What changed in this filing

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Item 1. Financial Statements

2022-07-26 compared with 2022-04-27 · 282 added, 171 removed, 622 unchanged (42% of the section changed)

3 unchanged sentences

(Millions of Dollars Except Share Data)

2022 March 28,

2022 June 27,

2021 December 26,

6 unchanged sentences

Prepaid expenses and other current assets 719.2 543.2 656.4

Assets held for sale — 479.5 —

Total current assets 3,085.4 3,616.4 3,728.1

17 unchanged sentences

1,379.4 1,396.5 1,674.8

Liabilities held for sale — 76.3 —

Total current liabilities

13 unchanged sentences

Authorized 600,000,000 shares;

issued 220,286,736 shares at March 27, 2022, March 28, 2021, and December 26, 2021

issued 220,286,736 shares at June 26, 2022, June 27, 2021, and December 26, 2021

110.1 110.1 110.1

6 unchanged sentences

Treasury stock, at cost;

80,844,603 shares at March 27, 2022;

82,724,111 shares at March 28, 2021;

82,199,298 shares at June 26, 2022;

82,617,426 shares at June 27, 2021;

and 82,066,136 shares at December 26, 2021

10 unchanged sentences

(Millions of Dollars Except Per Share Data)

Quarter Ended

2022 March 28,

Quarter Ended Six Months Ended

2022 June 27,

2021 June 26,

2022 June 27,

Net revenues $ 1,339.2 $ 1,322.2 $ 2,502.3 $ 2,437.0

6 unchanged sentences

Amortization of intangibles 27.2 29.7 54.3 62.6

Loss on assets held for sale — 101.8 — 101.8

Selling, distribution and administration 327.2 354.3 634.3 642.9

8 unchanged sentences

Income tax expense 39.4 63.0 56.7 75.0

Net earnings 62.9 117.5

Net earnings attributable to noncontrolling interests 1.7 1.3

Net earnings attributable to Hasbro, Inc.

Net earnings (loss) 140.5 ( 21.9 ) 203.4 95.6

Net earnings (loss) attributable to noncontrolling interests ( 1.5 ) 1.0 0.2 2.3

Net earnings (loss) attributable to Hasbro, Inc.

$ 142.0 $ ( 22.9 ) $ 203.2 $ 93.3

Net earnings per common share:

Net earnings (loss) per common share:

Basic $ 1.02 $ ( 0.17 ) $ 1.46 $ 0.68

5 unchanged sentences

(Millions of Dollars)

Quarter Ended

2022 March 28,

Net earnings $ 62.9 $ 117.5

Quarter Ended Six Months Ended

2022 June 27,

2021 June 26,

2022 June 27,

Net earnings (loss) $ 140.5 $ ( 21.9 ) $ 203.4 $ 95.6

Other comprehensive earnings:

1 unchanged sentence

( 20.2 ) 24.0 ( 31.0 ) 7.9

Unrealized holding gains on available-for-sale securities, net of tax 0.2 —

Net (losses) gains on cash flow hedging activities, net of tax ( 1.2 ) 5.6

Unrealized holding gains (losses) on available-for-sale securities, net of tax ( 0.5 ) 0.1 ( 0.1 ) 0.2

Net gains (losses) on cash flow hedging activities, net of tax 10.6 ( 3.2 ) 7.9 2.4

Reclassifications to earnings, net of tax:

Net gains on cash flow hedging activities — ( 1.1 )

Net gains (losses) on cash flow hedging activities ( 2.7 ) 1.8 ( 1.3 ) 0.6

Amortization of unrecognized pension and postretirement amounts

Total other comprehensive loss, net of tax $ ( 11.6 ) $ ( 11.4 )

Total comprehensive earnings attributable to noncontrolling interests 1.7 1.3

0.1 0.2 0.2 0.4

Total other comprehensive earnings (loss), net of tax $ ( 12.7 ) $ 22.9 $ ( 24.3 ) $ 11.5

Total comprehensive earnings (loss) attributable to noncontrolling interests ( 1.5 ) 1.0 0.2 2.3

Total comprehensive earnings attributable to Hasbro, Inc.

4 unchanged sentences

(Millions of Dollars)

Three months ended

2022 March 28,

Six months ended

2022 June 27,

Cash flows from operating activities:

3 unchanged sentences

Amortization of intangibles 54.3 62.6

Loss on assets held for sale — 101.8

Program cost amortization 219.2 208.2

5 unchanged sentences

Increase in inventories ( 324.7 ) ( 109.5 )

Decrease in prepaid expenses and other current assets 42.1 44.9

Increase in prepaid expenses and other current assets 13.9 38.8

Program spend, net ( 296.2 ) ( 308.3 )

Decrease in accounts payable and accrued liabilities ( 273.0 ) ( 169.3 )

Change in net deemed repatriation tax ( 18.4 ) ( 18.4 )

Other ( 12.0 ) ( 6.8 )

2 unchanged sentences

Additions to property, plant and equipment ( 75.8 ) ( 63.1 )

Acquisitions ( 146.3 ) —

Other 9.5 ( 3.2 )

4 unchanged sentences

Net proceeds from other short-term borrowings 97.2 ( 6.3 )

Purchases of common stock ( 124.0 ) —

Stock-based compensation transactions 74.2 9.4

5 unchanged sentences

Net increase (decrease) in cash, cash equivalents and restricted cash ( 391.0 ) ( 203.3 )

Net change due to cash classified as held for sale — ( 18.2 )

Net decrease in cash, cash equivalents and restricted cash ( 391.0 ) ( 221.5 )

Cash, cash equivalents and restricted cash at beginning of year 1,019.2 1,449.7

8 unchanged sentences

(Millions of Dollars)

Three Months Ended March 27, 2022

Three Months Ended June 26, 2022

Stock Additional

4 unchanged sentences

Equity Redeemable Noncontrolling Interests

Balance, December 26, 2021 $ 110.1 2,428.0 4,257.8 ( 235.3 ) ( 3,534.7 ) 37.2 $ 3,063.1 $ 23.9

Balance, March 27, 2022 $ 110.1 2,475.7 4,220.9 ( 246.9 ) ( 3,513.8 ) 34.7 $ 3,080.7 $ 23.5

Net earnings attributable to Hasbro, Inc.

