ 50.0 million, and during the fourth quarter of 2021, the Company repaid $ 100.0 million of the Variable % Notes Due December 30, 2024.

In November 2019, in conjunction with the Company's acquisition of eOne, the Company issued an aggregate of $ 2.4 billion of senior unsecured debt securities (the "Notes") consisting of the following tranches:

$ 300.0 million of notes due 2022 (the "2022 Notes") that bear interest at a fixed rate of 2.60 %, $ 500.0 million of notes due 2024 (the "2024 Notes") that bear interest at a fixed rate of 3.00 %, $ 675.0 million of notes due 2026 (the "2026 Notes") that bear interest at a fixed rate of 3.55 % and $ 900.0 million of notes due 2029 (the "2029 Notes") that bear interest at a fixed rate of 3.90 %.

Net proceeds from the issuance of the Notes, after deduction of $ 20.0 million of underwriting discount and fees, totaled $ 2.4 billion.

These costs are being amortized over the life of the Notes outstanding, which range from five years to ten years from the date of issuance.

During the third quarter of 2021, the Company repaid in full the $ 300.0 million of 2022 Notes and recorded $ 9.1 million of debt extinguishment costs within other expense (income) in the Consolidated Statements of Operations.

The Notes bear interest at the stated rates but may be subject to upward adjustment if the credit rating of the Company is reduced by Moody's or Standard & Poors.

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(2) 30 basis points (in the case of the 2026 Notes);

(3) 30 basis points (in the case of the 2026 Notes);

and (4) 35 basis points (in the case of the 2029 Notes).

In addition, on and after October 19, 2024 for the 2024 Notes, September 19, 2026 for the 2026 Notes and August 19, 2029 for the 2029 Notes, such series of Notes will be redeemable, in whole at any time or in part from time to time, at the Company's option at a redemption price equal to 100 % of the principal amount of the Notes to be redeemed plus any accrued and unpaid interest.

In September 2019, the Company entered into a $ 1,000,000 Term Loan Agreement (the "Term Loan Agreement”) with Bank of America N.A.

(“Bank of America”), as administrative agent, and certain financial institutions as lenders, pursuant to which such lenders committed to provide, contingent upon the completion of the eOne Acquisition and certain other customary conditions to funding, (1) a three-year senior unsecured term loan facility in an aggregate principal amount of $ 400,000 (the “Three-Year Tranche”) and (2) a five-year senior unsecured term loan facility in an aggregate principal amount of $ 600,000 (the “Five-Year Tranche” and together with the Three-Year Tranche, the “Term Loan Facilities”).

Loans under the Term Loan Facilities bear interest at the Company’s option, at either the Eurocurrency Rate or the Base Rate, in each case plus a per annum applicable rate that fluctuates (1) in the case of the Three-Year Tranche, between 87.5 basis points and 175.0 basis points, in the case of loans priced at the Eurocurrency Rate, and between 0.0 basis points and 75.0 basis points, in the case of

and (3) 35 basis points (in the case of the 2029

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

loans priced at the Base Rate, and (2) in the case of the Five-Year Tranche, between 100.0 basis points and 187.5 basis points, in the case of loans priced at the Eurocurrency Rate, and between 0.0 basis points and 87.5 basis points, in the case of loans priced at the Base Rate, in each case, based upon the non-credit enhanced, senior unsecured long-term debt ratings of the Company by Fitch Ratings Inc., Moody’s Investor Service, Inc.

and S&P Global Rankings, subject to certain provisions taking into account potential differences in ratings issued to the relevant rating agencies or a lack of ratings issued by such rating agencies.

In September 2019, the Company entered into a $ 1.0 billion Term Loan Agreement (the "Term Loan Agreement”) with Bank of America N.A.

(“Bank of America”), as administrative agent, and certain financial institutions as lenders, pursuant to which such lenders committed to provide, contingent upon the completion of the eOne acquisition and certain other customary conditions to funding, (1) a three-year senior unsecured term loan facility in an aggregate principal amount of $ 400.0 million (the “Three-Year Tranche”) and (2) a five-year senior unsecured term loan facility in an aggregate principal amount of $ 600.0 million (the “Five-Year Tranche” and together with the Three-Year Tranche, the “Term Loan Facilities”).

The full amount of the Term Loan Facilities were drawn down on December 30, 2019, the closing date of the eOne acquisition.

During 2020, the Company made $ 122.5 million in payments towards the $ 1.0 billion term loan notes consisting of $ 100.0 million on the principal of the Three-Year Tranche loans in addition to the required quarterly principal amortization payments totaling $ 22.5 million on the Five-Year Tranche loans.

During 2021, the Company paid $ 480.0 million toward the $ 1.0 billion term loan notes consisting of the remaining $ 300.0 million of the principal balance of the Three-Year Tranche loans as well as $ 150.0 million principal balance and principal amortization payments totaling $ 30.0 million on the Five-Year Tranche loans.

Loans under the Five-Year Tranche bear interest at the Company’s option, at either the Eurocurrency Rate or the Base Rate, plus a per annum applicable rate that fluctuates between 100.0 basis points and 187.5 basis points, in the case of loans priced at the Eurocurrency Rate, and between 0.0 basis points and 87.5 basis points, in the case of loans priced at the Base Rate, in each case, based upon the non-credit enhanced, senior unsecured long-term debt ratings of the Company by Fitch Ratings Inc., Moody’s Investor Service, Inc.

and S&P Global Rankings, subject to certain provisions taking into account potential differences in ratings issued by the relevant rating agencies or a lack of ratings issued by such rating agencies.

Loans under the Five-Year Tranche require principal amortization payments that are payable in equal quarterly installments of 5.0 % per annum of the original principal amount thereof for each of the first two years after funding, increasing to 10.0 % per annum of the original principal amount thereof for each subsequent year.

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(i) restrictions on the Company’s and its domestic subsidiaries’ ability to allow liens on their assets, (ii) restrictions on the incurrence of indebtedness, (iii) restrictions on the Company’s and certain of its subsidiaries’ ability to engage in certain mergers, (iv) the requirement that the Company maintain a Consolidated Interest Coverage Ratio of no less than 3.00 :1.00 as of the end of any fiscal quarter and (v) the requirement that the Company maintain a Consolidated Total Leverage Ratio of no more than, depending on the gross proceeds of equity securities issued after the effective date of the acquisition of eOne, 5.65 :1.00 or 5.40 :1.00 for each of the first, second and third fiscal quarters ended after the funding of the Term Loan Facilities, with periodic step downs to 3.50 :1.00 for the fiscal quarter ending December 31, 2023 and thereafter.

The term loan notes were drawn down on December 30, 2019, the closing date of the eOne Acquisition.

During 2020, the Company made $ 122,500 in payments towards the $ 1,000,000 term loan notes consisting of $ 100,000 on the principal balance of the Three-Year Tranche loans in addition to the required quarterly principal amortization payments totaling $ 22,500 on the Five-Year Tranche loans.

As of December 26, 2021, the Company was in compliance with the financial covenants contained in the Term Loan Agreement.

The Company may redeem its 3.15 % notes due in 2021 (the "2021 Notes") and 5.10 % notes due in 2044 (the "2044 Notes") at its option at the greater of the principal amount of the notes or the present value of the remaining scheduled payments discounted using the effective interest rate on applicable U.S.

The Company may redeem its 5.10 % notes due in 2044 (the "2044 Notes") at its option, at the greater of the principal amount of the notes or the present value of the remaining scheduled payments, discounted using the effective interest rate on applicable U.S.

Treasury bills at the time of repurchase.

Prior to the issuance of these Notes, the Company held forward-starting interest rate swap contracts to hedge the variability in the anticipated underlying U.S.

Treasury interest rate associated with the expected issuance of the 2021 Notes and 2044 Notes.

At the date of issuance, these contracts were terminated and the Company paid $ 33,306 , the fair value of the contracts on that date, to settle.

Of this amount, $ 6,373 related to the 2021 Notes and $ 26,933 related to the 2044 Notes has been deferred in AOCE and is being amortized to interest expense over the life of the respective Notes using the effective interest rate method.

The deferred costs associated with the 2021 Notes will be fully amortized during the second quarter of 2021.

Current portion long-term debt at December 27, 2020 o f $ 432,555 , as shown on the consolidated balance sheet, represents the $ 300,000 of 3.15 % Notes maturing in May of 2021, as well as the current portion of required quarterly principal amortization payments for the 5-Year Tranche of the Term Loan Facilities and other production financing facilities.

Current portion of long-term debt at December 26, 2021 o f $ 200.1 million , as shown on the consolidated balance sheet, represents the current portion of required quarterly principal amortization payments for the 5-Year Tranche of the Term Loan Facilities and other production financing facilities.

All of the Company’s other long-term borrowings have contractual maturities that occur subsequent to 2023 with the exception of certain of the Company’s production financing facilities and annual principal payments related to the Term Loan Facilities.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

The Company's long-term borrowings have the following future contractual maturities:

Future long-term borrowings contractual maturities

2021 $ 432,555

Future long-term borrowings contractual payments (In millions)

2027 and thereafter 2,309.9

Production financing facilities 170.1

*Represents the Company's current portion of required quarterly principal amortization payments for term loan facilities .

** Represents the Company's required quarterly principal amortization payments for term loan facilities in 2023.

The fair values of the Company’s long-term debt are considered Level 3 fair values (see note 13 for further discussion of the fair value hierarchy) and are measured using the discounted future cash flows method.

In addition to the debt terms, the valuation methodology includes an assumption of a discount rate that approximates the current yield on a similar debt security.

This assumption is considered an unobservable input in that it reflects the

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

Company’s own assumptions about the inputs that market participants would use in pricing the asset or liability.

This assumption is considered an unobservable input in that it reflects the Company’s own assumptions about the inputs that market participants would use in pricing the asset or liability.

The Company believes that this is the best information available for use in the fair value measurement.

Production Financing

In addition to the Company's financial instruments, the Company uses production financing to fund certain of its television and film productions which are arranged on an individual production basis by special purpose production subsidiaries.

