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Item 7. Management’s Discussion and Analysis

2026-02-25 compared with 2025-02-27 · 229 added, 168 removed, 206 unchanged (66% of the section changed)

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This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements concerning the Company’s expectations and beliefs.

See “Statement Regarding Forward-Looking Statements” and Part I, Item 1A.

Refer to “Statement Regarding Forward-Looking Statements” and Part I, Item 1A.

Risk Factors , of this Form 10-K for a discussion of other uncertainties, risks and assumptions associated with these statements.

The following includes a comparison of our consolidated results of operations for fiscal years 2025 and 2024.

For a comparison of our consolidated results of operations for fiscal years 2023 and 2022, see Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 28, 2024.

For a comparison of our consolidated results of operations for fiscal years 2024 and 2023, refer to Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of our Annual Report on Form 10-K for the fiscal year ended December 29, 2024, filed with the SEC on February 27, 2025.

Unless otherwise specifically indicated, all dollar or share amounts herein are expressed in millions of dollars or shares, except for per share amounts.

The fiscal year ended December 29, 2024 was a fifty-two week period and fiscal year December 31, 2023 was a fifty-three week period.

The fiscal years ended December 28, 2025 and December 29, 2024 were both fifty-two week periods.

EXECUTIVE SUMMARY

Hasbro is a leading game, IP, and toy company whose mission is to create joy and community through the magic of play.

With over 100 years of expertise, we deliver play experiences for fans of all ages around the world, through physical and digital games, video games, toys, licensed consumer products, location-based entertainment, film, TV and more.

("Hasbro") is a leading games, intellectual property ("IP"), and toy company whose mission is to create joy and community through the magic of play.

With over 100 years of expertise, we deliver play experiences to kids, families, and fans around the world, through physical and digital games, video games, toys, licensed consumer products, location-based entertainment, film, TV and more.

We generate revenue and earn cash by developing, marketing, licensing and selling products, play and entertainment experiences, based on our global brands as well as other IP in a broad variety of categories.

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innovative toy and gaming brands and role-playing and fantasy card collecting games;

the marketing and sale of toys and games, including our owned and partner brands, through retail stores, ecommerce platforms and Hasbro Direct, our direct-to-consumer platform;

the marketing and sale of toys and games, including our owned and partner brands, through retail stores, ecommerce platforms and Hasbro PULSE, our direct-to-consumer platform;

the distribution, license and sale of digital games developed both internally and through licensing out our IP to third parties, such as Baldur's Gate 3, Monopoly Go!

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and entertainment content.

Additionally, the Company generates revenue through licensing our brands to third parties for toys and games, consumer products, such as apparel and

publishing, as well as for use in theme park attractions and other forms of location-based entertainment and within formats such as film and TV programming.

Additionally, the Company generates revenue through licensing our brands to third parties for toys and games, consumer products, such as apparel and publishing, as well as for use in theme park attractions and other forms of location-based entertainment and within formats such as film and TV programming.

Recent Developments

Significant changes in trade policy announced by the U.S.

government could adversely impact our forward-looking financial results.

The Company monitors the impacts of tariffs to its business operations on an ongoing basis and may need to implement actions such as price adjustments or making changes in our supply chain sourcing strategies in order to mitigate the impact of tariffs in future periods.

The impacts of tariffs may lead to reduced economic activity, increased costs, reduced demand and changes in purchasing behaviors for some or all of our products, actual or potential impairments, write-downs or unrealizability of some of our existing assets, or other economic outcomes that could have a material adverse impact on our sales volumes, prices, and our financial results.

As a result of the estimated impact of tariffs and other macroeconomic headwinds on the Company's forward-looking forecasts, in the second quarter of 2025, the Company assessed its goodwill for potential impairment, resulting in the recognition of a non-cash goodwill impairment of $1,021.9 million in the Consumer Products segment.

Refer to Note 8, Goodwill and Intangible Assets, in our notes to consolidated financial statements for further details related to goodwill.

The Company recognized approximately $44.9 million of tariff costs within Cost of sales during 2025.

While the final impacts of tariffs remain uncertain, the Company continues to execute decisively against the evolving tariff backdrop.

On February 20, 2026, the U.S.

Supreme Court issued a ruling against the International Emergency Economic Powers Act ("IEEPA") Tariffs that we have been paying to the U.S.

government since the enactment on April 2, 2025.

This could impact our results in 2026 and we are currently evaluating the accounting impacts including our ability to apply for a refund on tariffs previously paid.

