What changed in this filing

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Item 1. Financial Statements

2024-10-31 compared with 2024-07-31 · 228 added, 129 removed, 622 unchanged (36% of the section changed)

3 unchanged sentences

(Millions of Dollars Except Share Data)

September 29,

2024 October 1,

2023 December 31,

6 unchanged sentences

Prepaid expenses and other current assets 391.6 286.2 416.9

Assets held for sale — 1,048.7 —

Total current assets 3,021.6 3,240.1 2,323.6

10 unchanged sentences

Current liabilities

Short-term borrowings $ — $ 148.2 $ —

Current portion of long-term debt $ 500.0 $ 60.0 $ 500.0

1 unchanged sentence

Accrued liabilities 1,132.5 985.4 1,215.8

Liabilities held for sale — 607.4 —

Total current liabilities 2,052.8 2,024.2 2,056.4

8 unchanged sentences

Authorized 600,000,000 shares;

issued 220,286,736 shares at June 30, 2024, July 2, 2023, and December 31, 2023

issued 220,286,736 shares at September 29, 2024, October 1, 2023, and December 31, 2023

110.1 110.1 110.1

3 unchanged sentences

Treasury stock, at cost;

80,905,996 shares at June 30, 2024;

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

80,798,468 shares at September 29, 2024;

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

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

7 unchanged sentences

(Millions of Dollars Except Per Share Data)

Three Months Ended Six Months Ended

2023 June 30,

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Net revenues $ 1,281.3 $ 1,503.4 $ 3,033.9 $ 3,714.4

17 unchanged sentences

Earnings (loss) before income taxes 290.3 ( 215.0 ) 554.2 ( 463.9 )

Income tax expense 44.4 7.0 66.3 7.7

Income tax expense (benefit) 67.0 ( 44.6 ) 133.3 ( 36.9 )

Net earnings (loss) 223.3 ( 170.4 ) 420.9 ( 427.0 )

10 unchanged sentences

(Millions of Dollars)

Three Months Ended Six Months Ended

2023 June 30,

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Net earnings (loss) $ 223.3 $ ( 170.4 ) $ 420.9 $ ( 427.0 )

3 unchanged sentences

Reclassifications to earnings, net of tax:

Net losses (gains) on cash flow hedging activities 0.7 1.8 1.1 ( 0.4 )

Net gains on cash flow hedging activities 0.1 2.9 1.2 2.5

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

7 unchanged sentences

(Millions of Dollars)

Six months ended

Nine months ended

September 29,

2024 October 1,

Cash flows from operating activities:

6 unchanged sentences

Amortization of intangibles 51.2 65.1

Program cost amortization 16.6 256.9

Program production cost amortization 24.5 325.3

Deferred income taxes 21.0 ( 47.1 )

2 unchanged sentences

Change in operating assets and liabilities net of acquired balances:

Decrease in accounts receivable 228.7 237.5

Increase in inventories ( 32.7 ) ( 48.4 )

Increase in prepaid expenses and other current assets ( 12.7 ) ( 14.6 )

Increase in accounts receivable ( 49.7 ) ( 86.3 )

(Increase) decrease in inventories ( 45.5 ) 53.0

Decrease in prepaid expenses and other current assets 8.2 17.0

Program spend, net ( 20.7 ) ( 337.5 )

Decrease in accounts payable and accrued liabilities ( 192.7 ) ( 192.1 )

Increase (decrease) in accounts payable and accrued liabilities 72.7 ( 127.5 )

Change in net deemed repatriation tax ( 45.9 ) ( 34.4 )

3 unchanged sentences

Additions to property, plant and equipment ( 146.2 ) ( 160.4 )

Investments ( 480.1 ) —

Purchases of investments ( 571.0 ) —

Net (settlement) proceeds from sale of business ( 12.0 ) —

Sale of investments 91.0 —

Other 2.8 ( 2.2 )

3 unchanged sentences

Repayments of borrowings with maturity greater than three months — ( 107.0 )

Net repayments from other short-term borrowings — 6.6

Net proceeds from other short-term borrowings — 0.3

Dividends paid ( 292.2 ) ( 290.9 )

6 unchanged sentences

Net increase (decrease) in cash, cash equivalents and restricted cash 150.7 ( 257.2 )

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

Net increase (decrease) in cash, cash equivalents and restricted cash 150.7 ( 327.6 )

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

31 unchanged sentences

Balance, June 30, 2024 $ 110.1 $ 2,592.1 $ 2,284.7 $ ( 222.2 ) $ ( 3,614.1 ) $ 22.3 $ 1,172.9

Net earnings attributable to Hasbro, Inc.