In addition to the Company's financial instruments, the Company uses 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.

Production financing facilities are secured by the assets and future revenue of the individual production subsidiaries and are non-recourse to the Company's assets.

Production financing facilities typically have maturities of less than two years , while the titles are in production, and are repaid once delivered and all credits, broadcaster pre-sales and international sales have been received.

The production financing facilities as of December 26, 2021 are as follows:

(In millions) 2021 2020

Production financing held by production subsidiaries $ 170.1 $ 165.5

1 unchanged sentence

Total $ 170.1 $ 170.9

Production financing shown in the consolidated balance sheet as:

Production financing included in the consolidated balance sheet as:

Non-current $ — $ 62.9

1 unchanged sentence

Total $ 170.1 $ 165.5

Other loans of $ 5,416 , consist of production related demand loans, and are recorded within Short-term Borrowings in the Company's consolidated balance sheets.

(1) Other loans of $ 5.4 million, consist of production related demand loans, and are recorded within Short-term Borrowings in the Company's consolidated balance sheets.

Interest is charged at bank prime rate plus a margin based on the risk of the respective production.

The weighted average interest rate on all production financing as of December 26, 2021 was 3.9 %.

The Company has Canadian and U.S.

production credit facilities with various banks.

The carrying amounts are as follows:

Canadian Facilities U.S.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

The Company has Canadian dollar and U.S.

dollar production credit facilities with various banks.

The carrying amounts are denominated in the following currencies:

(In millions) Canadian Facilities U.S.

Facilities Total

1 unchanged sentence

$ 35.8 134.3 170.1

The following table represents the movements in production financing and other related loans acquired as a result of the eOne Acquisition during 2020:

Production Financing Other Loans Total

The following table represents the movements in production financing and other related loans during 2021:

(In millions) Production Financing Other Loans Total

December 27, 2020 $ 165.5 $ 5.4 $ 170.9

4 unchanged sentences

$ 170.1 $ — $ 170.1

The Company expects to repay all of its outstanding production financing loans in 2022.

(12) Income Taxes

The Tax Cuts and Jobs Act (the “Tax Act”) enacted on December 22, 2017 introduced significant changes to U.S.

income tax law.

Effective 2018, the Tax Act reduced the U.S.

statutory tax rate from 35% to 21% and created new taxes on certain foreign-sourced earnings and certain related-party payments.

Each year, the U.S.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

has promulgated new regulations that have impacted our interpretation of our U.S.

tax federal income tax obligations.

Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in our consolidated financial statements as of December 31, 2017.

As the Company collected and prepared necessary data, and interpreted the additional guidance issued by the U.S.

Treasury Department, the Internal Revenue Service, and other standard-setting bodies, the Company made adjustments, over the course of 2018, to the provisional amounts including additional tax expense of $ 40,650 , primarily related to adjustments to the transition tax.

The accounting for the tax effects of the Tax Act was completed as of December 30, 2018.

The components of earnings before income taxes, determined by tax jurisdiction, are as follows:

2020 2019 2018

(In millions) 2021 2020 2019

United States $ 236.8 191.5 250.5

2 unchanged sentences

Income taxes attributable to earnings before income taxes are:

2020 2019 2018

(In millions) 2021 2020 2019

United States $ 59.5 22.3 41.4

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Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

A reconciliation of the statutory United States federal income tax rate to Hasbro’s effective income tax rate is as follows:

3 unchanged sentences

Tax on international earnings ( 1.1 ) ( 3.5 ) ( 2.7 )

Domestic tax on foreign earnings ( 1.7 ) ( 2.7 ) ( 1.9 )

Change in unrecognized tax benefits ( 3.4 ) 4.1 0.6

1 unchanged sentence

Share-based compensation ( 0.6 ) ( 0.4 ) ( 0.8 )

Tax Cuts and Jobs Act of 2017 — — 15.0

Research and development tax credits ( 1.1 ) ( 1.6 ) ( 0.7 )

Non-deductible goodwill impairment — — 2.0

Deferred tax rate change 6.5 3.6 —

1 unchanged sentence

Officers' compensation 1.9 1.4 —

Loss on disposition of business 3.9 — —

Other, net ( 0.1 ) 1.4 0.4

25.2 % 30.0 % 12.4 %

Certain reclassifications have been made to prior year presentation to conform to current year presentation.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

The components of deferred income tax expense (benefit) arise from various temporary differences and relate to items included in the consolidated statements of operations as well as items recognized in other comprehensive earnings.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 26, 2021 and December 27, 2020 are:

(In millions) 2021 2020

Deferred tax assets:

24 unchanged sentences

The most significant amount of the loss and credit carryforwards relate to tax attributes of the acquired eOne entities that historically operated at losses in certain jurisdictions.

At December 27, 2020, the Company has loss and credit carryforwards of $ 221,598 , which is an increase of $ 186,089 from $ 35,509 at December 29, 2019.

Loss and credit carryforwards as of December 27, 2020 relate primarily to the US and Canada.

At December 26, 2021, the Company has loss and credit carryforwards of $ 175.7 million, which is a decrease of $ 45.9 million from $ 221.6 million at December 27, 2020.

Loss and credit carryforwards as of December 26, 2021 relate primarily to the U.S.

The Canadian loss carryforwards expire at various dates from 2031 to 2041.

Some US federal and state loss and credit carryforwards expire at various dates beginning in 2021 while others have an indefinite carryforward period.

federal and state loss and credit carryforwards expire at various dates throughout 2022 while others have an indefinite carryforward period.

The recoverability of these future tax deductions and credits is evaluated by assessing the adequacy of future expected taxable income from all sources, including taxable income in prior carryback years, reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies.

1 unchanged sentence

To the extent that a valuation allowance was established and it is subsequently determined that it is more likely than not that the deferred tax assets will be recovered, the change in the valuation allowance is recognized in the consolidated statements of income.

The Company has a valuation allowance for certain net deferred tax assets at December 27, 2020 of $ 174,185 , which is an increase of $ 140,925 from $ 33,260 at December 29, 2019.

The Company has a valuation allowance for certain net deferred tax assets at December 26, 2021 of $ 171.2 million, which is a decrease of $ 3.0 million from $ 174.2 million at December 27, 2020.

The valuation allowance pertains to certain U.S.

state and international loss and credit carryforwards, some of which have no expiration and others

state and international loss and credit carryforwards, some of which have no expiration and

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

that would expire beginning in 2021, and other net deferred tax assets.

The significant increase in the valuation allowance is due to historical losses and other net deferred tax assets within eOne entities that are not expected to be utilized, offset by a release of historical attributes that will now be utilized by the combined Company.

others that expire beginning in 2022, and other net deferred tax assets.

The decrease in the valuation allowance is primarily due to the realization of certain net operating losses resulting from tax planning during the year.

At December 26, 2021 and December 27, 2020, the Company’s net deferred income taxes are recorded in the consolidated balance sheets as follows:

(In millions) 2021 2020

Other assets 132.1 137.6

3 unchanged sentences

subsidiaries to be indefinitely reinvested and, accordingly, recorded no deferred income taxes.

However, the Tax Act gave the Company more flexibility to manage cash globally.

However, the Tax Cuts and Jobs Act (the "Tax Act") enacted on December 22, 2017 gave the Company more flexibility to manage cash globally.

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.

However, we intend to repatriate substantially all of our accumulated foreign earnings when appropriate.

As such, we have recorded $ 1,163 of foreign withholding and U.S.

state income taxes as part of the provisional repatriation tax amount, which will be incurred due to certain future cash distributions.

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

state income tax liability.

The Company has not finalized the timing of any actual cash distributions or the specific amounts and therefore we could still be subject to some additional foreign withholding taxes and U.S.

1 unchanged sentence

A reconciliation of unrecognized tax benefits, excluding potential interest and penalties, for the fiscal years ended December 26, 2021, December 27, 2020, and December 29, 2019 is as follows:

2020 2019 2018

(In millions) 2021 2020 2019

Balance at beginning of year $ 67.8 36.7 46.1

6 unchanged sentences

Balance at end of year $ 50.6 67.8 36.7

Unrecognized tax benefits as of December 27, 2020, December 29, 2019 and December 30, 2018, were $ 67,823 , $ 36,651 , and $ 46,074 , respectively, and are recorded within other liabilities, prepaid expenses and other current assets, and other assets in the Company's consolidated balance sheets.

If recognized, these tax benefits would have affected our income tax provision for fiscal years 2020, 2019, and 2018, by approximately $ 57,000 , $ 36,000 , and $ 45,000 , respectively.

During 2020, 2019, and 2018, the Company recognized $ 3,652 , $ 1,766 , and $ 3,101 , respectively, of potential interest and penalties, which are included as a component of income taxes in the accompanying consolidated statements of operations.

At December 27, 2020, December 29, 2019, and December 30, 2018, the Company had accrued potential interest and penalties of $ 11,596 , $ 5,547 , and $ 4,200 , respectively.

Unrecognized tax benefits as of December 26, 2021, December 27, 2020 and December 29, 2019, were $ 50.6 million, $ 67.8 million, and $ 36.7 million, respectively, and are recorded within other liabilities, prepaid expenses and other current assets, and other assets in the Company's consolidated balance sheets.

If recognized, these tax benefits would have affected our income tax provision for fiscal years 2021, 2020, and 2019, by approximately $ 46.0 million, $ 57.0 million, and $ 36.0 million, respectively.

During 2021, 2020, and 2019, the Company recognized $ 2.6 million, $ 3.7 million, and $ 1.8 million, respectively, of potential interest and penalties, which are included as a component of income taxes in the accompanying consolidated statements of operations.

At December 26, 2021, December 27, 2020, and December 29, 2019, the Company had accrued potential interest and penalties of $ 7.3 million, $ 11.6 million, and $ 5.5 million, respectively.

The Company and its subsidiaries file income tax returns in the United States and various state and international jurisdictions.

6 unchanged sentences

income tax examinations by tax authorities in its major jurisdictions for years before 2014.