— — 142.0 — — — 142.0 —

Net earnings attributable to noncontrolling interests — — — — — 1.2 1.2 0.5

Net earnings (loss) attributable to noncontrolling interests — — — — — ( 1.6 ) ( 1.6 ) 0.1

Change in put option value — — —

Other comprehensive loss — — — ( 12.7 ) — — ( 12.7 ) —

Stock-based compensation transactions — 2.5 — — 1.3 — 3.8 —

Purchases of common stock — — — — ( 124.0 ) — ( 124.0 ) —

Stock-based compensation expense — 24.7 — — 0.3 — 25.0 —

Dividends declared — 0.5 ( 97.0 ) — — — ( 96.5 ) —

Distributions paid to noncontrolling owners — — — — — ( 3.9 ) ( 3.9 ) ( 0.6 )

Balance, June 26, 2022 $ 110.1 2,503.4 4,265.9 ( 259.6 ) ( 3,636.2 ) 29.2 $ 3,012.8 $ 23.0

Three Months Ended June 27, 2021

Stock Additional

Paid-in Capital Retained

Earnings Accumulated Other

Comprehensive Loss Treasury

Stock Noncontrolling Interests Total

Shareholders'

Equity Redeemable Noncontrolling Interests

Balance, March 28, 2021 $ 110.1 2,339.6 4,226.8 ( 206.4 ) ( 3,550.6 ) 40.4 $ 2,959.9 $ 24.0

Net loss attributable to Hasbro, Inc.

— — ( 22.9 ) — — — ( 22.9 ) —

Net earnings attributable to noncontrolling interests — — — — — 0.7 0.7 0.3

Other comprehensive earnings — — — 22.9 — — 22.9 —

2 unchanged sentences

Dividends declared — — ( 93.6 ) — — — ( 93.6 ) —

Distributions paid to noncontrolling owners — ( 0.3 ) — — — ( 1.2 ) ( 1.5 ) 0.2

Balance, June 27, 2021 $ 110.1 2,361.2 4,110.3 ( 183.5 ) ( 3,547.6 ) 39.9 $ 2,890.4 $ 24.5

AND SUBSIDIARIES

Consolidated Statements of Shareholders' Equity and Redeemable Noncontrolling Interests

(Millions of Dollars)

Six Months Ended June 26, 2022

Stock Additional

Paid-in Capital Retained

Earnings Accumulated Other Comprehensive Loss Treasury

Stock Noncontrolling Interests Total

Shareholders'

Equity Redeemable Noncontrolling Interests

Balance, December 26, 2021 $ 110.1 2,428.0 4,257.8 ( 235.3 ) ( 3,534.7 ) 37.2 $ 3,063.1 $ 23.9

Net earnings attributable to Hasbro, Inc.

— 203.2 — — — 203.2 —

Net earnings (loss) attributable to noncontrolling interests — — — — — ( 0.4 ) ( 0.4 ) 0.6

Change in put option value — ( 0.4 ) — — — — ( 0.4 ) —

Other comprehensive loss — — — ( 24.3 ) — — ( 24.3 ) —

Stock-based compensation transactions — 32.5 — — 22.2 — 54.7 —

Purchases of common stock — — — — ( 124.0 ) — ( 124.0 ) —

Stock-based compensation expense — 42.8 — — 0.3 — 43.1 —

Dividends declared — 0.5 ( 195.1 ) — — — ( 194.6 ) —

Distributions paid to noncontrolling owners and other foreign exchange — — — — — ( 7.6 ) ( 7.6 ) ( 1.5 )

Balance, March 27, 2022 $ 110.1 2,475.7 4,220.9 ( 246.9 ) ( 3,513.8 ) 34.7 $ 3,080.7 $ 23.5

Three Months Ended March 28, 2021

Balance, June 26, 2022 $ 110.1 2,503.4 4,265.9 ( 259.6 ) ( 3,636.2 ) 29.2 $ 3,012.8 $ 23.0

Six Months Ended June 27, 2021

Stock Additional

14 unchanged sentences

Distributions paid to noncontrolling owners and other foreign exchange — ( 0.7 ) — — — ( 2.1 ) ( 2.8 ) ( 0.2 )

Balance, March 28, 2021 $ 110.1 2,339.6 4,226.8 ( 206.4 ) ( 3,550.6 ) 40.4 $ 2,959.9 $ 24.0

Balance, June 27, 2021 $ 110.1 2,361.2 4,110.3 ( 183.5 ) ( 3,547.6 ) 39.9 $ 2,890.4 $ 24.5

AND SUBSIDIARIES

3 unchanged sentences

In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the consolidated financial position of Hasbro, Inc.

and all majority-owned subsidiaries ("Hasbro" or the "Company") as of March 27, 2022 and March 28, 2021, and the results of its operations and cash flows and shareholders' equity for the periods then ended in accordance with accounting principles generally accepted in the United States of America ("U.S.

and all majority-owned subsidiaries ("Hasbro" or the "Company") as of June 26, 2022 and June 27, 2021, and the results of its operations and cash flows and shareholders' equity for the periods then ended in accordance with accounting principles generally accepted in the United States of America ("U.S.

The preparation of consolidated financial statements in conformity with U.S.

1 unchanged sentence

Actual results could differ from those estimates.

The quarters ended March 27, 2022 and March 28, 2021 were each 13-week periods.

The results of operations for the quarter ended March 27, 2022 are not necessarily indicative of results to be expected for the full year 2022, nor were those of the comparable 2021 period representative of those actually experienced for the full year 2021.

The quarters ended June 26, 2022 and June 27, 2021 were each 13-week periods.

The six-month periods ended June 26, 2022 and June 27, 2021 were each 26-week periods.

The results of operations for the quarter ended June 26, 2022 are not necessarily indicative of results to be expected for the full year 2022, nor were those of the comparable 2021 period representative of those actually experienced for the full year 2021.

Significant Accounting Policies

The Company's significant accounting policies are summarized in note 1 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 26, 2021 ("2021 Form 10-K").

