What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-02-22 compared with 2022-02-23 · 351 added, 375 removed, 529 unchanged (58% of the section changed)

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EXECUTIVE SUMMARY

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

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

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

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

Our iconic brands include NERF, MAGIC:

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

Hasbro is a global Branded Entertainment leader whose mission is to entertain and connect generations of fans through the wonder of storytelling and exhilaration of play.

Hasbro is guided by our Purpose to create joy and community for all people around the world, one game, one toy, one story at a time.

Hasbro delivers immersive brand experiences for global audiences through gaming, consumer products and entertainment.

Our portfolio of iconic brands includes MAGIC:

THE GATHERING, DUNGEONS & DRAGONS, Hasbro Gaming, NERF, TRANSFORMERS, PLAY-DOH and PEPPA PIG, as well as premier partner brands.

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

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

Our strategic plan is centered around our Blueprint 2.0, a framework for bringing compelling and expansive brand experiences to consumers and audiences around the world.

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

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

Hasbro generates revenue and earns cash across our Blueprint 2.0 by developing, marketing, licensing, distributing and selling products, play and entertainment experiences, based on our global brands as well as other IP in a broad variety of categories.

This includes:

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

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

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

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

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

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

Our reportable segments are:

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

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

As we continue our Blueprint 2.0 transformation efforts focusing on fewer, bigger brands, we have begun out-licensing certain non-core brands which we believe may be more profitable through a licensing arrangement.

See Part I, Item 1.

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

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

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

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

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2022 highlights

• Net revenues of $5,856.7 million decreased 9% from $6,420.4 million in 2021.

The decline in net revenues includes an unfavorable foreign currency translation of $166.3 million.

◦ Net revenues in the Consumer Products segment decreased 10% to $3,572.5 million;

Wizards of the Coast and Digital Gaming segment increased 3% to $1,325.1 million;

and Entertainment segment net revenues decreased 17% to $959.1 million.

◦ TV/Film/Entertainment portfolio net revenues decreased 17%;

Hasbro Gaming net revenues decreased 13%;

Emerging Brands net revenues decreased 12%;

Partner Brands net revenues decreased 9%;

and Franchise Brands net revenues decreased 4%.

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

THE GATHERING and MONOPOLY, totaled $2.0 billion, a decrease of 5%.

• Operating profit was $407.7 million, or 7.0% of net revenues in 2022 compared to operating profit of $763.3 million, or 11.9% of net revenues in 2021.

◦ Operating Profit in the Wizards of the Coast and Digital Gaming segment decreased 2% to $538.3 million;

Consumer Products segment decreased 46% to $217.3 million;

Entertainment segment increased >100% to $22.7 million;

and Corporate and Other operating losses increased >100% to $370.6 million.

• Net earnings attributable to Hasbro, Inc.

declined in 2022 to $203.5 million, or $1.46 per diluted share, compared to $428.7 million, or $3.10 per diluted share in 2021.

2021 highlights

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

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

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

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

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

Consumer Products segment increased 30% to $401.4 million;

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

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

2020 highlights

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

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

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

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

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

◦ Hasbro Gaming net revenues increased 15%;

Emerging Brands net revenues increased 27%;

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

Partner Brands net revenues decreased 12%;

and Franchise Brands net revenues declined 5%.

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

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

Consumer Products segment remained relatively flat at $308.1 million;

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

• Net earnings attributable to Hasbro, Inc.

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

Summary of Financial Performance

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Net earnings 203.0 435.3 225.4

Net earnings attributable to noncontrolling interests 6.6 2.9 —

Net (loss) earnings attributable to noncontrolling interests (0.5) 6.6 2.9

Net earnings attributable to Hasbro, Inc.

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The fiscal years ended December 25, 2022, December 26, 2021 and December 27, 2020 were each fifty-two week periods.

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

Net earnings attributable to Hasbro, Inc.

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

decreased to $203.5 million for the fiscal year ended December 25, 2022 compared to $428.7 million for the fiscal year ended December 26, 2021, and were $222.5 million for the fiscal year ended December 27, 2020.

Diluted earnings per share attributable to Hasbro, Inc.

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for each fiscal year in the three years ended December 25, 2022 include certain charges and benefits as described below.

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

• In association with the Company's strategic review and subsequent Blueprint 2.0 strategy shift to focus on fewer, bigger brands, the Company incurred net charges of $253.0 million consisting of the following:

◦ Net asset impairments and other net charges of $231.9 million, or $1.67 per diluted share, of which $215.2 million, or $1.55 per diluted share relates to the partial impairment of the Company's definite-lived Power Rangers intangible asset, $12.4 million, or $0.09 per diluted share, of incurred incremental asset charges related to product cancellations, consisting of inventory and asset write offs, and $4.3 million, or $0.03 per diluted share, of strategy-related asset impairments due to the cancellation of certain projects primarily within the Entertainment segment;

◦ A net loss on disposal of business of $21.1 million, or $0.15 per diluted share, comprised of a non-cash goodwill impairment loss of $11.8 million and other asset impairments of $9.3 million, related to the exit of non-core businesses within the Entertainment segment.

• In support of Blueprint 2.0, Hasbro announced an Operational Excellence program designed to deliver $250-$300 million in annualized run-rate cost savings by year-end 2025.

In association with this program the Company incurred net charges of $89.2 million comprised of the following:

◦ Net severance expense and other employee charges of $79.8 million, or $0.57 per diluted share, associated with cost-savings initiatives across the Company;

◦ Net charges of $9.4 million, or $0.07 per diluted share, of program related consultant and transformation office expenses.

• In association with the Company's acquisition of eOne, the Company incurred related expenses of $72.3 million, comprised of the following:

◦ Net expenses of $59.4 million, or $0.43 per diluted share, of incremental intangible amortization costs related to the intangible assets acquired in the eOne acquisition;

◦ A net charge of $12.9 million, or $0.09 per diluted share, of stock based compensation expenses.

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

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

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

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

◦ A net charge of $6.6 million, or $0.05 per diluted share, of stock based compensation expenses.

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

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

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Retroactive to April 1, 2020, the new law maintains the corporate income tax rate at 19% instead of the planned reduction to 17% that was previously enacted in the UK Finance Act of 2016.

• A net charge of $86.0 million or $0.67 per diluted share, associated with the settlement of the Company's U.S.

defined benefit pension plan in the second quarter of 2019.

During 2018 the Compensation Committee of the Company's Board of Directors approved a resolution to terminate the Company's U.S.

defined benefit pension plan and commenced the termination process.

During the second and fourth quarters of 2019, the Company settled remaining benefits directly with vested participants.

• A net benefit, of $81.8 million or $0.64 per diluted share related to transaction costs and hedge gains associated with the Company's agreement to acquire eOne in an all cash transaction.

The $81.8 million after-tax gain consisted of the following:

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

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

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

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

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

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

Consolidated net revenues for the year ended December 25, 2022 declined 9% to $5,856.7 million from $6,420.4 million for the year ended December 26, 2021 and include an unfavorable foreign currency translation impact of $166.3 million as the result of foreign currency declines against the US dollar across the Company's regions.

Consolidated net revenues for the year ended December 26, 2021 grew 17% to $6,420.4 million from $5,465.4 million for the year ended December 27, 2020 and included a favorable foreign currency translation impact of $54.7 million.

The following table presents net revenues expressed in millions of dollars, by brand portfolio for each year in the three years ended December 25, 2022.

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TV/Film/Entertainment 828.7 -17 % 997.7 24 % 804.7

Brand portfolio net revenues for the years ended December 26, 2021 and December 27, 2020 have been restated to reflect the elevation of PEPPA PIG from Emerging Brands to Franchise Brands, effective for the first quarter of 2022.

As a result, net revenues of $162.9 million and $108.2 million, respectively, were reclassified from Emerging Brands to Franchise Brands.