— — 223.2 — — — 223.2

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

Other comprehensive loss — — — ( 5.6 ) — — ( 5.6 )

Stock-based compensation transactions — 0.6 — — 2.0 — 2.6

Stock-based compensation expense — 14.7 — — ( 0.7 ) — 14.0

Dividends declared — 2.1 ( 99.7 ) — — — ( 97.6 )

Distributions paid to noncontrolling owners and other foreign exchange — — — — — 0.1 0.1

Balance, September 29, 2024 $ 110.1 $ 2,609.5 $ 2,408.2 $ ( 227.8 ) $ ( 3,612.8 ) $ 22.5 $ 1,309.7

See accompanying condensed notes to consolidated financial statements.

28 unchanged sentences

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.

— — ( 171.1 ) — — — ( 171.1 )

Net earnings attributable to noncontrolling interests — — — — — 0.7 0.7

Other comprehensive earnings — — — 5.1 — — 5.1

Stock-based compensation transactions — ( 1.3 ) — — ( 0.1 ) — ( 1.4 )

Stock-based compensation expense — 19.2 — — 0.1 — 19.3

Dividends declared — 1.6 ( 98.7 ) — — — ( 97.1 )

Distributions paid to noncontrolling owners and other foreign exchange — — — — — ( 2.5 ) ( 2.5 )

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

See accompanying condensed notes to consolidated financial statements.

4 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 consolidated subsidiaries ("Hasbro" or the "Company") as of June 30, 2024, July 2, 2023, and December 31, 2023, and the results of its operations and cash flows and shareholders' equity for the periods ended June 30, 2024 and July 2, 2023 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 September 29, 2024, October 1, 2023, and December 31, 2023, and the results of its operations and cash flows and shareholders' equity for the periods ended September 29, 2024 and October 1, 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.

1 unchanged sentence

Actual results could differ from those estimates.

The three months ended June 30, 2024 and July 2, 2023 were 13-week and 14-week periods, respectively.

The six months ended June 30, 2024 and July 2, 2023 were 26-week and 27-week periods, respectively.

The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of results to be expected for the full year 2024, nor were those of the comparable 2023 periods representative of those actually experienced for the full year 2023.

The three months ended September 29, 2024 and October 1, 2023 were 13-week periods.

The nine months ended September 29, 2024 and October 1, 2023 were 39-week and 40-week periods, respectively.

The results of operations for the three and nine months ended September 29, 2024 are not necessarily indicative of results to be expected for the full year 2024, nor were those of the comparable 2023 periods 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").

3 unchanged sentences

Other Adjustments

During the three months 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 three months ended March 31, 2024 is not considered to be material to the full year 2023 or 2024 consolidated financial statements.

During the three months ended June 30, 2024, the Company corrected a prior year error and recorded a $ 31.1 million expense and associated liability related to historical environmental exposures in accordance with Accounting Standard Codification 410, Asset Retirement and Environmental Obligations .

The $ 31.1 million expense was recorded in Selling, distribution and administration on the Consolidated Statements of Operations.

Additionally, during the three months ended June 30, 2024, the Company corrected a prior year error and recorded a $ 26.7 million benefit related to an over-accrual of vendor commitment liabilities.

The $ 26.7 million benefit was recorded in Cost of sales on the Consolidated Statements of Operations.

The recording of these two items were not considered to be material, individually or in the aggregate, to the Company's prior year financial statements or the 2024 consolidated financial statements.

