What changed in this filing

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Item 1. Financial Statements

2022-10-26 compared with 2022-07-26 · 246 added, 210 removed, 694 unchanged (40% of the section changed)

3 unchanged sentences

(Millions of Dollars Except Share Data)

2022 June 27,

September 25,

2022 September 26,

2021 December 26,

36 unchanged sentences

Redeemable noncontrolling interests

23.0 24.5 23.9

Shareholders' equity

3 unchanged sentences

Authorized 600,000,000 shares;

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

issued 220,286,736 shares at September 25, 2022, September 26, 2021, and December 26, 2021

110.1 110.1 110.1

6 unchanged sentences

Treasury stock, at cost;

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

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

82,178,615 shares at September 25, 2022;

82,359,425 shares at September 26, 2021;

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

10 unchanged sentences

(Millions of Dollars Except Per Share Data)

Quarter Ended Six Months Ended

2022 June 27,

2021 June 26,

2022 June 27,

Quarter Ended Nine Months Ended

September 25,

2022 September 26,

2021 September 25,

2022 September 26,

Net revenues $ 1,675.9 $ 1,970.0 $ 4,178.2 $ 4,407.0

6 unchanged sentences

Amortization of intangibles 26.9 27.7 81.2 90.3

Loss on assets held for sale — 101.8 — 101.8

Selling, distribution and administration 365.8 361.8 1,000.1 1,004.7

Loss on assets held for sale 23.1 — 23.1 —

Loss on disposal of business — — — 101.8

Total costs and expenses 1,481.6 1,602.1 3,644.8 3,815.2

7 unchanged sentences

Income tax expense 37.4 68.5 94.1 143.5

Net earnings (loss) 140.5 ( 21.9 ) 203.4 95.6

Net earnings 128.2 254.9 331.6 350.5

Net earnings (loss) attributable to noncontrolling interests ( 1.0 ) 1.7 ( 0.8 ) 4.0

Net earnings (loss) attributable to Hasbro, Inc.

Net earnings attributable to Hasbro, Inc.

$ 129.2 $ 253.2 $ 332.4 $ 346.5

Net earnings (loss) per common share:

Net earnings per common share:

Basic $ 0.93 $ 1.83 $ 2.39 $ 2.51

5 unchanged sentences

(Millions of Dollars)

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:

Quarter Ended Nine Months Ended

September 25,

2022 September 26,

2021 September 25,

2022 September 26,

Net earnings $ 128.2 $ 254.9 $ 331.6 $ 350.5

Other comprehensive earnings (loss):

Foreign currency translation adjustments, net of tax

( 72.0 ) ( 31.4 ) ( 103.0 ) ( 23.6 )

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

Unrealized holding losses on available-for-sale securities, net of tax ( 0.1 ) ( 0.3 ) ( 0.3 ) ( 0.1 )

Net gains on cash flow hedging activities, net of tax 12.6 5.2 20.6 7.8

Reclassifications to earnings, net of tax:

2 unchanged sentences

0.1 0.2 0.3 0.6

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

Total other comprehensive loss, net of tax $ ( 65.3 ) $ ( 25.1 ) $ ( 89.6 ) $ ( 13.6 )

Total comprehensive earnings (loss) attributable to noncontrolling interests ( 1.0 ) 1.7 ( 0.8 ) 4.0

5 unchanged sentences

(Millions of Dollars)

Six months ended

2022 June 27,

Nine months ended

September 25,

2022 September 26,

Cash flows from operating activities:

4 unchanged sentences

Loss on assets held for sale 23.1 —

Loss on disposal of business — 101.8

Program cost amortization 365.7 396.1

3 unchanged sentences

Change in operating assets and liabilities net of acquired balances:

Decrease in accounts receivable 517.5 533.9

Decrease (increase) in accounts receivable 201.8 ( 83.8 )

Increase in inventories ( 327.2 ) ( 159.4 )

Increase in prepaid expenses and other current assets 13.9 38.8

Decrease in prepaid expenses and other current assets 34.4 56.7

Program spend, net ( 498.1 ) ( 526.3 )

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

(Decrease) increase in accounts payable and accrued liabilities ( 22.7 ) 310.5

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

4 unchanged sentences

Acquisitions ( 146.3 ) —

Proceeds from sale of business, net of cash — 379.2

Other 11.2 ( 3.6 )

Net cash utilized by investing activities ( 212.6 ) ( 66.3 )

