What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-04 compared with 2023-05-03 · 286 added, 166 removed, 606 unchanged (43% of the section changed)

3 unchanged sentences

(Millions of Dollars Except Share Data)

2023 March 27,

2023 June 26,

2022 December 25,

39 unchanged sentences

Authorized 600,000,000 shares;

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

issued 220,286,736 shares at July 2, 2023, June 26, 2022, and December 25, 2022

110.1 110.1 110.1

6 unchanged sentences

Treasury stock, at cost;

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

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

81,568,249 shares at July 2, 2023;

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

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

10 unchanged sentences

(Millions of Dollars Except Per Share Data)

Quarter Ended

2023 March 27,

Quarter Ended Six Months Ended

2023 June 26,

Net revenues $ 1,210.0 $ 1,339.2 $ 2,211.0 $ 2,502.3

7 unchanged sentences

Selling, distribution and administration 380.6 327.2 697.7 634.3

Impairment of goodwill 231.2 — 231.2 —

Total costs and expenses 1,398.6 1,120.1 2,381.7 2,163.2

Operating profit 17.9 120.0

Operating profit (loss) ( 188.6 ) 219.1 ( 170.7 ) 339.1

Non-operating expense (income):

6 unchanged sentences

Net earnings (loss) ( 234.9 ) 140.5 ( 256.6 ) 203.4

Net earnings attributable to noncontrolling interests 0.4 1.7

Net earnings (loss) attributable to noncontrolling interests 0.1 ( 1.5 ) 0.5 0.2

Net earnings (loss) attributable to Hasbro, Inc.

8 unchanged sentences

(Millions of Dollars)

Quarter Ended

2023 March 27,

Quarter Ended Six Months Ended

2023 June 26,

Net earnings (loss) $ ( 234.9 ) $ 140.5 $ ( 256.6 ) $ 203.4

2 unchanged sentences

24.8 ( 20.2 ) 49.1 ( 31.0 )

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 )

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

Net gains (losses) on cash flow hedging activities, net of tax ( 2.6 ) 10.6 ( 7.1 ) 7.9

Reclassifications to earnings, net of tax:

Net gains on cash flow hedging activities ( 2.1 ) —

Net (gains) losses on cash flow hedging activities 1.8 ( 2.7 ) ( 0.4 ) ( 1.3 )

Amortization of unrecognized pension and postretirement amounts ( 0.1 ) 0.1 ( 0.2 ) 0.2

Total other comprehensive earnings (loss), net of tax $ 23.9 $ ( 12.7 ) $ 41.4 $ ( 24.3 )

Total comprehensive earnings attributable to noncontrolling interests 0.4 1.7

Total comprehensive earnings (loss) attributable to noncontrolling interests 0.1 ( 1.5 ) 0.5 0.2

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

4 unchanged sentences

(Millions of Dollars)

Three months ended

2023 March 27,

Six months ended

2023 June 26,

Cash flows from operating activities:

3 unchanged sentences

Amortization of intangibles 45.9 54.3

Impairment of goodwill 231.2 —

Impairment of intangible assets 65.0 —

Program cost amortization 256.9 219.2

8 unchanged sentences

Decrease in accounts payable and accrued liabilities ( 192.1 ) ( 273.0 )

Change in net deemed repatriation tax ( 34.4 ) ( 18.4 )

Other 16.3 ( 12.0 )

2 unchanged sentences

Additions to property, plant and equipment ( 112.1 ) ( 75.8 )

Acquisitions — ( 146.3 )

Other ( 3.7 ) 9.5

3 unchanged sentences

Repayments of borrowings with maturity greater than three months ( 90.7 ) ( 152.5 )

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

Net proceeds from other short-term borrowings 6.6 97.2

Purchases of common stock — ( 124.0 )

Stock-based compensation transactions — 74.2

4 unchanged sentences

Effect of exchange rate changes on cash ( 3.7 ) ( 6.3 )

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

Net decrease in cash, cash equivalents and restricted cash ( 296.5 ) ( 391.0 )

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

8 unchanged sentences

(Millions of Dollars)

Three Months Ended April 2, 2023

Three Months Ended July 2, 2023

Stock Additional

4 unchanged sentences

Equity Redeemable Noncontrolling Interests

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

Net loss attributable to Hasbro, Inc.