2022 versus 2021

Net revenues declined in all brand portfolios in 2022 compared to 2021.

Franchise Brands:

The Franchise Brands portfolio net revenues decreased 4% in 2022 compared to 2021.

Higher net revenues from MAGIC:

THE GATHERING products, due to record sales from set releases that include:

Neon Dynasty , Commander Legends:

Battle for Baldur's Gate , Double Masters, Dominaria United, Streets of New Capenna and The Brothers War, reflected momentum in the brand, elevating MAGIC:

THE GATHERING to the Company's first billion-dollar brand.

In addition, the Franchise Brands portfolio benefited from higher sales of PEPPA PIG products, driven by the third quarter 2021 launch of the Company's first line of PEPPA PIG product line and higher sales of PLAY-DOH products.

These net revenue increases were offset by lower net revenues from NERF and MONOPOLY products and to a lesser extent, lower net revenues from TRANSFORMERS and BABY ALIVE products.

Partner Brands:

The Partner Brands portfolio net revenues declined 9% in 2022 compared to 2021.

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

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

Historically these entertainment-based brands experience higher revenues during years in which major films or television programming is released.

In 2022, Partner Brands net revenue declines were driven by lower sales of the Company's products for DISNEY FROZEN and DISNEY PRINCESS as the related license neared the end of its term, lower sales of BEYBLADE products, and to a lesser extent, lower sales of GHOSTBUSTERS products.

These net revenue decreases were partially offset by higher net revenues from the Company's products for MARVEL, led by momentum in the SPIDER-MAN franchise which benefited from entertainment releases including the children’s animated television series, Marvel's Spidey and His Amazing Friends as well as Marvel Studios' Spider-Man:

No Way Home, released in December 2021.

The Company's products for Marvel's AVENGERS benefited from the release of Marvel Studios' Doctor Strange in the Multiverse of Madness in May 2022 and the July 2022 release of Thor:

Love and Thunder , while the Company's products for BLACK PANTHER were supported by the November 2022 release of Black Panther:

Wakanda Forever.

To a lesser extent, net revenues from the Company's line of STAR WARS products increased as a result of continued STAR WARS entertainment released on Disney+.

In addition, Partner Brands net revenues benefited from the introduction of the Company's line of FORTNITE action figures during 2022.

Hasbro Gaming:

The Hasbro Gaming portfolio net revenues declined 13% in 2022 compared to 2021 driven primarily by lower net revenues from the Dungeons & Dragons:

Dark Alliance digital game launched during the second quarter 2021 with no comparable release in 2022, as well as lower net revenues from JENGA, LIFE and certain other Hasbro Gaming products.

These decreases were partially offset by higher net revenues from AVALON HILL'S HeroQuest products during 2022.

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

THE GATHERING and MONOPOLY, which are included in the Franchise Brands portfolio, totaled $1,997.5 million in 2022, a decrease 5%, from $2,098.9 million in 2021.

Emerging Brands:

The Emerging Brands portfolio net revenues declined 12% in 2022 compared to 2021 primarily driven by FURREAL FRIENDS and PJ MASKS products and to a lesser extent, core PLAYSKOOL and POTATO HEAD products.

TV/Film/Entertainment:

Net revenues from the TV/Film/Entertainment portfolio declined 17% in 2022 compared to 2021.

Lower net revenues in 2022 were driven by the sale of eOne Music during the third quarter of 2021, which represented $65.2 million or 6% of TV, Film and Entertainment portfolio net revenues during 2021.

In addition to the sale of eOne Music, net revenue declines in 2022 were driven by the lower number of film deliveries in 2022 compared to 2021 due to timing shifts of certain films into 2023, and to a lesser extent, lower unscripted television deliveries in 2022.

These decreases were partially offset by higher net revenues from scripted production deliveries, most notably, Cruel Summer season two, The Rookie seasons four and five and The Rookie:

Feds season one.

2021 versus 2020

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

Emerging Brands growth of 29%;

TV/Film/Entertainment growth of 24%;

Franchise Brands growth of 22%;

Partner Brands growth of 8%;

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

Franchise Brands:

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The Gathering Arena .

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

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

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

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

To a lesser extent, higher net revenues from NERF products, most notably in the US, higher net revenues from PEPPA PIG products following the Company's launch of its first PEPPA PIG product line during the second half of 2021, higher net revenues from the MY LITTLE PONY brand, due to the release of the film My Little Pony:

A New Generation and the launch of the associated product line contributed to the increase.

In addition to these increases were higher net revenues from TRANSFORMERS products supported by the release of the final chapter of the animated television series trilogy, Transformers:

War For Cybertron in July 2021 and higher net revenues from PLAY-DOH products.

Partner Brands:

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

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

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

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

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

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

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

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

Emerging Brands:

The Emerging Brands portfolio net revenues grew 22% in 2021 compared to 2020.

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

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

TV/Film/Entertainment:

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

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

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

second half of 2020 and into 2021.

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

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

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

The drivers of the net revenue increase during 2021 include higher scripted television production deliveries, most notably from Yellowjackets, Cruel Summer and The Rookie television series.

In addition to these increases were higher deliveries from eOne's slate of unscripted programming, as well as higher film production revenues from 2021 releases that include Clifford the Big Red Dog, Come From Away and Finch.

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

2020 versus 2019

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

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

Franchise Brands:

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

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

Much of the segment net revenue declines were due to reduced customer ordering, supply chain delays and other disruptions to the business as a result of the impact of the COVID-19 pandemic.

Additionally, in 2019 TRANSFORMERS products benefited from the December 2018 theatrical release of TRANSFORMERS:

BUMBLEBEE , driving lower revenues in 2020 compared to 2019.

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

THE GATHERING products, due to favorable card set releases, and to a lesser extent, MONOPOLY products during 2020.

Partner Brands:

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

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

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

END GAME and SPIDER-MAN:

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

THE RISE OF SKYWALKER , released during 2019.

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

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

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

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

AFTERLIFE film.

Hasbro Gaming:

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

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

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

THE GATHERING and MONOPOLY, which are included in the Franchise Brands portfolio, totaled $1,763.8 million in 2020, an increase of 15%, versus $1,528.3 million in 2019.

Emerging Brands:

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

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

TV/Film/Entertainment:

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

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

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

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

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

SEGMENT RESULTS

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

Our reportable segments are:

The summary that follows provides a discussion of the results of operations of our four reportable segments:

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

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2022 versus 2021

Consumer Products segment net revenues declined 10% in 2022 compared to 2021 and included the impact of an unfavorable $117.5 million foreign currency translation, most notably from the Company's European markets, and to a lesser extent, the Company's Asia Pacific and Latin American markets.

Segment net revenues declined in all brand portfolios including Franchise Brands, Partner Brands and to a lesser extent, Hasbro Gaming and Emerging Brands during 2022 compared to 2021.

In addition to the unfavorable foreign exchange, the drivers of the net revenue decrease include lower sales of NERF, MONOPOLY, TRANSFORMERS and BABY ALIVE products, lower sales of the Company's products for DISNEY PRINCESS and DISNEY FROZEN as the related license neared the end of its term and lower sales of BEYBLADE products.

In addition, lower sales of Hasbro Gaming products, primarily from the Company's tabletop gaming brands such as JENGA, LIFE and certain other Hasbro Gaming brands and lower net revenues from FURREAL FRIENDS products contributed to the decrease.

These net revenue decreases were partially offset by higher sales of PEPPA PIG and PLAY-DOH products, and higher sales of the Company's products for MARVEL and STAR WARS products.

Overall segment net revenue declines were primarily attributable to the challenging consumer discretionary environment in North America and to a lesser extent, the Company's European markets during 2022.

2021 versus 2020

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

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

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

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

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

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

2020 versus 2019

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

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

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

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

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

Wizards of the Coast and Digital Gaming Segment

The following table presents Wizards of the Coast and Digital Gaming segment net revenues by category for each fiscal year in the three years ended December 25, 2022.