Net cash (utilized) provided by investing activities ( 265.8 ) 277.5

Cash flows from financing activities:

6 unchanged sentences

Payments related to tax withholding for share-based compensation ( 21.1 ) ( 10.8 )

Debt extinguishment costs — ( 9.1 )

Other ( 25.4 ) ( 6.8 )

1 unchanged sentence

Effect of exchange rate changes on cash ( 16.2 ) ( 8.1 )

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

Net decrease in cash, cash equivalents and restricted cash ( 462.8 ) ( 268.5 )

Net change due to cash classified as held for sale ( 4.8 ) —

10 unchanged sentences

(Millions of Dollars)

Three Months Ended June 26, 2022

Three Months Ended September 25, 2022

Stock Additional

4 unchanged sentences

Equity Redeemable Noncontrolling Interests

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

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

Net earnings attributable to Hasbro, Inc.

— — 129.2 — — — 129.2 —

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

Change in put option value — — —

Net loss attributable to noncontrolling interests — — — — — ( 1.0 ) ( 1.0 ) —

Other comprehensive loss — — — ( 65.3 ) — — ( 65.3 ) —

3 unchanged sentences

Dividends declared — 0.7 ( 97.3 ) — — — ( 96.6 ) —

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

Distributions paid to noncontrolling owners and other foreign exchange — — — — — ( 5.2 ) ( 5.2 ) —

Buyout of redeemable noncontrolling interest — 4.5 — — — — 4.5 ( 23.0 )

Balance, September 25, 2022 $ 110.1 2,530.1 4,297.8 ( 324.9 ) ( 3,637.1 ) 23.0 $ 2,999.0 $ —

Three Months Ended September 26, 2021

Stock Additional

5 unchanged sentences

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

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

Net loss attributable to Hasbro, Inc.

1 unchanged sentence

Net earnings attributable to noncontrolling interests — — — — — 0.4 0.4 1.3

Other comprehensive earnings — — — 22.9 — — 22.9 —

Other comprehensive loss — — — ( 25.1 ) — — ( 25.1 ) —

Stock-based compensation transactions — 7.4 — — 6.6 — 14.0 —

1 unchanged sentence

Dividends declared — — ( 93.9 ) — — — ( 93.9 ) —

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

Distributions paid to noncontrolling owners and other foreign exchange — 1.2 — — — ( 2.1 ) ( 0.9 ) ( 2.9 )

Balance, September 26, 2021 $ 110.1 2,388.9 4,269.6 ( 208.6 ) ( 3,541.0 ) 38.2 $ 3,057.2 $ 22.9

AND SUBSIDIARIES

1 unchanged sentence

(Millions of Dollars)

Six Months Ended June 26, 2022

Nine Months Ended September 25, 2022

Stock Additional

7 unchanged sentences

— 332.4 — — — 332.4 —

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

Net loss attributable to noncontrolling interests — — — — — ( 1.4 ) ( 1.4 ) 0.6

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

5 unchanged sentences

Distributions paid to noncontrolling owners and other foreign exchange — — — — — ( 12.8 ) ( 12.8 ) ( 1.5 )

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

Buyout of redeemable noncontrolling interest $ — 4.5 — — — — $ 4.5 $ ( 23.0 )

Balance, September 25, 2022 $ 110.1 2,530.1 4,297.8 ( 324.9 ) ( 3,637.1 ) 23.0 $ 2,999.0 $ —

Nine Months Ended September 26, 2021

Stock Additional

9 unchanged sentences

Net earnings attributable to noncontrolling interests — — — — — 2.4 2.4 1.6

Other comprehensive earnings — — — 11.5 — — 11.5 —

Other comprehensive loss — — — ( 13.6 ) — — ( 13.6 ) —

Stock-based compensation transactions — 4.2 — — 9.6 — 13.8 —

2 unchanged sentences

Distributions paid to noncontrolling owners and other foreign exchange — 0.5 — — — ( 4.2 ) ( 3.7 ) ( 3.1 )

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

Balance, September 26, 2021 $ 110.1 2,388.9 4,269.6 ( 208.6 ) ( 3,541.0 ) 38.2 $ 3,057.2 $ 22.9

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 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.

and all majority-owned subsidiaries ("Hasbro" or the "Company") as of September 25, 2022 and September 26, 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 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.

The quarters ended September 25, 2022 and September 26, 2021 were each 13-week periods.