— — ( 235.0 ) — — — ( 235.0 ) —

Net earnings attributable to noncontrolling interests — — — — — 0.1 0.1 —

Other comprehensive earnings — — — 23.9 — — 23.9 —

Stock-based compensation transactions — ( 1.1 ) — — 0.7 — ( 0.4 ) —

Stock-based compensation expense — 18.5 — — 2.4 — 20.9 —

Dividends declared — 1.5 ( 98.7 ) — — — ( 97.2 ) —

Distributions paid to noncontrolling owners and other foreign exchange — — — — — ( 0.8 ) ( 0.8 ) —

Balance, July 2, 2023 $ 110.1 2,554.6 3,618.1 ( 213.5 ) ( 3,626.3 ) 27.2 $ 2,470.2 $ —

Three Months Ended June 26, 2022

Stock Additional

Paid-in Capital Retained

Earnings Accumulated Other

Comprehensive Loss Treasury

Stock Noncontrolling Interests Total

Shareholders'

Equity Redeemable Noncontrolling Interests

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

Net earnings attributable to Hasbro, Inc.

— — 142.0 — — — 142.0 —

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

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

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

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

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

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

Distributions paid to noncontrolling owners and other foreign exchange — — — — — ( 3.9 ) ( 3.9 ) ( 0.6 )

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

Six Months Ended July 2, 2023

Stock Additional

Paid-in Capital Retained

Earnings Accumulated Other Comprehensive Loss Treasury

Stock Noncontrolling Interests Total

Shareholders'

Equity Redeemable Noncontrolling Interests

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

7 unchanged sentences

Distributions paid to noncontrolling owners and other foreign exchange — — — — — ( 2.4 ) ( 2.4 ) —

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

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

Renegade Buyout — ( 2.1 ) — — — — ( 2.1 ) —

Balance, July 2, 2023 $ 110.1 2,554.6 3,618.1 ( 213.5 ) ( 3,626.3 ) 27.2 $ 2,470.2 $ —

Six Months Ended June 26, 2022

Stock Additional

8 unchanged sentences

— — 203.2 — — — 203.2 —

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

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

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

1 unchanged sentence

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

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

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

1 unchanged sentence

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

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

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

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 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.

and all majority-owned subsidiaries ("Hasbro" or the "Company") as of July 2, 2023 and June 26, 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 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.

The quarters ended July 2, 2023 and June 26, 2022 were each 13-week periods.

The six-month periods ended July 2, 2023 and June 26, 2022 were 27-week and 26-week periods, respectively.

The results of operations for the quarter ended July 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

The Company's significant accounting policies are summarized in note 1 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 25, 2022 ("2022 Form 10-K").

Impairment of Film and TV Reporting Unit

During the second quarter of 2023, the Company determined that a triggering event occurred following a downward revision of the Company's financial forecast for its Film and TV business, driven by challenging industry conditions that include the ongoing strike by the Writers Guild of America.

As a result, the Company performed a quantitative impairment test and determined that the Film and TV reporting unit within the Company's Entertainment segment, was impaired.

During the second quarter of 2023, the Company recorded pre-tax non-cash impairment charges of $ 296.2 million as the carrying value of the Film and TV reporting unit exceeded its expected fair value, as determined using a discounted cash flow model which is primarily based on management’s future revenue and cost estimates.

These impairment charges consisted of a $ 231.2 million goodwill impairment charge associated with goodwill assigned to the Company's Film and TV reporting unit, recorded within Impairment of Goodwill and a $ 65.0 million intangible asset impairment charge related to the Company's definite-lived intangible eOne Trademark, recorded in Selling, Distribution and Administration costs, within the Consolidated Statements of Operations for the quarter and six months ended July 2, 2023.

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.

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

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

Blueprint 2.0 and Operational Excellence

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.

In October 2022, following a several months long strategic review of our business led by our CEO, the Company announced a new 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, with the assistance of a third party consultant, 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

1 unchanged sentence

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.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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

1 unchanged sentence

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.

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 largest 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)

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

5 unchanged sentences

Recently Adopted Accounting Standards

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

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

Issued Accounting Pronouncements

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

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

(2) Revenue Recognition

11 unchanged sentences

(Millions of Dollars and Shares Except Per Share Data)

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

April 2, 2023

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

Balance at beginning of the year $ 594.4

11 unchanged sentences

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

As of July 2, 2023, unrecognized revenue attributable to unsatisfied performance obligations expected to be recognized in the future was $ 158.6 million.