Net Revenues %

Tabletop Gaming $ 1,067.0 12 % $ 950.6 44 % $ 659.6

Digital and Licensed Gaming 258.1 -23 % 336.0 36 % 247.1

Net Revenues $ 1,325.1 3 % $ 1,286.6 42 % $ 906.7

2022 versus 2021

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

Wizards of the Coast and Digital Gaming segment net revenues increased 3% in 2022 compared to 2021 and included the impact of an unfavorable $27.9 million foreign currency translation.

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

THE GATHERING, which has become the Company's first billion-dollar brand, driven by the number of strong performing card set releases in 2022.

In total, 81% of segment net revenues were attributable to Wizards of the Coast tabletop games during 2022.

The increase tabletop gaming net revenues was partially offset by lower digital and licensed gaming net revenues, primarily from Magic:

The Gathering Arena and from Dungeons & Dragons:

Dark Alliance , launched during the first half of 2021 and to a lesser extent, lower net revenues from certain other of the Company's licensed digital games during 2022.

2021 versus 2020

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

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

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

2020 versus 2019

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

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

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

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

Entertainment Segment

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2022 versus 2021

Entertainment segment net revenues declined 17% in 2022 compared to 2021 and included the impact of an unfavorable $21.0 million foreign currency translation.

The segment net revenue decrease primarily reflects the number of major film deliveries compared to 2021 where films such as Clifford The Big Red Dog , Mrs.

Harris Goes to Paris and Come From Away were delivered, without a comparable number of major film deliveries in 2022, as well as lower net revenues from streaming content sales compared to 2021, which benefited from the September 2021 release of My Little Pony:

A New Generation .

To a lesser extent, lower transactional net revenues and lower net revenues from unscripted television deliveries compared to 2021 contributed to the decline.

These decreases were partially offset by higher scripted television deliveries that include The Rookie seasons four and five, Cruel Summer season two, The Rookie:

Feds season one and Yellowjackets season two .

2021 versus 2020

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

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

2020 versus 2019

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

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

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

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

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

BUMBLEBEE film.

Operating Profit (Loss)

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Entertainment 22.7 2.4 % >100% (91.8) -8.0 % 35 % (141.1) -15.5 %

Corporate and Other (370.6) n/a >100% (93.3) n/a -8 % (85.6) n/a

Total 407.7 763.3 501.8

Effective for the first quarter of 2022, intangible amortization costs related to the intangible assets acquired in the eOne acquisition have been allocated between the Consumer Products and Entertainment segments to match the revenue generated from such intangible assets.

In 2021 and 2020, comparable intangible amortization costs were recorded within the Entertainment segment.

Consumer Products Segment

2022 versus 2021

Consumer Products segment operating profit decreased $184.1 million to $217.3 million in 2022, compared to $401.4 million in 2021.

Operating profit margin decreased to 6.1% of net revenues in 2022 from 10.1% of net revenues in 2021.

As noted above, to align with the revenue generated from the assets acquired in the eOne acquisition, Consumer Products segment operating profit in 2022 includes $37.7 million of incremental intangible asset amortization costs.

In 2021, comparable costs were reported in the Entertainment segment results.

Additionally, in connection with the Company's Blueprint 2.0 strategy shift, Consumer Products segment operating profit includes charges of $14.9 million of incremental asset charges related to product cancellations, consisting of inventory and asset write offs related to the Company's plans to focus on fewer, bigger brands.

The remaining operating profit decrease in 2022 was driven by lower net revenues and higher sales allowances and obsolescence charges, as well as higher levels of closeout sales and warehousing costs associated with higher inventory levels.

These negative effects were partially offset by the impact of the expiration of certain Consumer Products licensing agreements acquired through the eOne acquisition, which carried higher royalty expenses in prior periods and higher net revenues from licensing agreements related to certain of the Company's Franchise Brands, most notably TRANSFORMERS.

In addition to these benefits were savings realized from the Company’s operational excellence program within cost of sales and distribution expense, price increases implemented in 2022 combined with lower product development costs, lower advertising and promotion expenses, and lower incentive compensation.

2021 versus 2020

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

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

2020 versus 2019

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

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

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

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

Wizards of the Coast and Digital Gaming Segment

2022 versus 2021

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

Wizards of the Coast and Digital Gaming segment operating profit decreased $8.7 million to $538.3 million in 2022, compared to $547.0 million in 2021.

Operating profit margin decreased to 40.6% in 2022 from 42.5% in 2021.

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

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

The decrease in segment operating profit in 2022 was the result of higher inventory costs and higher product development costs as we continue to invest in tabletop and digital gaming initiatives and talent to support long-term growth within the segment, as well as higher royalty expense due to the growth of MAGIC:

THE GATHERING UNIVERSES BEYOND .

These increases were partially offset by lower administrative expenses, including lower incentive compensation expenses and lower advertising expense and depreciation costs compared to 2021, where the Company incurred higher costs associated with the launch of the mobile version of Magic:

The Gathering Arena and Dungeons & Dragons:

Dark Alliance .

2021 versus 2020

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

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

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

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

Operating profit margin was 42.5% in 2021 compared to 46.4% in 2020.

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

Entertainment Segment

2022 versus 2021

Entertainment segment operating profit was $22.7 million, or 2.4% of segment net revenues in 2022, compared to operating losses of $91.8 million, or -8.0% of segment net revenues in 2021.

The improved operating results in 2022 were driven primarily by the non-cash impairment charge of $108.8 million in 2021 associated with the sale of eOne Music, the allocation of $37.7 million of intangible asset amortization costs to the Consumer Products segment during 2022, as well as lower royalty expenses and lower advertising expense attributable to the lower number of film releases compared to 2021.

These impacts to segment operating results were partially offset by a loss on disposal of assets of $22.1 million and asset impairment charges of $4.1 million related to the Company's Blueprint 2.0 strategy to exit non-core businesses, the impact of the sale of the eOne Music business during 2021 described above and higher program amortization costs in proportion to entertainment revenues related to the mix of programming delivered in 2022.

2021 versus 2020

Entertainment segment operating losses were $91.8 million, or 8.0% of segment net revenues in 2021, compared to operating losses of $141.1 million, or 15.5% of segment net revenues in 2020.

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

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

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

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

2020 versus 2019

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

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

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

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

Corporate and Other Segment

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

In the Corporate and Other segment, the operating losses were $370.6 million in 2022 compared to operating losses of $93.3 million in 2021 and operating losses of $85.6 million in 2020.

The Corporate and Other segment operating losses during 2022 were primarily related to impairment charges of $281.0 million related to the Company's Power Rangers intangible asset, severance charges of $94.1 million and transformation office and consultant fees of $12.3 million associated with Company's Blueprint 2.0 strategy shift and operational excellence program related cost-savings initiatives described above, as well as $14.6 million of expense associated with retention awards granted in connection with the eOne acquisition.

These operating loss increases were partially offset by lower incentive compensation, royalty expenses and lower advertising costs.

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

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

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

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

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

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

OPERATING COSTS AND EXPENSES

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Operating expenses for 2022, 2021 and 2020 include benefits and expenses related to the following events:

• During 2022, in association with actions taken following the Company's strategic review and subsequent Blueprint 2.0 strategy shift to focus on fewer, bigger brands, the Company incurred:

◦ Asset impairments and charges of $300.3 million of which $281.0 relates to the partial impairment of the Company's definite-lived Power Rangers intangible asset recorded in Selling, Distribution and Administration within the Corporate and Other segment, $14.9 million of incurred incremental asset charges recorded within Cost of Sales related to product cancellations, consisting of inventory and asset write offs within the Consumer Products segment, and $4.4 million of strategy related asset impairments recorded within Program Cost Amortization, due to the cancellation of certain projects within the Entertainment segment;

◦ Charges of $22.1 million comprised of a non-cash goodwill impairment loss of $11.8 million and other asset impairments of $10.3 million related to the exit of non-core businesses within the Entertainment segment, included in Loss on Disposal of Business.