During the nine months ended September 29, 2024, the Company corrected prior period errors associated with 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 (recorded in Selling, distribution and administration on the Consolidated Statements of Operations), a $ 31.1 million expense and associated liability related to historical environmental exposures in accordance with Accounting Standard Codification 410, Asset Retirement and Environmental Obligations (recorded in Selling, distribution and administration on the Consolidated Statements of Operations), and a $ 26.7 million benefit related to an over-accrual of vendor commitment liabilities (recorded in Cost of sales on the Consolidated Statements of Operations).

The recording of these items was not considered to be material, individually or in the aggregate, to the Company's prior year financial statements or the 2024 consolidated financial statements.

Significant Accounting Policies

1 unchanged sentence

Recently Adopted Accounting Standards

During the three and six months ended June 30, 2024, there were no recently adopted accounting standards that had a material effect on the Company’s financial statements.

During the three and nine months ended September 29, 2024, there were no recently adopted accounting standards that had a material effect on the Company’s financial statements.

Issued Accounting Pronouncements

2 unchanged sentences

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

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

criteria for aggregating operating segments into reportable segments.

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 are assessing the impact of this ASU and upon adoption

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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.

25 unchanged sentences

(Millions of Dollars and Shares Except Per Share Data)

The changes in carrying amounts of contract assets and liabilities for the six months ended June 30, 2024 and July 2, 2023 are as follows:

The changes in carrying amounts of contract assets and liabilities for the nine months ended September 29, 2024 and October 1, 2023 are as follows:

September 29,

2024 October 1,

Balance at beginning of the year $ 213.3 $ 594.4

1 unchanged sentence

Amounts reclassified to accounts receivable ( 221.9 ) ( 427.4 )

Reclassified to assets held for sale (1)

Foreign currency impact ( 1.8 ) ( 5.3 )

4 unchanged sentences

Current year amounts reclassified to revenue ( 96.0 ) ( 156.6 )

Reclassified to liabilities held for sale (1)

Foreign currency impact 7.1 ( 2.1 )

Ending Balance $ 256.9 $ 113.0

(1) See Note 3 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 June 30, 2024, unrecognized revenue attributable to unsatisfied performance obligations expected to be recognized in the future was $ 2.4 million.

As of September 29, 2024, unrecognized revenue attributable to unsatisfied performance obligations expected to be recognized in the future was $ 2.7 million.

Of this amount, we expect to recognize $ 0.6 million in the remainder of 2024 and $ 2.1 million in 2025.

1 unchanged sentence

Accounts Receivable and Allowance for Credit Losses

The Company’s balance for accounts receivable on the Consolidated Balance Sheets as of June 30, 2024 and July 2, 2023 are primarily from contracts with customers.

A summary of the activity in the allowance for credit losses for the six months ended June 30, 2024 and July 2, 2023 are as follows:

The Company’s balance for accounts receivable on the Consolidated Balance Sheets as of September 29, 2024 and October 1, 2023 are primarily from contracts with customers.

A summary of the activity in the allowance for credit losses for the nine months ended September 29, 2024 and October 1, 2023 are as follows:

September 29,

2024 October 1,

Balance at beginning of the year $ 12.7 $ 20.0

1 unchanged sentence

Customer accounts written off—net of recoveries ( 0.5 ) ( 0.8 )

Reclassified to assets held for sale (1)

Foreign currency impact ( 0.6 ) 0.2

Ending balance $ 16.2 $ 20.8

(1) See Note 3 for additional information on assets held for sale.

Disaggregation of revenues

10 unchanged sentences

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

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 the three and six months ended July 2, 2023, have been reclassified to reflect the movement, resulting in a change of $ 0.8 million and $ 0.9 million, respectively.

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 three and six months ended June 30, 2024 and July 2, 2023:

Three Months Ended Six Months Ended

2023 June 30,

For comparability, net revenues for the three and nine months ended October 1, 2023, have been reclassified to reflect the movement, resulting in a change of $ 0.3 million and $ 1.2 million, respectively.