D&D Beyond Acquisition

On May 19, 2022, the Company acquired D&D Beyond, a strategic, complementary acquisition of the premier digital content platform for DUNGEONS & DRAGONS, which is expected to substantially accelerate our direct-to-fans capability for DUNGEONS & DRAGONS in physical and digital play.

The all-cash transaction in the amount of $ 146.3 million was funded with cash on hand.

The preliminary allocation of assets acquired includes $ 81.4 million to intangible assets, $ 64.7 million to goodwill, with the remainder allocated to property, plant, and equipment, all of which are included in the Company's consolidated balance sheets as of June 26, 2022.

eOne Music Sale

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 resulting in a net outflow of $ 0.9 million in the fourth quarter of 2021.

The final proceeds were subject to further adjustment upon completion of closing working capital, which resulted in a net outflow of $ 0.9 million in the fourth quarter of 2021.

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 $ 101.8 million within Loss on Assets Held for Sale on the consolidated statements of operations for the quarter ended June 27, 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 for the quarter ended June 27, 2021.

The impairment charge was recorded within the Entertainment segment and the transaction costs were recorded within the Corporate and Other segment.

Fiscal year 2021 includes two quarters of financial results for the eOne Music Business.

Dividend Equivalent Units

Beginning with employee stock incentive awards granted in 2022, the payment of cash dividends to shareholders also results in the crediting of Dividend Equivalent Units (“DEUs”) to holders of restricted stock units ("RSUs") and contingent stock performance awards ("PSUs") granted under the Company's Restated 2003 Stock Incentive Plan, as amended, for employees as defined and described in Note 15 in the Company's Annual Report on Form 10-K for the year ended December 26, 2021.

The DEUs will be credited as additional RSUs or PSUs and settled concurrently with the vesting of associated awards.

The forfeitable DEUs and dividends payable in cash are treated as a reduction of retained earnings or, if the Company is in a retained deficit position, as a reduction of additional paid-in capital.

These consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC").

1 unchanged sentence

GAAP have been condensed or omitted pursuant to such rules and regulations.

The Company filed with the SEC audited consolidated financial statements for the fiscal year ended December 26, 2021 in its 2021 Form 10-K, which includes all such information and disclosures and, accordingly, should be read in conjunction with the financial information included herein.

The Company filed with the SEC audited consolidated financial statements for the fiscal year ended December 26,

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

2021 in its 2021 Form 10-K, which includes all such information and disclosures and, accordingly, should be read in conjunction with the financial information included herein.

Recently Adopted Accounting Standards

As of March 27, 2022, there were no recently adopted accounting standards that had a material effect on the Company’s financial statements.

As of June 26, 2022, there were no recently adopted accounting standards that had a material effect on the Company’s financial statements.

Issued Accounting Pronouncements

7 unchanged sentences

The change from LIBOR to an alternate rate has not had a material impact on the Company's consolidated financial statements .

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(2) Revenue Recognition

9 unchanged sentences

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 March 27, 2022, March 28, 2021 and December 26, 2021 the Company had the following contract assets and liabilities in its consolidated balance sheets:

March 27, 2022 March 28, 2021 December 26, 2021

At June 26, 2022, June 27, 2021 and December 26, 2021 the Company had the following contract assets and liabilities in its consolidated balance sheets:

June 26, 2022 June 27, 2021 December 26, 2021

Contract assets - current $ 419.7 $ 257.9 $ 286.9

4 unchanged sentences

Total $ 109.3 $ 196.0 $ 121.2

For the three months ended March 27, 2022, the Company collected $ 58.8 million of the contract assets and recognized $ 38.6 million of contract liabilities that were included in the December 26, 2021 balances.

For the six months ended June 26, 2022, the Company collected $ 3.8 million of the contract assets and recognized $ 48.7 million of contract liabilities that were included in the December 26, 2021 balances.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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 March 27, 2022, unrecognized revenue attributable to unsatisfied performance obligations expected to be recognized in the future were $ 315.2 million.

As of June 26, 2022, unrecognized revenue attributable to unsatisfied performance obligations expected to be recognized in the future were $ 313.1 million.

Of this amount, we expect to recognize $ 187.4 million in the remainder of 2022, $ 109.4 million in 2023, $ 7.2 million in 2024 and $ 9.1 million in 2025.

These amounts include only fixed considerations.

These amounts include only fixed consideration.

Accounts Receivable and Allowance for Credit Losses

The Company’s balance for accounts receivable on the consolidated balance sheets as of March 27, 2022 and March 28, 2021 are primarily from contracts with customers.

The Company’s balance for accounts receivable on the consolidated balance sheets as of June 26, 2022 and June 27, 2021 are primarily from contracts with customers.

Of the Company’s accounts receivable, less allowance for doubtful accounts, of $ 870.5 million, approximately $ 4.3 million relates to accounts receivable held in Russia.

The Company has insurance coverage for over 90 % of Russia receivables.

The Company had no material expense for credit losses for the quarters ended March 27, 2022 and March 28, 2021.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

The Company has insurance coverage for over 90 % of Russian receivables.

The Company had no material expense for credit losses for the quarters or six months ended June 26, 2022 and June 27, 2021.

Disaggregation of revenues

11 unchanged sentences

See note 13 for further information.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(3) Earnings Per Share

Net earnings per share data for the quarters ended March 27, 2022 and March 28, 2021 were computed as follows:

Net earnings (loss) per share data for the quarters and six months ended June 26, 2022 and June 27, 2021 were computed as follows:

Quarter Basic Diluted Basic Diluted

Net earnings (loss) attributable to Hasbro, Inc.

$ 142.0 142.0 $ ( 22.9 ) ( 22.9 )

Average shares outstanding 139.0 139.0 137.8 137.8

Effect of dilutive securities:

Options and other share-based awards — 0.2 — —

Equivalent Shares 139.0 139.2 137.8 137.8

Net earnings (loss) attributable to Hasbro, Inc.

per common share $ 1.02 1.02 $ ( 0.17 ) ( 0.17 )

Six Months Basic Diluted Basic Diluted

Net earnings attributable to Hasbro, Inc.