Summary of Financial Performance

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The following table presents the consolidated results of operations for 2025 and 2024:

Amount % of Net Revenues Amount % of Net Revenues

Amount % Net Revenues Amount % Net Revenues

Net revenues $ 4,701.3 100.0 % $ 4,135.5 100.0 %

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Impairment of goodwill

1,021.9 21.7 % — — %

Loss on disposal of business 25.0 0.5 % 37.4 0.9 %

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Total costs and expenses 4,690.2 99.8 % 3,445.5 83.3 %

Operating profit (loss) 690.0 16.7 % (1,538.8) (30.8) %

Operating profit

11.1 0.2 % 690.0 16.7 %

Non-operating expense

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Interest income (28.6) (0.6) % (47.3) (1.1) %

Other expense, net 69.1 1.7 % 7.0 0.1 %

Other (income) expense, net

(21.7) (0.5) % 69.1 1.7 %

Total non-operating expense, net 113.1 2.4 % 193.0 4.7 %

Earnings (loss) before income taxes 497.0 12.0 % (1,709.1) (34.2) %

Income tax expense (benefit) 102.6 2.5 % (221.3) (4.4) %

Net earnings (loss) 394.4 9.5 % (1,487.8) (29.7) %

Net earnings (loss) attributable to noncontrolling interests 8.8 0.2 % 1.5 — %

Net earnings (loss) attributable to Hasbro, Inc.

(Loss) earnings before income taxes (102.0) (2.2) % 497.0 12.0 %

Income tax expense

216.2 4.6 % 102.6 2.5 %

Net earnings (loss) per common share:

Net (loss) earnings (318.2) (6.8) % 394.4 9.5 %

Net earnings attributable to noncontrolling interests 4.2 0.1 % 8.8 0.2 %

Net (loss) earnings attributable to Hasbro, Inc.

$ (322.4) (6.9) % $ 385.6 9.3 %

Net (loss) earnings per common share:

Basic $ (2.30) $ 2.77

Diluted $ (2.30) $ 2.75

Consolidated net revenues for the year ended December 29, 2024 decreased 17.3% to $4,135.5 million from $5,003.3 million for the year ended December 31, 2023, primarily driven by a $579.0 million, or 88%, decline in the Entertainment segment as a result of the sale of the eOne Film and TV business during the fourth quarter of 2023 and a $342.5 million, or 12%, decline in the Consumer Products segment, partially offset by a $53.7 million, or 4%, increase in the Wizards of the Coast and Digital Gaming segment.

See the Segment Results discussion below for further details.

The following table presents net revenues expressed in millions of dollars, by brand portfolio for 2024 and 2023:

Consolidated net revenues for the year ended December 28, 2025 increased 13.7% to $4,701.3 million from $4,135.5 million for the year ended December 29, 2024, primarily driven by growth of $675.6 million, or 44.7%, in the Wizards of the Coast and Digital Gaming segment.

This growth was offset by a $106.3 million, or 4.2%, decrease in the Consumer Products segment, as well as a $3.5 million, or 4.4%, decrease in the Entertainment segment.

Refer to the Segment Results discussion below for further details.

The following table presents net revenues expressed by brand portfolio category for 2025 and 2024:

2025 2024 % Change

Grow Brands $ 3,479.1 $ 2,797.1 24.4 %

Optimize Brands 698.2 731.5 (4.6) %

Reinvent Brands 524.0 606.9 (13.7) %

Net Revenues $ 4,701.3 $ 4,135.5 13.7 %

Franchise Brands $ 3,120.9 $ 3,256.5 (4) %

Partner Brands 583.4 687.8 (15) %

Portfolio Brands 431.2 521.8 (17) %

Non-Hasbro Branded Film & TV (1)

— 537.2 (100) %

Total $ 4,135.5 $ 5,003.3 (17) %

(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.

Franchise Brands:

Our Franchise Brands include our flagship owned or controlled brands, which we believe can deliver significant revenues, profits and growth over the long term, such as MAGIC:

THE GATHERING, Hasbro Gaming, PLAY-DOH, TRANSFORMERS, DUNGEONS & DRAGONS, PEPPA PIG and NERF.

The Franchise Brands portfolio net revenues decreased 4% in 2024 as compared to 2023.

The net revenue decrease primarily reflects lower net revenues from NERF, DUNGEONS & DRAGONS, and TRANSFORMERS products.

Net revenues in 2023 were supported by DUNGEONS & DRAGONS digital game and products, most notably Baldur's Gate 3 , the DUNGEONS & DRAGONS-based role-playing video game released during the third quarter 2023, as well as theatrical release of Dungeon & Dragons:

Honor Among Thieves released in March 2023.

Additionally, net revenues in 2023 were supported by TRANSFORMERS products from the June 2023 theatrical release of TRANSFORMERS:

Rise of the Beasts as compared to the late September 2024 theatrical release of Transformers One .