The following table represents consolidated Consumer Products segment net revenues by major geographic region for the three and nine months ended September 29, 2024 and October 1, 2023:

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

North America $ 526.8 $ 573.6 $ 1,072.0 $ 1,234.7

3 unchanged sentences

Net revenues $ 860.1 $ 956.9 $ 1,797.6 $ 2,132.5

The following table represents consolidated Wizards of the Coast and Digital Gaming segment net revenues by category for the three and six months ended June 30, 2024 and July 2, 2023:

Three Months Ended Six Months Ended

2023 June 30,

The following table represents consolidated Wizards of the Coast and Digital Gaming segment net revenues by category for the three and nine months ended September 29, 2024 and October 1, 2023:

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Tabletop Gaming $ 296.8 $ 290.5 $ 832.6 $ 806.9

1 unchanged sentence

Net revenues $ 404.0 $ 423.6 $ 1,172.3 $ 1,094.4

The following table represents consolidated Entertainment segment net revenues by category for the three and six months ended June 30, 2024 and July 2, 2023:

Three Months Ended Six Months Ended

2023 June 30,

The following table represents consolidated Entertainment segment net revenues by category for the three and nine months ended September 29, 2024 and October 1, 2023:

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Film and TV (1)

3 unchanged sentences

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

The following table presents consolidated net revenues by brand portfolio for the three and six months ended June 30, 2024 and July 2, 2023:

Three Months Ended Six Months Ended

2023 June 30,

The following table presents consolidated net revenues by brand portfolio for the three and nine months ended September 29, 2024 and October 1, 2023:

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Franchise Brands $ 941.6 $ 1,011.0 $ 2,334.7 $ 2,412.8

11 unchanged sentences

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.

During the three months ended June 30, 2024, the Company recorded a $ 15.3 million expense in Loss on disposal of business on the Consolidated Statements of Operations associated with certain purchase price and related adjustments.

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.

During the nine months ended September 29, 2024, the Company recorded a $ 24.4 million expense in Loss on disposal of business on the Consolidated Statements of Operations associated with certain purchase price and related adjustments.

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, of which $ 473.0 million was recorded during the three and nine months ended October 1, 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.

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 assets and liabilities 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

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 (1)

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) 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.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(4) Earnings (Loss) Per Share

Net earnings (loss) per share data for the three and six months ended June 30, 2024 and July 2, 2023 were computed as follows:

Three Months Ended Six Months Ended

2023 June 30,

Net earnings (loss) per share data for the three and nine months ended September 29, 2024 and October 1, 2023 were computed as follows:

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Net earnings (loss) attributable to Hasbro, Inc.

8 unchanged sentences

Diluted $ 1.59 $ ( 1.23 ) $ 3.00 $ ( 3.09 )

For the three and six months ended June 30, 2024, options and restricted stock units totaling 2.0 million and 2.3 million, respectively, were excluded from the calculation of diluted earnings per share because to include them would have been anti-dilutive.

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

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

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

Changes in the carrying amount of goodwill, by operating segment, for the six months ended June 30, 2024 and July 2, 2023 are as follows:

For the three and nine months ended September 29, 2024, options and restricted stock units totaling 1.1 million and 1.9 million, respectively, were excluded from the calculation of diluted earnings per share because to include them would have been anti-dilutive.

For the three 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.

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 three and nine months ended October 1, 2023.

Assuming the Company was in a net earnings position, the awards and options that would have been included, under the treasury stock method, 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 three and nine months ended October 1, 2023.

Changes in the carrying amount of goodwill, by operating segment, for the nine months ended September 29, 2024 and October 1, 2023 are as follows:

Consumer Products Wizards of the Coast and Digital Gaming Entertainment (1)

1 unchanged sentence

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

Balance as of June 30, 2024 $ 1,582.2 $ 371.4 $ 325.2 $ 2,278.8

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

Balance as of September 29, 2024 $ 1,582.2 $ 371.5 $ 325.2 $ 2,278.9

Consumer Products Wizards of the Coast and Digital Gaming Entertainment (1)

2 unchanged sentences

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

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

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

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(1) During the fourth quarter of 2023, the Company recorded $ 960.0 million of non-cash goodwill impairment charges within the Entertainment segment.

See further detail in the 2023 Annual Report.

During the six months ended July 2, 2023, the Company recorded non-cash impairment charges of $ 296.2 million within the Entertainment segment.

These impairment charges consisted of a $ 231.2 million goodwill impairment charge associated recorded within Impairment of goodwill and a $ 65.0 million intangible asset impairment charge, recorded in Selling, distribution and administration costs, within the Consolidated Statements of Operations for the three and six months ended July 2, 2023.