6 unchanged sentences

per common share $ 1.46 $ 1.46 $ 0.68 $ 0.68

For the quarters ended March 27, 2022 and March 28, 2021, options and restricted stock units totaling 2.5 million and 2.2 million, respectively, were excluded from the calculation of diluted earnings per share because to include them would have been anti-dilutive.

For the quarter and six months ended June 26, 2022, options and restricted stock units totaling 3.0 million and 3.8 million, respectively, were excluded from the calculation of diluted earnings per share because to include them would have been anti-dilutive.

For the quarter and six months ended June 27, 2021, options and restricted stock units totaling 4.6 million and 2.2 million, respectively, were excluded from the calculation of diluted earnings per share because to include them would have been anti-dilutive.

Of the second quarter 2021 amount, 2.5 million shares would have been included in the calculation of diluted shares had the Company not had a loss for the quarter ended June 27, 2021.

Assuming that these options and restricted stock units were included, under the treasury stock method, they would have resulted in an additional 0.4 million shares being included in the diluted earnings per share calculation for the quarter ended June 27, 2021.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

During the first quarter of 2021, the Company realigned its financial reporting structure creating the following three principal reportable segments:

2 unchanged sentences

As a result of these changes, during 2021, the Company reallocated its goodwill among the revised reporting units based on the change in relative fair values of the respective reporting units.

Changes in the carrying amount of goodwill, by operating segment, for the quarters ended March 27, 2022 and March 28, 2021 are as follows:

Changes in the carrying amount of goodwill, by operating segment, for the quarters ended June 26, 2022 and June 27, 2021 are as follows:

Consumer Products Wizards of the Coast and Digital Gaming Entertainment Total

Balance at December 26, 2021 $ 1,584.9 307.3 1,527.4 $ 3,419.6

Acquired during the period — 64.7 — 64.7

Foreign exchange translation ( 0.2 ) ( 0.1 ) ( 0.8 ) ( 1.1 )

Balance at March 27, 2022 $ 1,584.8 307.5 1,527.0 $ 3,419.3

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

Balance at June 26, 2022 $ 1,584.7 371.9 1,526.6 $ 3,483.2

Consumer Products Wizards of the Coast and Digital Gaming Entertainment Total

2 unchanged sentences

Foreign exchange translation — 0.4 ( 0.3 ) 0.1

Balance at March 28, 2021 $ 1,585.0 307.5 1,798.9 $ 3,691.4

Impairment during the period — — ( 101.8 ) ( 101.8 )

Reclass to assets held-for-sale — — ( 169.2 ) ( 169.2 )

Balance at June 27, 2021 $ 1,585.1 307.7 1,528.0 $ 3,420.8

On May 19, 2022, the Company completed its acquisition of D&D Beyond for $ 146.3 million, which was funded with cash on hand.

Based on the valuation of these assets, $ 64.7 million was allocated to goodwill within the Wizards of the Coast and Digital Gaming segment during the second quarter of 2022.

During the second quarter of 2021, the Company entered into a definitive agreement to sell the Entertainment One Music business ("eOne Music").

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 acquisition of Entertainment One in December 2019 (the "eOne Acquisition"), the Company recorded a pre-tax non-cash goodwill impairment charge of $ 108.8 million, during the second quarter of 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 of $ 162.2 million were removed from the consolidated financial statements.

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 acquisition of Entertainment One in December 2019 (the "eOne Acquisition"), the Company recorded a pre-tax non-cash goodwill impairment charge of $ 101.8 million, during the second quarter of 2021, within Loss on Assets Held for Sale in the Consolidated Statements of Operations, and within the Entertainment segment.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(5) Other Comprehensive Earnings (Loss)

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 the quarters ended March 27, 2022 and March 28, 2021.

Quarter Ended

2022 March 28,

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

The following table presents the related tax effects on changes in other comprehensive earnings (loss) for the quarters and six months ended June 26, 2022 and June 27, 2021.

Quarter Ended Six months ended

2022 June 27,

2021 June 26,

2022 June 27,

Other comprehensive earnings (loss), tax effect:

Tax expense on unrealized holding gains $ 0.1 — $ 0.1 —

Tax benefit (expense) on cash flow hedging activities 0.9 ( 1.0 )

Tax (expense) benefit on cash flow hedging activities ( 1.3 ) 0.6 ( 0.4 ) ( 0.4 )

Reclassifications to earnings, tax effect:

1 unchanged sentence

Amortization of unrecognized pension and postretirement amounts

— ( 0.1 ) ( 0.1 ) ( 0.1 )

Total tax effect on other comprehensive earnings (loss) $ ( 1.1 ) 0.3 $ ( 0.5 ) ( 0.5 )

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

Changes in the components of accumulated other comprehensive earnings (loss), net of tax for the quarters ended March 27, 2022 and March 28, 2021 are as follows:

Changes in the components of accumulated other comprehensive earnings (loss), net of tax for the six months ended June 26, 2022 and June 27, 2021 are as follows:

Postretirement

6 unchanged sentences

Current period other comprehensive earnings (loss) 0.2 6.6 ( 0.1 ) ( 31.0 ) ( 24.3 )

Balance at March 27, 2022 $ ( 35.0 ) ( 7.2 ) 0.4 ( 205.1 ) ( 246.9 )

Balance at June 26, 2022 $ ( 34.9 ) 0.6 0.1 ( 225.4 ) ( 259.6 )

Balance at December 27, 2020 $ ( 40.7 ) ( 22.1 ) 0.3 ( 132.5 ) ( 195.0 )

Current period other comprehensive earnings (loss) 0.2 4.5 — ( 16.1 ) ( 11.4 )

Balance at March 28, 2021 $ ( 40.5 ) ( 17.6 ) 0.3 ( 148.6 ) ( 206.4 )

Current period other comprehensive earnings 0.4 3.0 0.2 7.9 11.5

Balance at June 27, 2021 $ ( 40.3 ) ( 19.1 ) 0.5 ( 124.6 ) ( 183.5 )

Gains (Losses) on Derivative Instruments

At March 27, 2022, the Company had remaining net deferred gains on foreign currency forward contracts, net of tax, of $ 8.1 million in accumulated other comprehensive earnings (loss) ("AOCE").