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

The Company is currently under income tax examination by the Internal Revenue Service and in several U.S.

state and local and non-U.S.

jurisdictions.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

were effective on January 1, 2020.

The Company believes it is reasonably possible that a decrease of approximately $ 0.0 million - $ 5.0 million in gross unrecognized tax benefits may be necessary within the coming year as a result of expected tax return settlements and lapse of statute of limitations.

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 financial statements.

Swiss cantonal tax was enacted in 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 financial statements.

The Company believes it is reasonably possible that a decrease of approximately $ 5,000 - $ 13,000 in gross unrecognized tax benefits may be necessary within the coming year as a result of expected tax return settlements and lapse of statute of limitations.

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.

(13) Capital Stock

In November 2019, as part of its financing for the eOne acquisition, the Company issued and sold 10,592 shares of common stock at a price of $ 95.00 .

Proceeds from the issuance, net of underwriting and other fees, was $ 975,185 .

The Company has a long history of increasing shareholder value through its share repurchase program.

1 unchanged sentence

The Company has no obligation to repurchase shares under the authorization and the time, actual number, and the value of the shares which are repurchased will depend on a number of factors, including the price of the Company’s common stock.

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 $ 4,325,000 .

The most recent authorization for the repurchase of up to $ 500,000 in common stock was approved in May 2018.

As a result of the financing activities related to the eOne Acquisition, the Company suspended its share repurchase program to prioritize deleveraging, and did not repurchase any shares during 2020.

At December 27, 2020, $ 366,593 remained under the current authorization.

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 $ 4.3 billion.

The most recent authorization for the repurchase of up to $ 500.0 million in common stock was approved in May 2018.

As a result of the financing activities related to the eOne acquisition, the Company suspended its share repurchase program to prioritize deleveraging, and did not repurchase any shares during 2021 and 2020.

At December 26, 2021, $ 366.6 million remained under the current authorization.

(14) Fair Value of Financial Instruments

The Company measures certain assets at fair value in accordance with current accounting standards.

The Company measures certain financial instruments at fair value.

The fair value hierarchy consists of three levels:

Level 1 fair values are valuations based on quoted market prices in active markets for identical assets or liabilities that the entity has the ability to access;

Level 2 fair values are those valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities;

and Level 3 fair values are valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Level 1 fair values are based on quoted market prices in active markets for identical assets or liabilities that the entity has the ability to access;

Level 2 fair values are those based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities;

and Level 3 fair values are based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

There have been no transfers between levels within the fair value hierarchy.

Current accounting standards permit entities to choose to measure many financial instruments and certain other items at fair value and establish presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar assets and liabilities.

The Company has elected the fair value option for certain investments using net asset value per share.

During 2020, as part of its global cash management strategy, the Company liquidated these investments and received proceeds of $ 25,233 which is reflected in other investing activities within the Company’s consolidated statement of cash flows.

At December 29, 2019, these investments totaled $ 25,518 , and were included in prepaid expenses and other current assets in the consolidated balance sheets.

The Company recorded net (losses) gains of $( 295 ), $ 1,903 and $( 180 ) on these investments in other (income) expense, net for the years ended December 27, 2020, December 29, 2019 and December 30, 2018, respectively, relating to the change in fair value of such investments.

Accounting standards permit entities to measure many financial instruments and certain other items at fair value and establish presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar assets and liabilities.

The Company elected the fair value option for certain available-for-sale investments using net asset value per share and during 2020, the Company liquidated these investments as part of its global cash management strategy.

The Company recorded net (losses) gains of $( 0.3 ) million and $ 1.9 million on these investments in other (income) expense, net for the years ended December 27, 2020 and December 29, 2019, respectively, relating to the change in fair value of such investments.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

At December 26, 2021 and December 27, 2020, the Company had the following assets and liabilities measured at fair value in its consolidated balance sheets (excluding assets for which the fair value is measured using net asset value per share):

Fair Value Measurements Using

(In millions) Fair

(Level 1) Significant

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Available-for-sale securities include equity securities of one company quoted on an active public market.

The Company’s derivatives consist of foreign currency forward contracts.

The Company’s derivatives consist of foreign currency forward and option contracts.

The Company uses current forward rates of the respective foreign currencies to measure the fair value of these contracts.

The option agreement included in other liabilities at December 27, 2020 and December 29, 2019 is valued using an option pricing model based on the fair value of the related investment.

The Company's option agreement relates to an equity method investment in Discovery Family Channel.

The option agreement is included in other liabilities at December 26, 2021 and December 27, 2020, and is valued using an option pricing model based on the fair value of the related investment.

Inputs used in the option pricing model include volatility and fair value of the underlying company which are considered unobservable inputs as they reflect the Company’s own assumptions about the inputs that market participants would use in pricing the asset or liability.

The Company believes that this is the best information available for use in the fair value measurement.

There were no changes in these valuation techniques during 2020.

Due to the 2021 revaluation of the Discovery Family Channel and resulting impairment charges, the Company reduced the option's fair value by $ 20.1 million during the fourth quarter of 2021.

See note 7 for more information on the Company's investment in the Discovery Family Channel.

The following is a reconciliation of the beginning and ending balances of the fair value measurements of the Company’s financial instruments which use significant unobservable inputs (Level 3):

(In millions) 2021 2020

Balance at beginning of year $ ( 20.6 ) $ ( 22.1 )

Net gains from change in fair value 1,543 1,295

Gain from change in fair value 18.9 1.5

Balance at end of year $ ( 1.7 ) $ ( 20.6 )

(15) Stock Options, Other Stock Awards and Warrants

The Company has reserved 12,344 shares of its common stock for issuance upon exercise of options and other awards granted or to be granted under stock incentive plans for employees and for non-employee members of

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

the Board of Directors (collectively, the “plans”).

(15) Stock Options, Other Stock Awards and Warrants

The Company has reserved 11.3 million shares of its common stock for issuance upon exercise of options and other awards granted or to be granted under stock incentive plans for employees and for non-employee members of the Board of Directors (collectively, the “plans”).

These awards generally vest and are expensed in equal annual amounts over three to five years .

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The Company’s current plan permits the granting of awards in the form of stock, stock appreciation rights, stock awards and cash awards in addition to stock options.

Total compensation expense related to stock options, restricted stock units, including those awards made to non-employee members of its Board of Directors, and stock performance awards for the years ended December 27, 2020, December 29, 2019 and December 30, 2018 was $ 49,748 , $ 28,044 and $ 27,892 , respectively, and was recorded as follows:

2020 2019 2018

Total compensation expense related to stock options, restricted stock units, including those awards made to non-employee members of its Board of Directors, and stock performance awards for the years ended December 26, 2021, December 27, 2020 and December 29, 2019 was $ 97.8 million, $ 49.7 million and $ 28.0 million, respectively, and was recorded as follows:

(In millions) 2021 2020 2019

Product development $ 3.7 3.3 3.3

Selling, distribution and administration (a) 46,484 24,696 24,426

Selling, distribution and administration (a)(b)

94.1 46.4 24.7

97.8 49.7 28.0

Income tax benefit 10.2 5.3 3.6

$ 87.6 44.4 24.4

(a) The 2020 Increase in compensation expense was due to additional stock options, restricted stock units, and stock performance awards granted to eligible participants as a result of the eOne acquisition.

(a) The 2021 increase in compensation expense reflects $ 20.9 million of additional expense associated with the contractual accelerated vesting of certain equity awards as a result of the passing of the Company's former CEO.

(b) The 2020 increase in compensation expense was due to additional stock options, restricted stock units, and stock performance awards granted to eligible participants as a result of the eOne acquisition.

The following table represents total stock compensation expense, net of performance adjustments, by award type related to stock performance awards, restricted stock units, stock options and awards made to non-employee members of the Company’s Board of Directors, for the years ended December 26, 2021, December 27, 2020 and December 29, 2019:

2020 2019 2018

(In millions) 2021 2020 2019

Stock performance awards $ 26.9 8.4 ( 1.6 )

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$ 87.6 44.4 24.4

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Stock Performance Awards

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Each Stock Performance Award has a target number of shares of common stock associated with such award which may be earned by the recipient if the Company achieves the stated diluted earnings per share and revenue targets.

For certain employees, the Stock Performance Awards also include an additional target for the Company's return on invested capital target in addition to the diluted earnings per share and revenue targets.

For certain employees participating in the 2019 and 2020 awards, the Stock Performance Awards also include an additional target for the Company's return on invested capital, in addition to the diluted earnings per share and revenue targets.

Beginning with the 2021 awards, all employee awards will be measured on achieving diluted earnings per share, revenue and return on invested capital targets.

The ultimate amount of the award may vary from 0 % to 200 % of the target number of shares, depending on the cumulative results achieved.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

Information with respect to Stock Performance Awards for 2021, 2020 and 2019 is as follows:

2020 2019 2018

(In millions, except per share data) 2021 2020 2019

Outstanding at beginning of year 0.6 0.5 0.6

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Outstanding at end of year $ 75.74 69.25 87.59

Shares canceled in 2020 and 2019 represent Stock Performance Awards granted during 2018 and 2017, respectively, that were canceled based on the failure to meet the targets set forth by the agree ment.

Shares granted in 2018 included 14 additional shares related to the 2016 award, reflecting increases in the ultimate amount of shares to be issued based on the Company's cumulative results achieved during the performance period.

Shares granted in 2021 included additional shares related to the 2019 award, reflecting adjustments to the ultimate amount of shares to be issued based on the Company's cumulative results achieved during the performance period.

These shares were excluded from the calculation of the weighted average grant-date fair value of Stock Performance awards granted in 2021.

Stock Performance Awards are valued at the market value of the underlying common stock at the dates of grant and are expensed over the performance period.

On a periodic basis, the Company reviews the actual and forecasted performance of the Company against the stated targets for each award.

The total expense is adjusted upward or downward based on the expected amount of shares to be issued as defined in the respective stock performance award agreement.

The total expense is adjusted upward or downward based on the expected number of shares to be issued as defined in the respective stock performance award agreement.