During the nine months ended October 1, 2023, the Company recorded non-cash impairment charges of $ 296.2 million within the Entertainment segment.

These impairment charges consisted of a $ 231.2 million goodwill impairment charge recorded within Impairment of goodwill and a $ 65.0 million intangible asset impairment charge, recorded in Selling, distribution and administration costs, within the Consolidated Statements of Operations for the nine months ended October 1, 2023.

(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 three and six months ended June 30, 2024 and July 2, 2023.

Three Months Ended Six Months Ended

2023 June 30,

The following table presents the related tax effects on changes in Other comprehensive earnings (loss) for the three and nine months ended September 29, 2024 and October 1, 2023.

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Other comprehensive earnings (loss), tax effect:

4 unchanged sentences

Total tax effect on other comprehensive earnings (loss) $ 0.4 $ ( 1.6 ) $ ( 1.3 ) $ 0.3

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 six months ended June 30, 2024 and July 2, 2023 are as follows:

Changes in the components of Accumulated other comprehensive earnings (loss), net of tax for the nine months ended September 29, 2024 and October 1, 2023 are as follows:

Postretirement

6 unchanged sentences

Current period other comprehensive earnings (loss) ( 0.1 ) 1.9 — ( 28.1 ) ( 26.3 )

Balance at June 30, 2024 $ ( 4.2 ) $ ( 10.8 ) $ ( 0.1 ) $ ( 207.1 ) $ ( 222.2 )

Balance at September 29, 2024 $ ( 4.3 ) $ ( 14.9 ) $ ( 0.1 ) $ ( 208.5 ) $ ( 227.8 )

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

Current period other comprehensive earnings (loss) ( 0.2 ) 0.3 — 46.4 46.5

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

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

Gains (Losses) on Derivative Instruments

At June 30, 2024, the Company had remaining net deferred losses on foreign currency forward contracts, net of tax, of $ 3.1 million in Accumulated other comprehensive earnings (loss) ("AOCE").

These instruments hedge payments related to inventory purchased in the six months ended June 30, 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 second quarter of 2024 or forecasted to be made in the remainder of 2024.

At September 29, 2024, the Company had remaining deferred losses on foreign currency forward contracts, net of tax, of $ 0.2 million in Accumulated other comprehensive earnings (loss) ("AOCE").

These instruments hedge payments related to inventory purchased in the nine months ended September 29, 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 third 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)

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, and the 5.10 % Notes due 2044.

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

At June 30, 2024, deferred losses, net of tax of $ 13.7 million related to these instruments remained in AOCE.

For each of the three months ended June 30, 2024 and July 2, 2023, previously deferred losses of $ 0.2 million related to these instruments were reclassified from AOCE to net earnings.

For the six months ended June 30, 2024 and July 2, 2023, previously deferred losses of $ 0.4 million and $ 0.4 million, respectively, related to these instruments were reclassified from AOCE to net earnings.

Of the net deferred losses included in AOCE at June 30, 2024, the Company expects net losses of approximately $ 2.4 million to be reclassified to the Consolidated Statements of Operations within the next twelve months.

At September 29, 2024, deferred losses, net of tax of $ 13.5 million related to these instruments remained in AOCE.

For each of the three months ended September 29, 2024 and October 1, 2023, previously deferred losses, net of tax of $ 0.2 million related to these instruments were reclassified from AOCE to net earnings.

For the nine months ended September 29, 2024 and October 1, 2023, previously deferred losses, net of tax of $ 0.5 million and $ 0.5 million, respectively, related to these instruments were reclassified from AOCE to net earnings.

Of the net deferred losses included in AOCE at September 29, 2024, the Company expects net losses of approximately $ 0.4 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)

(7) Additional Balance Sheet Information

Components of Accrued liabilities for the periods ended June 30, 2024, July 2, 2023 and December 31, 2023 were as follows:

Components of Accrued liabilities for the periods ended September 29, 2024, October 1, 2023 and December 31, 2023 were as follows:

September 29,

2024 October 1,

2023 December 31, 2023

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Total accrued liabilities $ 1,132.5 $ 985.4 $ 1,215.8

(1) During the third quarter of 2024, the Board of Directors has declared a quarterly cash dividend of $ 0.70 per common share payable on September 4, 2024, to shareholders of record at the close of business on August 21, 2024.