These instruments hedge payments related to inventory purchased in the first quarter of 2022 or forecasted to be purchased during the remainder of 2022 through 2023, intercompany expenses expected to be paid or received during 2022, television and movie production costs paid in 2022 or expected to be paid in 2023 or 2024, and cash receipts for sales made at the end of the first quarter of 2022 or forecasted to be made in the remainder of 2022.

At June 26, 2022, the Company had remaining net deferred gains on foreign currency forward contracts, net of tax, of $ 15.8 million in accumulated other comprehensive earnings (loss) ("AOCE").

These instruments hedge payments related to inventory purchased in the second quarter of 2022 or forecasted to be purchased during the remainder of 2022 through 2023, intercompany expenses expected to be paid or received during 2022, television and movie production costs paid in 2022 or expected to be paid in 2023 or 2024, and cash receipts for sales made at the end of the first quarter of 2022 or forecasted to be made in the remainder of 2022.

These amounts will be reclassified into the consolidated statements of operations upon the sale of the related inventory, the recognition of the related production costs or the recognition of the related sales or intercompany expenses to be paid or received.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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 7), 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 March 27, 2022, deferred losses, net of tax of $ 15.4 million related to these instruments remained in AOCE.

For the quarters ended March 27, 2022 and March 28, 2021, previously deferred losses of $ 0.2 million and $ 0.5 million, respectively, related to these instruments were reclassified from AOCE to net earnings.

Of the net deferred gains included in AOCE at March 27, 2022, the Company expects net gains of approximately $ 8.7 million to be reclassified to the consolidated statements of operations within the next 12 months.

At June 26, 2022, deferred losses, net of tax of $ 15.2 million related to these instruments remained in AOCE.

For the quarters ended June 26, 2022 and June 27, 2021, previously deferred losses of $ 0.2 million and $ 0.3 million, respectively, related to these instruments were reclassified from AOCE to net earnings.

For the six-month periods ended June 26, 2022 and June 27, 2021, previously deferred losses of $ 0.4 million and $ 0.8 million, respectively, related to these instruments were reclassified from AOCE to net earnings.

Of the net deferred gains included in AOCE at June 26, 2022, the Company expects net gains of approximately $ 12.9 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.

See note 11 for additional discussion on reclassifications from AOCE to earnings.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(6) Accrued Liabilities

Components of accrued liabilities for the periods ended March 27, 2022, March 28, 2021 and December 26, 2021 were as follows:

March 27, 2022

March 28, 2021

Components of accrued liabilities for the periods ended June 26, 2022, June 27, 2021 and December 26, 2021 were as follows:

June 26, 2022

June 27, 2021

December 26, 2021

6 unchanged sentences

Advertising 71.6 83.0 60.4

Cancellation charges 63.0 45.9 57.2

Severance 27.5 37.5 32.0

2 unchanged sentences

Accrued income taxes 59.5 42.9 30.9

Lease liability - Current 44.0 44.9 43.9

Bonus accrual 34.5 68.2 168.5

Other 188.4 168.5 60.7

4 unchanged sentences

The Company's financial instruments include cash and cash equivalents, accounts receivable, short-term borrowings, accounts payable and certain accrued liabilities.

At March 27, 2022, March 28, 2021 and December 26, 2021, the carrying cost of these instruments approximated their fair value.

The Company's financial instruments at March 27, 2022, March 28, 2021 and December 26, 2021 also include certain assets and liabilities measured at fair value (see notes 10 and 11) as well as long-term borrowings.

The carrying costs, which are equal to the outstanding principal amounts, and fair values of the Company's long-term borrowings as of March 27, 2022, March 28, 2021 and December 26, 2021 are as follows:

March 27, 2022 March 28, 2021 December 26, 2021

At June 26, 2022, June 27, 2021 and December 26, 2021, the carrying cost of these instruments approximated their fair value.

The Company's financial instruments at June 26, 2022, June 27, 2021 and December 26, 2021 also include certain assets and liabilities measured at fair value (see notes 10 and 11) as well as long-term borrowings.

The carrying costs, which are equal to the outstanding principal amounts, and fair values of the Company's long-term borrowings as of June 26, 2022, June 27, 2021 and December 26, 2021 are as follows:

June 26, 2022 June 27, 2021 December 26, 2021

Value Carrying

41 unchanged sentences

(“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.

As of March 27, 2022, the Company has fully repaid the Three-Year Tranche $ 400.0 million principal term loan, and of the Five-Year Tranche $ 600.0 million principal balance, the Company has repaid a total of $ 260.0 million in the following increments:

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

As of June 26, 2022, the Company has fully repaid the Three-Year Tranche $ 400.0 million principal term loan, and of the Five-Year Tranche $ 600.0 million principal balance, the Company has repaid a total of $ 260.0 million in the following increments:

$ 22.5 million in 2020;

$ 180.0 million in 2021;

and, $ 57.5 million in the first quarter of 2022 consisting of $ 50.0 million of the principal balance and a principal amortization payment of $ 7.5 million.

and $ 57.5 million in the first six months of 2022 consisting of $ 50.0 million of the principal balance and a principal amortization payment of $ 7.5 million.

Loans under the remaining 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.

3 unchanged sentences

(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.

As of March 27, 2022, the Company was in compliance with the financial covenants contained in the Term Loan Agreement.

As of June 26, 2022 , the Company was in compliance with the financial covenants contained in the Term Loan Agreement.

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.

Current portion of long-term debt at March 27, 2022 o f $ 155.8 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 production financing facilities.

Current portion of long-term debt at June 26, 2022 o f $ 137.0 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 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.

6 unchanged sentences

Production Financing

In addition to the Company's financial instruments, t he Company uses production financing facilities to fund its film and television productions which are typically arranged on an individual production basis by either special purpose production subsidiaries, each secured by future revenues of such production subsidiaries, which are non-recourse to the Company's assets, or through a senior revolving credit facility dedicated to production financing obtained in November 2021.

In addition to the Company's financial instruments, t he Company uses production financing facilities to fund its film and television productions which are arranged on an individual production basis by either special purpose production subsidiaries, each secured by future revenues of such production subsidiaries, which are non-recourse to the Company's assets, or through a senior revolving credit facility dedicated to production financing obtained in November 2021.

The Company's 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”) provides the Company with commitments having a maximum aggregate principal amount of $ 250.0 million.

5 unchanged sentences

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 March 27, 2022, March 28, 2021 and December 26, 2021 are as follows:

March 27, 2022

March 28, 2021 December 26, 2021

The production financing facilities as of June 26, 2022, June 27, 2021 and December 26, 2021 are as follows:

June 26, 2022

June 27, 2021 December 26, 2021

Production financing facilities $ 175.0 $ 212.6 $ 170.1

Other loans (1)

Total $ 199.1 $ 209.7 $ 170.1

Production financing included in the consolidated balance sheet as:

2 unchanged sentences

Total $ 175.0 $ 212.6 $ 170.1

(1) Other loans 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 March 27, 2022 was 3.1 %.

The weighted average interest rate on all production financing as of June 26, 2022 was 2.8 %.

The Company has Canadian dollar and U.S.

3 unchanged sentences

Dollars Total

As of March 27, 2022

As of June 26, 2022

$ 22.9 $ 54.1 $ 77.0

The following table represents the movements in production financing loans during the first quarter of 2022:

The following table represents the movements in production financing loans during the first six months of 2022:

Production Financing

3 unchanged sentences

Foreign exchange differences 0.5

Balance at March 27, 2022

The Company expects to repay all of its currently outstanding production financing loans by the first quarter of 2023.

Balance at June 26, 2022

The Company expects to repay all of its currently outstanding production financing loans by the second quarter of 2023.

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

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

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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.

The Company's unamortized investments in productions and investments in acquired content rights consisted of the following at March 27, 2022, March 28, 2021, and December 26, 2021:

March 27, 2022

March 28, 2021 December 26, 2021

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

The Company's unamortized investments in productions and investments in acquired content rights consisted of the following at June 26, 2022, June 27, 2021, and December 26, 2021:

June 26, 2022

June 27, 2021 December 26, 2021

Investment in Films and Television Programs:

16 unchanged sentences

(1) Due to a monetization strategy change, as of December 26, 2021 the Company began monetizing certain content assets as a Film/TV group.

The Company recorded $ 138.5 million of program cost amortization related to released programming in the quarter ended March 27, 2022, consisting of the following:

The Company recorded $ 219.2 million of program cost amortization related to released programming in the six months ended June 26, 2022, consisting of the following:

Investment in Production Investment in Content Other Total

4 unchanged sentences

federal, state and local, and international tax authorities in various tax jurisdictions.

Our effective tax rate ("ETR") from continuing operations was 21.6 % for the quarter ended March 27, 2022 and 9.3 % for the quarter ended March 28, 2021.

The following items caused the first quarter ETR to be significantly different from the prior year ETR:

• during the quarter ended March 27, 2022, the Company recorded a net discrete tax benefit of $ 2.3 million primarily associated with the release of certain valuation allowances during the quarter;

• during the quarter ended March 28, 2021, the Company recorded a net discrete tax benefit of $ 8.9 million primarily associated with the decrease to our liability for uncertain tax positions that resulted from statutes of limitations

Our effective tax rate ("ETR") from continuing operations was 21.8 % for the six months ended June 26, 2022 and 43.9 % for the six months ended June 27, 2021.

The following items caused the year-to-date ETR to be significantly different from the prior year ETR:

• during the six months ended June 26, 2022, the Company recorded a net discrete tax benefit of $ 3.2 million primarily associated with the release of certain valuation allowances during the first quarter;

• during the six months ended June 27, 2021, the Company recorded a net discrete tax expense of $ 17.4 million primarily associated with the revaluation of net deferred tax liabilities as a result of the United Kingdom's ("UK") enactment of the Finance Act 2021 during the second quarter, which will increase the UK corporate income tax rate from 19% to 25% as of April 1, 2023.

This was reduced by the release of a valuation allowance on net operating losses that offset income received from a one-time legal settlement and certain tax benefits including the reversal of uncertain tax positions that resulted from statutes of limitations expiring in certain jurisdictions and operational tax planning during the second quarter;

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

expiring in certain jurisdictions.

Pre-tax income was benefited from a legal settlement gain, with no associated tax expense, due to the availability of net operating losses and release of the related valuation allowance on the net operating losses utilized by the settlement gain.

• the year-to-date 2021 ETR also included a one-time impairment expense on assets held for sale from which there was no corresponding tax benefit.

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.

20 unchanged sentences

(Millions of Dollars and Shares Except Per Share Data)

At March 27, 2022, March 28, 2021 and December 26, 2021, 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):

At June 26, 2022, June 27, 2021 and December 26, 2021, 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:

1 unchanged sentence

(Level 2) Significant

March 27, 2022

June 26, 2022

Available-for-sale securities $ 1.7 1.7 — —

4 unchanged sentences

Total liabilities $ 2.5 — 0.8 1.7

March 28, 2021

June 27, 2021

Available-for-sale securities $ 2.3 2.3 — —

17 unchanged sentences

The Company’s option agreement relates to an equity method investment in Discovery Family Channel ("Discovery").

The option agreement is included in other liabilities at March 27, 2022, March 28, 2021 and December 26, 2021, and is valued using an option pricing model based on the fair value of the related investment.

The option agreement is included in other liabilities at June 26, 2022, June 27, 2021 and December 26, 2021, 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 the 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.

1 unchanged sentence

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

There were no changes in these valuation techniques during the quarter ended March 27, 2022.

There were no changes in these valuation techniques during the quarter ended June 26, 2022.

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):

1 unchanged sentence

Gain from change in fair value — ( 1.2 )

Balance at end of first quarter $ ( 1.6 ) $ ( 21.8 )

Balance at end of second quarter $ ( 1.7 ) $ ( 21.8 )

(11) Derivative Financial Instruments

7 unchanged sentences

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, primarily for the remainder of 2022, 2023, and to a lesser extent, 2024.

