What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-03 compared with 2022-10-26 · 227 added, 395 removed, 545 unchanged (53% of the section changed)

3 unchanged sentences

(Millions of Dollars Except Share Data)

September 25,

2022 September 26,

2023 March 27,

2022 December 25,

6 unchanged sentences

Prepaid expenses and other current assets 754.4 621.4 676.8

Assets held for sale 16.8 — —

Total current assets 2,539.2 3,255.3 2,999.1

17 unchanged sentences

1,293.8 1,371.4 1,506.8

Liabilities held for sale 15.0 — —

Total current liabilities

12 unchanged sentences

Authorized 600,000,000 shares;

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

issued 220,286,736 shares at April 2, 2023, March 27, 2022, and December 25, 2022

110.1 110.1 110.1

6 unchanged sentences

Treasury stock, at cost;

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

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

81,687,608 shares at April 2, 2023;

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

and 82,106,383 shares at December 25, 2022

10 unchanged sentences

(Millions of Dollars Except Per Share Data)

Quarter Ended Nine Months Ended

September 25,

2022 September 26,

2021 September 25,

2022 September 26,

Quarter Ended

2023 March 27,

Net revenues $ 1,001.0 $ 1,163.1

7 unchanged sentences

Selling, distribution and administration 317.1 307.1

Loss on assets held for sale 23.1 — 23.1 —

Loss on disposal of business — — — 101.8

Total costs and expenses 983.1 1,043.1

5 unchanged sentences

Total non-operating expense, net 38.9 39.8

Earnings before income taxes 165.6 323.4 425.7 494.0

Earnings (loss) before income taxes ( 21.0 ) 80.2

Income tax expense 0.7 17.3

Net earnings 128.2 254.9 331.6 350.5

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

Net earnings attributable to Hasbro, Inc.

Net earnings (loss) ( 21.7 ) 62.9

Net earnings attributable to noncontrolling interests 0.4 1.7

Net earnings (loss) attributable to Hasbro, Inc.

$ ( 22.1 ) $ 61.2

Net earnings per common share:

Net earnings (loss) per common share:

Basic $ ( 0.16 ) $ 0.44

3 unchanged sentences

AND SUBSIDIARIES

Consolidated Statements of Comprehensive Earnings

Consolidated Statements of Comprehensive Earnings (Loss)

(Millions of Dollars)

Quarter Ended Nine Months Ended

September 25,

2022 September 26,

2021 September 25,

2022 September 26,

Net earnings $ 128.2 $ 254.9 $ 331.6 $ 350.5

Quarter Ended

2023 March 27,

Net earnings (loss) $ ( 21.7 ) $ 62.9

Other comprehensive earnings (loss):

1 unchanged sentence

24.3 ( 10.7 )

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

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

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

Net losses on cash flow hedging activities, net of tax ( 4.6 ) ( 1.2 )

Reclassifications to earnings, net of tax:

Net gains (losses) on cash flow hedging activities ( 5.9 ) 1.1 ( 7.2 ) 1.7

Net gains on cash flow hedging activities ( 2.1 ) —

Amortization of unrecognized pension and postretirement amounts

0.1 0.2 0.3 0.6

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

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

Total comprehensive earnings attributable to Hasbro, Inc.

Total other comprehensive earnings (loss), net of tax $ 17.5 $ ( 11.6 )

Total comprehensive earnings attributable to noncontrolling interests 0.4 1.7

Total comprehensive earnings (loss) attributable to Hasbro, Inc.

$ ( 4.6 ) $ 49.6

3 unchanged sentences

(Millions of Dollars)

Nine months ended

September 25,

2022 September 26,

Three months ended

2023 March 27,

Cash flows from operating activities:

Net earnings $ 331.6 $ 350.5

Adjustments to reconcile net earnings to net cash provided by operating activities:

Net earnings (loss) $ ( 21.7 ) $ 62.9

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:

Depreciation of plant and equipment 23.9 25.1

Amortization of intangibles 23.1 27.1

Loss on assets held for sale 23.1 —

Loss on disposal of business — 101.8

Program cost amortization 122.5 138.5

3 unchanged sentences

Change in operating assets and liabilities net of acquired balances:

Decrease (increase) in accounts receivable 201.8 ( 83.8 )

Decrease in accounts receivable 454.6 559.8

Increase in inventories ( 32.5 ) ( 99.6 )

Decrease in prepaid expenses and other current assets 34.4 56.7

(Increase) decrease in prepaid expenses and other current assets ( 75.4 ) 42.1

Program spend, net ( 266.3 ) ( 169.4 )

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

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

Decrease in accounts payable and accrued liabilities ( 167.0 ) ( 464.4 )

Other 15.2 24.0

2 unchanged sentences

Additions to property, plant and equipment ( 53.2 ) ( 29.2 )

Acquisitions ( 146.3 ) —

Proceeds from sale of business, net of cash — 379.2

Other ( 2.4 ) 5.3

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

Net cash utilized by investing activities ( 55.6 ) ( 23.9 )

Cash flows from financing activities:

1 unchanged sentence

Repayments of borrowings with maturity greater than three months ( 35.5 ) ( 133.9 )

Net proceeds from other short-term borrowings 121.6 ( 6.2 )

Purchases of common stock ( 125.0 ) —

Net (repayments) proceeds from other short-term borrowings ( 7.7 ) 103.3

Stock-based compensation transactions — 70.2

1 unchanged sentence

Payments related to tax withholding for share-based compensation ( 14.0 ) ( 19.3 )

Debt extinguishment costs — ( 9.1 )

Other ( 3.9 ) ( 4.6 )

1 unchanged sentence

Effect of exchange rate changes on cash ( 3.5 ) 5.4

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

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

Net decrease in cash, cash equivalents and restricted cash ( 467.6 ) ( 268.5 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 126.9 ) 38.7

Cash, cash equivalents and restricted cash at beginning of year 513.1 1,019.2

8 unchanged sentences

(Millions of Dollars)

Three Months Ended September 25, 2022

Three Months Ended April 2, 2023

Stock Additional

4 unchanged sentences

Equity Redeemable Noncontrolling Interests

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

Net earnings attributable to Hasbro, Inc.