• In support of Blueprint 2.0, Hasbro announced an Operational Excellence program designed to deliver $250-$300 million in annualized run-rate cost savings by year-end 2025.

In association with this program the Company incurred:

◦ Severance and other employee charges of $94.1 million associated with cost-savings initiatives across the Company, included within Selling, Distribution and Administration;

◦ Program related consultant fees and transformation office expenses of $12.3 million included within Selling, Distribution and Administration.

• During 2022, the Company incurred incremental intangible amortization costs of $71.4 million related to the intangible assets acquired in the eOne acquisition.

Beginning in 2022, these intangible amortization costs have been allocated between the Consumer Products and Entertainment segments, to match the revenue generated from such intangible assets.

• During 2022, the Company incurred $14.6 million of stock based compensation expense associated with retention awards granted in connection with the eOne acquisition.

These expenses are included within Selling, Distribution and Administration within the Corporate and Other segment.

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

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

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

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

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

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

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

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

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

Cost of Sales

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

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

Cost of sales decreased 1% to $1,911.8 million, or 32.6% of net revenues, for the year ended December 25, 2022 compared to $1,927.5 million, or 30.0% of net revenues, for the year ended December 26, 2021.

The cost of sales decrease in dollars was driven by lower sales volumes, primarily within the Consumer Products segment, and most notably in North America, and to a lesser extent Europe and Asia Pacific markets during 2022 compared to 2021.

These decreases were partially offset by cost of sales increases within the Wizards of the Coast and Digital Gaming segment, reflecting higher tabletop gaming sales during 2022.

The cost of sales increase as a percent of net revenues was the result of higher product input costs including higher material costs and higher inventory obsolescence, sales allowances and closeout charges to address excess inventory, most notably within Europe and the U.S., partially offset by the benefit of implemented price increases and lower freight costs.

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

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

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

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

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

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

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

Program Cost Amortization

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

The program cost amortization decrease during 2022 was driven by the volume and mix of programming revenues compared to 2021, partially offset by $4.1 million of asset impairment charges recorded during 2022, related to discontinued projects associated with the exit of non-core business within the Entertainment segment.

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

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A New Generation film released on Netflix in 2021.

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

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

This increase was partially offset by lower program cost amortization attributable to the TRANSFORMERS:

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

Royalty Expense

Royalty expense of $493.0 million, or 8.4% of net revenues, in 2022 compared to $620.4 million, or 9.7% of net revenues, in 2021 and $570.0 million, or 10.4% of net revenues, in 2020.

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

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

Fluctuations in royalty expense generally relate to the volume of entertainment-driven products sold in a given period, especially if the Company is selling

product tied to one or more major motion picture releases in the period.

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

In 2022, the decrease in royalty expense was driven by lower sales of certain Partner Brands products which carry higher royalty rates and a change in product mix within the Consumer Products segment, and to a lesser extent, the mix of entertainment deliveries in 2022 reflecting lower film deliveries compared to 2021.

In addition, lower royalty expense in 2022 reflects the impact of the sale of eOne Music during 2021 and the expiration of certain licensing agreements acquired through the eOne acquisition, resulting in lower royalty expenses compared to prior periods.

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

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

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

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

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

The decrease in dollars compared to 2021 was driven by lower spending in line with the Company's global cost savings initiatives partially offset by higher spending in the Wizards of the Coast and Digital Gaming segment in support of the Company’s core initiatives.

Product development expense in 2021 totaled $315.7 million, or 4.9% of net revenues, compared to $259.5 million, or 4.7% of net revenues, in 2020.

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

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

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

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

The decrease in dollars during 2020 was driven by lower spending as a result of global cost savings initiatives combined with the impact of the closure of the Company's Backflip business during the fourth quarter of 2019.

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

As a percentage of net revenues, the increase in product development expense reflects lower net revenues overall during 2022 compared 2021.

Advertising Expense

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

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

The advertising expense decrease during 2022 was driven by lower expense within the Consumer Products segment, reflecting the implementation of the Company's Blueprint 2.0 strategy shift to focus on fewer, bigger brands and lower advertising expense in the Entertainment segment related to the sale of the eOne Music business and a shift in the type of entertainment releases delivered in 2022.

In 2021, higher advertising expense was driven by support for the September 2021 release of My Little Pony:

A New Generation and within the Wizards of the Coast and Digital Gaming segment, expense in support of the 2021 launch of the mobile version of Magic:

The Gathering Arena and Dungeons & Dragons:

Dark Alliance , with no comparable releases in 2022.

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

THE GATHERING tabletop gaming releases, higher advertising costs in support of the feature length film, My Little Pony:

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

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

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

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

Amortization of Intangible Assets

Amortization of intangible assets decreased to $105.3 million, or 1.8% of net revenues, in 2022 compared to $116.8 million, or 1.8% of net revenues, in 2021 and $144.7 million, or 2.6% of net revenues in 2020.

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

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

The decrease in 2022 is the result of the discontinuation of amortization related to the eOne Music intangible assets following the sale of eOne Music during 2021.

This decline was partially offset by additional expense associated with assets acquired through the D&D Beyond acquisition during 2022.

In 2021, the decrease primarily related to certain licensed property rights which became fully amortized in the fourth quarter of 2020 combined with the discontinuation of amortization related to the eOne Music intangible assets in the

second quarter of 2021, upon being classified as held for sale assets and subsequently sold in the third quarter of 2021.

Selling, Distribution and Administration Expenses

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SD&A expenses increased to $1,666.1 million, or 28.4% of net revenues in 2022, from $1,432.7 million, or 22.3% of net revenues, in 2021.

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

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

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

In 2022, selling, distribution and administration expense reflects lower incentive compensation expense, lower depreciation expense within the Wizards of the Coast business, most notably due to the release of Dungeons & Dragons:

Dark Alliance in 2021, with no comparable releases in 2022 and lower shipping costs due to global supply chain improvements during the year.

These decreases were wholly offset by the impairment charges and severance and other charges associated with the Company's strategic review noted previously, and higher warehousing expenses, primarily in the Consumer Products segment and, to a lesser extent, the Wizards of the Coast and Digital Gaming segment, as a result of higher inventory levels for the year ended December 25, 2022.

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

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

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

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

The increase in SD&A expenses was driven primarily by higher marketing and sales costs consistent with the increase in net revenues, higher compensation expense and increased freight and warehousing costs, primarily due to ongoing global supply chain disruptions.

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

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

Loss on Disposal of Business

In 2022, the loss on disposal of business of $22.1 million, or 0.4% of net revenues represents non-cash impairment charges associated with the exit of certain non-core businesses within the Entertainment segment.

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

Acquisition and Related Costs

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

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

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

NON-OPERATING EXPENSE (INCOME)

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Interest expense totaled $171.0 million in 2022 compared to $179.7 million in 2021 and $201.1 million in 2020.

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

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

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

The decrease in interest expense during 2022 primarily reflects long-term debt repayments made throughout 2021, primarily related to borrowings utilized for the eOne acquisition, partially offset by higher interest expense related to borrowings from the Company's production financing credit facilities.

The decrease in 2021 compared to 2020 reflects the repayment of eOne acquisition related long-term borrowings during 2021 and lower interest rates.

These 2021 decreases were partially offset by expense related to higher production financing borrowings compared to 2020.

Interest Income

Interest income was $11.8 million in 2022 compared to $5.4 million in 2021 and $7.4 million in 2020.

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

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

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

Other Expense (Income), Net

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

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

Higher interest income in 2022 primarily reflects higher average interest rates in 2022 compared to 2021.