The lower net revenues in 2024 from NERF and TRANSFORMERS products were partially offset by higher net revenues from MONOPOLY GO!.

Partner Brands:

Partner Brands include those brands we license from other parties for which we develop toy and game products.

Partner brand revenues fluctuate based primarily on the entertainment releases around these brands in any given year, such as MARVEL, including SPIDER-MAN and THE AVENGERS, LUCASFILMS' STAR WARS, BEYBLADE, GHOSTBUSTERS, and INDIANA JONES.

The Partner Brands portfolio net revenues decreased 15% in 2024 as compared to 2023.

During 2024, Partner Brands net revenue decreases were driven by lower net revenues from the Company's products for STAR WARS and MARVEL which benefited from a broader slate of entertainment releases in prior years without a more recent release entertainment release to support revenue in 2024.

Additionally, revenue in 2023 was higher due to the Company's products for INDIANA JONES supported by the June 2023 theatrical release of Indiana Jones and the Dial of Destiny .

Portfolio Brands:

Portfolio Brands include 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.

The Portfolio Brands net revenues decreased 17% in 2024 as compared to 2023 primarily driven by lower net revenues from POWER RANGERS, PJ MASKS and BABY ALIVE products which were partially offset by revenue contributions from FURBY products following the Company's reintroduction of the brand and refreshed product line during the second quarter of 2023, the release of the next generation of BEYBLADE in 2024, and licensing revenue for MY LITTLE PONY trading cards.

Non-Hasbro Branded Film & TV:

Net revenues from the Company's Non-Hasbro-branded Film and TV portfolio were associated with the eOne Film and TV business sold during the fourth quarter of 2023.

Effective in the first quarter of 2024, 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 2023 have been reclassified to reflect the movement, resulting in a change of $0.5 million.

During the first quarter of 2025, in light of the Company's renewed strategy and differing level of investment depending on the growth and margin potential for the brand and business line, the Company will no longer report its brand portfolio based upon the categories described above.

Our Grow Brands represent the highest margin, highest growth opportunities in categories where we see significant share and/or underlying market growth, such as MAGIC:

THE GATHERING, Hasbro Gaming, PLAY-DOH, Marvel, including SPIDER-MAN and THE AVENGERS, and DUNGEONS & DRAGONS.

The Grow Brands portfolio net revenues increased 24.4% in 2025 as compared to 2024.

The net revenue increase primarily reflects higher net revenues from MAGIC:

THE GATHERING, which had a record year, increasing $641.5 million from 2024 behind Universes Beyond sets such as Final Fantasy , Avatar:

The Last Airbender, Marvel's Spider-Man , and Edges of Eternities.

Growth in MAGIC:

THE GATHERING was accompanied by an increase in MONOPOLY, both in the traditional games space, as well as from increased contributions from our digital licensing arrangement with Scopely, Inc.

for MONOPOLY GO!, which contributed $168.0 million of revenue in 2025 compared to $112.2 million of revenue in 2024.

The net revenue increase was partially offset by revenue declines from PLAY-DOH and DUNGEONS & DRAGONS.

Optimize Brands:

Optimize Brands represent opportunities to maintain or grow share while improving operating profit returns, including brands such as TRANSFORMERS, PEPPA PIG, and Lucasfilms' STAR WARS.

The Optimize Brands portfolio net revenues decreased 4.6% in 2025 as compared to 2024.

During 2025, Optimize Brands net revenue decreases were driven by lower net revenues from the Company's products for STAR WARS, impacted by a reduced slate of entertainment releases, along with declines from PEPPA PIG and BABY ALIVE.

The net revenue decrease was partially offset by continued growth in TRANSFORMERS and DUEL MASTERS.

Reinvent Brands:

Reinvent Brands represent opportunities to reinvent or restructure to drive innovation and improve operating profit returns and include those brands such as NERF, BEYBLADE, PJ MASKS, POWER RANGERS, and FURBY.

The Reinvent Brands net revenues decreased 13.7% in 2025 as compared to 2024 primarily driven by lower net revenues from NERF, which were partially offset by revenue contributions from BEYBLADE.

In addition, Reinvent Brands net revenues were also negatively impacted by the lapping of prior year's licensing revenues for MY LITTLE PONY trading cards, which directly resulted in a decrease of $40.5 million, or 47.0%, year-over-year.

OPERATING COSTS AND EXPENSES

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

Cost of sales decreased 30.9% to $1,179.5 million, or 28.5% of net revenues, for 2024 compared to $1,706.0 million, or 34.1% of net revenues, for 2023.