The nine-month periods ended September 25, 2022 and September 26, 2021 were each 39-week periods.

The results of operations for the quarter ended September 25, 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").

Blueprint 2.0 and Operational Excellence

On October 4, 2022, following a nine-month strategic review, the Company announced a new go-forward strategic plan guided by our new Blueprint 2.0, a framework for bringing compelling and expansive brand experiences to audiences around the world.

During the review, the Company identified opportunities to focus and scale its business, enhance operational excellence, including through organizational and supply chain programs, and drive high-margin growth and profit.

The Company plans to focus investment in its most valuable and profitable franchises across toys, games, entertainment and licensing, and to exit certain non-core aspects of the business.

Under this plan, a pre-tax charge of $ 55.3 million was recorded in the third quarter of 2022 associated with the program, comprised of a loss on assets held for sale of $ 23.1 million, severance and other employee charges of $ 21.3 million, consulting fees of $ 7.2 million and asset impairments of $ 3.7 million.

The impairment losses related to the exit of certain non-core businesses were recorded within the Entertainment segment and the severance and other employee charges and the consulting fees were recorded within the Corporate and Other segment.

The businesses to be exited do not constitute a material part of the Company's operations.

See Note 4 and Item 2.

Management's Discussion and Analysis in this Form 10-Q for further information.

D&D Beyond Acquisition

1 unchanged sentence

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.

The 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.

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.

On June 29, 2021, the Company completed the sale of its Entertainment One music business ("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 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.

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 Company’s 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 within Loss on Disposal of Business on the consolidated statements of operations for the nine ended September 26, 2021.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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.

2 unchanged sentences

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.

DEUs are forfeited in the event the underlying RSUs or PSU's do not vest.

The dividend equivalent value of forfeitable DEUs is 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,

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.

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.

Recently Adopted Accounting Standards

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

As of September 25, 2022, there were no recently adopted accounting standards that had a material effect on the Company’s financial statements.

Issued Accounting Pronouncements

9 unchanged sentences

Contract Assets and Liabilities

In the ordinary course of business, the Company’s Consumer Products, Wizards of the Coast and Digital Gaming 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.

In the ordinary course of business, the Company’s Consumer Products, Wizards of the Coast and Digital Gaming and Entertainment segments enter into contracts to license certain of the Company’s intellectual property, providing licensees right-to-use or access such intellectual property 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.

6 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 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

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

At September 25, 2022, September 26, 2021 and December 26, 2021 the Company had the following contract assets and liabilities in its consolidated balance sheets:

September 25, 2022 September 26, 2021 December 26, 2021

Contract assets - current $ 361.2 $ 263.3 $ 286.9

4 unchanged sentences

Total $ 134.0 $ 156.7 $ 121.2

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)

For the nine months ended September 25, 2022, the Company reclassified $ 469.9 million, including current year activity, from contract assets to accounts receivable, upon completion of contractual performance obligations.

In addition, for the nine months ended September 25, 2022, the Company recognized $ 59.0 million of contract liabilities that were included in the December 26, 2021 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 June 26, 2022, unrecognized revenue attributable to unsatisfied performance obligations expected to be recognized in the future were $ 313.1 million.

As of September 25, 2022, unrecognized revenue attributable to unsatisfied performance obligations expected to be recognized in the future were $ 371.2 million.

Of this amount, we expect to recognize $ 204.7 million in the remainder of 2022, $ 159.5 million in 2023, $ 2.5 million in 2024 and $ 4.5 million in 2025.

1 unchanged sentence

Accounts Receivable and Allowance for Credit Losses

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 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.

The Company’s balance for accounts receivable on the consolidated balance sheets as of September 25, 2022 and September 26, 2021 are primarily from contracts with customers.

The Company had no material expense for credit losses for the quarters or nine months ended September 25, 2022 and September 26, 2021.

Disaggregation of revenues

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

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

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

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

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

within its Entertainment segment by category:

Film & TV, Family Brands, and Other;

and within its Wizards of the Coast and Digital Gaming segment by line of business:

within its Wizards of the Coast and Digital Gaming segment by line of business:

Tabletop Gaming and Digital and Licensed Gaming;

and within its Entertainment segment by category:

Film & TV, Family Brands, and Other.