If minimum targets as detailed under the award are not met, no additional compensation expense will be recognized and any previously recognized compensation expense will be reversed.

During 2020, 2019 and 2018, the Company recognized expense, net of performance adjustments, of $ 8,415 , $( 1,573 ) and $ 842 , respectively, relating to Stock Performance Awards.

At December 27, 2020, the amount of total unrecognized compensation cost related to these awards is approximately $ 18,601 and the weighted average period over which this will be expensed is 21 months.

During 2021, 2020 and 2019, the Company recognized expense, net of performance adjustments, of $ 26.9 million, $ 8.4 million and $( 1.6 ) million, respectively, relating to Stock Performance Awards.

The expense recognized in 2021 included $ 7.6 million of additional stock expense associated with the contractual acceleration of outstanding performance share awards upon the passing of the Company's former CEO.

At December 26, 2021, the amount of total unrecognized compensation cost related to these awards is approximately $ 14.3 million and the weighted average period over which this will be expensed is 20 months.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Restricted Stock Units

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These awards are valued at the market value of the underlying common stock at the date of grant and are subsequently amortized over the periods during which the restrictions lapse, generally three years .

During 2020, 2019 and 2018, the Company recognized compensation expense, net of forfeitures, on these awards of $ 28,529 , $ 18,744 and $ 17,897 , respectively.

At December 27, 2020, the amount of total unrecognized compensation cost related to restricted stock units is $ 69,064 and the weighted average period over which this will be expensed is 24 months.

In October 2012, as part of an Amended and Restated Employment Agreement, (the “Agreement”), the Company’s Chief Executive Officer was awarded 587 shares to be granted in two tranches across 2013 and 2014, which were expensed from 2013 through 2018.

These awards provided the recipient with the ability to earn shares of the Company’s common stock based on the Company’s achievement of four stated stock price hurdles and continued employment through December 30, 2018.

In August 2014, the Agreement was further amended to include additional requirements.

Specifically, if the third and fourth stock price hurdles were achieved, the number of shares ultimately issued was dependent on the average stock price for the thirty day period immediately prior to December 30, 2018.

This amendment did not result in any incremental fair value to the award which was used to record compensation expense for the award.

At December 30, 2018, all requirements of the Agreement were met and 587 shares were issued.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

Excluding the aforementioned award for 587 shares, information with respect to the remaining Restricted Stock Awards and Restricted Stock Units for 2020, 2019 and 2018 is as follows:

2020 2019 2018

During 2021, 2020 and 2019, the Company recognized compensation expense, net of forfeitures, on these awards of $ 50.9 million, $ 28.5 million and $ 18.7 million, respectively.

The expense recognized in 2021 included $ 6.0 million of additional stock expense associated with the contractual acceleration of outstanding restricted stock awards upon the passing of the Company's former CEO.

At December 26, 2021, the amount of total unrecognized compensation cost related to restricted stock units is $ 71.6 million and the weighted average period over which this will be expensed is 20 months.

I nformation with respect to the remaining Restricted Stock Awards and Restricted Stock Units for 2021, 2020 and 2019 is as follows:

(In millions, except per share data) 2021 2020 2019

Outstanding at beginning of year 1.0 0.5 0.4

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Information with respect to stock options for each of the three fiscal years ended December 26, 2021 is as follows:

2020 2019 2018

(In millions, except per share data) 2021 2020 2019

Outstanding at beginning of year 2.8 2.4 2.3

10 unchanged sentences

Exercisable at end of year $ 92.05 82.80 73.03

With respect to the 2,862 outstanding options and 1,451 options exercisable at December 27, 2020, the weighted average remaining contractual life of these options was 4.26 years and 2.93 years, respectively.

The aggregate intrinsic value of the options outstanding and exercisable at December 27, 2020 was $ 21,131 and $ 16,149 , respectively.

With respect to the 2.9 million outstanding options and 2.1 million options exercisable at December 26, 2021, the weighted average remaining contractual life of these options was 4.29 years and 3.83 years, respectively.

The aggregate intrinsic value of the options outstanding and exercisable at December 26, 2021 was $ 17.4 million and $ 12.9 million, respectively.

Substantially all unvested outstanding options are expected to vest.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

The Company uses the Black-Scholes valuation model in determining the fair value of stock options.

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The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the fiscal years 2021, 2020 and 2019:

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

2021 2020 2019

3 unchanged sentences

Expected option life 4 years 4 years 4 years

The intrinsic values, which represent the difference between the fair market value on the date of exercise and the exercise price of the option, of the options exercised in fiscal 2020, 2019 and 2018 were $ 9,721 , $ 24,483 and $ 38,909 , respectively.

At December 27, 2020, the amount of total unrecognized compensation cost related to stock options was $ 15,181 and the weighted average period over which this will be expensed is 22 months.

The intrinsic values, which represent the difference between the fair market value on the date of exercise and the exercise price of the option, for the options exercised in fiscal 2021, 2020 and 2019 were $ 16.0 million, $ 9.7 million and $ 24.5 million, respectively.

At December 26, 2021, the amount of total unrecognized compensation cost related to stock options was $ 9.4 million and the weighted average period over which this will be expensed is 21 months.

Non-Employee Awards

2 unchanged sentences

These awards were valued at the market value of the underlying common stock at the date of grant and vested upon grant.

In connection with these grants, compensation cost of $ 1,846 was recorded in selling, distribution and administration expense in the year ended December 27, 2020, $ 1,760 in the year ended December 29, 2019 and $ 1,760 in the year ended December 30, 2018.

In connection with these grants, compensation cost of $ 1.6 million was recorded in selling, distribution and administration expense in the year ended December 26, 2021, and $ 1.8 million in the years ended December 27, 2020 and December 29, 2019.

(16) Pension, Postretirement and Postemployment Benefits

3 unchanged sentences

Reclassifications to earnings from AOCE related to pension and postretirement plans are recorded to other (income) expense.

Expenses related to the Company’s defined benefit pension and defined contribution plans for 2020, 2019 and 2018 were approximately $ 44,700 , $ 48,400 and $ 41,900 , respectively.

Of these amounts, $ 38,400 , $ 35,100 and $ 32,300 , respectively, related to defined contribution plans in the United States and certain international subsidiaries.

Expenses related to the Company’s defined benefit pension and defined contribution plans for 2021, 2020 and 2019 were approximately $ 49.3 million, $ 44.7 million and $ 48.4 million, respectively.

Of these amounts, $ 42.7 million, $ 38.4 million and $ 35.1 million, respectively, related to defined contribution plans in the United States and certain international subsidiaries.

The remainder of the expense relates to defined benefit pension plans discussed below.

7 unchanged sentences

Pension Plan, and ceased to exist as a separate plan on that date.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

In February 2018, the Compensation Committee of the Company’s Board of Directors approved a resolution to terminate the Company’s U.S.

6 unchanged sentences

Pension Plan's net funded asset position was sufficient to cover the lump sum payments and the purchase of the group annuity contract and settle all other remaining benefit obligations with no additional cost to the Company.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

After the settlement of the benefit obligations and payment of expenses, the Company had excess assets in the U.S.

Pension Plan of approximately $ 20,234 .

Pension Plan of approximately $ 20.2 million.

The Company elected to utilize the remaining surplus after payment of administrative expenses for the Company's future matching contributions under the Company's 401(k) plan.

The Company made a transfer of $ 19,500 to the Company’s 401(k) plan which occurred in February 2020, with the remainder to be transferred in 2021.

Upon settlement of the pension liability, which occurred in May 2019, the Company recognized a non-operating settlement charge of $ 110,777 , with an additional settlement charge of $ 185 in December 2019, related to pension losses, reclassified from accumulated other comprehensive loss to other (income) expense in the Company's consolidated statements of operations, adjusted for market conditions and settlement costs at benefit distribution.

During 2020, the Company merged its employee retirement agreements, which had beginning benefit liabilities of $ 14,796 , with its remaining US pension plans.

At December 27, 2020, the measurement date, the Company's remaining plans were unfunded with an aggregate accumulated and projected benefit obligation of $ 46,032 .

Hasbro also provides certain postretirement health care and life insurance benefits to eligible employees who retired prior to January 1, 2020 and have either attained age 65 with 5 years of service or age 55 with 10 years of service.

The Company made a transfer of $ 19.5 million to the Company’s 401(k) plan which occurred in February 2020, with the remainder transferred in November 2021.

Upon settlement of the pension liability, which occurred in May 2019, the Company recognized a non-operating settlement charge of $ 110.8 million, with an additional settlement charge of $ 0.2 million in December 2019, related to pension losses, reclassified from accumulated other comprehensive loss to other (income) expense in the Company's consolidated statements of operations, adjusted for market conditions and settlement costs at benefit distribution.

During 2020, the Company merged its employee retirement agreements, which had beginning benefit liabilities of $ 14.8 million, with its remaining US pension plans.

At December 26, 2021, the measurement date, the Company's remaining plans were unfunded with an aggregate accumulated and projected benefit obligation of $ 41.6 million.

The Company also provides certain postretirement health care and life insurance benefits to eligible employees who retired prior to January 1, 2020 and have either attained age 65 with 5 years of service or age 55 with 10 years of service.

The cost of providing these benefits on behalf of employees who retired prior to 1993 has been substantially borne by the Company.

3 unchanged sentences

As of December 26, 2021, the Company had unrecognized losses related to its remaining U.S.

pension and post retirement plans of $ 19,346 .

pension and post retirement plans of $ 17.1 million.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

Reconciliations of the beginning and ending balances for the projected benefit obligation, the fair value of plan assets and the funded status are included below for the years ended December 26, 2021 and December 27, 2020.

Pension Postretirement

2020 2019 2020 2019

(In millions) 2021 2020 2021 2020

Change in Projected Benefit Obligation

Projected benefit obligation — beginning $ 46.0 30.9 29.9 27.4

Service cost — 1,168 — 888

Interest cost 1.1 1.5 0.8 0.9

2 unchanged sentences

Benefits paid ( 3.1 ) ( 4.6 ) ( 1.8 ) ( 1.8 )

Expenses paid — ( 3,172 ) — —

Curtailment — — — ( 9,502 )

Plan amendments — — ( 1.2 ) —

Settlements paid ( 1.3 ) — — —

3 unchanged sentences

Fair value of plan assets — beginning $ — $ — — —

Actual return on plan assets — 23,147 — —

Employer contribution — 4,311 — —

Benefits paid — ( 13,271 ) — —

Expenses paid — ( 3,172 ) — —

Settlements paid — ( 348,004 ) — —

Transfers — ( 20,235 ) — —

Fair value of plan assets — ending $ — — — —

3 unchanged sentences

Funded status ( 41.6 ) ( 46.0 ) ( 28.1 ) ( 29.9 )

Unrecognized prior service cost (credit) — — ( 1.2 ) —

Unrecognized net loss 13.2 15.8 3.9 3.6

4 unchanged sentences

Net amount $ ( 28.4 ) ( 30.2 ) ( 25.4 ) ( 26.3 )

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

Assumptions used to determine the year-end pension and postretirement benefit obligations are as follows:

7 unchanged sentences

Year that the rate reaches the ultimate trend 2025 2024

The following is a detail of the components of the net periodic benefit cost for the three years ended December 27, 2020.

2020 2019 2018

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

The following presents detail of the components of the net periodic benefit cost for the three years ended December 26, 2021.

(In millions) 2021 2020 2019

Components of Net Periodic Cost

2 unchanged sentences

Expected return on assets — — ( 6.2 )

Amortization of prior service cost ( 11 ) ( 11 ) —

Amortization of actuarial loss 1.0 0.7 7.6

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Interest cost 0.8 0.9 1.3

Amortization of actuarial loss — 21 165

Net periodic benefit cost $ 0.8 0.9 2.2

2 unchanged sentences

Weighted average discount rate 2.51 % 3.33 % 3.72 %

Long-term rate of return on plan assets N/A 4.20 % 4.75 %

Long-term rate of return on plan assets N/A N/A 4.20 %

Postretirement

3 unchanged sentences

Year that the rate reaches the ultimate trend rate 2025 2024 2024

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

Expected benefit payments under the defined benefit pension plans (which reflects the 2019 Plan termination) and the postretirement benefit plan for the next five years subsequent to 2021 and in the aggregate for the following five years are as follows:

Pension Postretirement

2021 $ 3,287 1,763

2022 3,215 1,717

2023 3,265 1,670

2024 3,197 1,629

(In millions) Pension Postretirement

2022 $ 3.2 $ 1.7

2 unchanged sentences

Pension coverage for employees of Hasbro’s international subsidiaries is provided, to the extent deemed appropriate, through separate defined benefit and defined contribution plans.

At December 27, 2020 and December 29, 2019, the defined benefit plans had total projected benefit obligations of $ 128,162 and $ 112,882 , respectively, and fair values of plan assets of $ 95,244 and $ 84,252 , respectively.

At December 26, 2021 and December 27, 2020, the defined benefit plans had total projected benefit obligations of $ 121.6 million and $ 128.2 million, respectively, and fair values of plan assets of $ 94.8 million and $ 95.2 million, respectively.

Substantially all of the plan assets are invested in equity and fixed income securities.

The pension expense related to these plans was $ 3,502 , $ 2,113 and $ 2,392 in 2020, 2019 and 2018, respectively.

In fiscal 2021, the Company expects amortization of $( 35 ) of prior service costs, $ 1,720 of unrecognized net losses and $ 2 of unrecognized transition obligation to be included as a component of net periodic benefit cost.

The pension expense related to these plans was $ 4.0 million, $ 3.5 million and $ 2.1 million in 2021, 2020 and 2019, respectively.

In fiscal 2022, the Company expects

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

$ 1.2 million of unrecognized net losses and an immaterial amount of amortization of prior service costs and unrecognized transition obligation to be included as a component of net periodic benefit cost.

Expected benefit payments under the international defined benefit pension plans for the five years subsequent to 2021 and in the aggregate for the five years thereafter are as follows:

$ 2.3 million;

$ 2.5 million;

$ 2.6 million;

$ 2.7 million;

$ 3.0 million;

and 2027 through 2031:

$ 16.7 million.

Postemployment Benefits

1 unchanged sentence

These plans include certain severance plans which provide benefits to employees involuntarily terminated and certain plans which continue the Company’s health and life insurance contributions for employees who have left Hasbro’s employ under terms of its long-term disability plan.

Hasbro occupies offices and uses certain equipment under various operating lease arrangements.

The Company occupies offices and uses certain equipment under various operating lease arrangements.

The Company has no finance leases.

The leases have remaining terms of 1 to 18 years, some of which include either, options to extend lease terms, or options to terminate current lease terms at certain times, subject to notice requirements set out in the lease agreement.

The leases have remaining terms of 1 to 17 years, some of which include options to extend lease terms or options to terminate current lease terms at certain times, subject to notice requirements set out in the lease agreement.

Payments under certain of the lease agreements may be subject to adjustment based on a consumer price index or other inflationary indices.

The lease liability for such lease agreements as of the adoption date, was based on fixed payments as of the adoption date.

Any adjustments to these payments based on the related indices will be recorded to expense as incurred.

2 unchanged sentences

The Company capitalizes non-lease components for equipment leases, but expenses non-lease components as incurred for real estate leases.

The rent expense under such arrangements and similar arrangements that do not qualify as leases under ASU 2016-02, net of sublease income amounted to $ 90,630 , $ 68,860 and $ 65,181 , respectively, for each of the three years ended December 27, 2020 and was not material to the Company’s financial statements nor were expenses related to short term leases (expected term less than twelve months) or variable lease payments during those same periods.

All leases expire prior to the end of 2037.

The rent expense under such arrangements and similar arrangements that do not qualify as leases under ASU 2016-02, net of sublease income amounted to $ 88.2 million, $ 90.6 million and $ 68.9 million, respectively, for each of the three years ended December 26, 2021 and was not material to the Company’s financial statements nor were expenses related to short term leases (expected term less than twelve months) or variable lease payments during those same periods.

All leases expire prior to 2038.

Real estate taxes, insurance and maintenance expenses are generally obligations of the Company.

1 unchanged sentence

thus, it is anticipated that future minimum lease commitments will not be less than the amounts shown for 2021.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

Information related to the Company's leases for the years ended December 26, 2021 and December 27, 2020 is as follows:

Year Ended Year Ended

December 27, 2020 December 29, 2019

(In millions) December 26, 2021 December 27, 2020

Cash paid for amounts included in the measurement of lease liabilities:

6 unchanged sentences

Operating leases 3.0 % 3.1 %

In addition to the Right-of-use assets obtained in exchange for lease obligations in the table above, in 2020 as part of the acquisition of eOne the Company recognized Right-of-use assets, net in the form of operating leases in the amount of $ 88,819 .

*In 2020 as part of the acquisition of eOne, the Company recognized $ 88.8 million of Right-of-use assets, net in the form of operating leases.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

The following is a reconciliation of future undiscounted cash flows to the operating liabilities, and the related right of use assets, included in our Consolidated Balance Sheets as of December 26, 2021:

December 27, 2020

2021 $ 50,461

(In millions) December 26, 2021

2027 and thereafter 33.4

8 unchanged sentences

(3) Included in Property, plant and equipment on the consolidated balance sheets

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

(18) Derivative Financial Instruments

Hasbro uses foreign currency forward contracts to mitigate the impact of currency rate fluctuations on firmly committed and projected future foreign currency transactions.

These over-the-counter contracts, which hedge future currency requirements related to purchases of inventory, product sales, television and film production cost and production financing loans (see note 11) and other cross-border transactions not denominated in the functional currency of the business unit, are primarily denominated in United States and Hong Kong dollars, and Euros.

These over-the-counter contracts, which hedge future currency requirements related to purchases of inventory, product sales, television and film production cost and production financing loans (see note 11) as well as other cross-border transactions not denominated in the functional currency of the business unit, are primarily denominated in United States and Hong Kong dollars, and Euros.

All contracts are entered into with a number of counterparties, all of which are major financial institutions.

2 unchanged sentences

Cash Flow Hedges

Hasbro uses foreign currency forward contracts to reduce the impact of currency rate fluctuations on firmly committed and projected future foreign currency transactions.

All of the Company’s designated foreign currency forward contracts are considered to be cash flow hedges.

These instruments hedge a portion of the Company’s currency requirements associated with anticipated inventory purchases, product sales, certain production financing loans and other cross-border transactions in years 2021 through 2022.

At December 27, 2020 and December 29, 2019, the notional amounts and fair values of assets (liabilities) for the Company’s foreign currency forward contracts designated as cash flow hedging instruments were as follows:

At December 26, 2021 and December 27, 2020, the notional amounts and fair values of the Company’s foreign currency forward contracts designated as cash flow hedging instruments were as follows:

(In millions) Notional

Value Notional

4 unchanged sentences

Total $ 520.6 10.8 518.3 ( 8.3 )

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

The Company has a master agreement with each of its counterparties that allows for the netting of outstanding forward contracts.