The Cost of sales decrease in dollars and as a percent of net revenues was driven primarily by lower sales volumes, lower inventory obsolescence charges, supply chain productivity, and cost savings initiatives, and a $26.7 million benefit related to a historical

over-accrual of vendor commitment liabilities as discussed in Note 1, Summary of Significant Accounting Policies, in our consolidated financial statements.

Cost of sales increased 9.9% to $1,296.2 million, or 27.6% of net revenues, for 2025 compared to $1,179.5 million, or 28.5% of net revenues, for 2024.

The Cost of sales increase in dollars was driven primarily by sales volumes and a $26.7 million benefit recorded during 2024 related to a historical over-accrual of vendor commitment liabilities as discussed in Note 1, Summary of Significant Accounting Policies, in our notes to consolidated financial statements.

Additionally, Cost of sales for 2025 includes $44.9 million of tariff costs.

These factors were offset by supply chain productivity and cost savings initiatives.

Program Cost Amortization:

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The majority of the Company's program costs are capitalized as incurred and amortized using the individual-film-forecast method.

The Company also utilizes the percentage of completion methodology, primarily related to unscripted content.

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

The decrease in dollars and as a percent of net revenues during 2024 was driven by the impact of the sale of the eOne Film and TV business during the fourth quarter of 2023 as prior year Program costs were primarily associated with the eOne Film and TV business.

Royalty expense totaled $284.2 million, or 6.9% of net revenues, in 2024 compared to $428.3 million, or 8.6% of net revenues, in 2023.

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

The decrease in Royalty expense in dollars and as a percent of net revenues during 2024 directly reflects the impact of the sale of the eOne Film and TV business.

The decrease in dollars and as a percent of net revenues during 2025 was driven by reduced content spend.

Royalties totaled $368.9 million, or 7.8% of net revenues, in 2025 compared to $284.2 million, or 6.9% of net revenues, in 2024.

The increase in Royalties in dollars and as a percent of net revenues during 2025 directly reflects the impact of increased sales relating to MAGIC:

THE GATHERING Universes Beyond sets, such as Final Fantasy, Avatar:

The Last Airbender and Marvel's Spider-Man , for which the Company is obligated to pay a royalty.

Product Development:

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

The decrease in Product development expense during 2024 was driven by cost savings initiatives, along with phasing of product releases.

The increase in Product development expense during 2025 was driven by incremental investments in the development of digital game titles that have not yet met technological feasibility.

Advertising expense in 2025 totaled $316.9 million, or 6.7% of net revenues, compared to $319.5 million or 7.7% of net revenues in 2024.

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

The Advertising expense decrease during 2024 was primarily driven by the sale of the eOne Film and TV business, along with declines in the advertising expense in the Consumer Products segment due to lower net revenues.

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

The Advertising expense decrease during 2025 was primarily driven by the Consumer Products segment, which decreased $30.3 million , as the Company sought measures to reduce variable expenses to offset the operating profit impact of tariffs.

The reduction in Consumer Products spend was offset by additional spend necessary to support top line growth opportunities within the Grow Brands category, specifically an increase of $28.8 million within the Wizards of the Coast and Digital Gaming segment.

Amortization of Intangible Assets:

Amortization of intangible assets decreased to $68.3 million, or 1.7% of net revenues, in 2024 compared to $83.0 million, or 1.7% of net revenues, in 2023.

The decrease in 2024 reflects lower definite lived intangible assets due to the sale of the eOne Film and TV business and impairments taken in 2023.

See further detail of impairments taken in 2023 in Note 7, Goodwill and Intangible Assets, in our consolidated financial statements for additional information on impairment of intangible assets.

Amortization of intangible assets remained relatively flat at $66.0 million, or 1.4% of net revenues, in 2025 compared to $68.3 million, or 1.7% of net revenues, in 2024.

The amortization expense was driven by the straight-line amortization of the Company's remaining definite-lived intangible assets.

Impairment of Goodwill:

During 2025, the Company recorded a $1,021.9 million non-cash goodwill impairment charge associated with goodwill assigned to reporting units within the Company's Consumer Products segment.

There were no goodwill impairment charges during 2024.

During 2023, the Company recorded $1,191.2 million of non-cash goodwill impairment charges associated with goodwill assigned to the Company's Film and TV reporting unit.

See further detail in Note 7, Goodwill and Intangible Assets, in our consolidated financial statements related to the goodwill impairment charges.

Refer to Note 8, Goodwill and Intangible Assets, in our notes to consolidated financial statements for further details.

Loss on Disposal of Business:

Loss on disposal of business decreased to $25.0 million, or 0.5% of net revenues, in 2025 compared to $37.4 million, or 0.9% of net revenues, in 2024.

The Loss on disposal of business for both periods represents the loss recognized associated with the sale of the Company's eOne Film and TV business within the Entertainment segment during 2023.