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

5 unchanged sentences

(3) Earnings Per Share

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

Net earnings per share data for the quarters and nine months ended September 25, 2022 and September 26, 2021 were computed as follows:

Quarter Basic Diluted Basic Diluted

Net earnings (loss) attributable to Hasbro, Inc.

Net earnings attributable to Hasbro, Inc.

$ 129.2 129.2 $ 253.2 253.2

3 unchanged sentences

Equivalent Shares 138.3 138.5 138.1 138.5

Net earnings (loss) attributable to Hasbro, Inc.

Net earnings attributable to Hasbro, Inc.

per common share $ 0.93 0.93 $ 1.83 1.83

Six Months Basic Diluted Basic Diluted

Nine Months Basic Diluted Basic Diluted

Net earnings attributable to Hasbro, Inc.

6 unchanged sentences

per common share $ 2.39 $ 2.39 $ 2.51 $ 2.51

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.

For the quarter and nine months ended September 25, 2022, options and restricted stock units totaling 2.9 million and 2.8 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 nine months ended September 26, 2021, options and restricted stock units totaling 2.1 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.

Condensed Notes to Consolidated Financial Statements

4 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 June 26, 2022 and June 27, 2021 are as follows:

Changes in the carrying amount of goodwill, by operating segment, for the nine month periods ended September 25, 2022 and September 26, 2021 are as follows:

Consumer Products Wizards of the Coast and Digital Gaming Entertainment Total

2 unchanged sentences

Foreign exchange translation ( 0.4 ) ( 0.5 ) ( 1.8 ) ( 2.7 )

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

Impairment during the period — — ( 11.8 ) ( 11.8 )

Balance at September 25, 2022 $ 1,584.5 371.5 1,513.8 $ 3,469.8

Consumer Products Wizards of the Coast and Digital Gaming Entertainment Total

3 unchanged sentences

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

Goodwill associated with the disposal of business — — ( 169.2 ) ( 169.2 )

Balance at September 26, 2021 $ 1,585.0 307.5 1,527.7 $ 3,420.2

During the third quarter of 2022, the Company determined to exit certain non-core businesses within the Entertainment segment resulting in the classification of certain assets as Assets Held for Sale.

A revaluation of the effected businesses resulted in a pre-tax non-cash goodwill impairment charge of $ 11.8 million, recorded within Loss on Assets Held for Sale in the Consolidated Statement of Operations, and within the Entertainment segment for the quarter ended September 25, 2022.

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 $ 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.

During the second quarter of 2021, the Company entered into a definitive agreement to sell 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 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 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.

Condensed Notes to Consolidated Financial Statements

2 unchanged sentences

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,

The following table presents the related tax effects on changes in other comprehensive earnings (loss) for the quarters and nine months ended September 25, 2022 and September 26, 2021.

Quarter Ended Nine months ended

September 25,

2022 September 26,

2021 September 25,

2022 September 26,

Other comprehensive earnings (loss), tax effect:

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

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

Tax expense on cash flow hedging activities ( 1.7 ) ( 0.3 ) ( 2.1 ) ( 0.7 )

Reclassifications to earnings, tax effect:

2 unchanged sentences

— ( 0.1 ) ( 0.1 ) ( 0.2 )

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

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:

Total tax effect on other comprehensive loss $ ( 1.1 ) ( 0.6 ) $ ( 1.6 ) ( 1.2 )

Changes in the components of accumulated other comprehensive earnings (loss), net of tax for the nine months ended September 25, 2022 and September 26, 2021 are as follows:

Postretirement

6 unchanged sentences

Current period other comprehensive earnings (loss) 0.3 13.4 ( 0.3 ) ( 103.0 ) ( 89.6 )

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

Balance at September 25, 2022 $ ( 34.8 ) 7.4 ( 0.1 ) ( 297.4 ) ( 324.9 )

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

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 )

Current period other comprehensive earnings (loss) 0.6 9.5 ( 0.1 ) ( 23.6 ) ( 13.6 )

Balance at September 26, 2021 $ ( 40.1 ) ( 12.6 ) 0.2 ( 156.1 ) ( 208.6 )

Gains (Losses) on Derivative Instruments

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.

At September 25, 2022, the Company had remaining net deferred gains on foreign currency forward contracts, net of tax, of $ 22.4 million in accumulated other comprehensive earnings (loss) ("AOCE").

These instruments hedge payments related to inventory purchased in the third 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 third 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.

3 unchanged sentences

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 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.

At September 25, 2022, deferred losses, net of tax of $ 15.0 million related to these instruments remained in AOCE.

For each of the quarters ended September 25, 2022 and September 26, 2021, previously deferred losses of $ 0.2 million related to these instruments were reclassified from AOCE to net earnings.

For the nine-month periods ended September 25, 2022 and September 26, 2021, previously deferred losses of $ 0.5 million and $ 1.0 million, respectively, related to these instruments were reclassified from AOCE to net earnings.

Of the net deferred gains included in AOCE at September 25, 2022, the Company expects net gains of approximately $ 22.4 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.

1 unchanged sentence

(6) Accrued Liabilities

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

Components of accrued liabilities for the periods ended September 25, 2022, September 26, 2021 and December 26, 2021 were as follows:

September 25, 2022

September 26, 2021

December 26, 2021

2 unchanged sentences

Deferred revenue 132.2 147.0 114.1

Payroll and management incentives 52.1 86.9 183.6

Dividends 96.7 93.8 94.0

8 unchanged sentences

Bonus accrual 70.4 128.5 168.5

General vendor accruals 44.1 36.3 29.8

Interest 38.7 38.8 30.0

Accrued salaries 28.0 15.1 27.6

Defined contribution plans 26.7 33.1 31.0

Production payables 23.8 26.0 14.3

Other 95.9 141.7 111.6

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 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

At September 25, 2022, September 26, 2021 and December 26, 2021, the carrying cost of these instruments approximated their fair value.

The Company's financial instruments at September 25, 2022, September 26, 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 September 25, 2022, September 26, 2021 and December 26, 2021 are as follows:

September 25, 2022 September 26, 2021 December 26, 2021

Value Carrying

12 unchanged sentences

300.0 258.3 300.0 375.0 300.0 374.5

5.10 % Notes Due 2044

300.0 274.6 300.0 353.0 300.0 374.5

6.60 % Debentures Due 2028

1 unchanged sentence

Variable % Notes Due December 30, 2024 (1)

325.0 325.0 505.0 505.0 397.5 397.5

22 unchanged sentences

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:

As of September 25, 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 $ 275.0 million in the following increments:

$ 22.5 million in 2020;

$ 180.0 million in 2021;

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.

and $ 72.5 million in the first nine months of 2022, consisting of $ 50.0 million of the principal balance and principal amortization payments of $ 22.5 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 June 26, 2022 , the Company was in compliance with the financial covenants contained in the Term Loan Agreement.

As of September 25, 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 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.

Current portion of long-term debt at September 25, 2022 o f $ 122.6 million , as shown on the consolidated balance sheet, represents the current portion of required quarterly principal amortization payments for the Five-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.

14 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 June 26, 2022, June 27, 2021 and December 26, 2021 are as follows:

June 26, 2022

June 27, 2021 December 26, 2021

The production financing facilities as of September 25, 2022, September 26, 2021 and December 26, 2021 are as follows:

September 25, 2022

September 26, 2021 December 26, 2021

Production financing (net of cash)

Production financing facilities $ 184.9 $ 204.7 $ 170.1

4 unchanged sentences

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 June 26, 2022 was 2.8 %.

The weighted average interest rate on all production financing as of September 25, 2022 was 2.5 %.

The Company has Canadian dollar and U.S.

3 unchanged sentences

Dollars Total

As of June 26, 2022

As of September 25, 2022

$ 19.3 $ 43.3 $ 62.6

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

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

Production Financing

3 unchanged sentences

Foreign exchange differences ( 0.5 )

Balance at June 26, 2022

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

Balance at September 25, 2022

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

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

1 unchanged sentence

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.

Amounts capitalized are reviewed periodically on an individual title basis and any portion of the unamortized

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

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 September 25, 2022, September 26, 2021, and December 26, 2021:

September 25, 2022

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

The Company recorded $ 365.7 million of program cost amortization related to released programming in the nine months ended September 25, 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 21.8 % for the six months ended June 26, 2022 and 43.9 % for the six months ended June 27, 2021.

Our effective tax rate ("ETR") from continuing operations was 22.1 % for the nine months ended September 25, 2022 and 29.0 % for the nine months ended September 26, 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;

• during the nine months ended September 25, 2022, the Company recorded a net discrete tax benefit of $ 6.7 million primarily associated with (i) the release of certain valuation allowances during the first quarter;

(ii) the decrease to our liability for uncertain tax positions that resulted from statutes of limitations expiring in certain jurisdictions;

and (iii) a benefit on the loss of assets held for sale in the third quarter;

• during the nine months ended September 26, 2021, the Company recorded a net discrete tax expense of $ 8.8 million primarily associated with (i) 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 increases the UK corporate income tax rate from

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

• 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.