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

Other (Income) Expense, Net

Other (income) expense, net was $(13.0) million, $7.1 million and $(14.0) million in 2022, 2021 and 2020, respectively.

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

2022 2021 2020

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

Earnings from Discovery Family Channel (8.1) (20.8) (21.8)

Discovery Family Channel impairment 74.1 — —

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

Pension expense 1.7 1.2 119.5

Gain on PP&E (0.2) (4.9) (0.4)

eOne deferred financing costs — 1.0 19.6

Foreign currency (gains) losses $ (5.3) $ (5.1) $ 2.1

Loss (gain) on investments (1.1) (3.8) 7.3

Loss (gain) on PP&E 0.4 (0.2) (4.9)

Legal settlement — (26.7) (3.2)

Discovery Family Channel option — (20.1) (1.5)

Discovery Family Channel impairment — 74.1 —

Other 1.1 9.7 8.0

$ (13.0) 7.1 (14.0)

• Earnings from the Discovery joint venture are comprised of the Company’s share in the results of the Discovery Family Channel (the "Network").

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

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

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

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

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

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

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

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

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

defined benefit pension plan which is reflected as a non-cash charge to pension expense.

• The gain on PP&E in 2020 reflects a $6.1 million gain related to the sale of the Dragonvale software and brand.

• During 2019, the Company incurred costs associated with the financing of the eOne transaction.

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

• The 2022 gain on investments primarily reflects an increase in fair value of the Company's available for sale investment as well as further recoupment of the 2020 loss on investments.

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

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

• The gain on PP&E in 2020 reflects a $6.1 million gain related to the sale of the Dragonvale software and brand.

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

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

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

In 2020, the Company recorded a gain of $1.5 million due to the option’s value decrease.

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

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

Income tax expense totaled 22.4% of pre-tax earnings in 2022 compared with 25.2% in 2021 and 30.0% in 2020.

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

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

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

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

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

and (iv) discrete tax planning benefits.

Income tax expense for 2022 includes a net discrete benefit primarily related to:

(i) favorable return to provision adjustments;

offset by (ii) a discrete expense recording a valuation allowance against net deferred tax assets due to Russia's on-going conflict with Ukraine.

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

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

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

offset by (iii) a benefit from the release of uncertain tax positions resulting from a change in management judgement and (iv) discrete tax planning benefits.

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

(i) eOne acquisition and related costs;

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

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

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

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

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

(i) the settlement of the U.S.

defined benefit pension plan liability;

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

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

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

Subsequent to the United States passing the Tax Cuts and Jobs Act of 2017 (the Tax Act), the Company has greater flexibility to manage cash globally.

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

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NEW ACCOUNTING PRONOUNCEMENTS

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

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

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

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

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

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

2019-12 (ASU 2019-12), Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

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

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

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

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

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

The Company's significant accounting policies are summarized in note 1 to the consolidated financial statements included in Part II, Item 8.

Financial Statements, of this Form 10-K.

Recently Issued Accounting Pronouncements

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

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

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

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

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

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

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

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

The amendments in this Update were effective for all entities as of March 12, 2020 through December 31, 2022.

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

OTHER INFORMATION

Russian Sanctions

As a result of the military conflict in Ukraine, which has led to sanctions and other penalties being levied by the United States, European Union and other countries against Russia, the Company paused all shipments and new content distribution into Russia.

The impact to the Company’s operating results includes a loss of both revenue and operating profit, as well as a tax charge associated with recording a valuation allowance against local deferred tax assets.

As of December 25, 2022, the Company has exhausted all locally held inventories, recovered all receivables and released all reserves in Russia.

LIQUIDITY AND CAPITAL RESOURCES

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In 2022, the Company primarily funded its operations and liquidity needs through cash on hand and from cash flows from operations, and when needed, used borrowings under its available lines of credit.

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

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

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However, unexpected events or circumstances such as material operating losses or increased capital or other expenditures, or the inability to otherwise access the commercial paper market, may reduce or eliminate the availability of external financial resources.

In addition, significant disruptions to credit markets may also reduce or eliminate the availability of external financial resources.

In addition, significant disruptions to credit markets may also reduce or eliminate the availability of

external financial resources.

Although the Company believes the risk of nonperformance by the counterparties to its financial facilities is not significant, in times of severe economic downturn in the credit markets, it is possible that one or more sources of external financing may be unable or unwilling to provide funding to the Company.

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

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

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

As of December 25, 2022, the Company had a total liability of $137.7 million related to this tax, $34.4 million is reflected in current liabilities while the remaining long-term payable related to the Tax Act of $103.3 million is presented within other liabilities, non-current on the consolidated balance sheets included in Part II, Item 8.

Financial Statements , of this Form 10-K.

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$57.4 million.

$57.3 million.

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

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Other liabilities 533.1 -21 % 670.7 -16 % 794.0

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

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

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

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

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

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

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

Accounts receivable, net decreased 25% in 2022 compared to 2021.

The decrease in accounts receivable was driven by lower sales and improved collections across the majority of the Company's markets during 2022.

Days sales outstanding decreased from 68 days at December 26, 2021 to 61 days at December 25, 2022, primarily due to the decrease in revenues and mix of sales, primarily in the U.S.

during 2022 as well as from the improved collections described above.

In 2021, accounts receivable balances increased 8% as a result of higher sales, partially offset by improved collections, most notably in the Company's European and Latin American markets.

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

Inventories increased 23% in 2022 compared to 2021 primarily reflecting accelerated inventory purchases attributable to the Company's Consumer Products and Wizards of the Coast businesses to mitigate the impact of certain global supply chain challenges experienced throughout 2021 and into 2022.

Beginning late in 2022, certain global supply chain constraints began to subside resulting in reduced in transit times, most notably in the U.S.

and Europe, which combined with lower than anticipated Consumer Products sales, contributed to the Company's higher inventory levels.

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

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

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

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

Prepaid expenses and other current assets increased 3% in 2022 compared to 2021.

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

The increase was driven by higher accrued royalty and licensing balances, primarily attributable to the Company's Entertainment business as well as the reclassification of accrued income balances from long-term to current.

These increases were partially offset by lower prepaid royalty balances in relation to the Company’s Marvel, POWER RANGERS and DISNEY PRINCESS royalty agreements, the disposal of certain Entertainment assets in relation to the exit of certain non-core businesses within the Entertainment segment and from lower prepaid income tax balances during 2022.

2021, prepaid expenses and other current assets increased 8% compared to 2020 due to higher accrued tax credit balances related to film and television production costs, due to increased productions and timing of tax credit claims, as well as higher unrealized gains on foreign exchange contracts.

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

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

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

Other assets increased 23% in 2022 compared to 2021.

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

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

The increase was primarily driven by higher deferred tax balances, higher investments in film and television productions and higher non-current receivable balances within the Entertainment segment.

These increases were partially offset by a lower balance for the Company's investment in Discovery Family Channel, due to distributions received during 2022.

Other assets increased 3% in 2021 compared to 2020.

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

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

These increases were

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

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

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

Accounts payable and accrued liabilities decreased 14% in 2022 compared to 2021.

The drivers of the decrease include lower accounts payable balances associated with the Company's global cost savings initiatives and the timing of payments in 2022, lower incentive bonus accruals, lower accrued royalty balances as a result of partner brand product sales declines, lower accrued freight balances due to improving supply chain conditions within certain markets, as well as the disposal of certain Entertainment liabilities in relation to the exit of non-core businesses within the Entertainment segment.

These decreases were partially offset by higher severance accrual balances related to certain cost savings initiatives mentioned above.

Accounts payable and accrued liabilities increased 15% in 2021 compared to 2020 as a result of higher account payable balances driven by an extension of payable terms, higher accrued expenses for investments in content and productions, higher accrued freight balances due to increased costs as a result of supply chain disruptions and higher incentive compensation accruals.