See Note 3, Sale of Entertainment One Film and TV Business, in our consolidated financial statements for additional information on the sale of the eOne Film and TV business.

The Loss on disposal of business for both periods represents the loss recognized associated with the divestiture of the Company's non-core film and TV business (the "eOne Film and TV business") within the Entertainment segment.

Refer to Note 3, Sale of Entertainment One Film and TV Business, in our notes to consolidated financial statements for additional information on the sale of the eOne Film and TV business.

Selling, Distribution and Administration Expenses:

Selling, distribution and administration expenses decreased to $1,173.9 million, or 25.0% of net revenues in 2025, from $1,213.2 million, or 29.3% of net revenues, in 2024.

The decrease in Selling, distribution and administration expenses in dollars and as a percent of net revenues during the 2024 primarily reflects lower administrative expenses due to cost savings initiatives, a prior year intangible asset impairment charges of $65.0 million related to the Company's eOne trademark intangible asset and $51.0 million related to the Company's PJ MASKS intangible asset, along with a non-recurring stock-compensation favorable adjustment of $18.1 million recorded during the first quarter of 2024, partially offset by a non-recurring $31.1 million expense related to historical environmental exposures as discussed in Note 1, Summary of Significant Accounting Policies, in our consolidated financial statements.

NON-OPERATING EXPENSE (INCOME)

The decrease in Selling, distribution and administration expenses during 2025 compared to 2024 primarily reflects lower administrative expenses due to cost savings initiatives, along with a non-recurring $31.1 million expense related to historical environmental exposures recorded during 2024, partially offset by a non-recurring stock-compensation adjustment of $18.1 million recorded during 2024, as discussed in Note 1, Summary of Significant Accounting Policies, in our notes to consolidated financial statements.

NON-OPERATING EXPENSE

Interest Expense:

Interest expense totaled $163.4 million in 2025 compared to $171.2 million in 2024.

The decrease in Interest expense during 2024 primarily reflects lower average outstanding borrowings in 2024 as compared to 2023 due to the assumption of the production financing borrowings by Lionsgate as part of the eOne Film and TV business and due to the retirement of the Company's variable-rate Five-Year term loan using proceeds from the sale of the eOne Film and TV business, both occurring during the fourth quarter of 2023, the full payment

of the 2024 Notes and repurchases of the 2026 Notes during the fourth quarter of 2024.

These decreases were partially offset by the issuance of the 2034 Notes (see Liquidity and Capital Resources discussion below for further information including description of the partial payments of the 2026 Notes and the issuance of the 2034 Notes).

The decrease in Interest expense in 2025 primarily reflects lower average outstanding borrowings in 2025 as compared to 2024.

These decreases were partially offset by a higher average interest rate on the outstanding borrowings.

Interest Income:

Interest income was $28.6 million in 2025 compared to $47.3 million in 2024.

Higher Interest income in 2024 primarily reflects higher average interest rates in 2024 compared to 2023, along with the Company's investment in short-term treasury bills in connection with the issuance of the 2034 Notes that fully matured in the fourth quarter of 2024 (see Liquidity and Capital Resources discussion below for further information including description of the 2034 Notes).

Other Expense, Net:

Other expense, net was $69.1 million in 2024 compared to Other expense, net of $7.0 million in 2023.

The change in Other expense, net during 2024 was driven primarily by an impairment loss of $78.2 million related to our joint venture investment in the Discovery Family Channel as discussed in Note 8, Equity Method Investment, in our consolidated financial statements.

Income tax expense totaled $102.6 million on pre-tax income of $497.0 million during 2024 compared to an income tax benefit of $221.3 million on pre-tax loss of $1,709.1 million during 2023.

During 2024, the Company incurred a $37.4 million unfavorable adjustment to the 2023 Loss on sale of the Film & TV reporting unit with no corresponding tax benefit.

Absent the unfavorable adjustment to the loss on sale with no corresponding tax benefit, the Company recorded a net discrete tax benefit of $13.1 million, primarily associated with a benefit from the release of uncertain tax positions for certain statute of limitation expirations, and favorable return to provision adjustments.

Fiscal year 2023 includes discrete items related to an impairment of goodwill in our Family Brands reporting unit of $960.0 million with no tax benefit and an impairment of goodwill in the Film and TV reporting unit of $231.2 million with no tax benefit.

Exclusive of the goodwill impairments, the Company recorded a net discrete tax benefit of $278.7 million.

This benefit is primarily related to two items:

(i) the Company recognized tax benefits of $124.0 million associated with the impairment of trade names in our Film and TV reporting unit, as well as loss on assets held for sale, and (ii) during 2023, the Company concluded its discussions with the tax authorities in Switzerland as to the application of the grandfathering rules related to 2020 Swiss Tax Reform.