— — 129.2 — — — 129.2 —

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

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

Stock-based compensation transactions — ( 1.5 ) — — ( 0.1 ) — ( 1.6 ) —

Purchases of common stock — — — — ( 1.0 ) — ( 1.0 ) —

Stock-based compensation expense — 23.0 — — 0.2 — 23.2 —

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

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

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

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

Three Months Ended September 26, 2021

Stock Additional

Paid-in Capital Retained

Earnings Accumulated Other

Comprehensive Loss Treasury

Stock Noncontrolling Interests Total

Shareholders'

Equity Redeemable Noncontrolling Interests

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

Balance, December 25, 2022 $ 110.1 2,540.6 4,071.4 ( 254.9 ) ( 3,634.4 ) 29.1 $ 2,861.9 $ —

Net loss attributable to Hasbro, Inc.

1 unchanged sentence

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

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

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

Stock-based compensation expense — 19.1 — — — — 19.1 —

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

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

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

AND SUBSIDIARIES

Consolidated Statements of Shareholders' Equity and Redeemable Noncontrolling Interests

(Millions of Dollars)

Nine Months Ended September 25, 2022

Stock Additional

Paid-in Capital Retained

Earnings Accumulated Other Comprehensive Loss Treasury

Stock Noncontrolling Interests Total

Shareholders'

Equity Redeemable Noncontrolling Interests

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

Net earnings attributable to Hasbro, Inc.

— 332.4 — — — 332.4 —

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

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

Other comprehensive loss — — — ( 89.6 ) — — ( 89.6 ) —

Other comprehensive earnings — — — 17.5 — — 17.5 —

Stock-based compensation transactions — ( 19.0 ) — — 5.0 — ( 14.0 ) —

Purchases of common stock — — — — ( 125.0 ) — ( 125.0 ) —

Stock-based compensation expense — 15.7 — — — — 15.7 —

2 unchanged sentences

Buyout of redeemable noncontrolling interest — ( 2.1 ) — — — — ( 2.1 ) —

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

Nine Months Ended September 26, 2021

Balance, April 2, 2023 $ 110.1 2,535.7 3,951.8 ( 237.4 ) ( 3,629.4 ) 27.9 $ 2,758.7 $ —

Three Months Ended March 27, 2022

Stock Additional

9 unchanged sentences

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

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

Other comprehensive loss — — — ( 11.6 ) — — ( 11.6 ) —

3 unchanged sentences

Distributions paid to noncontrolling owners and other foreign exchange — — — — — ( 3.7 ) ( 3.7 ) ( 0.9 )

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

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

AND SUBSIDIARIES

3 unchanged sentences

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

and all majority-owned subsidiaries ("Hasbro" or the "Company") as of September 25, 2022 and September 26, 2021, and the results of its operations and cash flows and shareholders' equity for the periods then ended in accordance with accounting principles generally accepted in the United States of America ("U.S.

and all majority-owned subsidiaries ("Hasbro" or the "Company") as of April 2, 2023 and March 27, 2022, and the results of its operations and cash flows and shareholders' equity for the periods then ended in accordance with accounting principles generally accepted in the United States of America ("U.S.

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

1 unchanged sentence

Actual results could differ from those estimates.

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

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

The results of operations for the quarter ended September 25, 2022 are not necessarily indicative of results to be expected for the full year 2022, nor were those of the comparable 2021 period representative of those actually experienced for the full year 2021.

The quarters ended April 2, 2023 and March 27, 2022 were 14-week and 13-week periods, respectively.

The results of operations for the quarter ended April 2, 2023 are not necessarily indicative of results to be expected for the full year 2023, nor were those of the comparable 2022 period representative of those actually experienced for the full year 2022.

Significant Accounting Policies

1 unchanged sentence

Blueprint 2.0 and Operational Excellence

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

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

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

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

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

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

See Note 4 and Item 2.

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

D&D Beyond Acquisition

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

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

The allocation of assets acquired includes $ 81.4 million to intangible assets, $ 64.7 million to goodwill, with the remainder allocated to property, plant, and equipment.

eOne Music Sale

On June 29, 2021, the Company completed the sale of its Entertainment One music business ("eOne Music") for net proceeds of $ 397.0 million, including the sales price of $ 385.0 million and $ 12.0 million of closing adjustments related to working capital and net debt calculations.

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

Based on the value of the net assets held by eOne Music, which included goodwill and intangible assets allocated to eOne Music as part of the Company’s acquisition of Entertainment One in December 2019 (the “eOne Acquisition"), the Company recorded a pre-tax non-cash goodwill impairment charge of $ 101.8 million within Loss on Disposal of Business on the consolidated statements of operations for the nine ended September 26, 2021.

The Company also recorded pre-tax cash transaction expenses of $ 9.5 million within Selling, Distribution and Administration expenses on the consolidated statements of operations for the second quarter of 2021.

On October 4, 2022, following a several months long strategic review of our business led by our CEO, the Company announced a go-forward strategic plan guided by our new Blueprint 2.0, a consumer-centric framework for bringing compelling and expansive brand experiences to audiences around the world.