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

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

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

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

Other liabilities decreased 21% in 2022 compared to 2021.

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

The decrease was driven by a lower transition tax liability balance reflecting the reclassification of the 2022 installment payment due April 2023, lower long-term lease liability balances, lower deferred tax balances reflecting the amortization of certain deferred tax liabilities and the impact of foreign exchange revaluation, primarily related to the British Pound.

These decreases were partially offset by an increase to the liability for uncertain tax positions, primarily related to the capitalization of research and experimentation expenditures.

Other liabilities decreased 16% in 2021 compared to 2020.

The decrease was primarily driven by lower long-term lease liability balances, a lower transition tax liability balance and lower tax reserves.

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

Other liabilities increased 43% in 2020 compared to 2019.

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

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

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

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

Financial Statements , of this Form 10-K, expressed in millions of dollars, for each of the years ended on December 26, 2021, December 27, 2020 and December 29, 2019.

Financial Statements , of this Form 10-K, expressed in millions of dollars, for each of the years ended December 25, 2022, December 26, 2021 and December 27, 2020.

2022 2021 2020

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Operating cash flows in 2022, 2021 and 2020 included $767.7 million, $697.3 million and $438.9 million, respectively, of cash used for television program and film production.

The decrease in cash provided by operating activities during 2022 was attributable to lower earnings and higher working capital requirements, including cash utilized for accounts payable and higher spend for television program and film production.

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

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

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

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

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

Net cash flows utilized for investing activities were $313.0 million in 2022 compared to net cash flows provided by investing activities of $242.0 million in 2021 and net cash flows utilized for investing activities of $4,500.2 million in 2020.

Investing activities in 2022 reflect a cash payment of $146.3 million related to the D&D Beyond Acquisition during the second quarter of 2022.

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

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

The D&D Beyond Acquisition during 2022 was funded with cash on hand.

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

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

Additions to property, plant and equipment were $174.2 million, $132.7 million and $125.8 million in 2022, 2021 and 2020, respectively.

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

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

The cash used for the

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

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

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

Net cash (utilized) provided by financing activities was $(553.3) million, $(1,459.8) million, and $405.9 million in 2022, 2021 and 2020, respectively.

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

Net cash utilized for financing activities in 2022 included payments totaling $87.5 million related to the $1.0 billion in term loans described below, consisting of a $50.0 million principal and quarterly principal amortization payments of $37.5 million toward the Five-Year Tranche loan.

In addition, cash utilized for financing activities included as drawdowns of $258.6 million and repayments of $231.5 million related to production financing loans and cash payments of $125.0 million to repurchases the Company's Common Stock.

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

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

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

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

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

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

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

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

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

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

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

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

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

Dividends paid were $374.5 million in 2021, $372.7 million in 2020 and $336.6 million in 2019.

The Company has a long history of returning cash to its shareholders through quarterly dividends and has maintained its quarterly dividend rate of $0.68 per share throughout 2021.

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

Dividends paid were $385.3 million in 2022, $374.5 million in 2021 and $372.7 million in 2020 reflecting the Company's quarterly dividend rate increase from $0.68 per share in 2020 and 2021, to $0.70 per share in 2022.

Net repayments of short-term borrowings were $141.7 million, $5.6 million and $8.6 million in 2022, 2021 and 2020, respectively.

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Sources and Uses of Cash

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

The Company commits to inventory production, advertising and marketing expenditures in support of its consumer products business, prior to the peak fourth quarter retail selling season.

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

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

The entertainment business often expends cash for production well in advance of sale and delivery of the content.

Trading card and digital gaming revenues have shorter collection periods, but development expense occurs often years prior to release and revenue generation.

During 2021, 2020 and 2019 the Company primarily used cash from operations and, to a lesser extent, borrowings under available lines of credit, in particular production financing vehicles, to fund its working capital.

In the Company's entertainment business, cash expenditures for productions are often made well in advance of sale and delivery of the content produced whereas trading card and digital gaming revenues have shorter collection periods, but product development expense often occurs years prior to release and revenue generation.

During 2022, 2021 and 2020 the Company primarily used cash from

operations and, to a lesser extent, borrowings under available lines of credit, in particular production financing vehicles, to fund its working capital.

The Company has an agreement with a group of banks which provides for a commercial paper program (the "Program").

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If, for any reason, the Company is unable to access the commercial paper market, the Company intends to use the revolving credit agreement to meet the Company's short-term liquidity needs.

At December 26, 2021, the Company had no outstanding borrowings related to the Program and has not borrowed under the program in 2021 or 2020.

The Company has a second amended and restated revolving credit agreement with Bank of America, N.A., as administrative agent, swing line lender and a letter of credit issuer and lender and certain other financial institutions, as lenders thereto (the "Amended Revolving Credit Agreement"), which provides the Company with commitments having a maximum aggregate principal amount of $1,500.0 million.

At December 25, 2022, the Company had no outstanding borrowings related to the Program.

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

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However, letters of credit outstanding under this facility as of December 25, 2022 were approximately $4.0 million.

Amounts available and unused under the committed line, at December 26, 2021 were approximately $1,496.9 million, inclusive of borrowings under the Company’s commercial paper program.

Amounts available and unused under the committed line, at December 25, 2022 were approximately $1.5 billion, inclusive of borrowings under the Company’s commercial paper program.

The Company also has other uncommitted lines from various banks, of which approximately $8.7 million was utilized at December 25, 2022.

Of the amount utilized under, or supported by, the uncommitted lines, approximately $0.7 million and $10.5 million represent outstanding short-term borrowings and letters of credit, respectively.

Of the amount utilized under, or supported by, the uncommitted lines, approximately $7.9 million and $0.8 million represent letters of credit and outstanding short-term borrowings, respectively.

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

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On December 30, 2019, the Company completed the acquisition of eOne and on that date, borrowed the full amount of $1.0 billion under the Term Loan Facilities.

Of the Three-Year Tranche $400 million principal balance, the Company repaid $100 million during the fourth quarter 2020 and the remaining $300 million balance during 2021.

Of the Five-Year Tranche $600.0 million principal balance, the Company repaid $22.5 million and $180.0 million during 2020 and 2021, respectively.

As of December 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 $290.0 million in the following increments:

$22.5 million in 2020;

$180.0 million in 2021;

and, $87.5 million in 2022.

The Company is subject to certain financial covenants contained in this agreement and, as of December 25, 2022, the Company was in compliance with these covenants.

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Financial Statements, of this Form 10-K.

During 2021 and 2020, the Company used production financing to fund certain of its film and television productions which were typically arranged on an individual production basis by special purpose production subsidiaries.

Production financing facilities were secured by the assets and future revenue of the individual production

subsidiaries and were non-recourse to the Company's assets.

During 2021, the Company had drawdowns of $144.0 million and repayments of $140.1 million towards its production financing facilities.

As of December 26, 2021 the Company outstanding production financing borrowings related to these facilities were $170.1 million, all of which are recorded within the current portion of long-term debt in the Company's consolidated balance sheets, included in Part II, Item 8.

Financial Statements, of this Form 10-K.

During November 2021, the Company secured a senior revolving film and television production credit facility (the “RPCF”) with MUFG Union Bank, N.A., as administrative agent and lender and certain other financial institutions, as lenders thereto (the “Revolving Production Financing Agreement”) which provides the Company with commitments having a maximum aggregate principal amount of $250.0 million.

The Revolving Production Financing Agreement also provides the Company the option to request a commitment increase up to an aggregate additional amount of $150.0 million subject to agreement of the lenders.

The 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 the assets and

future revenues of such production subsidiaries, which are non-recourse to the Company's assets, or through a senior revolving credit facility obtained in November 2021, dedicated to production financing.

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.

The Revolving Production Financing Agreement also provides the Company with the option to request a commitment increase up to an aggregate additional amount of $150.0 million subject to agreement of the lenders.