19% to 25% as of April 1, 2023;

(ii) a one-time tax charge related to an ongoing tax audit;

(iii) release of a valuation allowance on net operating losses that offset income received from a one-time legal settlement;

and (iv) certain tax benefits, including the reversal of uncertain tax positions and operational tax planning.

The year-to-date 2021 ETR also included a goodwill impairment charge on the sale of the eOne Music 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.

10 unchanged sentences

jurisdictions.

On August 16, 2022, President Biden signed into law the Inflation Reduction Act, which included various tax provisions.

The two main tax provisions, a 15% alternative corporate minimum tax based on financial statement income and a 1% excise tax on corporate stock buy backs, are not expected to have a material impact to the Company.

(10) Fair Value of Financial Instruments

8 unchanged sentences

(Millions of Dollars and Shares Except Per Share Data)

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):

At September 25, 2022, September 26, 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

June 26, 2022

September 25, 2022

Available-for-sale securities $ — — — —

4 unchanged sentences

Total liabilities $ 2.1 — 0.4 1.7

June 27, 2021

September 26, 2021

Available-for-sale securities $ 2.0 2.0 — —

11 unchanged sentences

Total Liabilities $ 4.3 — 2.6 1.7

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

Condensed Notes to Consolidated Financial Statements

3 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 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.

The option agreement is included in other liabilities at September 25, 2022, September 26, 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 June 26, 2022.

There were no changes in these valuation techniques during the quarter ended September 25, 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 second quarter $ ( 1.7 ) $ ( 21.8 )

Balance at end of third 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 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

At September 25, 2022, September 26, 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:

September 25, 2022 September 26, 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 June 26, 2022, June 27, 2021 and December 26, 2021 as follows:

2022 June 27,

The fair values of the Company's foreign currency forward contracts designated as cash flow hedges are recorded in the consolidated balance sheets at September 25, 2022, September 26, 2021 and December 26, 2021 as follows:

September 25,

2022 September 26,

2021 December 26,

10 unchanged sentences

Net unrealized losses $ ( 0.1 ) $ ( 1.0 ) $ ( 0.1 )

Other liabilities

Unrealized gains $ — $ — $ —

Unrealized losses — ( 0.1 ) —

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 June 26, 2022 and June 27, 2021 as follows:

Quarter Ended Six Months Ended

2022 June 27,

2021 June 26,

2022 June 27,

Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings (loss) to net earnings for the quarters and nine months ended September 25, 2022 and September 26, 2021 as follows:

Quarter Ended Nine Months Ended

September 25,

2022 September 26,

2021 September 25,

2022 September 26,

Statements of Operations Classification

8 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 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.

As of September 25, 2022, September 26, 2021 and December 26, 2021 the total notional amounts of the Company's undesignated derivative instruments were $ 601.3 million, $ 663.2 million and $ 632.0 million, respectively.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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,

At September 25, 2022, September 26, 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:

September 25,

2022 September 26,

2021 December 26,

8 unchanged sentences

Total unrealized gains (losses), net $ 13.4 $ 2.3 $ ( 2.5 )

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.

The Company recorded net gains of $ 28.7 million and $ 49.2 million on these instruments to other (income) expense, net for the quarter and nine months ended September 25, 2022, respectively, and net gains of $ 3.6 million and $ 2.9 million for the quarter and nine months ended September 26, 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).

1 unchanged sentence

The Company has no material finance leases.

These leases have remaining lease 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.

The Company's leases have remaining lease 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.

4 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 $ 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.

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 $ 24.2 million and $ 67.4 million for the quarter and nine months ended September 25, 2022, respectively, and $ 21.8 million and $ 66.0 million for the quarter and nine months ended September 26, 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 nine months ended September 25, 2022 or September 26, 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 June 26, 2022 and June 27, 2021 is as follows:

Quarter Ended Six Months Ended

2022 June 27,

2021 June 26,

2022 June 27,

Information related to the Company’s leases for the quarters ended September 25, 2022 and September 26, 2021 is as follows:

Quarter Ended Nine Months Ended

September 25,

2022 September 26,

2021 September 25,

2022 September 26,

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

6 unchanged sentences

Operating leases 3.4 % 3.1 % 3.4 % 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 June 26, 2022:

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

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 September 25, 2022:

September 25,

2022 (excluding the nine months ended September 25, 2022) $ 12.2

2027 and thereafter 24.2

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 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.