This resulted in the recording of a deferred tax asset of $135.6 million related to tax intangibles that will be amortized over time and result in a future cash tax benefit.

This treatment applies starting in 2021.

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

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

Lower Interest income in 2025 primarily reflects earnings on the Company's investments in U.S.

Treasury bills, which were substantially higher in 2024 when compared to 2025.

Other (income) expense, Net:

Other income, net was $21.7 million in 2025 compared to other expense of $69.1 million in 2024.

Other (income) expense, net in 2024 was impacted by an impairment loss of $78.2 million related to our joint venture investment in the Discovery Family Channel as discussed in Note 9, Equity Method Investment, in our notes to consolidated financial statements.

The remainder of the change in Other (income) expense, net was primarily driven by foreign currency exchange gains and losses experienced during 2025 as compared to those experienced during 2024.

Income tax expense totaled $216.2 million on pre-tax loss of $102.0 million during 2025 compared to income tax expense of $102.6 million on pre-tax income of $497.0 million during 2024.

Both periods were impacted by discrete tax events.

During 2025, the Company recorded a non-cash goodwill impairment within the Consumer Products segment of $1,021.9 million with an associated tax benefit of $5.4 million and an unfavorable adjustment to Loss on disposal of the eOne Film and TV business of $25.0 million with no associated tax benefit.

For 2024, the Company had a $37.4 million unfavorable adjustment to Loss on disposal of the eOne Film and TV business with no associated tax benefit.

The effective tax rates for 2025 and 2024 were (212.1)% and 20.7%, respectively.

The change in the effective rate from 2024 to 2025 is primarily driven by the non-cash impairment of goodwill with no material tax benefit.

Exclusive of the impairment of goodwill and the unfavorable adjustment to the Loss on disposal of the eOne Film and TV business, the Company recorded a net discrete tax expense of $2.3 million compared to a net discrete tax benefit of $13.1 million during 2024.

The net discrete tax expense recorded in 2025 is primarily associated with net valuation allowances recorded during the year.

The net discrete tax benefit recorded in 2024 is primarily associated with a benefit from the release of uncertain tax positions for certain statute of limitation expirations, and favorable return to provision adjustments.

We previously considered the earnings in our non-U.S.

subsidiaries to be indefinitely reinvested and, accordingly, recorded no deferred income taxes.

The Company still has significant cash needs outside the United States and continues to consistently monitor and analyze its global working capital and cash requirements.

As of 2024, we have recorded $4.6 million of foreign withholding and U.S.

However, we intend to repatriate substantially all of our accumulated foreign earnings when appropriate.

As of December 28, 2025, we have recorded $5.3 million of foreign withholding and U.S.

state income tax liability.

The Company will continue to record additional tax effects, if any, in the period that the on-going distribution analysis is completed and is able to make reasonable estimates.

Tax laws are regularly being re-examined and evaluated globally.

The Organization for Economic Co-operation and Development ("OECD") has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as "Pillar 2").

Certain aspects of Pillar 2 were effective in 2024, which were not material to the Company’s financial statements, and other aspects are effective January 1, 2025.

Many non-US tax jurisdictions have either (i) enacted legislation to adopt certain components of Pillar 2 beginning in 2024 (including the European Union Member States) with delayed adoption of other components;

or (ii) announced their plans to enact legislation in future years.

We continue to evaluate the impacts of enacted and pending legislation related to Pillar 2 in our non-US tax jurisdictions.

The Company will continue to record additional tax effects, if any, in the period that the ongoing distribution analysis is completed and is able to make reasonable estimates.

We are subject to income and other taxes in the U.S.

(federal and state) and foreign jurisdictions.

Changes to these laws or regulations may impact our tax liabilities.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law with certain provisions effective in 2025 and other provisions becoming effective in 2026.

The OBBBA provisions include the restoration of full expensing for domestic research and development expenses, reinstatement of accelerated depreciation on qualified capital expenditures, and modifications to the international tax framework, among other items.

The OBBBA also provides for an election to accelerate the deduction of the remaining unamortized domestic research and development expenses capitalized previously.

For fiscal year 2025, the primary impact of the OBBBA to the Company was the accelerated expensing of domestic research and development costs which decreased our income eligible for foreign-derived intangible income ("FDII"), reduced our deferred tax assets, and reduced our current income tax liability.

Other OBBBA changes did not have a material impact on the Company's consolidated financial statements in the current year, we are assessing the impact of OBBBA on the consolidated financial statements for future periods.

As a global company, we review changes in all global tax laws.

In 2025 and 2024 no changes, other than those discussed above, materially impacted our Consolidated Financial Statements.