The Revolving Production Financing Agreement extends through November 22, 2024.

The Company will use the RPCF to fund certain of the Company’s original film and TV production costs.

Borrowings under the RPCF will be non-recourse to the Company's assets .

The Company uses the RPCF to fund certain of the Company’s original film and TV production costs.

Borrowings under the RPCF are non-recourse to the Company's assets.

The Company expects to utilize the revolving production financing facility for the majority of its future production financing needs.

During 2022, the Company had total drawdowns of $258.6 million and repayments of $231.5 million towards these production financing facilities.

As of December 25, 2022, the Company had outstanding production financing borrowings related to these facilities of $195.6 million, $53.2 million of which are recorded within the current portion of long-term debt and $142.4 million are recorded within short-term borrowings in the Company's consolidated balance sheets, included in Part II, Item 8.

Financial Statements, of this Form 10-K.

The Company has principal amounts of long-term debt at December 25, 2022 of $3.8 billion due at varying times from 2024 through 2044.

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Financial Statements, of this Form 10-K for additional information on long-term debt and long-term debt interest repayment, respectively.

In November of 2019, the Company completed an underwritten public offering of 10.6 million shares of common stock, par value $0.50 per share, at a public offering price of $95.00 per share.

Net proceeds from this public offering were approximately $975.2 million, after deducting underwriting discounts and commissions and offering expenses of approximately $31.1 million.

The net proceeds were used to finance, in part, the acquisition of eOne and to pay related costs and expenses.

See note 9 to the consolidated financial statements in Part II, Item 8.

Financial Statements, of this Form 10-K for more information on the Company's eOne acquisition financing.

Under a multi-year game production agreement entered with Cartamundi, the Company has purchase commitments of $95.0 million in 2022 and $85.0 million in 2023.

Under a multi-year game production agreement entered with Cartamundi, the Company has purchase commitments of $85.0 million in 2023.

The Company also has various third-party, inventory and tooling purchase commitments related primarily to the Company's Consumer Products segment which may total approximately $367.7 million in 2023.

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

In 2021, Hasbro maintained its quarterly dividend rate of $0.68 per share.

In February 2022 the Company’s Board announced a 3% increase in the Company’s quarterly dividend rate to $0.70 per share for the quarterly dividend scheduled to be paid in May 2022.

Hasbro increased its quarterly dividend rate from $0.68 per share to $0.70 per share effective for the dividend paid in May 2022.

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

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

Since 2005, Hasbro has repurchased 108.6 million shares at a total cost of $4.0 billion and an average price of $36.44 per share.

Following the Company's acquisition of eOne, the Company temporarily suspended its share repurchase program to prioritize deleveraging.

During the second quarter of 2022, given the Company's progress towards reducing debt, the Company resumed its share repurchase activity and has since repurchased approximately 1.4 million shares at a total cost of $125.0 million and at an average price of $87.46 per share.

At December 25, 2022, Hasbro had $241.6 million remaining available under these share repurchase authorizations.

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

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

There were no share repurchases made in 2020 or 2021, however a share repurchase program continues to be an important long-term component of Hasbro’s capital allocation strategy and Hasbro has $367 million available under its authorized share repurchase programs.

We anticipate resuming share repurchase when it is not expected to materially impact the timeline to reach our deleverage targets.

The Company believes this could be in the second half of 2023 or sooner, depending on business performance and other factors.

The Company has no obligation to repurchase shares under the authorization, and the timing, actual number, and value of the shares that are repurchased, if any, will depend on a number of factors, including the price of the Company’s stock and the Company's generation of, and uses for, cash.

The Company believes that cash from operations, and, if necessary, its committed line of credit and other borrowing facilities, will allow the Company to meet its obligations over the next twelve months.

The Company intends to resume this program when it will not materially impact its ability to de-lever.

Critical Accounting Policies and Significant Estimates

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These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the periods presented.

The critical accounting policies which management believes are the most critical to aid in fully understanding and evaluating the Company’s reported financial results include film and television production costs, recoverability of goodwill, intangible assets, income taxes and business combinations.

The critical accounting policies which management believes are the most critical to aid in fully understanding and evaluating the Company’s reported

financial results include film and television production costs, recoverability of goodwill, intangible assets, income taxes and business combinations.

Additionally, the Company identified the valuation of the Company’s equity method investment in Discovery Family Channel as a significant accounting estimate.

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If an event occurs or circumstances change that indicate that the carrying value of a reporting unit exceeds its fair value, the Company will perform an interim goodwill impairment test at that time.

The Company may perform a qualitative assessment and bypass the quantitative impairment testing process, if it is not more likely than not that impairment exists.

If it is more likely than not that impairment exists, a quantitative goodwill impairment test is performed.

The Company may perform a qualitative assessment and bypass the quantitative impairment testing process, if it is not more likely than not that the carrying value of a reporting unit exceeds its fair value.

If it is more likely than not the carrying value exceeds its fair value, a quantitative goodwill impairment test is performed.

When performing a quantitative impairment test, goodwill is tested for impairment by comparing the carrying value to the estimated fair value of the reporting unit which is calculated using an income approach.

Other intangible assets with indefinite lives are tested for impairment by comparing their carrying value to their estimated fair value.

In 2020, following the acquisition of eOne during the first quarter, the Company allocated its $4.6 billion purchase price to tangible and identifiable intangible assets acquired and liabilities assumed, based on their estimated fair values as of the acquisition date.

The excess of the purchase price over those fair values amounted to $3.2 billion and was recorded to goodwill and allocated to the Company's reportable segments as follows:

Entertainment:

$2.241 million and Consumer Products:

$954.0 million.

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 third quarter of 2022, the Company determined to exit certain non-core businesses within the Entertainment segment.

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.

During the fourth quarter of 2022, the Company performed a qualitative goodwill assessment with respect to each of its reporting units.

Based on its qualitative assessments, the Company determined it is not more likely than not that the carrying value exceeds the fair value for any of its reporting units and as a result, the Company concluded it was not necessary to perform a quantitative test for impairment of goodwill for any of its reporting units during 2022.

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

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

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

See note 6 to the Company's consolidated financial

statements in Part II, Item 8.

As a result of these changes, the Company reallocated its goodwill among the revised reporting units based on the

change in relative fair values of the respective reporting units.

See note 6 to the Company's consolidated financial statements in Part II, Item 8.

Financial Statements, of this Form 10-K for details on the allocation of goodwill across the Company's new reporting structure.

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The quantitative analysis concluded that the fair values of the Company’s reporting units exceeded their carrying values.

As a result of this assessment, the Company concluded there was no impairment to any of its reporting units as of December 26, 2021 other than the Music impairment loss noted above.

During the fourth quarter of 2020 the Company performed a qualitative goodwill assessment with respect to each of its reporting units, including an assessment of eOne.

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

Based on the conclusions reached, the Company determined that it was not necessary to perform a quantitative assessment for the goodwill of the reporting units in 2020.

As a result of these assessments, the Company concluded there was no impairment to any of its reporting units as of December 26, 2021 other than the Music impairment loss noted above.

The estimation of future cash flows utilized in the evaluation of the Company’s goodwill requires significant judgments and estimates with respect to future revenues related to the respective asset and the future cash outlays related to those revenues.

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Intangible assets, other than those with indefinite lives, are reviewed for indications of impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable.

During the fourth quarter of 2022, following the decision to cancel certain projects in conjunction with the Company's Blueprint 2.0 strategy shift, it was determined that there was a partial impairment of the Company's definite-lived Power Rangers intangible asset.

As a result of these cancelled projects, changes to anticipated revenues and related cash flows led to the determination that carrying values of these intangible assets exceeded their related estimated future cash flows, thus indicating impairment.