Results shown for the quarter ended September 25, 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 and six months ended June 26, 2022 and June 27, 2021 are as follows:

Information by segment and a reconciliation to reported amounts for the quarters and nine months ended September 25, 2022 and September 26, 2021 are as follows:

Quarter Ended

June 26, 2022 June 27, 2021

September 25, 2022 September 26, 2021

Net revenues External Affiliate (c)

6 unchanged sentences

$ 1,675.9 $ — $ 1,970.0 $ —

Six Months Ended

June 26, 2022 June 27, 2021

Nine Months Ended

September 25, 2022 September 26, 2021

Net revenues External Affiliate (c)

8 unchanged sentences

(Millions of Dollars and Shares Except Per Share Data)

Quarter Ended Six Months Ended

Operating profit (loss) June 26,

2022 June 27,

2021 June 26,

2022 June 27,

Quarter Ended Nine Months Ended

Operating profit (loss) September 25,

2022 September 26,

2021 September 25,

2022 September 26,

Consumer Products (a)

6 unchanged sentences

$ 194.3 $ 367.9 $ 533.4 $ 591.8

Total assets June 26,

2022 June 27,

Total assets September 25,

2022 September 26,

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 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,

The following table represents consolidated Consumer Products segment net revenues by major geographic region for the quarters and nine months ended September 25, 2022 and September 26, 2021:

Quarter Ended Nine Months Ended

September 25,

2022 September 26,

2021 September 25,

2022 September 26,

North America $ 693.3 $ 805.0 $ 1,531.8 $ 1,559.1

3 unchanged sentences

Net revenues $ 1,160.8 $ 1,282.7 $ 2,567.8 $ 2,625.8

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,

The following table represents consolidated Wizards of the Coast and Digital Gaming segment net revenues by category for the quarters and nine months ended September 25, 2022 and September 26, 2021:

Quarter Ended Nine Months Ended

September 25,

2022 September 26,

2021 September 25,

2022 September 26,

Tabletop Gaming $ 246.3 $ 269.4 $ 800.3 $ 760.1

3 unchanged sentences

(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,

The following table represents consolidated Entertainment segment net revenues by category for the quarters and nine months ended September 25, 2022 and September 26, 2021:

Quarter Ended Nine Months Ended

September 25,

2022 September 26,

2021 September 25,

2022 September 26,

Film and TV $ 188.6 $ 255.4 $ 527.0 $ 586.1

2 unchanged sentences

Net revenues $ 211.6 $ 327.1 $ 624.3 $ 772.5

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,

The following table presents consolidated net revenues by brand and entertainment portfolio for the quarters and nine months ended September 25, 2022 and September 26, 2021:

Quarter Ended Nine Months Ended

September 25,

2022 September 26,

2021 September 25,

2022 September 26,

Franchise Brands (1)

8 unchanged sentences

(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 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.

For comparability, net revenues for the quarter and nine months ended September 26, 2021 have been restated to reflect the elevation of PEPPA PIG from Emerging Brands to Franchise Brands, which amounted to a change of $ 43.1 million and $ 102.0 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 $ 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.

THE GATHERING and MONOPOLY which are reported within Franchise Brands, totaled $ 508.6 million and $ 1,415.7 million for the quarter and nine months ended September 25, 2022, respectively.

For the quarter and nine months ended September 26, 2021, total gaming revenues were $ 658.6 million and $ 1,543.3 million, respectively.

(14) Restructuring Actions

During the third quarter of 2022, the Company took certain restructuring actions related to the Company's strategic review which resulted in severance and other employee charges of $ 21.3 million recorded in Selling, Distribution and Administration within the Corporate and Other segment and a loss of $ 26.7 million of non-cash charges related to the sale or disposal of non-strategic businesses, recorded as assets held for sale of $ 23.1 million and program cost amortization of $ 3.7 million recorded within the Entertainment segment.

These businesses do not constitute a material part of the Company's operations.

See Note 1 for additional information related to these charges.

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

As of September 25, 2022, the Company had a remaining balance of $ 26.8 million in termination payments related to these restructuring 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