At March 27, 2022, March 28, 2021 and December 26, 2021, the notional amounts and fair values of the Company's foreign currency forward contracts designated as cash flow hedging instruments were as follows:

March 27, 2022 March 28, 2021 December 26, 2021

At June 26, 2022, June 27, 2021 and December 26, 2021, the notional amounts and fair values of the Company's foreign currency forward contracts designated as cash flow hedging instruments were as follows:

June 26, 2022 June 27, 2021 December 26, 2021

Hedged transaction Notional

8 unchanged sentences

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 sheets at March 27, 2022, March 28, 2021 and December 26, 2021 as follows:

2022 March 28,

The fair values of the Company's foreign currency forward contracts designated as cash flow hedges are recorded in the consolidated balance sheets at June 26, 2022, June 27, 2021 and December 26, 2021 as follows:

2022 June 27,

2021 December 26,

14 unchanged sentences

Net unrealized losses $ — $ ( 0.1 ) $ —

Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings (loss) to net earnings for the quarters ended March 27, 2022 and March 28, 2021 as follows:

Quarter Ended

2022 March 28,

Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings (loss) to net earnings for the quarters ended June 26, 2022 and June 27, 2021 as follows:

Quarter Ended Six Months Ended

2022 June 27,

2021 June 26,

2022 June 27,

Statements of Operations Classification

2 unchanged sentences

Other ( 0.1 ) 0.2 ( 0.7 ) 1.2

Net realized gains $ ( 1.3 ) $ 1.4

Net realized (losses) gains $ 3.1 $ ( 1.7 ) $ 1.7 0.2

Undesignated Hedges

3 unchanged sentences

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 March 27, 2022, March 28, 2021 and December 26, 2021 the total notional amounts of the Company's undesignated derivative instruments were $ 665.0 million, $ 653.4 million and $ 632.0 million, respectively.

As of June 26, 2022, June 27, 2021 and December 26, 2021 the total notional amounts of the Company's undesignated derivative instruments were $ 464.7 million, $ 573.0 million and $ 632.0 million, respectively.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

At March 27, 2022, March 28, 2021 and December 26, 2021, the fair values of the Company's undesignated derivative financial instruments were recorded in the consolidated balance sheets as follows:

2022 March 28,

At June 26, 2022, June 27, 2021 and December 26, 2021, the fair values of the Company's undesignated derivative financial instruments were recorded in the consolidated balance sheets as follows:

2022 June 27,

2021 December 26,

8 unchanged sentences

Total unrealized gains (losses), net $ 1.0 $ 3.4 $ ( 2.5 )

The Company recorded net (losses) of $( 2.6 ) million and $( 6.1 ) million on these instruments to other (income) expense, net for the quarters ended March 27, 2022 and March 28, 2021, 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 contracts relate.

The Company recorded net gains of $ 16.7 million and $ 20.5 million on these instruments to other (income) expense, net for the quarter and six months ended June 26, 2022, respectively, and net gains (losses) of $ 5.4 million and $( 0.7 ) million for the quarter and six months ended June 27, 2021, 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 contracts relate.

For additional information related to the Company's derivative financial instruments (see notes 5 and 10).

8 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 $ 22.3 million and $ 21.8 million for the quarters ended March 27, 2022 and March 28, 2021, respectively, and was not material to the Company's financial statements nor were expenses related to short-term leases (expected terms less than 12 months) or variable lease payments was not material in the quarters ended March 27, 2022 or March 28, 2021.

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 $ 20.9 million and $ 43.2 million for the quarter and six months ended June 26, 2022, respectively, and $ 22.5 million and $ 44.3 million for the quarter and six months ended June 27, 2021, respectively, and was not material to the Company's financial statements.

Expenses related to short-term leases (expected terms less than 12 months) or variable lease payments was not material in the quarter or six months ended June 26, 2022 or June 27, 2021.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

Information related to the Company’s leases for the quarters ended March 27, 2022 and March 28, 2021 are as follows:

Quarter Ended

2022 March 28,

Information related to the Company’s leases for the quarters ended June 26, 2022 and June 27, 2021 is as follows:

Quarter Ended Six Months Ended

2022 June 27,

2021 June 26,

2022 June 27,

Cash paid for amounts included in the measurement of lease liabilities:

1 unchanged sentence

Right-of-use assets obtained in exchange for lease obligations:

Operating leases $ 9.1 $ 7.3

Operating leases net of lease modifications $ ( 9.5 ) $ 4.1 $ ( 0.5 ) 11.5

Weighted Average Remaining Lease Term

Operating leases 5.4 years 5.9 years

Operating leases 4.6 years 5.8 years 4.6 years 5.8 years

Weighted Average Discount Rate

Operating leases 3.3 % 3.1 % 3.3 % 3.1 %

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 March 27, 2022:

2022 (excluding the three months ended March 27, 2022) $ 38.5

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 June 26, 2022:

2022 (excluding the six months ended June 26, 2022) $ 25.1

2027 and thereafter 24.7

22 unchanged sentences

The significant accounting policies of the Company's segments are the same as those referenced in note 1.

Results shown for the quarter ended March 27, 2022 are not necessarily representative of those which may be expected for the full year 2022, nor were those of the comparable 2021 periods representative of those actually experienced for the full year 2021.

Results shown for the quarter ended June 26, 2022 are not necessarily representative of those which may be expected for the full year 2022, nor were those of the comparable 2021 periods representative of those actually experienced for the full year 2021.

Similarly, such results are not necessarily those which would be achieved were each segment an unaffiliated business enterprise.

Information by segment and a reconciliation to reported amounts for the quarters ended March 27, 2022 and March 28, 2021 are as follows:

Information by segment and a reconciliation to reported amounts for the quarters and six months ended June 26, 2022 and June 27, 2021 are as follows:

Quarter Ended

March 27, 2022 March 28, 2021

June 26, 2022 June 27, 2021

Net revenues External Affiliate (c)

6 unchanged sentences

$ 1,339.2 $ — $ 1,322.2 $ —

Quarter Ended

Operating profit (loss) March 27,

2022 March 28,

Consumer Products (a)

Six Months Ended

June 26, 2022 June 27, 2021

Net revenues External Affiliate (c)

External Affiliate (c)

Consumer Products $ 1,407.0 $ 237.1 $ 1,343.1 $ 167.2

Wizards of the Coast and Digital Gaming 682.6 82.6 648.5 55.1

Entertainment (a)

Entertainment 412.7 26.7 445.4 26.7

Corporate and Other (a)

3 unchanged sentences

(Millions of Dollars and Shares Except Per Share Data)

Total assets March 27,

2022 March 28,

Quarter Ended Six Months Ended

Operating profit (loss) June 26,

2022 June 27,

2021 June 26,

2022 June 27,

Consumer Products (a)

$ ( 6.5 ) $ 17.8 $ 2.1 $ 50.1

Wizards of the Coast and Digital Gaming 225.6 192.9 332.0 302.9

Entertainment (a)

14.3 ( 113.7 ) 26.5 ( 96.7 )

Corporate and Other (a)

( 14.3 ) ( 20.4 ) ( 21.5 ) ( 32.4 )

$ 219.1 $ 76.6 $ 339.1 $ 223.9

Total assets June 26,

2022 June 27,

2021 December 26,

16 unchanged sentences

(c) Amounts represent revenues from transactions with other operating segments that are included in the operating profit (loss) of the segment.

The following table represents consolidated Consumer Products segment net revenues by major geographic region for the quarters ended March 27, 2022 and March 28, 2021:

Quarter Ended

2022 March 28,

The following table represents consolidated Consumer Products segment net revenues by major geographic region for the quarters and six months ended June 26, 2022 and June 27, 2021:

Quarter Ended Six Months Ended

2022 June 27,

2021 June 26,

2022 June 27,

North America $ 433.3 $ 391.4 $ 838.5 $ 754.1

3 unchanged sentences

Net revenues $ 734.2 $ 689.2 $ 1,407.0 $ 1,343.1

The following table represents consolidated Wizards of the Coast and Digital Gaming segment net revenues by category for the quarters ended March 27, 2022 and March 28, 2021:

Quarter Ended

2022 March 28,

The following table represents consolidated Wizards of the Coast and Digital Gaming segment net revenues by category for the quarters and six months ended June 26, 2022 and June 27, 2021:

Quarter Ended Six Months Ended

2022 June 27,

2021 June 26,

2022 June 27,

Tabletop Gaming $ 361.8 $ 315.4 $ 554.0 $ 490.7

1 unchanged sentence

Net revenues $ 419.8 $ 406.3 $ 682.6 $ 648.5

The following table represents consolidated Entertainment segment net revenues by category for the quarters ended March 27, 2022 and March 28, 2021:

Quarter Ended

2022 March 28,

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

The following table represents consolidated Entertainment segment net revenues by category for the quarters and six months ended June 26, 2022 and June 27, 2021:

Quarter Ended Six Months Ended

2022 June 27,

2021 June 26,

2022 June 27,

Film and TV $ 148.2 $ 164.3 $ 338.4 $ 330.7

2 unchanged sentences

Net revenues $ 185.2 $ 226.7 $ 412.7 $ 445.4

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

The following table presents consolidated net revenues by brand and entertainment portfolio for the quarters ended March 27, 2022 and March 28, 2021:

Quarter Ended

2022 March 28,

The following table presents consolidated net revenues by brand and entertainment portfolio for the quarters and six months ended June 26, 2022 and June 27, 2021:

Quarter Ended Six Months Ended

2022 June 27,

2021 June 26,

2022 June 27,

Franchise Brands (1)

2 unchanged sentences

Hasbro Gaming (2)

125.8 147.1 269.4 283.4

Emerging Brands (1)

92.0 89.7 168.4 162.8

TV/Film/Entertainment 158.1 196.2 351.6 390.5

1 unchanged sentence

(1) Effective in the first quarter of 2022, the Company moved PEPPA PIG into Franchise Brands from Emerging Brands.

For comparability, net revenues for the quarter ended March 28, 2021 have been restated to reflect the elevation of PEPPA PIG from Emerging Brands to Franchise Brands, which amounted to a change of $ 31.6 million.

For comparability, net revenues for the quarter and six months ended June 27, 2021 have been restated to reflect the elevation of PEPPA PIG from Emerging Brands to Franchise Brands, which amounted to a change of $ 27.3 million and $ 58.9 million, respectively.

(2) Hasbro's total gaming category, which includes all gaming net revenues, both those reported in Hasbro Gaming and those reported elsewhere, most notably MAGIC:

THE GATHERING and MONOPOLY which are reported within Franchise Brands, totaled $ 378.8 million and $ 365.3 million for the quarters ended March 27, 2022 and March 28, 2021, respectively.

THE GATHERING and MONOPOLY which are reported within Franchise Brands, totaled $ 528.3 million and $ 907.1 million for the quarter and six months ended June 26, 2022, respectively.

For the quarter and six months ended June 27, 2021, total gaming revenues were $ 519.4 million and $ 884.7 million, respectively.

(14) Restructuring Actions

During 2018 and 2020, the Company took certain restructuring actions including headcount reduction aimed at right-sizing the Company’s cost-structure and integration actions related to the acquisition of eOne.

As of March 27, 2022, the Company had a remaining balance of $ 13.3 million in termination payments related to these programs.

(15) Subsequent Event

On April 13, 2022, the Company announced that it entered into a definitive agreement with Fandom, Inc.

to purchase D&D Beyond for $ 146.3 million to be paid in cash.

D&D Beyond is the premier digital content platform for DUNGEONS & DRAGONS.

It is a rapidly growing role-playing game digital toolset that will become the hub for DUNGEONS & DRAGONS digital gaming.

The strategic acquisition of D&D Beyond is expected to deliver a direct relationship with fans, providing valuable, data-driven insights to unlock opportunities for growth in new product development, live services and tools, and regional expansions.

The transaction is subject to customary closing conditions, including obtaining required regulatory approvals, and is expected to close late in the second quarter or early in the third quarter of 2022.

The transaction will be funded out of cash on hand and is not expected to have a material impact on Hasbro's 2022 results of operations.

As of June 26, 2022, the Company had a remaining balance of $ 12.2 million in termination payments related to these programs.

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-Q

Item 1. Financial Statements