SEGMENT RESULTS

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

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

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

Corporate and Other, which does not meet the criteria to be an operating segment, provides management and administrative services to the Company's principal reporting segments 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 following table presents net external revenues and operating profit (loss) for the Company's reportable segments for 2025 and 2024:

2025 2024 % Change

Net revenues:

Consumer Products $ 2,543.9 $ 2,886.4 (12) %

Wizards of the Coast and Digital Gaming $ 2,186.9 $ 1,511.3 44.7 %

Consumer Products 2,437.6 2,543.9 (4.2) %

Entertainment 76.8 80.3 (4.4) %

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Operating profit (loss):

Consumer Products $ 115.3 $ (64.7) 278 %

Wizards of the Coast and Digital Gaming $ 1,006.8 $ 632.0 59.3 %

Consumer Products (1)

(942.6) 115.3 NM

Entertainment (1)

Corporate and Other (53.5) (55.7) 3.9 %

Total Operating profit (loss) $ 690.0 $ (1,538.8) 145 %

Consumer Products Segment

The following table presents the Consumer Products segment net revenues by major geographic region for 2024 and 2023:

Net Revenues 2024 2023 %

North America $ 1,493.0 $ 1,649.1 (9) %

Europe 519.7 669.5 (22) %

Asia Pacific 286.7 256.3 12 %

Latin America 244.5 311.5 (22) %

Net Revenues $ 2,543.9 $ 2,886.4 (12) %

Consumer Products segment net revenues decreased 12% in 2024 compared to 2023 primarily driven by exited businesses, including out-licensing certain brands, shifts in product mix, reduced closeout sales as a result of last year's inventory clean up initiatives, and broader industry trends, .

The net revenue decrease primarily reflects lower net revenues from NERF, STAR WARS and MARVEL products, POWER RANGERS, Hasbro Gaming, and TRANSFORMERS.

The net revenue decrease from lower net revenues from the Company's products for STAR WARS and MARVEL benefited from a slate of entertainment releases in prior years without a more recent release entertainment release to support revenue in 2024.

Additionally, net revenues from TRANSFORMERS products in 2023 were supported by the June 2023 theatrical release of TRANSFORMERS:

Rise of the Beasts compared to the late September 2024 theatrical release of Transformers One .

These revenue decreases were partially offset by revenue contributions from FURBY products following the Company's reintroduction of the brand and refreshed product line during the second quarter of 2023, BEYBLADE products following the Company's refreshed product line in 2024, and licensing revenue for MY LITTLE PONY trading cards.

Consumer Products segment operating results increased $180.0 million to an operating income of $115.3 million in 2024, compared to an operating loss of $64.7 million in 2023.

Operating profit margin increase to 4.5% of net revenues in 2024 from an operating loss margin of 2.2% of net revenues in 2023.

The increase in operating profit in 2024 was driven by favorable licensing product mix, supply chain productivity, and cost savings realized from cost savings initiatives, partially offset by the lower sale volumes contributions.

Total operating profit

$ 11.1 $ 690.0 (98.4) %

(1) % Change is not meaningful ("NM") for these segments.

Wizards of the Coast and Digital Gaming Segment

The following table presents Wizards of the Coast and Digital Gaming segment net revenues by category for 2025 and 2024:

Net Revenues 2024 2023 %

2025 2024 % Change

Tabletop Gaming $ 1,686.6 $ 1,039.6 62.2 %

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Wizards of the Coast and Digital Gaming segment net revenues increased 44.7% in 2025 compared to 2024.

Tabletop Gaming revenue decreased 3% primarily attributable to timing releases for MAGIC:

THE GATHERING sets resulting in few releases in 2024 as compared to 2023.

Digital and Licensed Gaming increased 22% due to strong demand for MONOPOLY GO!, partially offset by the decrease in net revenue recognized from the digital licensing of Baldur's Gate 3 , the DUNGEONS & DRAGONS-based role-playing video game that was released during the third quarter 2023.

Tabletop Gaming revenue increased 62.2% behind growth of $638.2 million in MAGIC:

THE GATHERING, primarily due to strong demand for Universes Beyond sets such as Final Fantasy, Marvel's Spider-Man, and Avatar:

The Last Airbender as well as various backlist titles.

Digital and Licensed Gaming increased 6.1% due to strong results for MONOPOLY GO!, which contributed $168.0 million of revenue in 2025 compared to $112.2 million of revenue in 2024.

Wizards of the Coast and Digital Gaming segment operating profit increased $374.8 million to $1,006.8 million in 2025, compared to $632.0 million in 2024.

Operating profit margin increased to 41.8% in 2024 from 36.1% in 2023.