The fair values of the Company’s foreign currency forward contracts designated as cash flow hedges are recorded in the consolidated balance sheet at December 27, 2020 and December 29, 2019 as follows:

The fair values of the Company’s foreign currency forward contracts designated as cash flow hedges are recorded in the consolidated balance sheets at December 26, 2021 and December 27, 2020 as follows:

(In millions) 2021 2020

Prepaid expenses and other current assets

1 unchanged sentence

Unrealized losses ( 3.1 ) ( 1.6 )

Net unrealized gain $ 700 8,178

Net unrealized gains $ 10.7 0.7

Unrealized gains $ 0.2 1.1

Unrealized losses — —

Net unrealized gain $ 1,108 6,652

Net unrealized gains $ 0.2 1.1

Accrued liabilities

1 unchanged sentence

Unrealized losses ( 0.1 ) ( 12.9 )

Net unrealized loss $ ( 9,942 ) ( 1,926 )

Net unrealized losses $ ( 0.1 ) ( 9.9 )

Other liabilities

1 unchanged sentence

Unrealized losses — ( 0.2 )

Net unrealized loss $ ( 184 ) —

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings to net earnings for the years ended December 27, 2020, December 29, 2019 and December 30, 2018 as follows:

2020 2019 2018

Net unrealized losses $ — ( 0.2 )

Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings (loss) to net earnings for the years ended December 26, 2021, December 27, 2020 and December 29, 2019 as follows:

(In millions) 2021 2020 2019

Consolidated Statements of Operations Classification

Cost of sales $ ( 4.7 ) 21.2 16.7

Sales 2,947 5,644 3,479

Royalties and other 1,247 193 ( 527 )

Net realized gains (losses) $ 25,383 22,526 6,861

Net revenues 1.0 2.9 5.6

Other 2.0 1.2 0.2

Net realized (losses) gains $ ( 1.7 ) 25.3 22.5

Undesignated Hedges

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The Company does not use hedge accounting for these contracts as changes in the fair values of these contracts are substantially offset by changes in the fair value of the intercompany loans.

Additionally, with the acquisition of eOne during the first quarter of 2020, the Company continued eOne's balance sheet hedging program designed to manage transactional exposure to fair value movements on certain of eOne's foreign currency denominated monetary assets and liabilities.

The Company does not use hedge accounting for these contracts as changes in the fair values of these contracts are offset by changes in the fair value of the balance sheet item.

As of December 27, 2020 and December 29, 2019, the total notional amounts of the Company’s undesignated derivative instruments were $ 590,620 and $ 307,351 , respectively.

Additionally, to manage transactional exposure to fair value movements on certain monetary assets and liabilities denominated in foreign currencies, the Company has implemented a balance sheet hedging program.

The Company does not use hedge accounting for these contracts as changes in the fair values of these contracts are offset by changes in the fair value of the balance sheet items.

As of December 26, 2021 and December 27, 2020, the total notional amounts of the Company’s undesignated derivative instruments were $ 632.0 million and $ 590.6 million, respectively.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

At December 26, 2021 and December 27, 2020, the fair value of the Company’s undesignated derivative financial instruments are recorded in the consolidated balance sheets as follows:

(In millions) 2021 2020

Prepaid expenses and other current assets

1 unchanged sentence

Unrealized losses — ( 0.5 )

Net unrealized gain $ 2,986 —

Net unrealized gains $ — 3.0

Accrued liabilities

1 unchanged sentence

Unrealized losses ( 6.0 ) ( 2.6 )

Net unrealized loss $ ( 2,558 ) ( 3,807 )

Total unrealized losses $ 428 ( 3,807 )

The Company recorded net (losses) gains of $( 27,657 ), $ 13,443 and $ 11,698 on these instruments to other (income) expense, net for 2020, 2019 and 2018, respectively, relating to the change in fair value of such derivatives, substantially offsetting gains and losses from the change in fair value of intercompany loans to which the instruments relate.

Net unrealized losses $ ( 2.5 ) ( 2.6 )

Total unrealized (losses) gains, net $ ( 2.5 ) 0.4

The Company recorded net gains (losses) gains of $ 4.6 million, $( 27.7 ) million and $ 13.4 million on these instruments to other (income) expense, net for 2021, 2020 and 2019, respectively, relating to the change in fair value of such derivatives, substantially offsetting gains and losses from the change in fair value of intercompany loans to which the instruments relate.

eOne Purchase Hedges

D uring the third quarter of 2019 the Company hedged a portion of its exposure to fluctuations in the British pound sterling and other transactions in relation to the eOne acquisition using a series of both foreign exchange forward and option contracts.

During the third quarter of 2019, the Company hedged a portion of its exposure to fluctuations in the British pound sterling and other transactions in relation to the eOne acquisition using a series of both foreign exchange forward and option contracts.

These contracts did not qualify for hedge accounting and as such, were marked to market through the Company's Consolidated Statement of Operations.

For tax purposes these contracts qualified as nontaxable integrated tax hedges.

The Company recorded realized gains of $ 79,990 on matured contracts to other (income) expense, net for the year ended December 29, 2019.

The Company recorded realized gains of $ 80.0 million on matured contracts to other (income) expense, net for the year ended December 29, 2019.

These contracts matured on December 30, 2019 (the closing date of the transaction) and the related net gains or losses recognized in the Company's 2020 results were immaterial to the Company's consolidated financial statements.

For additional information related to the Company’s derivative financial instruments see notes 4 and 14.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

(19) Restructuring Actions

During 2018, the Company announced a comprehensive restructuring plan which consists of re-designing its go-to market strategy and re-shaping its organization to become a more responsive, innovative and digitally-driven play and entertainment company.

During 2018, the Company announced a comprehensive restructuring plan which consisted of re-designing its go-to market strategy and re-shaping its organization to become a more responsive, innovative and digitally-driven play and entertainment company.

As part of this process the Company took certain restructuring actions which continued through 2019.

The actions primarily included headcount reduction aimed at right-sizing the Company’s cost-structure and giving it the ability to add required new talent in the future.

In 2020, the Company continued to streamline its commercial organization, and recorded severance of $ 6,938 associated with these cost-savings initiatives.

These charges were included within selling, distribution and administrative costs on the Consolidated Statement of Operations for the year ended December 27, 2020, and reported within Corporate and Eliminations.

During 2020, in connection with the eOne Acquisition, the Company recorded $ 32,519 of severance and other employee charges related to the integration of eOne.

In 2020, the Company continued to streamline its commercial organization, and recorded severance of $ 6.9 million associated with these cost-savings initiatives.

These charges were included within selling, distribution and administrative costs on the Consolidated Statement of Operations for the year ended December 27, 2020.

During 2020, in connection with the eOne acquisition, the Company recorded $ 32.5 million of severance and other employee charges related to the integration of eOne.

These charges were recorded within acquisition and related costs on the Consolidated Statements of Operations for the year ended December 27, 2020, and reported within Corporate and Eliminations.

The Company also recorded severance charges of $ 1,532 in 2020 associated with cost-savings initiatives within the Company's Music business.

The Company also recorded severance charges of $ 1.5 million in 2020 associated with cost-savings initiatives within the eOne Music business.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

The detail of activity related to the programs as of December 26, 2021 is as follows:

2018 Restructuring & 2020 Commercial Program eOne Integration Program Other Total

(In millions) 2018 Restructuring & 2020 Commercial Program eOne Integration Program Other Total

Remaining amounts to be paid as of December 29, 2019 $ 31.1 $ — $ — $ 31.1

2020 restructuring charges 6.9 32.5 1.5 40.9

Payments made in 2020 ( 20.7 ) ( 15.6 ) ( 0.7 ) ( 37.0 )

Changes in estimates ( 2,598 ) — — ( 2,598 )

Remaining amounts to be paid as of December 27, 2020 17.3 16.9 0.8 $ 35.0

2020 restructuring charges 6,938 32,519 1,532 40,989

Payments made in 2021 ( 7.5 ) ( 11.8 ) ( 0.8 ) ( 20.1 )

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(20) Commitments and Contingencies

Hasbro had unused open letters of credit and related instruments of approximately $ 16,200 and $ 14,000 at December 27, 2020 and December 29, 2019, respectively.

Hasbro had unused open letters of credit and related instruments of approximately $ 13.6 million and $ 16.2 million at December 26, 2021 and December 27, 2020, respectively.

The Company enters into license agreements with strategic partners, inventors, designers and others for the use of intellectual properties in its products.

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Under terms of existing agreements as of December 26, 2021, Hasbro may, provided the other party meets their contractual commitment, be required to pay amounts as follows:

$ 223.7 million;

$ 128.3 million;

$ 65.7 million;

and thereafter:

At December 27, 2020, the Company had $ 93,675 of prepaid royalties, all of which are included in prepaid expenses and other current assets.

$ 3.2 million.

At December 26, 2021, the Company had $ 79.7 million of prepaid royalties, all of which are included in prepaid expenses and other current assets

Interest payment obligations on the Company's fixed-rate long-term debt are as follows:

$ 145.9 million;

$ 130.9 million;

and thereafter:

$ 823.1 million.

See note 11 for information on repayment terms for the Company's variable rate term loans.

The Company enters into contracts with certain partners which among other things, provide the Company right of first refusal to purchase, distribute, or license certain entertainment projects or content.

At December 27, 2020, the Company estimates that it may be obligated to pay $ 20,916 and $ 8,479 , in 2021 and 2022, respectively, related to such agreements.

At December 26, 2021, the Company estimates that it may be obligated to pay $ 30.8 million and $ 5.4 million, in 2022 and 2023, respectively, related to such agreements.

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.

The Company estimates these payments may total approximately $ 24,600 and may range from approximately $ 2,800 to $ 6,000 per year during the period 2021 to 2025, and approximately $ 400 in aggregate for all years occurring thereafter.

These payments are

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

contingent upon the Company having sufficient taxable income to realize the expected tax deductions of certain amounts related to the joint venture.

At December 27, 2020, the Company estimates payments related to inventory and tooling purchase commitments may total approximately $ 574,323 , including contractual commitments under the manufacturing agreement with Cartamundi as follows:

$ 105,000 , 2022:

$ 95,000 and 2023:

The Company estimates these payments may total approximately $ 19.8 million and may range from approximately $ 0.4 million to $ 6.0 million per year during the period 2022 to 2026, with no remaining payments due thereafter.

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.

At December 26, 2021, the Company estimates payments related to inventory and tooling purchase commitments may total approximately $ 621.7 million, including contractual commitments under the manufacturing agreement with Cartamundi as follows:

$ 95.0 million and 2023:

$ 85.0 million.

Hasbro is party to certain legal proceedings, as well as certain asserted and unasserted claims.

Amounts accrued, as well as the total amount of reasonably possible losses with respect to such matters, individually and in the aggregate, are not deemed to be material to the consolidated financial statements.