Prepaid expenses and other current assets include accrued income, current of $ 159.3 million, $ 375.8 million, and $ 85.6 million as of June 30, 2024, July 2, 2023 and December 31, 2023 , respectively.

Other assets include deferred tax assets of $ 397.4 million, $ 264.9 million, and $ 427.9 million as of June 30, 2024, July 2, 2023 and December 31, 2023 , respectively, and content assets of $ 144.7 million , $ 949.1 million , and $ 162.8 million as of June 30, 2024, July 2, 2023 and December 31, 2023 , respectively.

(1) During the fourth quarter of 2024, the Board of Directors declared a quarterly cash dividend of $ 0.70 per common share payable on December 4, 2024, to shareholders of record at the close of business on November 24, 2024.

Prepaid expenses and other current assets include accrued income, current of $ 173.6 million, $ 92.0 million, and $ 85.6 million as of September 29, 2024, October 1, 2023 and December 31, 2023 , respectively.

Other assets include deferred tax assets of $ 407.1 million, $ 251.7 million, and $ 427.9 million as of September 29, 2024, October 1, 2023 and December 31, 2023 , respectively, and content assets of $ 145.1 million , $ 196.5 million , and $ 162.8 million as of September 29, 2024, October 1, 2023 and December 31, 2023 , respectively

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

The carrying costs, which are equal to the outstanding principal amounts, and fair values of the Company's long-term borrowings as of June 30, 2024, July 2, 2023 and December 31, 2023 are as follows:

June 30, 2024 July 2, 2023 December 31, 2023

The carrying costs, which are equal to the outstanding principal amounts, and fair values of the Company's long-term borrowings as of September 29, 2024, October 1, 2023 and December 31, 2023 are as follows:

September 29, 2024 October 1, 2023 December 31, 2023

Value Carrying

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Production Financing Facilities (2)

— — 9.4 9.4 — —

Total long-term debt $ 3,984.9 $ 3,976.9 $ 3,734.9 $ 3,463.1 $ 3,484.9 $ 3,349.1

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(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.

(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 and were recorded in liabilities held for sale as of October 1, 2023.

See Note 3 for additional information.

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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 $ 72.4 million, $ 89.0 million, and $ 43.3 million as of June 30, 2024, July 2, 2023 and December 31, 2023 , respectively.

The amount of obligations confirmed under the program that remain unpaid by the Company were $ 118.7 million, $ 105.7 million, and $ 43.3 million as of September 29, 2024, October 1, 2023 and December 31, 2023 , respectively.

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

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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 June 30, 2024, July 2, 2023, and December 31, 2023:

The Company's unamortized investments in productions and investments in acquired content rights consisted of the following at September 29, 2024, October 1, 2023, and December 31, 2023:

September 29,

2024 October 1,

2023 December 31,

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See Note 3 for additional information.

The Company's program cost amortization related to released programming during the three and six months ended June 30, 2024 and July 2, 2023, consist of the following:

Three Months Ended Six Months Ended

2023 June 30,

The Company's program cost amortization related to released programming during the three and nine months ended September 29, 2024 and October 1, 2023, consist of the following:

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Investment in production $ 7.9 $ 60.3 $ 24.5 $ 294.5

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

Our effective tax rate ("ETR") from continuing operations was 25.1 % for the six months ended June 30, 2024 and ( 3.1 )% for the six months ended July 2, 2023.

The effective tax rate ("ETR") was 23.1 % for the three months ended September 29, 2024, and 20.8 % for the three months ended October 1, 2023.

The following items caused the third quarter ETR in 2024 to be different from the third quarter 2023 ETR:

• During the three months ended September 29, 2024 the Company recorded a discrete tax expense of $ 1.1 million, primarily associated with the interest accruals on uncertain tax positions.

• During the three months ended October 1, 2023 the Company recorded a discrete tax benefit of $ 104.4 million, primarily associated with the loss on assets held for sale.

The ETR was 24.1 % for the nine months ended September 29, 2024, and 8.0 % for the nine months ended October 1, 2023.

The following items caused the year-to-date ETR in 2024 to be significantly different from the 2023 year-to-date ETR:

• During the six months ended June 30, 2024, the Company recorded unfavorable adjustments to the 2023 Loss on Sale of the Film & TV reporting unit of $ 24.4 million with no tax benefit.

• During the nine months ended September 29, 2024, the Company recorded unfavorable adjustments to the 2023 Loss on Sale of the Film & TV reporting unit of $ 24.4 million with no tax benefit.

The Company also recorded a net discrete tax expense of $ 1.8 million, primarily associated with stock-based compensation.

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

The Company also recorded a net discrete tax benefit of $ 8.9 million, exclusive of the goodwill impairment, primarily associated with a tax benefit on the impairment of trade names in the Entertainment segment, offset by discrete tax expense on stock-based compensation and net activity related to uncertain tax positions, primarily interest accruals, combined with the phasing of the Company's income earned throughout 2023.

• 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 $ 113.3 million, exclusive of the goodwill impairment, primarily associated with tax benefits on the impairment of trade names in the Film & TV reporting unit in the second quarter and loss on assets held for sale of $ 473.0 million in the third quarter.

(11) Fair Value of Financial Instruments

6 unchanged sentences

(Millions of Dollars and Shares Except Per Share Data)

At June 30, 2024, July 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):

At September 29, 2024, October 1, 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:

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(Level 2) Significant

June 30, 2024

September 29, 2024

Short-term investments $ 489.3 $ 489.3 $ — $ —

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Total liabilities $ 7.6 $ — $ 5.9 $ 1.7

October 1, 2023

Available-for-sale securities $ 1.2 $ 1.2 $ — $ —

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Total Liabilities $ 5.6 $ — $ 3.9 $ 1.7

At June 30, 2024, the Company held $ 483.0 million of U.S.

At September 29, 2024, the Company held $ 489.3 million of U.S.

Treasury bills which are classified as held-to maturity and carried at amortized cost, and were recorded in Short-term investments in the Company's Consolidated Balance Sheet.

4 unchanged sentences

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 three and six months ended June 30, 2024.

There were no material changes to fair value measurements of the Company's financial instruments which use significant unobservable inputs (Level 3) for three and six months ended June 30, 2024 and July 2, 2023.

There were no changes in these valuation techniques during the three and nine months ended September 29, 2024.

There were no material changes to fair value measurements of the Company's financial instruments which use significant unobservable inputs (Level 3) for three and nine months ended September 29, 2024 and October 1, 2023.

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 June 30, 2024, July 2, 2023 and December 31, 2023, the carrying cost of these instruments approximated their fair value.

The Company's financial instruments at June 30, 2024, July 2, 2023 and December 31, 2023 also include certain assets and liabilities measured at fair value, as described above.

At September 29, 2024, October 1, 2023 and December 31, 2023, the carrying cost of these instruments approximated their fair value.

The Company's financial instruments at September 29, 2024, October 1, 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.

8 unchanged sentences

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 June 30, 2024, July 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:

June 30, 2024 July 2, 2023 December 31, 2023

At September 29, 2024, October 1, 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:

September 29, 2024 October 1, 2023 December 31, 2023

Hedged transaction Notional

8 unchanged sentences

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

The fair values of the Company's foreign currency forward contracts designated as cash flow hedges are recorded in the Consolidated Balance Sheets at June 30, 2024, July 2, 2023 and December 31, 2023 as follows:

The fair values of the Company's foreign currency forward contracts designated as cash flow hedges are recorded in the Consolidated Balance Sheets at September 29, 2024, October 1, 2023 and December 31, 2023 as follows:

September 29,

2024 October 1,

2023 December 31,

10 unchanged sentences

Net unrealized losses $ ( 3.0 ) $ ( 2.0 ) $ ( 2.8 )

Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings (loss) to net earnings for the three and six months ended June 30, 2024 and July 2, 2023 as follows:

Three Months Ended Six Months Ended

2023 June 30,

Other liabilities

Unrealized gains $ 0.1 $ — $ —

Unrealized losses ( 1.0 ) — —

Net unrealized losses $ ( 0.9 ) $ — $ —

Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings (loss) to net earnings for the three and nine months ended September 29, 2024 and October 1, 2023 as follows:

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

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.

As of June 30, 2024, July 2, 2023 and December 31, 2023, the total notional amounts of the Company's undesignated derivative instruments were $ 246.6 million, $ 810.4 million, and $ 340.5 million, respectively.

As of September 29, 2024, October 1, 2023 and December 31, 2023, the total notional amounts of the Company's undesignated derivative instruments were $ 267.4 million, $ 807.5 million, and $ 340.5 million, respectively.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

At June 30, 2024, July 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:

At September 29, 2024, October 1, 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:

September 29,

2024 October 1,

2023 December 31,

7 unchanged sentences

Net unrealized losses $ ( 2.0 ) $ ( 0.1 ) $ ( 1.1 )

The Company recorded a net loss of $ 4.9 million and a net gain of $ 4.2 million for three and six months ended June 30, 2024, respectively, and net gains of $ 6.8 million and $ 11.2 million, three and six months ended July 2, 2023, respectively, on these instruments to Other (income) expense, net 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 a net gain of $ 4.5 million and a net gain of $ 8.7 million for three and nine months ended September 29, 2024, respectively, and net gains of $ 15.1 million and $ 26.4 million, three and nine months ended October 1, 2023, respectively, on these instruments to Other (income) expense, net 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).

3 unchanged sentences

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

As of June 30, 2024, the Company had a remaining balance of $ 0.7 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 $ 1.9 million during the six months ended June 30, 2024.

As of September 29, 2024, the Company had a remaining balance of $ 0.6 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 $ 1.9 million during the nine months ended September 29, 2024.

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

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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 June 30, 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:

Six Months Ended

Operational Excellence June 30,

As of September 29, 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:

Nine Months Ended

Operational Excellence September 29,

2024 October 1,

Balance at beginning of the year $ 81.2 $ 84.9

2 unchanged sentences

Ending Balance $ 48.9 $ 51.0

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 Program as of June 30, 2024:

Operational Excellence Total

15 unchanged sentences

(Millions of Dollars and Shares Except Per Share Data)

a $ 31.1 million environmental liability related to a previously owned manufacturing facility (environmental liability assumed as part of a historical acquisition), in which the Company is solely responsible for the mitigation and remediation activities.

estimated a $ 31.1 million environmental liability related to a previously owned manufacturing facility (environmental liability assumed as part of a historical acquisition), in which the Company is solely responsible for the mitigation and remediation activities.

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, except as disclosed above and as disclosed in Note 8.

11 unchanged sentences

(Millions of Dollars and Shares Except Per Share Data)

Information by segment and a reconciliation to reported amounts for the three and six months ended June 30, 2024 and July 2, 2023 are as follows:

Three Months Ended Six Months Ended

2023 June 30,

Information by segment and a reconciliation to reported amounts for the three and nine months ended September 29, 2024 and October 1, 2023 are as follows:

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Net revenues:

22 unchanged sentences

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

(2) During the three months ended June 30, 2024, the Company recorded two non-recurring prior year adjustments:

(2) During the nine months ended September 29, 2024, the Company recorded two non-recurring prior year adjustments:

(i) a $ 31.1 million expense related to historical environmental exposures, and (ii) a $ 26.7 million benefit related to over-accrual of vendor commitment liabilities.

7 unchanged sentences

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

(4) Corporate and Other Operating profit (loss) includes Operational Excellence related transformation office and consulting fees of $ 7.3 million and $ 12.5 million for the three and six months ended June 30, 2024, respectively, and $ 10.4 million and $ 21.0 million for the three and six months ended July 2, 2023, respectively, which are recorded within Selling, distribution and administration costs within the Consolidated Statements of Operations.

(4) Corporate and Other Operating profit (loss) includes Operational Excellence related transformation office and consulting fees of $ 6.0 million and $ 18.5 million for the three and nine months ended September 29, 2024, respectively, and $ 8.4 million and $ 29.4 million for the three and nine months ended October 1, 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.

2 unchanged sentences

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