During the review, the Company identified opportunities to focus and scale its business, enhance operational excellence, including through specialized organizational programs and supply chain transformation, to drive growth and profit and enhance shareholder value.

The Company is increasing strategic investment in its most valuable and profitable franchises across toys, games, entertainment and licensing, and exiting certain non-core aspects of the business.

TV and Film Business

On November 17, 2022, the Company announced an authorization by Hasbro's Board of Directors to initiate a marketing process to explore a sale of parts of our eOne TV and film business that do not directly support the Company’s Branded Entertainment strategy.

In the event a transaction were to occur, Hasbro is expected to maintain the capability to develop and produce animation, digital shorts, scripted TV and theatrical films for audiences related to core Hasbro IP.

The family brands business, including the brands PEPPA PIG and PJ MASKS, is not expected to be part of any sale transaction involving parts of the eOne film and television business.

The sale process was ongoing as of the close of the first quarter of 2023 however, there can be no assurance that the process will result in a sale.

Brand Portfolio Realignment

Effective for the first quarter 2023, we realigned our brand portfolios to correspond with the evolution of our Blueprint 2.0 strategy.

We are focusing on fewer, bigger, more profitable brands that showcase our leadership in preschool toys, action figures and accessories, games, arts & crafts, and outdoor action brands.

Our new product categories beginning in the first quarter of 2023 are as follows:

Franchise Brands - A refreshed group of our most financially significant brands which we consider to have the greatest long-term potential including DUNGEONS & DRAGONS, Hasbro Gaming, MAGIC:

THE GATHERING, NERF, PEPPA PIG, PLAY-DOH, and TRANSFORMERS.

Partner Brands - The Partner Brands category includes those brands we license from other parties such as Disney's STAR WARS and MARVEL brands as well as other partners, for which we develop toy and game products, with a focus on those key Partner Brands that give us the biggest growth potential and where we can lead and innovate in the category.

Portfolio Brands - Our Portfolio Brands category includes those brands we own or control which we feel have upside in revenue and profitability that have not yet grown to the significance of a franchise brand.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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

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

Dividend Equivalent Units

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

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

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

The dividend equivalent value of forfeitable DEUs is treated as a reduction of retained earnings or, if the Company is in a retained deficit position, as a reduction of additional paid-in capital.

Non-Hasbro Branded Film & TV - The Non-Hasbro Branded Film & TV category includes non-Hasbro-branded film, TV and other entertainment related revenues.

All Hasbro-branded content is included in the portfolios noted above.

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

3 unchanged sentences

Recently Adopted Accounting Standards

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

As of April 2, 2023, there were no recently adopted accounting standards that had a material effect on the Company’s financial statements.

Issued Accounting Pronouncements

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

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

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

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

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

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

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

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

As of April 2, 2023, there were no recently issued accounting pronouncements that had a material effect on the Company’s financial statements.

(2) Revenue Recognition

Contract Assets and Liabilities

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

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

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

4 unchanged sentences

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

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

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

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

1 unchanged sentence

(Millions of Dollars and Shares Except Per Share Data)

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

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

Contract assets - current $ 361.2 $ 263.3 $ 286.9

Contract assets - long term 157.5 108.1 104.2

Total $ 518.7 $ 371.4 $ 391.1

Contract liabilities - current $ 132.2 $ 147.0 $ 114.1

Contract liabilities - long term 1.8 9.7 7.1

Total $ 134.0 $ 156.7 $ 121.2

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

In addition, for the nine months ended September 25, 2022, the Company recognized $ 59.0 million of contract liabilities that were included in the December 26, 2021 balances.

The changes in carrying amounts of contract assets and liabilities for the quarter ended April 2, 2023 are as follows:

April 2, 2023

Balance at beginning of the year $ 594.4

Recognized in current year 213.8

Amounts reclassified to accounts receivable ( 218.7 )

Foreign currency impact 7.7

Ending Balance $ 597.2

Balance at beginning of the year $ 113.0

Recognized in current year 80.3

Amounts in beginning balance reclassified to revenue ( 53.3 )

Current year amounts reclassified to revenue ( 22.5 )

Foreign currency impact ( 2.2 )

Ending Balance $ 115.3

Unsatisfied performance obligations

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

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

As of April 2, 2023, unrecognized revenue attributable to unsatisfied performance obligations expected to be recognized in the future was $ 293.8 million.

Of this amount, we expect to recognize $ 244.4 million in the remainder of 2023, $ 38.0 million in 2024, $ 11.3 million in 2025 and $ 0.1 million in 2026.

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Accounts Receivable and Allowance for Credit Losses

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

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

The Company’s balance for accounts receivable on the consolidated balance sheets as of April 2, 2023 and March 27, 2022 are primarily from contracts with customers.

The Company had no material expense for credit losses for the quarters ended April 2, 2023 and March 27, 2022.

Disaggregation of revenues

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

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

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

Tabletop Gaming and Digital and Licensed Gaming;

1 unchanged sentence

Film & TV, Family Brands, and Other.

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

Franchise Brands, Partner Brands, Hasbro Gaming, Emerging Brands, and TV/Film/Entertainment.

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

Franchise Brands, Partner Brands, Portfolio Brands, and Non-Hasbro Branded Film & TV.

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

2 unchanged sentences

(Millions of Dollars and Shares Except Per Share Data)

(3) Earnings Per Share

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

(3) Earnings (Loss) Per Share

Net earnings (loss) per share data for the quarters ended April 2, 2023 and March 27, 2022 were computed as follows:

Quarter Basic Diluted Basic Diluted

Net earnings attributable to Hasbro, Inc.

$ 129.2 129.2 $ 253.2 253.2

Average shares outstanding 138.3 138.3 138.1 138.1

Effect of dilutive securities:

Options and other share-based awards — 0.2 — 0.4

Equivalent Shares 138.3 138.5 138.1 138.5

Net earnings attributable to Hasbro, Inc.

per common share $ 0.93 0.93 $ 1.83 1.83

Nine Months Basic Diluted Basic Diluted

Net earnings attributable to Hasbro, Inc.

Net (loss) earnings attributable to Hasbro, Inc.

$ ( 22.1 ) ( 22.1 ) $ 61.2 61.2

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Equivalent Shares 138.6 138.6 139.3 139.6

Net earnings attributable to Hasbro, Inc.

Net (loss) earnings attributable to Hasbro, Inc.

per common share $ ( 0.16 ) ( 0.16 ) $ 0.44 0.44

For the quarter and nine months ended September 25, 2022, options and restricted stock units totaling 2.9 million and 2.8 million, respectively, were excluded from the calculation of diluted earnings per share because to include them would have been anti-dilutive.

For the quarter and nine months ended September 26, 2021, options and restricted stock units totaling 2.1 million and 2.2 million, respectively, were excluded from the calculation of diluted earnings per share because to include them would have been anti-dilutive.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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

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

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

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

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

For the quarters ended April 2, 2023 and March 27, 2022, options and restricted stock units totaling 4.2 million and 2.5 million, respectively, were excluded from the calculation of diluted earnings per share because to include them would have been anti-dilutive.

Of the fiscal 2023 amount, 2.0 million shares would have been included in the calculation of diluted shares had the Company not had a net loss for the quarter ended April 2, 2023.

Assuming that these options and restricted stock units were included, under the treasury stock method, they would have resulted in an additional 0.1 million shares being included in the diluted earnings per share calculation for the quarter ended April 2, 2023.

Changes in the carrying amount of goodwill, by operating segment, for the quarters ended April 2, 2023 and March 27, 2022 are as follows:

Consumer Products Wizards of the Coast and Digital Gaming Entertainment Total

Balance at December 25, 2022 $ 1,584.7 371.5 1,513.9 $ 3,470.1

Acquired during the period — 64.7 — 64.7

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

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

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

Balance at April 2, 2023 $ 1,584.7 371.5 1,513.9 $ 3,470.1

Consumer Products Wizards of the Coast and Digital Gaming Entertainment Total

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

Goodwill allocation 199.4 254.2 ( 453.6 ) —

Foreign exchange translation ( 0.1 ) 0.2 ( 0.4 ) ( 0.3 )

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

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

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

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

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

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

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

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

Based on the value of the net assets held by eOne Music, which included goodwill and intangible assets allocated to eOne Music as part of the eOne Acquisition, the Company recorded a pre-tax non-cash goodwill impairment charge of $ 101.8 million, during the second quarter of 2021, within Loss on Disposal of Business in the Consolidated Statements of Operations, and within the Entertainment segment.

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

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

Condensed Notes to Consolidated Financial Statements

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(5) Other Comprehensive Earnings (Loss)

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

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

Quarter Ended Nine months ended

September 25,

2022 September 26,

2021 September 25,

2022 September 26,

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

The following table presents the related tax effects on changes in other comprehensive earnings (loss) for the quarters ended April 2, 2023 and March 27, 2022.

Quarter Ended

2023 March 27,

Other comprehensive earnings (loss), tax effect:

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

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

Tax benefit on cash flow hedging activities 1.2 0.9

Reclassifications to earnings, tax effect:

Tax expense (benefit) on cash flow hedging activities 0.1 ( 0.2 )

Amortization of unrecognized pension and postretirement amounts

— ( 0.1 ) ( 0.1 ) ( 0.2 )

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

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

Total tax effect on other comprehensive earnings $ 1.3 $ 0.6

Changes in the components of accumulated other comprehensive earnings (loss), net of tax for the quarters ended April 2, 2023 and March 27, 2022 are as follows:

Postretirement

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Current period other comprehensive earnings (loss) ( 0.1 ) ( 6.7 ) — 24.3 17.5

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

Balance at April 2, 2023 $ ( 3.1 ) ( 18.7 ) ( 0.1 ) ( 215.5 ) $ ( 237.4 )

Balance at December 26, 2021 $ ( 35.1 ) ( 6.0 ) 0.2 ( 194.4 ) $ ( 235.3 )

Current period other comprehensive earnings (loss) 0.1 ( 1.2 ) 0.2 ( 10.7 ) ( 11.6 )

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

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

Gains (Losses) on Derivative Instruments

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

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

At April 2, 2023, the Company had remaining net deferred losses on foreign currency forward contracts, net of tax, of $ 4.0 million in accumulated other comprehensive earnings (loss) ("AOCE").

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

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

In addition to foreign currency forward contracts, the Company entered into hedging contracts on future interest payments related to the 3.15 % Notes that were repaid in full in the aggregate principal amount of $ 300.0 million in 2021 (See note 7), and the 5.10 % Notes due 2044.

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

At April 2, 2023, deferred losses, net of tax of $ 14.7 million related to these instruments remained in AOCE.

For each of the quarters ended April 2, 2023 and March 27, 2022, previously deferred losses of $ 0.2 million related to these instruments were reclassified from AOCE to net earnings.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

In addition to foreign currency forward contracts, the Company entered into hedging contracts on future interest payments related to the 3.15 % Notes that were repaid in full in the aggregate principal amount of $ 300.0 million during the first quarter of 2021 (See note 7), and the 5.10 % Notes due 2044.

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

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

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

Of the net deferred gains included in AOCE at September 25, 2022, the Company expects net gains of approximately $ 22.4 million to be reclassified to the consolidated statements of operations within the next 12 months.

Of the net deferred losses included in AOCE at April 2, 2023, the Company expects net losses of approximately $ 4.2 million to be reclassified to the consolidated statements of operations within the next 12 months.

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

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(6) Accrued Liabilities

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

September 25, 2022

September 26, 2021

Components of accrued liabilities for the periods ended April 2, 2023, March 27, 2022 and December 25, 2022 were as follows:

April 2, 2023

March 27, 2022

December 25, 2022

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Dividends 97.0 97.6 96.7

Other taxes 69.2 69.9 95.0

Advertising 103.5 148.5 60.4

Cancellation charges 84.6 55.7 89.2

Severance 82.4 27.6 100.3

Accrued Expenses IIC & IIP 51.9 52.9 74.9

Freight 47.7 72.6 107.5

Accrued income taxes 58.6 55.3 30.9

Lease liability - Current 40.4 43.9 43.9

Bonus accrual 70.4 128.5 168.5

Other taxes 71.6 74.1 82.1

Accrued expenses - IIP & IIC 60.6 70.7 80.8

General vendor accruals 50.1 32.6 44.3

Interest 40.8 38.8 31.0

Accrued salaries 28.0 15.1 27.6

Defined contribution plans 26.7 33.1 31.0

Production payables 23.8 26.0 14.3

Lease liability - current 37.9 45.0 39.6

Advertising 36.7 58.6 53.2

Accrued income taxes 33.5 33.1 44.8

Freight 22.7 65.6 28.5

Payroll and management incentives 15.4 56.9 66.7

Other 140.1 154.1 142.7

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

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

The Company's financial instruments at September 25, 2022, September 26, 2021 and December 26, 2021 also include certain assets and liabilities measured at fair value (see notes 10 and 11) as well as long-term borrowings.

The carrying costs, which are equal to the outstanding principal amounts, and fair values of the Company's long-term borrowings as of September 25, 2022, September 26, 2021 and December 26, 2021 are as follows:

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

At April 2, 2023, March 27, 2022 and December 25, 2022, the carrying cost of these instruments approximated their fair value.

The Company's financial instruments at April 2, 2023, March 27, 2022 and December 25, 2022 also include certain assets and liabilities measured at fair value (see notes 10 and 11) as well as long-term borrowings.

The carrying costs, which are equal to the outstanding principal amounts, and fair values of the Company's long-term borrowings as of April 2, 2023, March 27, 2022 and December 25, 2022 are as follows:

April 2, 2023 March 27, 2022 December 25, 2022

Value Carrying

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Variable % Notes Due December 30, 2024 280.0 280.0 340.0 340.0 310.0 310.0

325.0 325.0 505.0 505.0 397.5 397.5

Production Financing Facilities 49.0 49.0 95.8 95.8 53.2 53.2

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Long-term debt $ 3,682.4 3,609.8 $ 3,737.9 4,060.5 $ 3,711.2 3,626.3

(1) During the first quarter of 2022, the Company repaid $ 50.0 million of the Variable % Notes due December 30, 2024.

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

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

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

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

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

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

In September 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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$ 180.0 million in 2021;

and $ 72.5 million in the first nine months of 2022, consisting of $ 50.0 million of the principal balance and principal amortization payments of $ 22.5 million.

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

$ 87.5 million in 2022;

and $ 30.0 million of principal amortization payments in the first quarter of 2023.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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

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

2 unchanged sentences

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

As of September 25, 2022 , the Company was in compliance with the financial covenants contained in the Term Loan Agreement.

As of April 2, 2023 , the Company was in compliance with the financial covenants contained in the Term Loan Agreement.

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

Treasury bills at the time of repurchase.

Current portion of long-term debt at September 25, 2022 o f $ 122.6 million , as shown on the consolidated balance sheet, represents the current portion of required quarterly principal amortization payments for the Five-Year Tranche of the Term Loan Facilities and production financing facilities.

Current portion of long-term debt at April 2, 2023 o f $ 109.0 million , as shown on the consolidated balance sheet, represents the current portion of required quarterly principal amortization payments for the Five-Year Tranche of the Term Loan Facilities and production financing facilities.

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

14 unchanged sentences

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

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

September 25, 2022

September 26, 2021 December 26, 2021

Production financing (net of cash)

Production financing facilities $ 184.9 $ 204.7 $ 170.1

Production financing included in the consolidated balance sheet as:

Non-current $ — $ 47.0 $ —

Current 184.9 157.7 170.1

Total $ 184.9 $ 204.7 $ 170.1

The production financing facilities as of April 2, 2023, March 27, 2022 and December 25, 2022 are as follows:

April 2, 2023

March 27, 2022 December 25, 2022

Production financing facilities included in the consolidated balance sheet as:

Current liabilities $ 183.5 $ 199.1 $ 195.6

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

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

The weighted average interest rate on all production financing as of April 2, 2023 was 5.9 %.

The Company has Canadian dollar and U.S.

3 unchanged sentences

Dollars Total

As of September 25, 2022

As of April 2, 2023

$ 14.8 $ 168.7 $ 183.5

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

The following table represents the movements in production financing loans during the first quarter of 2023:

Production Financing

3 unchanged sentences

Foreign exchange differences ( 0.1 )

Balance at September 25, 2022

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

Balance at April 2, 2023

The Company expects to repay all of its currently outstanding production financing loans by the first quarter of 2024.

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

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

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

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

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

amount that appears not to be recoverable from future net revenues is expensed as part of program cost amortization during the period the loss becomes evident.

The Company's unamortized investments in productions and investments in acquired content rights consisted of the following at September 25, 2022, September 26, 2021, and December 26, 2021:

September 25, 2022

September 26, 2021 December 26, 2021

The Company's unamortized investments in productions and investments in acquired content rights consisted of the following at April 2, 2023, March 27, 2022, and December 25, 2022:

April 2, 2023

March 27, 2022 December 25, 2022

Investment in Films and Television Programs:

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In production 24.0 15.8 22.2

41.6 47.3 48.0

Investment in Other Programming

5 unchanged sentences

Total Program Investments $ 945.4 $ 816.4 $ 921.4

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

The Company recorded $ 365.7 million of program cost amortization related to released programming in the nine months ended September 25, 2022, consisting of the following:

Investment in Production Investment in Content Other Total

The Company recorded $ 122.5 million of program cost amortization related to released programming in the quarter ended April 2, 2023, consisting of the following:

Investment in Production Investment in Content Total

Program cost amortization $ 110.9 $ 11.6 $ 122.5

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

Our effective tax rate ("ETR") from continuing operations was 22.1 % for the nine months ended September 25, 2022 and 29.0 % for the nine months ended September 26, 2021.

Our effective tax rate ("ETR") from continuing operations was ( 3.4 )% for the quarter ended April 2, 2023 and 21.6 % for the quarter ended March 27, 2022.

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

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

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

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

• during the nine months ended September 26, 2021, the Company recorded a net discrete tax expense of $ 8.8 million primarily associated with (i) the revaluation of net deferred tax liabilities as a result of the United Kingdom's ("UK") enactment of the Finance Act 2021 during the second quarter, which increases the UK corporate income tax rate from

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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

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

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

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

The year-to-date 2021 ETR also included a goodwill impairment charge on the sale of the eOne Music from which there was no corresponding tax benefit.

In May 2019, a public referendum held in Switzerland approved the Swiss Federal Act on Tax Reform and AHV Financing ("TRAF") proposals previously approved by the Swiss Parliament.

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

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

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

• during the quarter ended April 2, 2023, the Company recorded a net discrete tax expense of $ 3.3 million, primarily associated with stock-based compensation coupled with a pre-tax loss for the quarter;

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

The Company is no longer subject to U.S.

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jurisdictions.

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

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

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(10) Fair Value of Financial Instruments

8 unchanged sentences

(Millions of Dollars and Shares Except Per Share Data)

At September 25, 2022, September 26, 2021 and December 26, 2021, the Company had the following assets and liabilities measured at fair value in its consolidated balance sheets (excluding assets for which the fair value is measured using net asset value per share):

At April 2, 2023, March 27, 2022 and December 25, 2022, the Company had the following assets and liabilities measured at fair value in its consolidated balance sheets (excluding assets for which the fair value is measured using net asset value per share):

Fair Value Measurements Using:

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(Level 2) Significant

September 25, 2022

April 2, 2023

Available-for-sale securities $ 1.3 1.3 — —

4 unchanged sentences

Total liabilities $ 6.9 — 5.2 1.7

September 26, 2021

March 27, 2022

Available-for-sale securities $ 1.6 1.6 — —

11 unchanged sentences

Total Liabilities $ 4.6 — 2.9 1.7

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

Condensed Notes to Consolidated Financial Statements

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

The option agreement is included in other liabilities at September 25, 2022, September 26, 2021 and December 26, 2021, and is valued using an option pricing model based on the fair value of the related investment.

The option agreement is included in other liabilities at April 2, 2023, March 27, 2022 and December 25, 2022, and is valued using an option pricing model based on the fair value of the related investment.

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

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

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

There were no changes in these valuation techniques during the quarter ended September 25, 2022.

There were no changes in these valuation techniques during the quarter ended April 2, 2023.

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

Balance at beginning of year $ ( 1.7 ) $ ( 1.7 )

Gain from change in fair value — ( 1.2 )

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

Balance at end of first quarter $ ( 1.7 ) $ ( 1.7 )

(11) Derivative Financial Instruments

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

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

These over-the-counter contracts, which hedge future currency requirements related to purchases of inventory, product sales, television and film production cost and production financing loans (see note 7) as well as other cross-border transactions not denominated in the functional currency of the business unit, are primarily denominated in United States and Hong Kong dollars, and Euros.

4 unchanged sentences

All of the Company's designated foreign currency forward contracts are considered to be cash flow hedges.

These instruments hedge a portion of the Company's currency requirements associated with anticipated inventory purchases, product sales, certain production financing loans and other cross-border transactions, primarily for the remainder of 2022, 2023, and to a lesser extent, 2024.

At September 25, 2022, September 26, 2021 and December 26, 2021, the notional amounts and fair values of the Company's foreign currency forward contracts designated as cash flow hedging instruments were as follows:

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

At April 2, 2023, March 27, 2022 and December 25, 2022, the notional amounts and fair values of the Company's foreign currency forward contracts designated as cash flow hedging instruments were as follows:

April 2, 2023 March 27, 2022 December 25, 2022

Hedged transaction Notional

8 unchanged sentences

The Company has a master agreement with each of its counterparties that allows for the netting of outstanding forward contracts.

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

September 25,

2022 September 26,

The fair values of the Company's foreign currency forward contracts designated as cash flow hedges are recorded in the consolidated balance sheets at April 2, 2023, March 27, 2022 and December 25, 2022 as follows:

2023 March 27,

2022 December 25,

10 unchanged sentences

Net unrealized losses $ ( 4.8 ) $ ( 1.8 ) $ ( 2.8 )

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

Quarter Ended Nine Months Ended

September 25,

2022 September 26,

2021 September 25,

2022 September 26,

Other liabilities

Unrealized gains $ — $ — $ —

Unrealized losses — ( 0.2 ) —

Net unrealized losses $ — $ ( 0.2 ) $ —

Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings (loss) to net earnings for the quarters ended April 2, 2023 and March 27, 2022 as follows:

Quarter Ended

2023 March 27,

Statements of Operations Classification

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The Company does not use hedge accounting for these contracts as changes in the fair values of these contracts are offset by changes in the fair value of the balance sheet items.

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

As of April 2, 2023, March 27, 2022 and December 25, 2022 the total notional amounts of the Company's undesignated derivative instruments were $ 723.3 million, $ 665.0 million and $ 765.6 million, respectively.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

At September 25, 2022, September 26, 2021 and December 26, 2021, the fair values of the Company's undesignated derivative financial instruments were recorded in the consolidated balance sheets as follows:

September 25,

2022 September 26,

At April 2, 2023, March 27, 2022 and December 25, 2022, the fair values of the Company's undesignated derivative financial instruments were recorded in the consolidated balance sheets as follows:

2023 March 27,

2022 December 25,

8 unchanged sentences

Total unrealized gains (losses), net $ 1.9 $ ( 2.6 ) $ 5.0

The Company recorded net gains of $ 28.7 million and $ 49.2 million on these instruments to other (income) expense, net for the quarter and nine months ended September 25, 2022, respectively, and net gains of $ 3.6 million and $ 2.9 million for the quarter and nine months ended September 26, 2021, respectively, relating to the change in fair value of such derivatives, substantially offsetting gains and losses from the change in fair value of intercompany loans to which the contracts relate.

The Company recorded net gains (losses) of $ 4.4 million and $( 2.6 ) million on these instruments to other (income) expense, net for the quarters ended April 2, 2023 and March 27, 2022, respectively, relating to the change in fair value of such derivatives, substantially offsetting gains and losses from the change in fair value of intercompany loans to which the contracts relate.

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

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

The rent expense under such arrangements and similar arrangements that do not qualify as leases under ASU 2016-02, net of sublease income amounted to $ 24.2 million and $ 67.4 million for the quarter and nine months ended September 25, 2022, respectively, and $ 21.8 million and $ 66.0 million for the quarter and nine months ended September 26, 2021, respectively, and was not material to the Company's financial statements.

Expenses related to short-term leases (expected terms less than 12 months) or variable lease payments was not material in the quarter or nine months ended September 25, 2022 or September 26, 2021.

The rent expense under such arrangements and similar arrangements that do not qualify as leases under ASU 2016-02, net of sublease income amounted to $ 23.5 million and $ 22.3 million for the quarters ended April 2, 2023 and March 27, 2022, respectively, and was not material to the Company's financial statements.

Expenses related to short-term leases (expected terms less than 12 months) or variable lease payments was not material in the quarters ended April 2, 2023 or March 27, 2022.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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

Quarter Ended Nine Months Ended

September 25,

2022 September 26,

2021 September 25,

2022 September 26,

Information related to the Company’s leases for the quarters ended April 2, 2023 and March 27, 2022 is as follows:

Quarter Ended

2023 March 27,

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

3 unchanged sentences

Weighted Average Remaining Lease Term

Operating leases 4.5 years 5.6 years 4.5 years 5.6 years

Operating leases 7.3 years 5.4 years

Weighted Average Discount Rate

Operating leases 3.7 % 2.9 %

The following is a reconciliation of future undiscounted cash flows to the operating liabilities, and the related right of use assets, included in our consolidated balance sheets as of September 25, 2022:

September 25,

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

The following is a reconciliation of future undiscounted cash flows to the operating liabilities, and the related right of use assets, included in our consolidated balance sheets as of April 2, 2023:

2023 (excluding the three months ended April 2, 2023) $ 34.4

2028 and thereafter 69.2

12 unchanged sentences

Hasbro is a global play and entertainment company with a broad portfolio of brands and entertainment content spanning toys, games, licensed products ranging from traditional to digital, as well as film and television entertainment.

Effective for the three months ended March 28, 2021, the Company realigned its reportable segment structure to:

(1) align with changes to its business structure subsequent to the integration of eOne;

and (2) reflect changes to its reporting structure and provide transparency into how operating performance is measured.

The Company's three principal reportable segments are (i) Consumer Products, (ii) Wizards of the Coast and Digital Gaming, and (iii) Entertainment.

2 unchanged sentences

The Wizards of the Coast and Digital Gaming business engages in the promotion of the Company's brands through the development of trading card, role-playing and digital game experiences based on Hasbro and Wizards of the Coast games.

Additionally, the Company out-licenses certain brands to other third-party digital game developers who transform Hasbro brand-based characters and other intellectual properties, into digital gaming experiences.

The Entertainment segment engages in the development, acquisition, production, financing, distribution and sale of world-class entertainment content including film, scripted and unscripted television, family programming, digital content and live entertainment.

The Entertainment segment engages in the development, acquisition, production, distribution and sale of world-class entertainment content including film, scripted and unscripted television, family programming, digital content and live entertainment.

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

Results shown for the quarter ended September 25, 2022 are not necessarily representative of those which may be expected for the full year 2022, nor were those of the comparable 2021 periods representative of those actually experienced for the full year 2021.

Results shown for the quarter ended April 2, 2023 are not necessarily representative of those which may be expected for the full year 2023, nor were those of the comparable 2022 periods representative of those actually experienced for the full year 2022.