Of this amount, we expect to recognize $ 135.3 million in the remainder of 2023, $ 19.0 million in 2024, $ 4.2 million in 2025 and $ 0.1 million in 2026.

1 unchanged sentence

Accounts Receivable and Allowance for Credit Losses

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.

The Company’s balance for accounts receivable on the consolidated balance sheets as of July 2, 2023 and June 26, 2022 are primarily from contracts with customers.

The Company had no material expense for credit losses for the quarters ended July 2, 2023 and June 26, 2022.

Disaggregation of revenues

14 unchanged sentences

(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:

Net earnings (loss) per share data for the quarters and six months ended July 2, 2023 and June 26, 2022 were computed as follows:

Quarter Basic Diluted Basic Diluted

7 unchanged sentences

per common share $ ( 1.69 ) ( 1.69 ) $ 1.02 1.02

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

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

Six Months Basic Diluted Basic Diluted

Net (loss) earnings attributable to Hasbro, Inc.

$ ( 257.1 ) ( 257.1 ) $ 203.2 203.2

Average shares outstanding 138.7 138.7 139.2 139.2

Effect of dilutive securities:

Options and other share-based awards — — — 0.2

Equivalent Shares 138.7 138.7 139.2 139.4

Net (loss) earnings attributable to Hasbro, Inc.

per common share $ ( 1.85 ) ( 1.85 ) $ 1.46 1.46

For the quarter and six months ended July 2, 2023, options and restricted stock units totaling 4.3 million and 4.2 million, respectively, were excluded from the calculation of diluted earnings per share because to include them would have been anti-dilutive.

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

Of the fiscal 2023 amount, 1.2 million and 1.6 million shares, respectively, would have been included in the calculation of diluted shares had the Company not had a net loss for the quarter and six months ended July 2, 2023.

Assuming that these awards and options were included, under the treasury stock method, they would have resulted in an additional 0.2 million and 0.1 million shares, respectively, being included in the diluted earnings per share calculation for the quarter and six months ended July 2, 2023 .

Changes in the carrying amount of goodwill, by operating segment, for the six months ended July 2, 2023 and June 26, 2022 are as follows:

Consumer Products Wizards of the Coast and Digital Gaming Entertainment Total

1 unchanged sentence

Foreign exchange translation 0.1 0.2 — 0.3

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

Impairment during the period — — ( 231.2 ) ( 231.2 )

Balance at July 2, 2023 $ 1,584.8 371.7 1,282.7 $ 3,239.2

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

See note 1 for discussion of goodwill impairment recorded during the second quarter of 2023.

Consumer Products Wizards of the Coast and Digital Gaming Entertainment Total

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

Acquired during the period — 64.7 — 64.7

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

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

See note 1 for discussion of D&D Beyond acquisition completed in the second quarter of 2022.

(5) Other Comprehensive Earnings (Loss)

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

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

Quarter Ended

2023 March 27,

The following table presents the related tax effects on changes in other comprehensive earnings (loss) for the quarters and six months ended July 2, 2023 and June 26, 2022.

Quarter Ended Six Months Ended

2023 June 26,

Other comprehensive earnings (loss), tax effect:

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

Tax benefit on cash flow hedging activities 1.2 0.9

Tax benefit on unrealized holding losses $ — $ 0.1 $ — 0.1

Tax benefit (expense) on cash flow hedging activities 1.2 ( 1.3 ) 2.3 ( 0.4 )

Reclassifications to earnings, tax effect:

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

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:

Tax (benefit) expense on cash flow hedging activities ( 0.6 ) 0.1 ( 0.4 ) ( 0.1 )

Amortization of unrecognized pension and postretirement amounts

— — 0.1 ( 0.1 )

Total tax effect on other comprehensive earnings (loss) $ 0.6 $ ( 1.1 ) $ 2.0 ( 0.5 )

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

Changes in the components of accumulated other comprehensive earnings (loss), net of tax for the six months ended July 2, 2023 and June 26, 2022 are as follows:

Postretirement

6 unchanged sentences

Current period other comprehensive earnings (loss) ( 0.2 ) ( 7.6 ) — 49.2 41.4

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

Balance at July 2, 2023 $ ( 3.2 ) ( 19.6 ) ( 0.1 ) ( 190.6 ) $ ( 213.5 )

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

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

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

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

Gains (Losses) on Derivative Instruments

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.

At July 2, 2023, the Company had remaining net deferred losses on foreign currency forward contracts, net of tax, of $ 5.0 million in accumulated other comprehensive earnings (loss) ("AOCE").

These instruments hedge payments related to inventory purchased in the second quarter of 2023 or forecasted to be purchased during the remainder of 2023 and throughout 2024, 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 and throughout 2024.

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.

1 unchanged sentence

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)

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.

At July 2, 2023, deferred losses, net of tax of $ 14.6 million related to these instruments remained in AOCE.

For the quarters ended July 2, 2023 and June 26, 2022, previously deferred losses of $ 0.2 million related to these instruments were reclassified from AOCE to net earnings.

For the six months ended July 2, 2023 and June 26, 2022, previously deferred losses of $ 0.3 million and $ 0.4 million were reclassified from AOCE to net earnings, respectively.

Of the net deferred losses included in AOCE at July 2, 2023, the Company expects net losses of approximately $ 4.8 million to be reclassified to the consolidated statements of operations within the next 12 months.

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

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

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(6) Accrued Liabilities

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

April 2, 2023

March 27, 2022

Components of accrued liabilities for the periods ended July 2, 2023, June 26, 2022 and December 25, 2022 were as follows:

June 26, 2022

December 25, 2022

8 unchanged sentences

General vendor accruals 52.3 46.2 44.3

Interest 40.8 38.8 31.0

Lease liability - current 37.9 45.0 39.6

Advertising 51.7 71.6 53.2

Accrued income taxes 50.8 59.5 44.8

Freight 22.7 65.6 28.5

Lease liability - current 35.2 44.0 39.6

Interest 32.6 31.6 31.0

Payroll and management incentives 31.2 52.1 66.7

Freight 29.6 62.1 28.5

Other 136.6 145.1 142.7

4 unchanged sentences

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

At 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

At July 2, 2023, June 26, 2022 and December 25, 2022, the carrying cost of these instruments approximated their fair value.

The Company's financial instruments at July 2, 2023, June 26, 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 July 2, 2023, June 26, 2022 and December 25, 2022 are as follows:

July 2, 2023 June 26, 2022 December 25, 2022

Value Carrying

38 unchanged sentences

$ 87.5 million in 2022;

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

and $ 45.0 million of principal amortization payments in the first six months of 2023.

Condensed Notes to Consolidated Financial Statements

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

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

As of July 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 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.

Current portion of long-term debt at July 2, 2023 of $ 69.4 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.

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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 April 2, 2023, March 27, 2022 and December 25, 2022 are as follows:

April 2, 2023

March 27, 2022 December 25, 2022

The production financing facilities as of July 2, 2023, June 26, 2022 and December 25, 2022 are as follows:

June 26, 2022 December 25, 2022

Production financing facilities included in the consolidated balance sheet as:

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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 April 2, 2023 was 5.9 %.

The weighted average interest rate on all production financing as of July 2, 2023 was 6.8 %.

The Company has Canadian dollar and U.S.

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Dollars Total

As of April 2, 2023

As of July 2, 2023

$ 4.0 $ 153.6 $ 157.6

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

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

Production Financing

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Foreign exchange differences ( 0.5 )

Balance at April 2, 2023

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

Balance at July 2, 2023

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

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

4 unchanged sentences

(Millions of Dollars and Shares Except Per Share Data)

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

April 2, 2023

March 27, 2022 December 25, 2022

The Company's unamortized investments in productions and investments in acquired content rights consisted of the following at July 2, 2023, June 26, 2022, and December 25, 2022:

June 26, 2022 December 25, 2022

Investment in Films and Television Programs:

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Total Program Investments $ 949.1 $ 824.7 $ 921.4

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:

The Company recorded $ 256.9 million of program cost amortization related to released programming in the six months ended July 2, 2023, consisting of the following:

Investment in Production Investment in Content Total

Program cost amortization $ 234.2 $ 22.7 $ 256.9

*During the second quarter of 2023, the Company recorded film production cost impairment charges of $ 25.0 million associated with Dungeons & Dragons:

Honor Among Thieves , within Program Cost Amortization in the Consolidated Statement of Operations, within the Entertainment Segment.

The film impairment charges reflected the excess of the unamortized costs of the impaired film over its estimated fair value using estimated discounted future cash flows.

(9) Income Taxes

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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 ( 3.4 )% for the quarter ended April 2, 2023 and 21.6 % for the quarter ended March 27, 2022.

Our effective tax rate ("ETR") from continuing operations was ( 3.1 )% for the six months ended July 2, 2023 and 21.8 % for the six months ended June 26, 2022.

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

• 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.

• during the six months ended July 2, 2023, the Company recorded an impairment of goodwill related to the Film and TV reporting unit of $ 231.2 million with no tax benefit.

The Company also recorded a net discrete tax benefit of $ 8.9 million, exclusive of the goodwill impairment, primarily associated with a tax benefit on the impairment of trade names in the Entertainment segment, offset by stock-based compensation and net activity related to uncertain tax

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

positions, primarily interest accruals, combined with the phasing of the Company's income earned throughout 2023, and;

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

The Company is no longer subject to U.S.

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jurisdictions.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(10) Fair Value of Financial Instruments

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(Millions of Dollars and Shares Except Per Share Data)

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):

At July 2, 2023, June 26, 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

April 2, 2023

Available-for-sale securities $ 1.5 1.5 — —

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Total liabilities $ 8.1 — 6.4 1.7

March 27, 2022

June 26, 2022

Available-for-sale securities $ 1.7 1.7 — —

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

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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

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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 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.

The option agreement is included in other liabilities at July 2, 2023, June 26, 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.

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

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

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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 )

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

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

(11) Derivative Financial Instruments

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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 2023, and to a lesser extent, into 2024.

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

At July 2, 2023, June 26, 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:

July 2, 2023 June 26, 2022 December 25, 2022

Hedged transaction Notional

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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 April 2, 2023, March 27, 2022 and December 25, 2022 as follows:

2023 March 27,

The fair values of the Company's foreign currency forward contracts designated as cash flow hedges are recorded in the consolidated balance sheets at July 2, 2023, June 26, 2022 and December 25, 2022 as follows:

2023 June 26,

2022 December 25,

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Other liabilities

Unrealized gains $ — $ — $ —

Unrealized losses ( 0.4 ) — —

Net unrealized losses $ ( 0.4 ) $ — $ —

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,

Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings (loss) to net earnings for the quarters and six months ended July 2, 2023 and June 26, 2022 as follows:

Quarter Ended Six Months Ended

2023 June 26,

Statements of Operations Classification

8 unchanged sentences

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

As of 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.

As of July 2, 2023, June 26, 2022 and December 25, 2022 the total notional amounts of the Company's undesignated derivative instruments were $ 810.4 million, $ 464.7 million and $ 765.6 million, respectively.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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,

At July 2, 2023, June 26, 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 June 26,

2022 December 25,

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Accrued liabilities

Unrealized gains $ — $ 6.6 $ —

Unrealized losses ( 0.2 ) ( 0.1 ) —

Net unrealized losses $ ( 0.2 ) $ ( 0.1 ) $ —

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

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.

Total unrealized gains, net $ 2.9 $ 1.0 $ 5.0

The Company recorded net gains of $ 6.8 million and $ 11.2 million on these instruments to other (income) expense, net for the quarter and six months ended July 2, 2023, respectively, and net gains of $ 16.7 million and $ 20.5 million for the quarter and six months ended June 26, 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 $ 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.

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 $ 24.8 million and $ 48.3 million for the quarter and six months ended July 2, 2023, respectively, and $ 20.9 million and $ 43.2 million for the quarter and six months ended June 26, 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 or six months ended July 2, 2023 or June 26, 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 April 2, 2023 and March 27, 2022 is as follows:

Quarter Ended

2023 March 27,

Information related to the Company’s leases for the quarters and six months ended July 2, 2023 and June 26, 2022 is as follows:

Quarter Ended Six Months Ended

2023 June 26,

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

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Weighted Average Remaining Lease Term

Operating leases 7.3 years 5.4 years

Operating leases 7.3 years 4.6 years 7.3 years 4.6 years

Weighted Average Discount Rate

Operating leases 3.7 % 3.3 % 3.7 % 3.3 %

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

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 July 2, 2023:

2023 (excluding the six months ended July 2, 2023) $ 21.9

2028 and thereafter 68.9

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(13) Segment Reporting

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.

Hasbro is a toy and game 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.

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

3 unchanged sentences

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.

Corporate and Other provides management and administrative services to the Company's principal reporting segments described above and consists of unallocated corporate expenses and administrative costs and activities not considered when evaluating segment performance as well as certain assets benefiting more than one segment.

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

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.

Results shown for the quarter ended July 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 ended April 2, 2023 and March 27, 2022 are as follows:

Information by segment and a reconciliation to reported amounts for the quarters and six months ended July 2, 2023 and June 26, 2022 are as follows:

Quarter Ended

April 2, 2023 March 27, 2022

July 2, 2023 June 26, 2022

Net revenues External Affiliate (b)

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Entertainment 179.2 11.4 185.2 12.8

Corporate and Other (a)

— ( 134.2 ) — ( 135.6 )

Corporate and Other — ( 137.4 ) — ( 210.9 )

$ 1,210.0 $ — $ 1,339.2 $ —

Quarter Ended

Operating profit (loss) April 2,

2023 March 27,

Consumer Products (a)

Six Months Ended

July 2, 2023 June 26, 2022

Net revenues External Affiliate (b)

External Affiliate (b)

Consumer Products $ 1,175.6 $ 154.0 $ 1,407.0 $ 237.1

Wizards of the Coast and Digital Gaming 670.8 93.0 682.6 82.6

Entertainment 364.6 24.6 412.7 26.7

Corporate and Other — ( 271.6 ) — ( 346.4 )

$ 2,211.0 $ — $ 2,502.3 $ —

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

Quarter Ended Six Months Ended

Operating profit (loss) July 2,

2023 June 26,

Consumer Products $ 11.4 $ ( 6.5 ) $ ( 34.6 ) $ 2.1

Wizards of the Coast and Digital Gaming 142.3 225.6 219.1 332.0

Entertainment (a)

Corporate and Other (a)

( 324.2 ) 14.3 ( 332.9 ) 26.5

Corporate and Other (a)(c)

( 18.1 ) ( 14.3 ) ( 22.3 ) ( 21.5 )

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

Total assets April 2,

2023 March 27,

Operating profit (loss) ( 188.6 ) 219.1 ( 170.7 ) 339.1

Interest expense 46.6 41.7 92.9 83.3

Interest income ( 5.8 ) ( 2.7 ) ( 11.8 ) ( 4.8 )

Other non-operating (income) expense ( 1.5 ) 0.2 ( 2.9 ) 0.5

Earnings (loss) before income taxes $ ( 227.9 ) $ 179.9 $ ( 248.9 ) $ 260.1

Total assets July 2,

2023 June 26,

2022 December 25,

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Dollar to local currency at budgeted rates when recorded.

Beginning in 2022, the Company has allocated certain of the intangible amortization costs related to the assets acquired in the eOne Acquisition, between the Consumer Products and Entertainment segments.

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

(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,

(c) Corporate and Other Operating profit (loss) includes Operational Excellence related transformation office and consulting fees of $ 10.4 million and $ 21.0 million, for the quarter and six-month periods ended July 2, 2023, respectively, which are recorded within Selling, Distribution and Administration costs within the Consolidated Statements of Operations.

Third party consultants were engaged to assist the Company in performing a comprehensive review of operations and developing a transformation plan designed to support the organization in identifying, realizing, and capturing savings through the identification of organizational initiatives intended to create efficiencies and improve business processes and operations.

The consultants assisted in providing benchmark data and are currently assisting with the design of an improved operating model and supply chain function.

The Company expects this consulting assistance to conclude in 2023 in line with the planning stages of the final components of the transformation plan.

Corporate and Other Operating Profit (loss) includes other consulting expense of $ 19.1 million and $ 21.5 million for the quarter and six month periods ended June 26, 2022, respectively, as well as incentive compensation for all periods presented.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

The following table represents consolidated Consumer Products segment net revenues by major geographic region for the quarters and six months ended July 2, 2023 and June 26, 2022:

Quarter Ended Six Months Ended

2023 June 26,

North America $ 382.0 $ 433.3 $ 661.1 $ 838.5

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Net revenues $ 655.2 $ 734.2 $ 1,175.6 $ 1,407.0

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,

The following table represents consolidated Wizards of the Coast and Digital Gaming segment net revenues by category for the quarters and six months ended July 2, 2023 and June 26, 2022:

Quarter Ended Six Months Ended

2023 June 26,

Tabletop Gaming $ 298.5 $ 361.8 $ 516.4 $ 554.0

1 unchanged sentence

Net revenues $ 375.6 $ 419.8 $ 670.8 $ 682.6

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,

The following table represents consolidated Entertainment segment net revenues by category for the quarters and six months ended July 2, 2023 and June 26, 2022:

Quarter Ended Six Months Ended

2023 June 26,

Film and TV $ 153.3 $ 148.2 $ 321.7 $ 338.4

7 unchanged sentences

(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,

The following table presents consolidated net revenues by brand portfolio for the quarters and six months ended July 2, 2023 and June 26, 2022:

Quarter Ended Six Months Ended

Net revenues July 2,

2023 June 26,

Franchise Brands $ 788.4 $ 826.0 $ 1,401.8 $ 1,476.4

4 unchanged sentences

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 and Hasbro Gaming, totaled $ 491.2 million and $ 528.3 million for the quarters ended July 2, 2023 and June 26, 2022, respectively, of which MAGIC:

THE GATHERING contributed $ 311.0 million and $ 365.5 million, respectively.

Net revenues from Hasbro's Total Gaming category totaled $ 877.7 million and $ 907.1 million for the six months ended July 2, 2023 and June 26, 2022, respectively, of which MAGIC:

THE GATHERING contributed $ 540.1 million and $ 562.7 million, respectively.

(14) Restructuring Actions

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

As of 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

As of July 2, 2023, the Company had a remaining balance of $ 7.1 million in severance and other employee expenses related to these programs included within other accrued liabilities in the Consolidated Balance Sheets, after making payments of $ 2.0 million in fiscal 2023.

Substantially all of the remaining cash payments related to these programs are expected to be made by the end of 2024.

During 2022, in support of Blueprint 2.0, Hasbro announced an Operational Excellence program ("the Program"), an ongoing enterprise-wide initiative intended to improve our business through specialized organizational programs that include targeted cost-savings, supply chain transformation and certain other restructuring actions designed to drive growth and enhance shareholder value.

Charges related to the Program were recorded in Selling, Distribution and Administration within Corporate and Other.

These actions are expected to be substantially complete by the end of 2024.

Going forward, the Company may implement further cost-saving initiatives under the Program that could result in additional restructuring charges including severance and other employee charges.

As of July 2, 2023, the liability balance included within other accrued liabilities in the Consolidated Balance Sheets for the restructuring actions associated with the Program is as follows:

Operational Excellence Severance Total

Balance at December 25, 2022 $ 84.9 $ 84.9

2023 charges — —

2023 payments ( 26.1 ) ( 26.1 )

Balance at July 2, 2023 $ 58.8 $ 58.8

The following table presents the restructuring charges incurred to date under the Program, along with the estimated charges expected to be incurred on approved initiatives under the plan as of July 2, 2023:

Operational Excellence Severance Total

Charges incurred to date $ 94.1 $ 94.1

Estimated charges to be incurred on approved initiatives — —

Total expected charges on approved initiatives $ 94.1 $ 94.1

(15) Subsequent Event

Sale of Non-core Film and TV Business

On August 3, 2023, the Company announced it reached a definitive agreement with Lionsgate Entertainment Corp.

to sell its eOne Film and TV business for approximately $ 500.0 million, consisting of $ 375.0 million in cash, subject to certain purchase

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

price adjustments, and the assumption by Lionsgate of production financing loans.

The sale will include a team of employees, a content library of approximately 6,500 titles, active productions for certain non-Hasbro owned intellectual properties, and the eOne unscripted television business which will also include rights to produce certain Hasbro-based shows.

The pending transaction is subject to receipt of regulatory approvals and satisfaction of customary closing conditions and is expected to close before the end of fiscal 2023.

The Company intends to use the net proceeds from the sale to retire floating rate debt and for other general corporate purposes.

Following the transaction, Hasbro will maintain the capability to develop and produce entertainment including animation, digital shorts, scripted TV and theatrical films related to core Hasbro IP.

The Family Brands business, including the brands PEPPA PIG and PJ MASKS, are not included in the sale transaction.

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