See note 17 for additional information on the Company's future lease payment commitments.

See note 11 for additional information on the Company's long-term debt and production financing repayments.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(21) Segment Reporting

Segment and Geographic Information

Hasbro is a global play and entertainment company with a broad portfolio of brands and entertainment properties spanning toys, games, licensed products ranging from traditional to high-tech and digital, and film and television entertainment.

For the periods presented in these consolidated financial statements, the Company’s segments are (i) U.S.

and Canada, (ii) International, (iii) Entertainment, Licensing and Digital, (iv) eOne and (v) Global Operations.

Following the eOne Acquisition on December 30, 2019, the eOne operating segment was added to the Company's existing reporting structure.

and Canada segment includes the marketing and selling of action figures, arts and crafts and creative play products, electronic toys and related electronic interactive products, fashion and other dolls, infant products, play sets, preschool toys, plush products, sports action blasters and accessories, vehicles and toy-related specialty products, as well as traditional board games, and trading card and role-playing games primarily within the United States and Canada.

Within the International segment, the Company markets and sells both toy and game products in markets outside of the U.S.

and Canada, primarily in the European, Asia Pacific, and Latin and South American regions.

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

The eOne segment is engaged in the development, acquisition, production, financing, distribution and sale of entertainment content and is comprised of all legacy eOne operations.

The Global Operations segment is responsible for sourcing finished products for the Company’s U.S.

and Canada and International segments.

As a result of the realignment 2018 results for the U.S.

and Canada and the former Entertainment and Licensing segments have been restated to reflect those changes.

Hasbro is a global play and entertainment company with a broad portfolio of brands and entertainment content spanning toys, games, licensed products ranging from traditional to digital, as well as film and television entertainment.

In the first quarter of 2020, the Company completed its acquisition of the global independent studio, eOne and throughout 2020, the Company successfully integrated the acquired eOne business and started to achieve synergies as a combined company.

During the first quarter of 2021, the Company realigned its reportable segment structure to:

(1) align with changes to its business structure subsequent to the integration of eOne;

and (2) reflect changes to its reporting structure and provide transparency into how operating performance is measured.

The Company's three principal reportable segments are (i) Consumer Products, (ii) Wizards of the Coast and Digital Gaming, and (iii) Entertainment.

The Consumer Products segment engages in the sourcing, marketing and sales of toy and game products around the world.

The Consumer Products business also promotes the Company's brands through the out-licensing of our trademarks, characters and other brand and intellectual property rights to third parties, through the sale of branded consumer products such as toys and apparel.

The Wizards of the Coast and Digital Gaming business engages in the promotion of the Company's brands through the development of trading card, role-playing and digital game experiences based on Hasbro and Wizards of the Coast games.

The Entertainment segment engages in the development, acquisition, production, distribution and sale of world-class entertainment content including film, scripted and unscripted television, family programming, digital content and live entertainment.

Segment performance is measured at the operating profit level.

3 unchanged sentences

The accounting policies of the segments are the same as those referenced in note 1.

Given the evolution and reorganization of the Company in recent years, including as a result of the acquisition of eOne, the Company plans to realign the reporting segment structure in 2021 to reflect how future operating results will be organized for decision-making purposes and for assessing the Company’s performance.

This realignment is expected to integrate the eOne segment and certain legacy Hasbro segments into a new reporting segment structure.

However, for the year ended December 27, 2020, management views eOne’s performance separately from the Hasbro’s legacy business.

Results shown for fiscal years 2021, 2020 and 2019 are not necessarily those which would be achieved if each segment was an unaffiliated business enterprise.

Reclassifications of certain prior year segment results and account balances have been made to conform to the current-year presentation.

None of the segment changes impact the Company's previously reported consolidated net revenue, operating profits, net earnings or net earnings per share.

On June 29, 2021, the Company completed the sale of eOne Music.

The financial results of eOne Music were recorded within the Company's Entertainment segment through the date of the closing of the sale.

The assets and liabilities of eOne Music were de-consolidated as of the closing date and there are no remaining carrying amounts in the Company's Consolidated Balance Sheets as of December 26, 2021.

The sale of eOne Music in 2021 did not impact the Company's previously reported 2020 or 2019 net revenues, operating profit, earnings, assets or liabilities.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

Information by segment and a reconciliation to reported amounts are as follows:

(In millions) Revenues

Customers Affiliate

3 unchanged sentences

Additions Total

and Canada $ 2,556,104 19,788 539,727 10,304 13,864 3,063,421

International 1,578,989 374 42,466 5,151 3,898 2,303,696

Entertainment, Licensing and Digital 373,854 962 92,957 7,324 24,040 693,782

eOne 956,496 975 ( 79,185 ) 103,664 4,702 5,784,302

Global Operations(a) — 1,193,831 ( 8,670 ) 68,117 65,348 3,401,024

Corporate and Eliminations(b) — ( 1,215,930 ) ( 85,481 ) 70,415 13,902 ( 4,427,840 )

Consolidated Total $ 5,465,443 — 501,814 264,975 125,754 10,818,385

and Canada $ 2,449,280 11,016 415,436 8,696 6,280 3,244,950

International 1,836,360 273 107,304 6,166 4,290 2,482,170

Entertainment, Licensing and Digital 434,467 11,466 99,686 8,342 25,718 695,898

Global Operations(a) 120 1,388,623 ( 7,237 ) 81,532 73,708 3,334,190

Corporate and Eliminations(b) — ( 1,411,378 ) 36,861 76,051 23,640 ( 901,580 )

Consumer Products $ 3,981.6 465.4 401.4 112.4 73.1 4,925.5

Wizards of the Coast and Digital Gaming 1,286.6 121.6 547.0 48.5 35.1 1,585.1

Entertainment 1,152.2 61.5 ( 91.8 ) 96.6 6.2 6,052.8

Corporate and Other (a)

— ( 648.5 ) ( 93.3 ) 22.6 18.3 ( 2,525.6 )

Consolidated Total $ 6,420.4 — 763.3 280.1 132.7 10,037.8

and Canada $ 2,375,653 10,242 370,197 11,119 5,255 2,899,986

International 1,847,585 290 39,470 6,530 4,652 2,229,053

Entertainment, Licensing and Digital 356,299 15,796 29,127 4,627 26,631 620,425

Global Operations(a) 109 1,439,292 ( 8,415 ) 84,759 82,912 3,197,847

Corporate and Eliminations(b) — ( 1,465,620 ) ( 99,327 ) 60,923 20,976 ( 3,684,323 )

Consumer Products $ 3,649.6 379.0 308.1 78.3 69.3 5,552.5

Wizards of the Coast and Digital Gaming 906.7 77.3 420.4 9.0 35.9 585.7

Entertainment 909.1 5.9 ( 141.1 ) 138.0 6.6 6,003.0

Corporate and Other (a)

— ( 462.2 ) ( 85.6 ) 39.7 14.0 ( 1,322.8 )

Consolidated Total $ 5,465.4 — 501.8 265.0 125.8 10,818.4

(a) The Global Operations segment derives substantially all of its revenues, and thus its operating results, from intersegment activities.

(b) Certain long-term assets, including property, plant and equipment, goodwill and other intangibles, which benefit multiple operating segments, are included in Corporate and eliminations.

Allocations of certain expenses related to these assets to the individual operating segments are done at the beginning of the year based on budgeted amounts.

Any differences between actual and budgeted amounts are reflected in Corporate and eliminations.

Furthermore, Corporate and eliminations includes elimination of inter-company income statement transactions.

Corporate and eliminations also includes the elimination of inter-company balance sheet amounts.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

The following table represents consolidated International segment net revenues by major geographic region for the three fiscal years ended December 27, 2020.

Consumer Products $ 3,881.2 386.0 306.9 92.7 78.2 5,388.9

Wizards of the Coast and Digital Gaming 761.2 55.0 294.7 9.2 31.1 613.1

Entertainment 77.8 11.5 13.6 2.8 0.6 338.5

Corporate and Other (a)

— ( 452.5 ) 36.9 76.1 23.7 2,515.1

Consolidated Total $ 4,720.2 — 652.1 180.8 133.6 8,855.6

(a) Certain long-term assets, including property, plant and equipment, goodwill and other intangibles, which benefit multiple operating segments, are included in both Entertainment and Corporate and Other.

Allocations of certain expenses, related assets within the individual operating segments, are done at the beginning of the year based on budgeted amounts.

Any differences between actual and budgeted amounts are reflected in Corporate and Other.

Furthermore, Corporate and Other includes elimination of inter-company income statement transactions.

Corporate and Other also includes the elimination of inter-company balance sheet amounts.

The following table represents consolidated Consumer Products segment net revenues by major geographic region for the three fiscal years ended December 26, 2021.

(In millions) 2021 2020 2019

North America $ 2,315.9 2,116.2 2,098.1

Europe 1,067.7 989.2 982.2

Latin America 241,611 435,740 454,066

Asia Pacific 310.1 295.6 359.4

Latin America 287.9 248.6 441.5

Net revenues $ 3,981.6 3,649.6 3,881.2

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

The following table represents consolidated Entertainment segment net revenues by category for the three fiscal years ended December 26, 2021 .

(In millions) 2021 2020 2019

Film and TV $ 932.5 $ 700.5 $ 45.1

Family Brands 132.9 86.5 31.8

Music and Other 86.8 122.1 0.9

Net revenues $ 1,152.2 909.1 77.8

The following table presents consolidated net revenues by brand portfolio for the three fiscal years ended December 26, 2021.

2020 2019 2018

(In millions) 2021 2020 2019

Franchise Brands $ 2,792.7 2,286.1 2,411.8

5 unchanged sentences

Hasbro’s total gaming category, including all gaming net revenues, most notably MAGIC:

THE GATHERING and MONOPOLY, totaled $ 1,763,793 , $ 1,528,283 and $ 1,443,164 for the years ended December 27, 2020, December 29, 2019 and December 30, 2018, respectively.