As a result, charges of $281.0 million were recorded in the fourth quarter of 2022 within Selling, Distribution and Administration within the Corporate and Other segment.

During 2020, the Company determined that certain of its definite-lived intangible entertainment and production assets related to properties, from both the legacy Hasbro business as well as properties acquired through the eOne acquisition, were impaired.

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The Swiss tax reform measures were effective on January 1, 2020.

Changes in tax reform include the abolishment of preferential tax regimes for holding

companies, domicile companies and mixed companies at the cantonal level.

Changes in tax reform include the abolishment of preferential tax regimes for holding companies, domicile companies and mixed companies at the cantonal level.

The enacted changes in Swiss federal and cantonal tax, including cantonal transitional provisions adopted in 2021, were not material to the Company’s financial statements.

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Determining the fair value of assets acquired, liabilities assumed and noncontrolling interests requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items.

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

As further analysis of assets including program rights, investment in films and television content, intangible assets, as well as deferred revenue, noncontrolling interests, tax and certain other liabilities was completed during the year, additional information on the assets acquired and liabilities assumed became available.

Changes in the information related to the net assets acquired changed the amount of the purchase price assigned to goodwill, and as a result, the preliminary fair values disclosed were adjusted as additional information was obtained and valuations were finalized.

Provisional adjustments were recognized during the reporting periods in which the adjustments were determined.

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

Financial Statements, of this Form 10-K.

Valuation of Equity Method Investment in Discovery Family Channel

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

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

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

During 2022, the Company and Discovery agreed to extend the option exercise window to March 31, 2025.

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

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As a result, the Company recorded an impairment loss of $74.1 million, related to its investment in the Network, which is included in other (income) expense, net in the consolidated statements of operations for the year ended December 26, 2021.

As result of the Network's revaluation, the Company recorded a gain of $20.1 million in relation to the Company's Discovery option agreement described above.

As result of the Network's revaluation, during the fourth quarter of 2021, the Company recorded a gain of $20.1 million in relation to the Company's Discovery option agreement described above.

During the fourth quarter of 2022, the Company reviewed its investment in the Network for impairment and concluded there was no impairment to its investment in the Network as of December 25, 2022.

Contractual Obligations and Commercial Commitments

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Results of operations may be affected primarily by changes in the value of the U.S.

dollar, Euro, British pound sterling, Canadian dollar, Brazilian real, Russian ruble and Mexican peso and, to a lesser extent, other currencies in Latin American and Asia Pacific countries.

To manage this exposure, the Company has hedged a portion of its forecasted foreign currency transactions using foreign exchange forward contracts.

dollar, Euro, British pound sterling, Canadian dollar, Brazilian real, and Mexican peso and, to a lesser extent, other currencies in Latin American and Asia Pacific countries.

To manage this exposure, the Company has hedged a portion of its forecasted foreign currency transactions using foreign exchange forward contracts and foreign exchange option contracts.

At December 25, 2022, the Company estimates that a hypothetical immediate 10% depreciation of the U.S.

dollar against all foreign currencies included in these foreign exchange forward contracts could result in an approximate $21.8 million decrease in the fair value of these instruments.

A decrease in the fair value of these instruments would be substantially offset by increases in the value of the forecasted foreign currency transactions.

A decrease in the fair value of these instruments would be offset by increases in the value of the forecasted foreign currency transactions.

The Company is also exposed to foreign currency risk with respect to its net cash and cash equivalents or short-term borrowing positions in currencies other than the U.S.

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A significant change in foreign exchange rates can materially impact the Company’s revenues and earnings due to translation of foreign-denominated revenues and expenses.

The Company does not hedge against translation impacts of foreign exchange.

From time to time, affiliates of the Company may make or receive intercompany loans in currencies other

than their functional currency.

The Company does not hedge against translation impacts of foreign

From time to time, affiliates of the Company may make or receive intercompany loans in currencies other than their functional currency.

The Company manages this exposure at the time the loan is made by using foreign exchange contracts.

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Included in accumulated other comprehensive earnings at December 25, 2022 are deferred gains of $3.0 million, net of tax, related to these derivatives.

In addition, during the third quarter of 2019 the Company hedged a portion of its exposure to fluctuations in the British pound sterling in relation to the eOne acquisition purchase price and other transaction related costs using a series of both foreign exchange forward and option contracts.

These contracts did not qualify for hedge accounting and as such, were marked to market through the Company's Consolidated Statement of Operations.

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

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

The remaining contracts matured on December 30, 2019, the closing date of the transaction.

The net gains or losses recognized in 2020 were immaterial to the Company's consolidated financial statements.

At December 25, 2022, the Company had fixed rate long-term debt of $3,484.9 million.

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To the extent that retailers do not sell as much of their year-end inventory purchases during this holiday selling season as they had anticipated, their demand for additional product earlier in the following fiscal year may be curtailed, thus negatively impacting the Company’s future revenues.

However, in 2021, the Company's inventory levels increased 40% compared to 2020.

This increase is the result of ongoing global supply chain disruptions, which began in late 2020 as economies slowly recovered from COVID-19 shutdowns, while consumer demand began to outpace the capacity of the global supply chain infrastructure.

Supply chain inefficiencies including overcrowding of cargo ports and shipping container and truck transportation shortages, have led to higher costs for ocean, air and over the road freight and delays in the availability of products, as inventory remains in transit for extended periods of time.

These and other disruptions are expected to continue throughout 2022.

In 2022, the Company's inventory levels increased 23% compared to 2021.

This increase reflects the impact of global supply chain disruptions, which began in late 2020 and continued into 2022, related to the COVID-19 pandemic and its after-effects.

During the first half of 2022, the Company accelerated certain inventory purchases to ensure sufficient finished goods and raw material availability ahead of expected periods of high consumer demand.

However, during the third quarter of 2022, as the effects of supply chain disruptions began to subside, most notably in the U.S, and Europe, the accelerated inventory purchases did not see corresponding increases in sales as consumers were impacted by the economic environment, including lower discretionary consumer income due to higher inflation and rising interest rates, leading to higher inventory levels as compared to prior years.

In response, during the third quarter the Company launched incremental year-over-year promotional activity behind key holiday toy and game items to reduce inventory on hand and at retail and is continuing to manage inventory levels through closeout sales and by monitoring consumer purchase patterns to ensure adequate supply of new product while clearing excess supply to mitigate the risk of inventory obsolescence.

In addition to these inventory management challenges, the bankruptcy or other lack of success of one of the Company’s significant retailers could negatively impact the Company’s future revenues.

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In addition, entertainment business operating results fluctuate due to expenses recorded in relation to film and television productions and content such as program amortization costs and advertising expenses, which are incurred and recognized, beginning prior to initial releases and then continue throughout the related distribution windows.

The impact of inflation on the Company's business operations has been significant during 2021 compared to prior years.

However, due to mitigating actions taken by the Company, such as modest price increases when deemed necessary, the impact of general price inflation on our 2021 financial position and results of operations has not been significant.

The Company continues to monitor the impact of inflation to its business operations on an ongoing basis and may need to adjust its prices further to mitigate the impacts of changes to the rate of inflation during 2022 or in future years.

However, future volatility of general price inflation and the impact of inflation on costs and availability of materials, costs for shipping and warehousing and other operational overhead could adversely affect the Company's financial results.

The impact of inflation on the Company's business operations has been significant during 2022;

however, due to mitigating actions taken by the Company, such as price increases where deemed necessary, the impact of general price inflation on our financial position and results of operations has been reduced.

The Company monitors the impact of inflation to its business operations on an ongoing basis and may need to adjust its prices further to mitigate the impact of changes to the rate of inflation in future periods.

However, future volatility of general price inflation could affect consumer purchases of our products and spending on entertainment.

Additionally, the impact of inflation on costs and availability of materials, costs for shipping and warehousing and other operational overhead, could adversely affect the Company's financial results.

Other Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis