What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-01 compared with 2023-11-01 · 287 added, 563 removed, 424 unchanged (67% of the section changed)

3 unchanged sentences

(Millions of Dollars Except Share Data)

2023 September 25,

2024 April 2,

2023 December 31,

2 unchanged sentences

$ 570.2 $ 386.2 $ 545.4

Accounts receivable, less allowance for doubtful accounts of $ 20.8 million, $ 21.8 million and $ 20.0 million

1,102.0 1,188.8 1,132.4

Accounts receivable, net 632.5 685.2 1,029.3

Inventories 336.2 713.4 332.0

Prepaid expenses and other current assets 456.5 754.4 416.9

Assets held for sale 1,048.7 16.8 —

Total current assets 1,995.4 2,539.2 2,323.6

1 unchanged sentence

501.3 509.1 488.6

Other assets:

Goodwill 2,278.8 3,470.1 2,279.2

14 unchanged sentences

1,038.0 1,293.8 1,215.8

Liabilities held for sale 607.4 15.0 —

Total current liabilities 1,792.2 1,897.4 2,056.4

2,024.2 2,356.9 2,189.7

Long-term debt

4 unchanged sentences

$ 5,173.1 $ 6,165.0 $ 5,453.9

Redeemable noncontrolling interests

Commitments and contingencies (Note 14)

Shareholders' equity

3 unchanged sentences

Authorized 600,000,000 shares;

issued 220,286,736 shares at October 1, 2023, September 25, 2022, and December 25, 2022

issued 220,286,736 shares at March 31, 2024, April 2, 2023, and December 31, 2023

110.1 110.1 110.1

6 unchanged sentences

Treasury stock, at cost;

81,541,637 shares at October 1, 2023;

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

81,081,180 shares at March 31, 2024;

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

and 81,498,181 shares at December 31, 2023

10 unchanged sentences

(Millions of Dollars Except Per Share Data)

Quarter Ended Nine Months Ended

2023 September 25,

2022 October 1,

2023 September 25,

Quarter Ended

2024 April 2,

Net revenues $ 757.3 $ 1,001.0

7 unchanged sentences

Selling, distribution and administration 234.8 317.1

Loss on assets held for sale 473.0 23.1 473.0 23.1

Impairment of goodwill — — 231.2 —

Loss on disposal of business 9.1 —

Total costs and expenses 641.1 983.1

Operating profit (loss) ( 169.5 ) 194.3 ( 340.2 ) 533.4

Operating profit 116.2 17.9

Non-operating expense (income):

1 unchanged sentence

Interest income ( 8.3 ) ( 6.0 )

Other (income) expense, net 2.2 ( 10.0 ) ( 0.7 ) ( 9.5 )

Other expense (income), net 5.0 ( 1.4 )

Total non-operating expense, net 35.2 38.9

Earnings (loss) before income taxes 81.0 ( 21.0 )

Income tax expense (benefit)

( 44.6 ) 37.4 ( 36.9 ) 94.1

Income tax expense 21.9 0.7

Net earnings (loss) 59.1 ( 21.7 )

Net earnings (loss) attributable to noncontrolling interests 0.7 ( 1.0 ) 1.2 ( 0.8 )

Net earnings attributable to noncontrolling interests 0.9 0.4

Net earnings (loss) attributable to Hasbro, Inc.

8 unchanged sentences

(Millions of Dollars)

Quarter Ended Nine Months Ended

2023 September 25,

2022 October 1,

2023 September 25,

Quarter Ended

2024 April 2,

Net earnings (loss) $ 59.1 $ ( 21.7 )

1 unchanged sentence

Foreign currency translation adjustments, net of tax

( 2.7 ) ( 72.0 ) 46.4 ( 103.0 )

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

Net gains (losses) on cash flow hedging activities, net of tax 1.8 ( 4.6 )

1 unchanged sentence

Net losses (gains) on cash flow hedging activities

2.9 ( 5.9 ) 2.5 ( 7.2 )

Amortization of unrecognized pension and postretirement amounts — ( 0.1 )

Total other comprehensive earnings (loss), net of tax $ ( 1.8 ) $ 17.5

Total comprehensive earnings (loss) attributable to noncontrolling interests 0.7 ( 1.0 ) 1.2 ( 0.8 )

Total comprehensive earnings attributable to noncontrolling interests 0.9 0.4

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

4 unchanged sentences

(Millions of Dollars)

Nine months ended

2023 September 25,

Three months ended

2024 April 2,

Cash flows from operating activities:

2 unchanged sentences

Depreciation of plant and equipment 21.3 23.9

Loss on disposal of business 9.1 —

Amortization of intangibles 17.0 23.1

Impairment of goodwill 231.2 —

Impairment of intangible assets 65.0 —

Loss on assets held for sale

Program cost amortization 8.1 122.5

3 unchanged sentences

Change in operating assets and liabilities net of acquired balances:

(Increase) decrease in accounts receivable

( 86.3 ) 201.8

Decrease (increase) in inventories

53.0 ( 327.2 )

Decrease in prepaid expenses and other current assets

Decrease in accounts receivable 388.3 454.6

Increase in inventories ( 7.9 ) ( 32.5 )

Increase in prepaid expenses and other current assets ( 36.4 ) ( 75.4 )

Program spend, net ( 9.3 ) ( 266.3 )

Decrease in accounts payable and accrued liabilities ( 279.3 ) ( 167.0 )

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

Other ( 6.7 ) 15.2

2 unchanged sentences

Additions to property, plant and equipment ( 45.8 ) ( 53.2 )

Acquisitions — ( 146.3 )

Other ( 2.3 ) ( 2.4 )

3 unchanged sentences

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

Net proceeds from other short-term borrowings 0.3 121.6

Purchases of common stock — ( 125.0 )

Stock-based compensation transactions — 74.2

Net repayments from other short-term borrowings — ( 7.7 )

Dividends paid ( 97.2 ) ( 96.7 )

Payments related to tax withholding for share-based compensation ( 10.2 ) ( 14.0 )

Stock-based compensation transactions 0.2 —

Other ( 1.7 ) ( 3.9 )

1 unchanged sentence

Effect of exchange rate changes on cash 4.0 ( 3.5 )

Net decrease in cash, cash equivalents and restricted cash ( 257.2 ) ( 462.8 )

Net change due to cash classified as held for sale ( 70.4 ) ( 4.8 )

Net decrease in cash, cash equivalents and restricted cash ( 327.6 ) ( 467.6 )

Net increase (decrease) in cash, cash equivalents and restricted cash 24.8 ( 126.9 )

Cash, cash equivalents and restricted cash at beginning of year 545.4 513.1

3 unchanged sentences

Interest $ 28.5 $ 34.3

Income taxes $ 96.9 $ 157.2

Income taxes, net $ 5.1 $ 26.0

See accompanying condensed notes to consolidated financial statements.

2 unchanged sentences

(Millions of Dollars)

Three Months Ended October 1, 2023

Three Months Ended March 31, 2024

Stock Additional

3 unchanged sentences

Shareholders'

Equity Redeemable Noncontrolling Interests

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

Net loss attributable to Hasbro, Inc.

Balance, December 31, 2023 $ 110.1 $ 2,590.6 $ 2,188.4 $ ( 201.5 ) $ ( 3,625.7 ) $ 25.1 $ 1,087.0

Net earnings attributable to Hasbro, Inc.

— — 58.2 — — — 58.2

Net earnings attributable to noncontrolling interests — — — — — 0.9 0.9

Other comprehensive earnings — — — 5.1 — — 5.1 —

Other comprehensive loss — — — ( 1.8 ) — — ( 1.8 )

Stock-based compensation transactions — ( 16.9 ) — — 6.9 — ( 10.0 )

2 unchanged sentences

Distributions paid to noncontrolling owners and other foreign exchange — — — — — ( 2.0 ) ( 2.0 )

Balance, October 1, 2023 $ 110.1 2,574.1 3,348.3 ( 208.4 ) ( 3,626.3 ) 25.4 $ 2,223.2 $ —

Three Months Ended September 25, 2022

Balance, March 31, 2024 $ 110.1 $ 2,569.9 $ 2,148.0 $ ( 203.3 ) $ ( 3,618.8 ) $ 24.0 $ 1,029.9

Three Months Ended April 2, 2023

Stock Additional

4 unchanged sentences

Shareholders'

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 ) —

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

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

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 October 1, 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

6 unchanged sentences

Dividends declared — 0.5 ( 97.5 ) — — — ( 97.0 )

Distributions paid to noncontrolling owners and other foreign exchange — — — — — ( 4.9 ) ( 4.9 ) —

Renegade buyout — ( 2.1 ) — — — — ( 2.1 ) —

Balance, October 1, 2023 $ 110.1 2,574.1 3,348.3 ( 208.4 ) ( 3,626.3 ) 25.4 $ 2,223.2 $ —

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 earnings (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 ) —

Stock-based compensation transactions — 31.0 — — 22.1 — 53.1 —

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

Stock-based compensation expense — 65.8 — — 0.5 — 66.3 —

Dividends declared — 1.2 ( 292.4 ) — — — ( 291.2 ) —

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

Distributions paid to noncontrolling owners and other foreign exchange — — — — — ( 1.6 ) ( 1.6 )

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

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

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 October 1, 2023 and September 25, 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 consolidated subsidiaries ("Hasbro" or the "Company") as of March 31, 2024, April 2, 2023, and December 31, 2023, and the results of its operations and cash flows and shareholders' equity for the periods ended March 31, 2024 and April 2, 2023 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.

GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and notes thereto.

GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and condensed notes thereto.

Actual results could differ from those estimates.

The quarters ended October 1, 2023 and September 25, 2022 were each 13-week periods.

The nine-month periods ended October 1, 2023 and September 25, 2022 were 40-week and 39-week periods, respectively.

The results of operations for the quarter ended October 1, 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").

An update and supplement to these accounting policies for the treatment of assets and liabilities held for sale associated with our planned sale of the non-core eOne Film and TV business is below.

Assets and Liabilities Held for Sale

We classify assets and related liabilities as held for sale when:

(i) management has committed to a plan to sell the assets, (ii) the net assets are available for immediate sale, (iii) there is an active program to locate a buyer, (iv) the sale and transfer of the net assets is probable within one year, (v) the sale price of the net assets is comparable to current fair value and (vi) actions required to complete the plan indicate it is unlikely that significant changes will be made or that management will withdraw from the sale.

Assets and liabilities held for sale are presented separately on our consolidated balance sheets at the lower of cost or fair value, less costs to sell.

Depreciation of property, plant and equipment and amortization of finite-lived intangible assets and right-of-use assets are not recorded while these assets are classified as held for sale.

For each period that assets are classified as being held for sale, they are tested for recoverability.

Unless otherwise specified, the amounts and information in the notes presented do not include assets and liabilities that have been reclassified as held for sale as of October 1, 2023.

See note 15 — Assets held for sale, for additional information.

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 included the 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 nine months ended October 1, 2023.

Blueprint 2.0 and Operational Excellence

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.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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.

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 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.

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.

The quarters ended March 31, 2024 and April 2, 2023 were 13-week and 14-week periods, respectively.

The results of operations for the quarter ended March 31, 2024 are not necessarily indicative of results to be expected for the full year 2024, nor were those of the comparable 2023 period representative of those actually experienced for the full year 2023.

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

1 unchanged sentence

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

The Company filed with the SEC audited consolidated financial statements for the fiscal year ended December 25, 2022 in its 2022 Form 10-K, which includes all such information and disclosures and, accordingly, should be read in conjunction with the financial information included herein.

The Company filed with the SEC audited consolidated financial statements for the fiscal year ended December 31, 2023 in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 ("2023 Form 10-K"), which includes all such information and disclosures and, accordingly, should be read in conjunction with the financial information included herein.

Other Adjustments

During the quarter ended March 31, 2024, the Company corrected a prior year error and recorded an $ 18.1 million benefit related to the reversal of stock compensation expense for the Company's performance stock awards that should have been recorded during fiscal year 2023.

The $ 18.1 million benefit recorded during the quarter ended March 31, 2024 is not considered to be material to the full year 2023 or 2024 consolidated financial statements.

Significant Accounting Policies

The Company's significant accounting policies are summarized in note 1 to the consolidated financial statements included in the Company's 2023 Form 10-K.

Recently Adopted Accounting Standards

As of October 1, 2023, there were no recently adopted accounting standards that had a material effect on the Company’s financial statements.

During the quarter ended March 31, 2024, there were no recently adopted accounting standards that had a material effect on the Company’s financial statements.

Issued Accounting Pronouncements

As of October 1, 2023, there were no recently issued accounting pronouncements that are expected to have a material effect on the Company’s financial statements.

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The amendments in this update enhance disclosures for significant segment expenses for all public entities required to report segment information in accordance with ASC 280.

The standard did not change the definition of a segment, the method for determining segments or the criteria for aggregating operating segments into reportable segments.

The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Retrospective adoption is required for all prior periods presented in the financial statements.

We are assessing the impact of this ASU and upon adoption expect that any impact would be limited to additional segment expense disclosures in the footnotes to our consolidated financial statements.

We expect to adopt the standard beginning with our 2024 Form 10-K.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements in Income Tax Disclosures .

The amendments in this update enhance the transparency and decision usefulness of income tax disclosures.

This amendment requires public companies to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

Additionally, under the amendment, entities are required to disclose the amount of income taxes paid disaggregated by federal, state and foreign taxes, as well as disaggregated by material individual

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

jurisdictions.

Finally, the amendment requires entities to disclose income from continuing operations before income tax expense disaggregated between domestic and foreign and income tax expense from continuing operations disaggregated by federal, state and foreign.

The new rules are effective for annual periods beginning after December 15, 2024.

We are currently assessing the impact of this ASU on our consolidated financial statements.

(2) Revenue Recognition

Revenue is recognized when control of the promised goods, functional intellectual property or production is transferred to the customers or licensees, in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring those goods.

The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable.

The majority of the Company’s revenues are derived from sales of finished products to customers.

See note 1 of the Company's 2023 Annual Report for the Company's revenue recognition accounting policy.

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 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.

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

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

Through these arrangements, the Company may receive advanced royalty payments from licensees, either in advance of a licensees’ subsequent sales to customers or, prior to the completion of the Company’s performance obligation.

In addition, the Company’s Wizards of the Coast and Digital Gaming segment may receive advanced payments from end users of its digital games at the time of the initial purchase or through in-application purchases.

These digital gaming revenues are recognized over a period of time, determined based on player usage patterns or the estimated playing life of the user or when additional downloadable content is made available.

In addition, the Company’s Wizards of the Coast and Digital Gaming segment may receive advanced payments from end users of its digital games at the time of the initial purchase, through in-application purchases or through subscription services.

These digital gaming revenues are recognized over a period of time, determined based on player usage patterns or the estimated playing life of the user, or when additional downloadable content is made available, or as with subscription services, ratably over the subscription term.

The Company defers revenues on all licensee and digital gaming advanced payments until the respective performance obligations are satisfied.

1 unchanged sentence

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.

The current portion of contract assets is recorded in Prepaid expenses and Other current assets and the long-term portion is recorded within Other long-term assets.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

The changes in carrying amounts of contract assets and liabilities for the nine months ended October 1, 2023 are as follows:

October 1, 2023

The changes in carrying amounts of contract assets and liabilities for the three months ended March 31, 2024 and April 2, 2023 are as follows:

2024 April 2,

Balance at beginning of the year $ 213.3 $ 594.4

1 unchanged sentence

Amounts reclassified to accounts receivable ( 54.8 ) ( 218.7 )

Reclassified to assets held for sale (1)

Foreign currency impact 0.3 7.7

4 unchanged sentences

Current year amounts reclassified to revenue ( 22.0 ) ( 22.5 )

Reclassified to liabilities held for sale (1)

Foreign currency impact ( 10.1 ) ( 2.2 )

Ending Balance $ 231.6 $ 115.3

(1) See note 15 for additional information on assets and liabilities held for sale.

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 October 1, 2023, unrecognized revenue attributable to unsatisfied performance obligations expected to be recognized in the future was $ 137.3 million of which $ 120.5 million is attributable to the Company's non-core entertainment business, expected to be sold to Lionsgate.

Of the performance obligations expected to be retained following the pending sale, we expect to recognize $ 6.4 million in the remainder of 2023, $ 5.5 million in 2024 and $ 5.0 million in 2025.

As of March 31, 2024, unrecognized revenue attributable to unsatisfied performance obligations expected to be recognized in the future was $ 2.1 million.

Of this amount, we expect to recognize $ 1.9 million in the remainder of 2024 and $ 0.2 million in 2025.

These amounts include only fixed consideration.

Accounts Receivable and Allowance for Credit Losses

The Company’s balance for accounts receivable on the consolidated balance sheets as of October 1, 2023 and September 25, 2022 are primarily from contracts with customers.

The Company had no material expense for credit losses for the quarters ended October 1, 2023 and September 25, 2022.

The Company’s balance for accounts receivable on the Consolidated Balance Sheets as of March 31, 2024 and April 2, 2023 are primarily from contracts with customers.

A summary of the activity in the allowance for credit losses for the three months ended March 31, 2024 and April 2, 2023 are as follows:

2024 April 2,

Balance at beginning of the year $ 12.7 $ 20.0

Charged to costs and expenses, net 0.7 1.3

Foreign currency impact ( 0.3 ) 0.4

Ending balance $ 13.1 $ 21.7

Disaggregation of revenues

7 unchanged sentences

Film & TV, Family Brands, and Other.

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.

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

Franchise Brands, Partner Brands and Portfolio Brands.

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

See note 13 for further information.

Effective in the first quarter of 2024, subsequent to the sale of the eOne Film and TV business (as defined in Note 3), the Company moved the remaining Non-Hasbro Branded Film & TV brands into Portfolio Brands to align with the Company's Brand Strategy.

For comparability, net revenues for quarter ended April 2, 2023, has been reclassified to reflect the movement, resulting in a change of $ 0.1 million.

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 ended March 31, 2024 and April 2, 2023:

Quarter Ended

2024 April 2,

North America $ 239.1 $ 279.1

Europe 87.5 131.6

Asia Pacific 48.8 63.3

Latin America 37.6 46.4

Net revenues $ 413.0 $ 520.4

The following table represents consolidated Wizards of the Coast and Digital Gaming segment net revenues by category for the quarters ended March 31, 2024 and April 2, 2023:

Quarter Ended

2024 April 2,

Tabletop Gaming $ 228.2 $ 217.9

Digital and Licensed Gaming 88.1 77.3

Net revenues $ 316.3 $ 295.2

The following table represents consolidated Entertainment segment net revenues by category for the quarters ended March 31, 2024 and April 2, 2023:

Quarter Ended

2024 April 2,

Film and TV $ — $ 168.4

Family Brands 28.0 17.0

Net revenues $ 28.0 $ 185.4

The following table presents consolidated net revenues by brand portfolio for the quarters ended March 31, 2024 and April 2, 2023:

Quarter Ended

Net revenues March 31,

2024 April 2,

Franchise Brands $ 606.5 $ 613.4

Partner Brands 87.7 132.7

Portfolio Brands 63.1 92.1

Non-Hasbro Branded Film & TV (1)

Total $ 757.3 $ 1,001.0

(1) Net revenues from the Company's Non-Hasbro-branded Film and TV portfolio were associated with the Company's non-core eOne Film and TV business sold to Lionsgate during the fourth quarter of 2023.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(3) Sale of Non-Core Entertainment One Film and TV Business

On December 27, 2023, the Company completed the sale of its Entertainment One film and television business ("eOne Film and TV") to Lions Gate Entertainment Corp., Lions Gate Entertainment Inc.

and Lions Gate International Motion Pictures S.à.r.l (collectively "Lionsgate"), pursuant to the terms of an Equity Purchase Agreement dated August 3, 2023, among Hasbro and Lionsgate.

The Company sold eOne Film and TV for a sales price of $ 375.0 million in cash, subject to the satisfaction of customary net working capital closing conditions and holdbacks for certain retained liabilities, plus the assumption by Lionsgate of production financing loans.

The Company recorded a pre-tax non-cash charge of $ 539.0 million within Loss on disposal of business on the Consolidated Statements of Operations for the year ended December 31, 2023.

The Company also recorded pre-tax cash transaction expenses of $ 35.1 million within Selling, distribution and administration expense on the Consolidated Statements of Operations for the year ended December 31, 2023.

See note 3 of the Company's 2023 Annual Report for further detail of the Company's sale of the eOne Film and TV business.

(4) Earnings (Loss) Per Share

Net earnings (loss) per share data for the quarters and nine months ended October 1, 2023 and September 25, 2022 were computed as follows:

Quarter Basic Diluted Basic Diluted

Net (loss) earnings attributable to Hasbro, Inc.

$ ( 171.1 ) ( 171.1 ) $ 129.2 129.2

Average shares outstanding 138.8 138.8 138.3 138.3

Effect of dilutive securities:

Options and other share-based awards — — — 0.2

Equivalent Shares $ 138.8 138.8 $ 138.3 138.5

Net (loss) earnings attributable to Hasbro, Inc.

per common share $ ( 1.23 ) ( 1.23 ) $ 0.93 0.93

Basic Diluted Basic Diluted

Net (loss) earnings attributable to Hasbro, Inc.

Net earnings (loss) per share data for the quarters ended March 31, 2024 and April 2, 2023 were computed as follows:

Quarter Ended

March 31, 2024 April 2, 2023

Net earnings (loss) attributable to Hasbro, Inc.

$ 58.2 $ ( 22.1 )

3 unchanged sentences

Equivalent Shares 139.3 138.6

Net (loss) earnings attributable to Hasbro, Inc.

Net earnings (loss) attributable to Hasbro, Inc.

per common share

For the quarter and nine months ended October 1, 2023, options and restricted stock units totaling 2.1 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.

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.

Of the fiscal 2023 amount, 1.9 million and 1.7 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 nine months ended October 1, 2023.

Assuming that these awards and options were included, under the treasury stock method, they would have resulted in an additional 0.4 million and 0.2 million shares, respectively, being included in the diluted earnings per share calculation for the quarter and nine months ended October 1, 2023 .

Changes in the carrying amount of goodwill, by operating segment, for the nine months ended October 1, 2023 and September 25, 2022 are as follows:

Basic $ 0.42 $ ( 0.16 )

Diluted $ 0.42 $ ( 0.16 )

For the quarters ended March 31, 2024 and April 2, 2023, options and restricted stock units totaling 2.6 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.

Of the fiscal 2023 amount, 2.0 million 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 awards and options were included, under the treasury stock method, they would have resulted in an additional 0.1 million 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 March 31, 2024 and April 2, 2023 are as follows:

Consumer Products Wizards of the Coast and Digital Gaming Entertainment Total

Balance as of December 31, 2023 (1)

Foreign exchange translation ( 0.1 ) — — ( 0.1 )

Impairment during the period (1)

$ 1,582.3 $ 371.7 $ 325.2 $ 2,279.2

Balance as of October 1, 2023 $ 1,584.6 371.5 1,282.7 $ 3,238.8

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

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

Balance as of March 31, 2024 $ 1,582.2 $ 371.5 $ 325.1 $ 2,278.8

Condensed Notes to Consolidated Financial Statements

2 unchanged sentences

Balance as of 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 — — — —

Impairment during the period

— — ( 11.8 ) ( 11.8 )

Balance as of September 25, 2022

Balance as of April 2, 2023 (1)

$ 1,584.7 $ 371.5 $ 1,513.9 $ 3,470.1

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.

(1) During the second and fourth quarters of 2023, the Company recorded $ 231.2 million and $ 960.0 million of non-cash goodwill impairments charges, respectively, within the Entertainment segment.

See further detail in the 2023 Annual Report.

(6) 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 and nine months ended October 1, 2023 and September 25, 2022.

Quarter Ended Nine Months Ended

2023 September 25,

2022 October 1,

2023 September 25,

The following table presents the related tax effects on changes in Other comprehensive earnings (loss) for the quarters ended March 31, 2024 and April 2, 2023.

Quarter Ended

2024 April 2,

Other comprehensive earnings (loss), tax effect:

Tax expense on unrealized holding losses

$ — $ — $ — 0.1

Tax (expense) benefit on cash flow hedging activities

( 0.7 ) ( 1.7 ) 1.6 ( 2.1 )

Tax benefit on cash flow hedging activities $ — $ 1.2

Reclassifications to earnings, tax effect:

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

Amortization of unrecognized pension and postretirement amounts

— — 0.1 ( 0.1 )

Total tax effect on other comprehensive earnings (loss) $ ( 0.2 ) $ 1.3

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 nine months ended October 1, 2023 and September 25, 2022 are as follows:

Changes in the components of Accumulated other comprehensive earnings (loss), net of tax for the quarters ended March 31, 2024 and April 2, 2023 are as follows:

Postretirement

6 unchanged sentences

Current period other comprehensive earnings (loss) — 2.2 — ( 4.0 ) ( 1.8 )

Balance at October 1, 2023 $ ( 3.2 ) ( 11.7 ) ( 0.1 ) ( 193.4 ) $ ( 208.4 )

Balance at March 31, 2024 $ ( 4.2 ) $ ( 14.6 ) $ ( 0.1 ) $ ( 184.4 ) $ ( 203.3 )

Balance at December 25, 2022 $ ( 3.0 ) $ ( 12.0 ) $ ( 0.1 ) $ ( 239.8 ) $ ( 254.9 )

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 )

Gains (Losses) on Derivative Instruments

At October 1, 2023, the Company had remaining net deferred gains on foreign currency forward contracts, net of tax, of $ 2.7 million in accumulated other comprehensive earnings (loss) ("AOCE").

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

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 March 31, 2024, the Company had remaining net deferred losses on foreign currency forward contracts, net of tax, of $ 0.6 million in Accumulated other comprehensive earnings (loss) ("AOCE").

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

These amounts will be reclassified into the Consolidated Statements of Operations upon the sale of the related inventory or recognition of the related sales expenses.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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 October 1, 2023, deferred losses, net of tax of $ 14.4 million related to these instruments remained in AOCE.

For the quarters ended October 1, 2023 and September 25, 2022, previously deferred losses of $ 0.2 million related to these instruments were reclassified from AOCE to net earnings.

For the nine months ended October 1, 2023 and September 25, 2022, previously deferred losses of $ 0.5 million were reclassified from AOCE to net earnings, respectively.

Of the net deferred losses included in AOCE at October 1, 2023, the Company expects net losses of approximately $ 0.4 million to be reclassified to the consolidated statements of operations within the next 12 months.

At March 31, 2024, deferred losses, net of tax of $ 13.8 million related to these instruments remained in AOCE.

For the quarters ended March 31, 2024 and April 2, 2023, previously deferred losses of $ 0.2 million related to these instruments were reclassified from AOCE to net earnings.

Of the net deferred losses included in AOCE at March 31, 2024, the Company expects net losses of approximately $ 0.9 million to be reclassified to the Consolidated Statements of Operations within the next twelve months.

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

See note 12 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 October 1, 2023, September 25, 2022 and December 25, 2022 were as follows:

October 1, 2023

September 25, 2022

(7) Additional Balance Sheet Information

Components of Accrued liabilities for the periods ended March 31, 2024, April 2, 2023 and December 31, 2023 were as follows:

2024 April 2,

2023 December 31, 2023

1 unchanged sentence

Deferred revenue 103.5 113.7 101.6

Lag and cancellation charges 112.0 84.6 118.9

Dividends 97.4 97.0 97.2

Cancellation charges 83.0 65.5 89.2

Other taxes 63.8 69.2 82.1

Payroll and management incentives 62.9 98.4 66.7

General vendor accruals 57.9 44.1 44.3

Severance 75.7 82.4 83.7

Advertising 52.3 103.5 53.2

Accrued income taxes 59.0 33.5 61.6

Other taxes 45.8 71.6 68.7

Interest 38.1 40.8 29.9

Freight 32.3 47.7 28.5

General vendor accruals 34.9 50.1 51.9

Participations and residuals 33.7 275.7 34.0

Advertising 33.3 36.7 45.0

Lease liability - current 29.1 37.9 30.5

Accrued income taxes 27.3 58.6 44.8

Payroll and management incentives 21.9 15.4 85.6

Defined contributions plans 18.9 23.2 29.7

Freight 17.0 22.7 22.9

Insurance 14.6 12.8 13.3

Professional fees 10.0 10.4 12.4

Accrued expenses - IIP & IIC 0.7 60.6 0.7

Production payables 0.9 23.8 23.8

Other 36.8 93.7 41.4

Total accrued liabilities $ 1,038.0 $ 1,293.8 $ 1,215.8

$ 985.4 $ 1,537.5 $ 1,506.8

(1) For the nine-month period ended October 1, 2023, liabilities of $ 607.4 million attributable to the Film & TV business, which were previously classified within Accrued liabilities, have been transferred to Liabilities held for sale.

For the nine-month period ended September 25, 2022, liabilities of $ 15.0 million attributable to non-core entertainment businesses, which were previously classified within Accrued liabilities, were transferred to Liabilities held for sale.

Prepaid expenses and other current assets include accrued income, current of $ 127.3 million, $ 423.0 million, and $ 85.6 million as of March 31, 2024, April 2, 2023 and December 31, 2023 , respectively.

Other assets include deferred tax assets of $ 406.3 million, $ 263.5 million, and $ 427.9 million as of March 31, 2024, April 2, 2023 and December 31, 2023 , respectively, and content assets of $ 165.3 million, $ 950.2 million, and $ 162.8 million as of March 31, 2024, April 2, 2023 and December 31, 2023 , respectively.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(7) Financial Instruments

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

At October 1, 2023, September 25, 2022 and December 25, 2022, the carrying cost of these instruments approximated their fair value.

The Company's financial instruments at October 1, 2023, September 25, 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 October 1, 2023, September 25, 2022 and December 25, 2022 are as follows:

October 1, 2023 September 25, 2022 December 25, 2022

The carrying costs, which are equal to the outstanding principal amounts, and fair values of the Company's long-term borrowings as of March 31, 2024, April 2, 2023 and December 31, 2023 are as follows:

March 31, 2024 April 2, 2023 December 31, 2023

Value Carrying

15 unchanged sentences

Variable % Notes Due December 30, 2024 (1)

— — 280.0 280.0 — —

Production Financing Facilities (2)

4 unchanged sentences

Long-term debt $ 2,966.9 $ 3,324.4 $ 3,682.4 $ 3,609.8 $ 2,965.8 $ 3,349.1

(1) During the third quarter of 2023, all production financing facilities attributable to the non-core eOne Film and TV business, which were previously classified within Current portion of long-term debt, have been transferred to Liabilities held for sale.

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:

$ 300.0 million of notes due 2022 (the "2022 Notes") that bear interest at a fixed rate of 2.60 %, $ 500.0 million of notes due 2024 (the "2024 Notes") that bear interest at a fixed rate of 3.00 %, $ 675.0 million of notes due 2026 (the "2026 Notes") that bear interest at a fixed rate of 3.55 % and $ 900.0 million of notes due 2029 (the "2029 Notes") that bear interest at a fixed rate of 3.90 %.

Net proceeds from the issuance of the Notes, after deduction of $ 20.0 million of underwriting discount and fees, totaled $ 2.4 billion.

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.

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.

The adjustment can be from 0.25 % to 2.00 % based on the extent of the ratings decrease.

The Company may redeem the 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, plus (1) 25 basis points (in the case of the 2024 Notes);

(2) 30 basis points (in the case of the 2026 Notes);

and (3) 35 basis points (in the case of the 2029 Notes).

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.

(“Bank of America”), as administrative agent, and certain financial institutions as lenders, pursuant to which such lenders committed to provide, contingent upon the completion of the eOne Acquisition and certain other customary conditions to funding, (1) a three-year senior unsecured term loan facility in an aggregate principal amount of $ 400.0 million (the “Three-Year Tranche”) and (2) a five-year senior unsecured term loan facility in an aggregate principal amount of $ 600.0 million (the “Five-Year Tranche” and together with the Three-Year Tranche, the “Term Loan Facilities”).

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

As of September 25, 2022, the Company has fully repaid the Three-Year Tranche $ 400.0 million principal term loan, and of the Five-Year Tranche $ 600.0 million principal balance, the Company has repaid a total of $ 350.0 million in the following increments:

$ 22.5 million in 2020;

$ 180.0 million in 2021;

$ 87.5 million in 2022;

and $ 60.0 million of principal amortization payments in the first nine months of 2023.

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.

Loans under the Five-Year Tranche require principal amortization payments that are payable in equal quarterly installments of 5.0 % per annum of the original principal amount thereof for each of the first two years after funding, increasing to 10.0 % per annum of the original principal amount thereof for each subsequent year.

The Term Loan Agreement contains affirmative and negative covenants typical of this type of facility, including:

(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 October 1, 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 October 1, 2023 of $ 60.0 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.

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

The fair values of the Company's long-term debt are considered Level 3 fair values (see note 10 for further discussion of the fair value hierarchy) and are measured using the discounted future cash flows method.

In addition to the debt terms, the valuation methodology includes an assumption of a discount rate that approximates the current yield on a similar debt security.

This assumption is considered an unobservable input in that it reflects 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.

Financing Arrangements

In September 2023, the Company entered into a third amended and restated revolving credit agreement with Bank of America, as administrative agent, swing line lender, a letter of credit issuer and a lender and certain other financial institutions, as lenders thereto (the "Amended Revolving Credit Agreement"), which provides the Company with commitments having a maximum aggregate principal amount of $ 1.25 billion.

(1 ) During the fourth quarter of 2023, the Company paid the remaining principal balance of the Variable % Notes Due December 30, 2024.

(2) The Company's production financing facilities were assumed by Lionsgate effective upon the closing of the sale of the eOne Film and TV business in the fourth quarter of 2023.

See note 3 for additional information.

Other Financing Arrangements

The Company's third amended and restated revolving credit facility with Bank of America, as administrative agent, swing line lender, a letter of credit issuer and a lender and certain other financial institutions as lenders thereto (the "Amended Revolving Credit Facility") provides the Company with commitments having a maximum aggregate principal amount of $ 1.25 billion.

The Amended Revolving Credit Agreement contains certain financial covenants setting forth leverage and coverage requirements, and certain other limitations typical of an investment grade facility, including with respect to liens, mergers and incurrence of indebtedness.

It also provides for a potential additional incremental commitment increase of up to $ 500.0 million subject to agreement of the lenders.

Loans under the revolving credit facility bear interest, at the Company’s option, at either the Adjusted Term Benchmark Rate (determined in accordance with the Amended Revolving Credit Agreement), the Base Rate (determined in accordance with the Amended Revolving Credit Agreement) or the Daily Benchmark Rate (determined in accordance with the Amended Revolving Credit Agreement).

In each case there is also a spread added to the rate, which fluctuates based upon the more favorable of the Company’s long-term debt ratings and the Company’s leverage.

The Company is also required to pay a commitment fee in

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

respect to the unused commitments under the facility, the rate for which is also determined based upon the more favorable of the Company's long-term debt ratings and leverage.

The Amended Revolving Credit Agreement contains affirmative and negative covenants typical of this type of facility, including:

(a) restrictions on the Company’s and its domestic subsidiaries’ ability to allow liens on their assets, (b) restrictions on the incurrence of indebtedness, (c) restrictions on the Company’s and certain of its subsidiaries’ ability to engage in certain mergers, (d) 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 (e) the requirement that the Company maintain:

prior to the date on which the disposition of the Company’s eOne film and television business pursuant to the Equity Purchase Agreement, dated as of August 3, 2023, by and among the Company, Lions Gate Entertainment Corp., Lions Gate Entertainment Inc.

and Lions Gate International Motion Pictures S.À.R.L.

is consummated (the “EOne Disposition Date”), a Consolidated Total Leverage Ratio of no more than (1) 4.10 :1.00 for the quarter ended September 30, 2023 and (2) 3.50 :1.00 for the quarter ended December 31, 2023 and thereafter and on and after the EOne Disposition Date, a Consolidated Net Total Leverage Ratio of no more than (1) 4.00 :1.00 for each of the quarters ended September 30, 2023 and December 31, 2023, (2) 3.75 :1.00 for each of the first, second and fourth fiscal quarters of each year (other than 2023) and (3) 4.00 :1:00 for the third fiscal quarter of each year (other than 2023).

Production Financing

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

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

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

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

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

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

Going forward, the Company expects to utilize the RPCF for the majority of its production financing needs.

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 October 1, 2023, September 25, 2022 and December 25, 2022 are as follows:

October 1, 2023

September 25, 2022 December 25, 2022

Production financing facilities included in the consolidated balance sheet as:

Current liabilities (1)

$ — $ 184.9 $ 195.6

(1) During the third quarter of 2023, production financing facilities of $ 150.9 million attributable to the non-core eOne Film and TV business, which were previously classified within Current portion of long-term debt, have been transferred to Liabilities held for sale.

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

Production Financing

December 25, 2022 $ 195.6

Drawdowns 117.9

Repayments ( 162.0 )

Reclass to Liabilities held for sale (2)

Foreign exchange differences ( 0.6 )

Balance at October 1, 2023

(2) See note 15 for additional information on assets and liabilities held for sale.

The Company also has a supplier finance program which provides participating suppliers the option of receiving payment in advance of an invoice due date, to be paid by certain administering banks, on the basis of invoices that the Company has confirmed as valid and approved.

The Company’s obligation is to make payment in the invoice amount negotiated with participating suppliers, to the administering banks on the invoice due date.

The Company’s suppliers are not required to participate in the supplier finance program.

The early payment transactions between the Company’s supplier and the administering bank are subject to an agreement between those parties, and the Company does not participate in any financial aspect of the agreements between the Company’s suppliers and the administering banks.

The Company has not pledged any assets to the administering bank under the supplier financing program.

The Company or the administering bank may terminate the agreement upon at least 30 days’ written notice.

The amount of obligations confirmed under the program that remain unpaid by the Company were $ 47.7 million, $ 66.0 million and $ 43.3 million as of March 31, 2024, April 2, 2023 and December 31, 2023 , respectively.

These obligations are presented within Accounts payable in our Consolidated Balance Sheets.

The activity related to this program is reflected within the operating activities section of the Consolidated Statements of Cash Flows.

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

Investments in productions and investments in acquired content rights are predominantly monetized on a title-by-title basis and are recorded within Other assets in the Company's Consolidated Balance Sheets, to the extent they are considered recoverable against future revenues.

These amounts are being amortized to program cost amortization using a model that reflects the

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

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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 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 October 1, 2023, September 25, 2022, and December 25, 2022:

October 1, 2023 (1)

September 25, 2022 December 25, 2022

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

The Company's unamortized investments in productions and investments in acquired content rights consisted of the following at March 31, 2024, April 2, 2023, and December 31, 2023:

2024 April 2,

2023 December 31,

Investment in Films and Television Programs:

1 unchanged sentence

Released, net of amortization $ 60.3 $ 613.3 $ 74.7

$ 78.3 $ 486.3 $ 584.5

Completed and not released — 53.0 5.1

8 unchanged sentences

Released, net of amortization 13.7 13.2 16.1

Completed and not released — 0.3 —

In production 5.1 8.2 0.8

2 unchanged sentences

Total Program Investments $ 165.3 $ 945.4 $ 184.6

(1) During the third quarter of 2023, investments in productions and investments in acquired content rights of $ 734.5 million, net of accumulated amortization, attributable to the non-core eOne Film and TV business, which were previously classified within Other assets, were transferred to Assets held for sale.

(2) 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.

The Company recorded $ 325.3 million of program cost amortization related to released programming in the nine months ended October 1, 2023, consisting of the following:

Investment in Production Investment in Content Total

Program cost amortization $ 294.5 $ 30.8 $ 325.3

(1) Investments in productions and investments in acquired content totaling $ 734.8 million were removed from the Company's balance sheet as of December 31, 2023, in connection with the sale of the eOne Film and TV business completed on December 27, 2023.

See note 3 for additional information.

The Company recorded $ 8.1 million of program cost amortization related to released programming during the quarter ended March 31, 2024, consisting of the following:

Quarter Ended

2024 April 2,

Investment in production $ 8.1 $ 110.9

Investment in content — 11.6

Total program cost amortization $ 8.1 $ 122.5

(10) 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 8.0 % for the nine months ended October 1, 2023 and 22.1 % for the nine months ended September 25, 2022.

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

• during the nine months ended October 1, 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

Our effective tax rate ("ETR") from continuing operations was 27.1 % for the quarter ended March 31, 2024 and ( 3.4 )% for the quarter ended April 2, 2023.

The following items caused the year-to-date ETR in 2024 to be significantly different from the prior year first quarter ETR:

• During the quarter ended March 31, 2024, the Company recorded a net discrete tax expense of $ 1.8 million, primarily associated with stock-based compensation.

• 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.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

$ 113.3 million, exclusive of the goodwill impairment, primarily associated with tax benefits on the impairment of trade names in the Entertainment segment during the second quarter and the $ 473.0 million loss on assets held for sale in the third quarter, and;

• 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.

The Company is no longer subject to U.S.

federal income tax examinations for years before 2012.

With few exceptions, the Company is no longer subject to U.S.

state or local and non-U.S.

income tax examinations by tax authorities in its major jurisdictions for years before 2016.

The Company is currently under income tax examination by the Internal Revenue Service and in several U.S.

state and local and non-U.S.

jurisdictions.

(11) Fair Value of Financial Instruments

3 unchanged sentences

• Level 2 fair values are those based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities;

and Level 3 fair values are based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

There have been transfers between levels within the fair value hierarchy.

Accounting standards permit entities to measure many financial instruments and certain other items at fair value and establish presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar assets and liabilities.

• Level 3 fair values are based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

At October 1, 2023, September 25, 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 March 31, 2024, April 2, 2023 and December 31, 2023, the Company had the following assets and liabilities measured at fair value in its Consolidated Balance Sheets (excluding assets for which the fair value is measured using net asset value per share):

Fair Value Measurements Using:

1 unchanged sentence

(Level 2) Significant

October 1, 2023

March 31, 2024

Available-for-sale securities (1)

3 unchanged sentences

Derivatives $ 2.9 $ — $ 2.9 $ —

$ 2.1 — 2.1 —

Option agreement 1.7 — — 1.7

Total liabilities $ 4.6 $ — $ 2.9 $ 1.7

September 25, 2022

April 2, 2023

Available-for-sale securities (1)

$ 1.3 $ 1.3 $ — $ —

Derivatives 3.2 — 3.2 —

5 unchanged sentences

Available-for-sale securities (1)

$ 1.1 $ 1.1 $ — $ —

Derivatives 0.7 — 0.7 —

4 unchanged sentences

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

(2) These balances include certain amounts attributable to the non-core eOne Film and TV business that were reclassified to Assets held for sale and Liabilities held for sale at October 1, 2023.

See note 15 for additional information.

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

The Company uses current forward rates of the respective foreign currencies to measure the fair value of these contracts.

There were no changes in these valuation techniques during the quarter ended March 31, 2024.

There were no material changes to fair value measurements of the Company's financial instruments which use significant unobservable inputs (Level 3) for both the quarters ended March 31, 2024 and April 2, 2023.

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.

The Company uses current forward rates of the respective foreign currencies to measure the fair value of these contracts.

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 October 1, 2023, September 25, 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 October 1, 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 )

Balance at end of third quarter

$ ( 1.7 ) $ ( 1.7 )

Other Fair Value Measurements

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

At March 31, 2024, April 2, 2023 and December 31, 2023, the carrying cost of these instruments approximated their fair value.

The Company's financial instruments at March 31, 2024, April 2, 2023 and December 31, 2023 also include certain assets and liabilities measured at fair value, as described above.

See note 8 for the fair value of the Company's outstanding debt.

(12) Derivative Financial Instruments

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 and television and film production costs (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.

Hasbro uses foreign currency forward and 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 and 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.

All contracts are entered into with a number of counterparties, all of which are major financial institutions.

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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 expenses and other cross-border transactions, primarily for the remainder of 2023, and into 2024.

At October 1, 2023, September 25, 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:

October 1, 2023 (1)

September 25, 2022 December 25, 2022

These instruments hedge a portion of the Company's currency requirements associated with anticipated inventory purchases, product sales and other cross-border transactions, primarily for the remainder of 2024, and into 2025.

At March 31, 2024, April 2, 2023 and December 31, 2023, the notional amounts and fair values of the Company's foreign currency forward contracts designated as cash flow hedging instruments were as follows:

March 31, 2024 April 2, 2023 December 31, 2023

Hedged transaction Notional

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Total $ 257.2 $ ( 1.0 ) $ 339.7 $ ( 3.9 ) $ 251.3 $ ( 2.4 )

(1) Includes certain cash flow hedges attributable to the non-core eOne Film and TV business, which were reclassified to Assets held for sale and Liabilities held for sale at October 1, 2023.

See note 15 for additional information.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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 October 1, 2023, September 25, 2022 and December 25, 2022 as follows:

October 1, 2023 (1)

September 25,

The fair values of the Company's foreign currency forward contracts designated as cash flow hedges are recorded in the Consolidated Balance Sheets at March 31, 2024, April 2, 2023 and December 31, 2023 as follows:

2024 April 2,

2023 December 31,

4 unchanged sentences

Unrealized gains $ 0.1 $ — $ —

Unrealized losses ( 0.1 ) ( 0.1 ) —

Net unrealized gains $ 0.1 $ — $ —

3 unchanged sentences

Net unrealized losses $ ( 2.7 ) $ ( 4.8 ) $ ( 2.8 )

(1) Includes certain balances attributable to the non-core eOne Film and TV business which were reclassified to Assets held for sale and Liabilities held for sale at October 1, 2023.

See note 15 for additional information.

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 October 1, 2023 and September 25, 2022 as follows:

Quarter Ended Nine Months Ended

2023 September 25,

2022 October 1,

2023 September 25,

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings (loss) to net earnings for the quarters ended March 31, 2024 and April 2, 2023 as follows:

Quarter Ended

2024 April 2,

Statements of Operations Classification

6 unchanged sentences

The Company does not use hedge accounting for these contracts as changes in the fair values of these contracts are substantially offset by changes in the fair value of the intercompany loans.

Additionally, to manage transactional exposure to fair value movements on certain monetary assets and liabilities denominated in foreign currencies, the Company has implemented a balance sheet hedging program.

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 October 1, 2023, September 25, 2022 and December 25, 2022 the total notional amounts of the Company's undesignated derivative instruments were $ 807.5 million, $ 601.3 million and $ 765.6 million, respectively.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

At October 1, 2023, September 25, 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:

October 1, 2023

September 25,

As of March 31, 2024, April 2, 2023 and December 31, 2023, the total notional amounts of the Company's undesignated derivative instruments were $ 328.6 million, $ 723.3 million and $ 340.5 million, respectively.

At March 31, 2024, April 2, 2023 and December 31, 2023, the fair values of the Company's undesignated derivative financial instruments were recorded in the Consolidated Balance Sheets as follows:

2024 April 2,

2023 December 31,

4 unchanged sentences

Accrued liabilities

Unrealized gains $ — $ — $ 1.4

Unrealized losses ( 0.2 ) ( 0.3 ) ( 2.5 )

Net unrealized losses $ ( 0.2 ) $ ( 0.3 ) $ ( 1.1 )

Total unrealized gains, net $ 2.9 $ 13.4 $ 5.0

The Company recorded net gains of $ 15.1 million and $ 26.4 million on these instruments to other (income) expense, net for the quarter and nine months ended October 1, 2023, respectively, and net gains of $ 28.7 million and $ 49.2 million for the quarter and nine months ended September 25, 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.

The Company recorded net gains of $ 9.1 million and $ 4.4 million on these instruments to Other (income) expense, net for the quarters ended March 31, 2024 and April 2, 2023, 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 6 and 11).

The Company occupies offices and uses certain equipment under various operating lease arrangements.

The Company has no material finance leases.

The Company's leases have remaining lease terms of 1 to 15 years, some of which include options to extend lease terms or options to terminate current lease terms at certain times, subject to notice requirements set out in the lease agreement.

Payments under certain of the lease agreements may be subject to adjustment based on a consumer price index or other inflationary indices.

The lease liability for such lease agreements as of the adoption date, was based on fixed payments as of the adoption date.

Any adjustments to these payments based on the related indices will be recorded to expense as incurred.

Leases with an expected term of 12 months or less are not capitalized.

Lease expense under such leases is recorded straight line over the life of the lease.

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 $ 21.7 million and $ 70.0 million for the quarter and nine months ended October 1, 2023, respectively, and $ 24.2 million and $ 67.4 million for the quarter and nine months ended September 25, 2022, respectively, and was not material to the Company's financial statements.

Due to the held for sale criteria being met as of October 1, 2023, certain lease assets attributable to the non-core eOne Film and TV businesses are no longer being depreciated.

Expenses related to short-term leases (expected terms less than 12 months) or variable lease payments were not material in the quarters or nine months ended October 1, 2023 or September 25, 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 and nine months ended October 1, 2023 and September 25, 2022 is as follows:

Quarter Ended Nine Months Ended

October 1, 2023 (1)

September 25,

2022 October 1, 2023 (1)

September 25,

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

Operating cash flows from operating leases $ 11.5 $ 12.7 $ 37.3 39.4

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

Operating leases net of lease modifications $ 9.2 $ 0.4 $ 76.9 —

Weighted Average Remaining Lease Term

Operating leases 7.4 years 4.5 years 7.4 years 4.5 years

Weighted Average Discount Rate

Operating leases 3.8 % 3.4 % 3.8 % 3.4 %

(1) Includes certain amounts attributable to the non-core eOne Film and TV businesses, which were transferred to Assets held for sale and Liabilities held for sale as of October 1, 2023.

See note 15 for additional information.

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 October 1, 2023:

October 1, 2023 (1)

2023 (excluding the nine months ended October 1, 2023) $ 11.0

2028 and thereafter 69.8

Total future lease payments 210.0

Less imputed interest 63.5

Present value of future operating lease payments 146.5

Less current portion of operating lease liabilities (2)

Non-current operating lease liability (3)

Operating lease right-of-use assets, net (4)

(1) Includes certain assets and liabilities attributable to the non-core eOne Film and TV businesses, which were transferred to Assets held for sale and Liabilities held for sale as of October 1, 2023.

See note 15 for additional information.

(2) Included in Accrued liabilities on the consolidated balance sheets.

(3) Included in Other liabilities on the consolidated balance sheets.

(4) Included in Property, plant, and equipment on the consolidated balance sheets.

(13) Restructuring Actions

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

As of March 31, 2024, the Company had a remaining balance of $ 1.0 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 $ 1.6 million in the first quarter of 2024.

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

During 2022 and 2023, Hasbro implemented its Operational Excellence program ("the Program"), an ongoing enterprise-wide initiative intended to improve our business through programs that include targeted cost-savings, supply chain transformation and certain other restructuring actions designed to drive growth and enhance shareholder value.

The Company's organizational structure changes have resulted and will further result in workforce reductions as well as the reallocation of people and resources, which will include voluntary early retirement for certain groups of employees and additional involuntary reduction in employees ("Additional Actions").

The Company currently anticipates that the Additional Actions will be substantially complete over the next 18 to 24 months.

Charges related to the Program were recorded in Selling, distribution and administration within Corporate and Other.

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 March 31, 2024, the liability balance associated with the Program related restructuring actions consisted of severance payments recorded within Other accrued liabilities in the Consolidated Balance Sheets as follows:

Quarter Ended

Operational Excellence March 31,

2024 April 2,

Balance at beginning of the year $ 81.2 $ 84.9

Charges 5.7 —

Payments ( 14.3 ) ( 16.2 )

Ending Balance $ 72.6 $ 68.7

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 Programs as of March 31, 2024:

Operational Excellence Total

Charges incurred to date $ 138.0

Estimated charges to be incurred on approved initiatives —

Total expected charges on approved initiatives $ 138.0

(14) Commitments and Contingencies

Contingencies – The Company is subject to claims related to product and other commercial matters.

In determining costs to accrue related to these items, the Company carefully analyzes cases and considers the likelihood of adverse judgments or outcomes, as well as the potential range of possible loss.

The Company accrues for matters when losses are both probable and estimable.

Any amounts accrued for these matters are monitored on an ongoing basis and are updated based on new developments or new information as it becomes available for each matter.

Litigation and Other Claims – The Company from time to time may be subject to lawsuits and other claims related to product, commercial, employee, environmental and other matters in the normal course of business.

The Company accrues for matters when losses are both probable and estimable.

Any amounts accrued for these matters are monitored on an ongoing basis and are updated based on new developments or new information as it becomes available for each matter.

Contractual obligations and commercial commitments, as detailed in the Company's 2023 Form 10-K, did not materially change outside of certain payments made in the normal course of business.

Condensed Notes to Consolidated Financial Statements

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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.

The Company's reportable segments are Consumer Products, Wizards of the Coast and Digital Gaming, Entertainment and Corporate and Other.

• The Consumer Products segment engages in the sourcing, marketing and sales of toy and game products around the world.

The Consumer Products business also promotes the Company's brands through the out-licensing of our trademarks, characters and other brand and intellectual property rights to third parties, through the sale of branded consumer products such as toys and apparel.

Additionally, through license agreements with third parties, we develop and sell products based on popular third-party brands.

• 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.

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.

Additionally, we license certain of our 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 and production of Hasbro-branded entertainment content including film, television, children's programming, digital content and live entertainment focused on Hasbro-owned properties.

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 October 1, 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 October 1, 2023 and September 25, 2022 are as follows:

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

Information by segment and a reconciliation to reported amounts for the quarters ended March 31, 2024 and April 2, 2023 are as follows:

Quarter Ended

October 1, 2023 September 25, 2022

Net revenues External Affiliate (b)

External Affiliate (b)

2024 April 2,

Net revenues:

Consumer Products $ 413.0 $ 520.4

2 unchanged sentences

Corporate and Other — —

Total net revenues:

$ 757.3 $ 1,001.0

Nine Months Ended

October 1, 2023 September 25, 2022

Net revenues External Affiliate (b)

External Affiliate (b)

Intercompany revenues:

Consumer Products $ 39.3 $ 73.3

2 unchanged sentences

Corporate and Other ( 85.7 ) ( 134.2 )

$ 3,714.4 $ — $ 4,178.2 $ —

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

Quarter Ended Nine Months Ended

Operating profit (loss) October 1,

2023 September 25,

2022 October 1,

2023 September 25,

Total intercompany revenues:

Operating profit (loss):

Consumer Products $ ( 46.9 ) $ ( 46.0 )

1 unchanged sentence

Entertainment (a) 5.8 ( 8.7 )

( 468.5 ) ( 28.9 ) ( 801.4 ) ( 2.4 )

Corporate and Other (a) (c) 34.5 ( 4.2 )

( 0.5 ) ( 15.8 ) ( 22.8 ) ( 37.3 )

Operating profit (loss) ( 169.5 ) 194.3 ( 340.2 ) 533.4

Total Operating profit 116.2 17.9

Interest expense 38.5 46.3

1 unchanged sentence

Other non-operating expense (income) 5.0 ( 1.4 )

2.2 ( 10.0 ) ( 0.7 ) ( 9.5 )

Earnings (loss) before income taxes $ 81.0 $ ( 21.0 )

Total assets October 1,

2023 September 25,

2022 December 25,

Consumer Products $ 6,474.4 $ 5,817.9 $ 5,757.7

Wizards of the Coast and Digital Gaming 4,029.1 2,646.6 2,968.7

Entertainment (a)

5,346.7 6,158.5 6,273.3

Corporate and Other (a)

( 7,510.0 ) ( 4,996.9 ) ( 5,703.8 )

$ 8,340.2 $ 9,626.1 $ 9,295.9

(a) Certain long-term assets, including property, plant and equipment, goodwill and other intangibles, which benefit multiple operating segments, are included in both Entertainment and Corporate and Other.

4 unchanged sentences

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

(c) Corporate and Other Operating profit (loss) includes Operational Excellence related transformation office and consulting fees of $ 8.4 million and $ 29.4 million, for the quarter and nine-month periods ended October 1, 2023, respectively, which are recorded within Selling, distribution and administration costs within the Consolidated Statements of Operations.

(c) Corporate and Other Operating profit (loss) includes Operational Excellence related transformation office and consulting fees of $ 5.2 million and $ 10.6 million, for the quarters ended March 31, 2024 and April 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 $ 2.8 million and $ 24.3 million for the quarter and nine month periods ended September 25, 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 nine months ended October 1, 2023 and September 25, 2022:

Quarter Ended Nine Months Ended

2023 September 25,

2022 October 1,

2023 September 25,

North America $ 573.6 $ 693.3 $ 1,234.7 $ 1,531.8

Europe 208.7 271.6 472.2 610.4

Asia Pacific 61.8 82.8 191.5 201.6

Latin America 112.8 113.1 234.1 224.0

Net revenues $ 956.9 $ 1,160.8 $ 2,132.5 $ 2,567.8

The following table represents consolidated Wizards of the Coast and Digital Gaming segment net revenues by category for the quarters and nine months ended October 1, 2023 and September 25, 2022:

Quarter Ended Nine Months Ended

2023 September 25,

2022 October 1,

2023 September 25,

Tabletop Gaming $ 290.5 $ 246.3 $ 806.9 $ 800.3

Digital and Licensed Gaming 133.1 57.2 287.5 185.8

Net revenues $ 423.6 $ 303.5 $ 1,094.4 $ 986.1

The following table represents consolidated Entertainment segment net revenues by category for the quarters and nine months ended October 1, 2023 and September 25, 2022:

Quarter Ended Nine Months Ended

2023 September 25,

2022 October 1,

2023 September 25,

Film and TV $ 102.1 $ 188.6 $ 423.8 $ 527.0

Family Brands 20.8 13.6 63.7 59.6

Music and Other — 9.4 — 37.7

Net revenues $ 122.9 $ 211.6 $ 487.5 $ 624.3

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 and nine months ended October 1, 2023 and September 25, 2022:

Quarter Ended Nine Months Ended

Net revenues October 1,

2023 September 25,

2022 October 1,

2023 September 25,

Franchise Brands $ 1,011.0 $ 939.8 $ 2,412.8 $ 2,416.2

Partner Brands 228.2 349.9 533.8 775.8

Portfolio Brands 170.3 209.0 369.4 457.4

Non-Hasbro Branded Film & TV 93.9 177.2 398.4 528.8

Total $ 1,503.4 $ 1,675.9 $ 3,714.4 $ 4,178.2

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

THE GATHERING and Hasbro Gaming, totaled $ 628.0 million and $ 508.6 million for the quarters ended October 1, 2023 and September 25, 2022, respectively, of which MAGIC:

THE GATHERING contributed $ 287.4 million and $ 239.3 million, respectively.

Net revenues from Hasbro's Total Gaming category totaled $ 1,505.7 million and $ 1,415.7 million for the nine months ended October 1, 2023 and September 25, 2022, respectively, of which MAGIC:

THE GATHERING contributed $ 827.5 million and $ 802.0 million, respectively.

(14) Restructuring Actions

As of October 1, 2023, the Company had a remaining balance of $ 6.7 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 $ 2.3 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.

In January 2023, in connection the Program we announced the elimination of approximately 1,000 positions from our global workforce, or approximately 15 % of global full-time employees.

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 October 1, 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 ( 33.9 ) ( 33.9 )

Balance at October 1, 2023

$ 51.0 $ 51.0

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

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(15) Assets Held for Sale

In connection with Blueprint 2.0, and after evaluating its portfolio of businesses, the Company determined that its non-core eOne Film and TV business, which is included within the Entertainment segment, is no longer aligned with its current long-term strategy and during the third quarter of 2023, the Company entered into a definitive agreement to sell its non-core eOne Film and TV business to Lions Gate Entertainment.

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

The Company determined that the carrying value of the non-core eOne Film and TV business was greater than its fair value and, accordingly, recorded a pre-tax non-cash loss on assets held for sale of $ 473.0 million for the quarter and nine months ended October 1, 2023, in the Company’s consolidated statements of operations, within the Entertainment segment.

The Company determined that the non-core eOne Film and TV business met the criteria to be classified as held for sale at October 1, 2023, but did not meet the criteria to be classified as discontinued operations.

As a result, the related assets and liabilities were included in the separate held-for-sale line items of the asset and liability sections of the consolidated balance sheets.

The following table summarizes the assets and liabilities held for sale at October 1, 2023:

October 1, 2023

Cash and cash equivalents including restricted cash of $ 4.1 million (1)

Accounts receivable, less allowance for doubtful accounts of $ 1.4 million

Prepaid expenses and other current assets

Property, plant and equipment, less accumulated depreciation of $ 21.3 million

Write-down loss allowance (2)

Total assets held for sale

Short-term borrowings

Current portion of long-term debt

Accounts payable and accrued liabilities

Long-term debt

Other liabilities

Total liabilities held for sale

(1) The net cash and cash equivalents attributable to the non-core entertainment business will be paid for by Lionsgate under the agreement between the Company and Lionsgate dated August 3, 2023 as part of the purchase price adjustment for net debt.

(2) In addition to the write-down loss allowance of $ 457.3 million, the Company also recognized $ 15.7 million of currency translation losses on the classification of held for sale.

The pre-tax non-cash loss on assets held for sale of $ 473.0 million includes both the write-down allowance and the currency translation losses.

The Company expects this consulting assistance to conclude within 2024 in line with the planning stages of the final components of the transformation plan.

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