THE GATHERING and MONOPOLY, totaled $ 2,098.9 million, $ 1,763.8 million and $ 1,528.3 million for the years ended December 26, 2021, December 27, 2020 and December 29, 2019, respectively.

Information as to Hasbro’s operations in different geographical areas is presented below on the basis the Company uses to manage its business.

Net revenues are categorized based on location of the customer, while long-lived assets (property, plant and equipment, goodwill and other intangibles) are categorized based on their location.

2020 2019 2018

(In millions) 2021 2020 2019

United States $ 3,898.9 3,202.4 2,653.3

8 unchanged sentences

Other Information

Hasbro markets its products primarily to customers in the retail sector.

Hasbro markets its tangible products primarily to customers in the retail sector.

Although the Company closely monitors the creditworthiness of its customers, adjusting credit policies and limits as deemed appropriate, a substantial portion of its customers’ ability to discharge amounts owed is generally dependent upon the overall retail economic environment.

4 unchanged sentences

Sales to these customers amounted to 18 % and 9 %, respectively, of consolidated net revenues during 2019.

These sales were primarily within the U.S.

and Canada segment.

Net revenues from the Company’s major customers are reported within the Consumer Products segment, Wizards of the Coast & Digital Gaming segment and the Entertainment segment.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

Hasbro purchases certain components used in its manufacturing process and certain finished products from manufacturers in the Far East.

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These licenses have multi-year terms and provide the Company with the right to market and sell designated classes of products based on Marvel’s portfolio of brands, including SPIDER-MAN and THE AVENGERS, and Lucas’s STAR WARS brand.

The Company also has a license to market products with The Walt Disney Company for DISNEY PRINCESS and DISNEY FROZEN lines.

Hasbro’s net revenues from these licenses can be significant in any given year based on the level of third party entertainment.

The Company also has a license to market products with The Walt Disney Company for DISNEY PRINCESS and DISNEY FROZEN lines through the end of 2022.

Hasbro’s net revenues from these licenses can be significant in any given year based on the level of thirdparty entertainment.

In addition to DISNEY PRINCESS and DISNEY FROZEN, both Marvel and Lucas are owned by The Walt Disney Company.

1 unchanged sentence

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

(22) Quarterly Financial Data (Unaudited)

First Second Third Fourth Full Year

Net revenues $ 1,105,570 860,279 1,776,623 1,722,971 5,465,443

Operating profit (loss) (a) ( 23,283 ) 2,175 336,558 186,364 501,814

Earnings (loss) before income taxes ( 71,882 ) ( 43,728 ) 299,198 138,474 322,062

Net earnings (loss) (a) ( 67,810 ) ( 32,898 ) 219,983 106,166 225,441

Net earnings (loss) attributable to Hasbro, Inc.

( 69,637 ) ( 33,915 ) 220,898 105,173 222,519

Per common share

Net earnings (loss)

Basic $ ( 0.51 ) ( 0.25 ) 1.61 0.77 1.62

Diluted ( 0.51 ) ( 0.25 ) 1.61 0.76 1.62

High $ 109.50 83.99 83.26 97.13 109.50

Low 41.33 60.20 70.78 77.29 41.33

Cash dividends declared $ 0.68 0.68 0.68 0.68 2.72

Net revenues $ 732,510 984,537 1,575,173 1,428,007 4,720,227

Operating profit (b) 36,127 128,333 297,210 190,380 652,050

Earnings before income taxes 29,595 6,108 259,746 298,761 594,210

Net earnings (b) 26,727 13,433 212,949 267,345 520,454

Per common share

Basic $ 0.21 0.11 1.68 2.02 4.07

Diluted 0.21 0.11 1.67 2.01 4.05

High $ 93.19 108.86 126.87 123.05 126.87

Low 77.34 84.61 103.04 92.59 77.34

Cash dividends declared $ 0.68 0.68 0.68 0.68 2.72

(a) Operating profit (loss) and net earnings (loss) for the 2020 quarters include the impact of the following items:

• During 2020, in association with the acquisition of eOne, the Company incurred the following:

◦ Incremental intangible amortization costs related to the intangible assets acquired totaling $ 97,856 ($ 80,731 after-tax).

Incremental intangible amortization costs by quarter were as follows:

$ 25,028 ($ 19,885 after-tax) in the first quarter, $ 22,592 ($ 17,949 after-tax) in the second quarter, $ 24,716 ($ 19,637 after-tax) in the third quarter, and $ 25,520 ($ 23,260 after-tax) in the fourth quarter, respectively.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(Thousands of Dollars and Shares Except Per Share Data)

◦ The Company also incurred related costs of $ 218,566 ($ 188,557 after-tax), comprised of the following:

▪ Acquisition and integration costs, including expense associated with the acceleration of eOne stock-based compensation, intangible asset impairments and advisor fees settled at the closing of the acquisition by quarter were as follows:

$ 95,718 in the first quarter, $ 3,966 in the second quarter, $ 4,599 in the third quarter, and $ 40,886 in the fourth quarter, respectively.

▪ Restructuring and related costs, including severance and retention costs by quarter were as follows:

$ 54,064 in the first quarter, $ 6,296 in the second quarter, $ 1,350 in the third quarter, and $ 11,687 in the fourth quarter, respectively.

• The Company incurred $ 8,470 of severance charges during 2020, associated with cost-savings initiatives within the Company’s commercial and Film and TV business.

Severance charges by quarter were as follows:

$ 11,554 in the second quarter, and ($ 3,084 ) in the fourth quarter, respectively.

• During 2020, net earnings was impacted by income tax expense of $ 15,389 as a result of the revaluation of Hasbro’s UK tax attributes in accordance with the Finance Act of 2020 enacted by the United Kingdom on July 22, 2020.

Income tax expense by quarter were as follows:

$ 13,680 in the third quarter, and $ 1,709 in the fourth quarter, respectively.

(b) Operating profit and net earnings for the 2019 quarters include the impact of the following items:

• During 2019, net earnings was impacted by $ 110,962 ($ 85,995 after-tax) non-cash charges related to the settlement of the Company's U.S.

defined benefit pension plan.

Non-cash charges consisted of $ 110,777 ($ 85,852 after-tax) in the second quarter, and $ 185 ($ 143 after-tax) in the fourth quarter, respectively.

During 2018 the Compensation Committee of the Company’s Board of Directors approved a resolution to terminate the Company’s U.S.

defined benefit pension plan and commenced the termination process.

• In the third quarter of 2019, net earnings were impacted by a loss of $ 25,533 ($ 20,886 after-tax) related to hedging the British pound sterling purchase price of eOne.

During the third quarter of 2019 the Company announced that they entered into a definitive agreement under which the Company would acquire eOne in an all-cash transaction, to be paid in British pound sterling.

The Company hedged a portion of its exposure to fluctuations in the British pound sterling in relation to the acquisition using a series of both foreign exchange forward and option contracts.

These contracts did not qualify for hedge accounting and, as such, were marked to market through other expense in the Company's Consolidated Statement of Operations.

• In the fourth quarter of 2019, in association with the Company's agreement to acquire eOne, the Company incurred certain transaction-related costs, as well as hedge gains on the British pound sterling purchase price in 2019.

This resulted in eOne net gains in the fourth quarter of 2019 of $ 101,249 ($ 102,658 after-tax), comprised of the following:

◦ Net earnings were impacted by hedge gains of $ 139,666 in the fourth quarter of 2019 related to the foreign exchange forward and option contracts to hedge a portion of the British pound sterling purchase price for the eOne Acquisition;

◦ Net earnings were impacted by financing transaction fees of $ 20,568 in the fourth quarter, primarily related to the Company’s bridge financing facility which terminated unused in the fourth quarter of 2019;

◦ Operating profit and net earnings were impacted by eOne Acquisition related costs of $ 17,778 in the fourth quarter;

◦ Net earnings were impacted by tax benefits of $ 1,409 in the fourth quarter of 2019 related to the eOne Acquisition related costs and Financing transaction fees.

(22) eOne Music Sale

On April 25, 2021, the Company entered into a definitive agreement to sell eOne Music for an aggregate sales price of $ 385.0 million, subject to certain closing adjustments related to working capital and net debt.

On June 29, 2021, the Company completed the sale of eOne Music for net proceeds of $ 397.0 million, including the sales price of $ 385.0 million and $ 12.0 million of closing adjustments related to working capital and net debt calculations.

The final proceeds were subject to further adjustment upon completion of closing working capital, which resulted in a net outflow of $ 0.9 million.

The Company acquired eOne Music through its acquisition of eOne in December 2019.

Based on the value of the net assets held by eOne Music, which included goodwill and intangible assets allocated to eOne Music as part of the eOne acquisition, 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.

The Company also recorded pre-tax cash transaction expenses of $ 9.5 million within Selling, Distribution and Administration expenses on the Consolidated Statements of Operations during the second quarter of 2021.

The impairment charge was recorded within the Entertainment segment and the transaction costs were recorded within the Corporate and Other segment.

The operations of eOne Music did not meet the criteria to be presented as discontinued operations in accordance with Accounting Standards Update No.

2014-08 (ASU 2014-08) Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity and eOne Music did not represent an individually significant component of the Company’s business.

Income from operations before income taxes, attributable to eOne Music, was recorded to the Company's Consolidated Statements of Operations, within the Entertainment segment through the sale transaction closing date.

Assets of $ 473.5 million and liabilities of $ 77.3 million, attributable to eOne Music, were de-consolidated as of the closing date and, as of December 26, 2021, there are no remaining carrying amounts in the Company's Consolidated Balance Sheets.

The following table presents the carrying amounts of the major classes of eOne Music assets and liabilities sold on June 29, 2021 and reflects final working capital adjustments.

(In millions) December 26,

Cash and Cash Equivalents $ 18.2

Goodwill and Other Intangible Assets 410.3

Prepaid Expenses 31.0

Other Assets 14.0

Total Assets 473.5

Accrued Liabilities 24.4

Deferred Taxes 36.9

Other Liabilities 16.0

Total Liabilities $ 77.3

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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 8. Financial Statements and Supplementary Data