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

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

Information by segment and a reconciliation to reported amounts for the quarters ended April 2, 2023 and March 27, 2022 are as follows:

Quarter Ended

September 25, 2022 September 26, 2021

Net revenues External Affiliate (c)

External Affiliate (c)

Consumer Products $ 1,160.8 $ 113.2 $ 1,282.7 $ ( 149.6 )

Wizards of the Coast and Digital Gaming 303.5 39.4 360.2 ( 38.0 )

Entertainment 211.6 14.6 327.1 ( 13.7 )

Corporate and Other (a)

— ( 167.2 ) — 201.3

$ 1,675.9 $ — $ 1,970.0 $ —

Nine Months Ended

September 25, 2022 September 26, 2021

Net revenues External Affiliate (c)

External Affiliate (c)

April 2, 2023 March 27, 2022

Net revenues External Affiliate (b)

External Affiliate (b)

Consumer Products $ 520.4 $ 73.3 $ 672.8 $ 91.9

4 unchanged sentences

$ 1,001.0 $ — $ 1,163.1 $ —

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

Quarter Ended Nine Months Ended

Operating profit (loss) September 25,

2022 September 26,

2021 September 25,

2022 September 26,

Quarter Ended

Operating profit (loss) April 2,

2023 March 27,

Consumer Products (a)

2 unchanged sentences

Entertainment (a)

( 28.9 ) 22.4 ( 2.4 ) ( 74.3 )

Corporate and Other (a)

1 unchanged sentence

$ 17.9 $ 120.0

Total assets September 25,

2022 September 26,

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

Total assets April 2,

2023 March 27,

2022 December 25,

Consumer Products (b)

$ 5,817.9 $ 4,754.0 $ 4,925.5

Consumer Products $ 5,533.3 $ 4,817.9 $ 5,757.7

Wizards of the Coast and Digital Gaming 3,256.8 1,877.7 2,968.7

10 unchanged sentences

Corporate and Other also includes the elimination of inter-company balance sheet amounts.

(b) During the second quarter of 2021, the Company adjusted certain inter-segment balance sheet amounts which impacted the Consumer Products and Corporate and Other total asset values.

These adjustments did not impact the Company's total assets.

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

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

Quarter Ended Nine Months Ended

September 25,

2022 September 26,

2021 September 25,

2022 September 26,

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

The following table represents consolidated Consumer Products segment net revenues by major geographic region for the quarters ended April 2, 2023 and March 27, 2022:

Quarter Ended

2023 March 27,

North America $ 279.1 $ 405.2

3 unchanged sentences

Net revenues $ 520.4 $ 672.8

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

Quarter Ended Nine Months Ended

September 25,

2022 September 26,

2021 September 25,

2022 September 26,

The following table represents consolidated Wizards of the Coast and Digital Gaming segment net revenues by category for the quarters ended April 2, 2023 and March 27, 2022:

Quarter Ended

2023 March 27,

Tabletop Gaming $ 217.9 $ 192.2

1 unchanged sentence

Net revenues $ 295.2 $ 262.8

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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

Quarter Ended Nine Months Ended

September 25,

2022 September 26,

2021 September 25,

2022 September 26,

The following table represents consolidated Entertainment segment net revenues by category for the quarters ended April 2, 2023 and March 27, 2022:

Quarter Ended

2023 March 27,

Film and TV $ 168.4 $ 190.2

2 unchanged sentences

Net revenues $ 185.4 $ 227.5

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

Quarter Ended Nine Months Ended

September 25,

2022 September 26,

2021 September 25,

2022 September 26,

Effective for the first quarter of 2023, the Company realigned its brand portfolios to correspond with the Blueprint 2.0 strategy.

Net Revenues by Brand Portfolio below have been restated to present net revenues and operating profit under the realigned structure.

See note 1 for more information on the Company's brand portfolio realignment.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

The following table presents consolidated net revenues by brand portfolio for the quarters ended April 2, 2023 and March 27, 2022:

Quarter Ended

Net revenues April 2,

2023 March 27,

Franchise Brands $ 613.4 $ 650.4

$ 814.1 $ 925.1 $ 2,101.1 $ 2,125.4

Partner Brands 132.7 206.5

Hasbro Gaming (2)

211.3 281.9 480.7 565.3

Emerging Brands (1)

123.4 134.4 291.8 297.2

TV/Film/Entertainment 177.2 261.9 528.8 652.4

Portfolio Brands 92.0 112.6

Non-Hasbro Branded Film & TV 162.9 193.6

Total $ 1,001.0 $ 1,163.1

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

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

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

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

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

Net revenues from Hasbro's Total Gaming category, including all gaming revenue, most notably DUNGEONS & DRAGONS, MAGIC:

THE GATHERING and Hasbro Gaming, totaled $ 386.5 million and $ 378.8 million for the quarters ended April 2, 2023 and March 27, 2022, respectively, of which MAGIC:

THE GATHERING contributed $ 229.1 million and $ 197.2 million, respectively.

(14) Restructuring Actions

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

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

See Note 1 for additional information related to these charges.

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

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

As of April 2, 2023, the Company had a remaining balance of $ 8.2 million in severance and other employee expenses related to these programs, after making payments of $ 0.9 million during the first three months of 2023.

During 2022, in support of Blueprint 2.0, Hasbro announced an Operational Excellence program under which the Company took certain restructuring actions, including global workforce reductions, resulting in severance and other employee charges of $ 94.1 million recorded in Selling, Distribution and Administration within the Corporate and Other segment.

The detail of activity related to the Company's Operational Excellence program as of April 2, 2023 is as follows:

Remaining amounts to be paid as of December 25, 2022 $ 84.9

Payments made in the first three months of 2023 ( 16.2 )

Remaining amounts to be paid as of April 2, 2023 $ 68.7

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

What changed 10-Q

Item 1. Financial Statements