The increase in operating profit was primarily driven by increased net revenues, contributions from higher digital licensing revenue mix, lower royalty expense, and cost savings initiatives.

The increase in operating profit in dollars is directly attributable to the revenue growth as discussed above.

Segment operating profit margin increased to 46.0% in 2025 from 41.8% in 2024, primarily driven by increased net revenue and product mix in 2025 as compared to 2024.

Consumer Products Segment

The following table presents the Consumer Products segment net revenues by major geographic region for 2025 and 2024:

2025 2024 % Change

North America $ 1,421.7 $ 1,493.0 (4.8) %

Europe 566.0 519.7 8.9 %

Asia Pacific 249.4 286.7 (13.0) %

Latin America 200.5 244.5 (18.0) %

Net Revenues $ 2,437.6 $ 2,543.9 (4.2) %

Consumer Products segment net revenues decreased 4.2% in 2025 compared to 2024 primarily driven by reduced sales volumes, which was impacted by broader industry trends and tariff-related impacts to North America, partially offset by strong performance in Europe.

While the Company had growth in brands such as BEYBLADE, MARVEL, MONOPOLY, and TRANSFORMERS, the growth was more than offset by lower net revenue for brands such as NERF, MY LITTLE PONY, and PLAY-DOH.

The decline associated with MY LITTLE PONY was attributed to the lapping of 2024 licensing revenue related to MY LITTLE PONY trading cards, which resulted in a decrease of $40.5 million, or 47.0%, year-over-year.

Consumer Products segment operating results decreased $1,057.9 million to an operating loss of $942.6 million in 2025, compared to operating profit of $115.3 million in 2024.

Operating profit margin decreased to (38.7)% of net revenues in 2025 from an operating margin of 4.5% of net revenues in 2024.

The decrease in operating profit in 2025 in both dollars and percent was driven by the declines in revenue, discussed above, a non-cash goodwill impairment charge of $1,021.9 million recorded in 2025, and approximately $44.9 million of tariff costs recognized in Cost of sales.

The declines were partially offset by savings realized from the Company's cost savings and transformation initiatives.

Refer to Note 8, Goodwill and Intangible Assets, in our notes to consolidated financial statements for further details related to goodwill.

Entertainment Segment

The following table presents Entertainment segment net revenues by category for 2025 and 2024:

Net Revenues 2024 2023 %

Film and TV $ 6.6 $ 575.5 (99) %

2025 2024 % Change

Family Brands $ 66.7 $ 73.7 (9.5) %

Film and TV 10.1 6.6 53.0 %

Net Revenues $ 76.8 $ 80.3 (4.4) %

Entertainment segment net revenues decreased 88% in 2024 compared to 2023 driven by lower net revenues as a result of the sale of the eOne Film and TV business during the fourth quarter of 2023.

The Entertainment segment operating loss increased to an operating loss of $1.6 million, compared to an operating loss of $1,911.5 million in 2023.

The increase in Entertainment segment operating results in 2024 was driven by non-cash impairment charges in 2023 comprised of a goodwill impairment charge of $1,191.2 million primarily associated Company's eOne Film and TV business;

a loss on disposal of business of $539.0 million related to the sale of the eOne Film and TV business;

and intangible asset impairment charges of $65.0 million and $51.0 million related to definite-lived intangible assets for the eOne Trademark and PJ MASKS, respectively.

Entertainment segment net revenues decreased 4.4% in 2025 compared to 2024, primarily driven by the timing of entertainment streaming renewals.

Entertainment segment operating profit increased to $0.4 million, compared to an operating loss of $1.6 million in 2024.

The increase in Entertainment segment operating results was driven by a decrease of $12.4 million in Loss on disposal of business related to the sale of the eOne Film and TV business in 2025 as compared to 2024.

Refer to Note 3, Sale of Entertainment One Film and TV Business, to the notes to consolidated financial statements for further details.

The favorability was offset by lower segment net revenues due the timing of entertainment streaming renewals and a decrease of $16.2 million in royalty income allocated to the Entertainment segment driven by the decrease in sales volumes within the Consumer Products segment, partially offset by $13.5 million of lower program cost amortization.

Corporate and Other

In Corporate and Other, the operating losses were $53.5 million in 2025 compared to operating losses of $55.7 million in 2024.

Improved operating results in 2024 reflects cost savings realized from cost savings initiatives and a benefit from the net impact of the three non-recurring prior period adjustments recorded during 2024.

Refer to Note 1, Summary of Significant Accounting Policies, in our consolidated financial statements for further information on these non-recurring adjustments.

Operating losses in 2025 were lower than 2024, primarily due to net realized cost savings initiatives more than offsetting three prior period non-recurring adjustments recorded during 2024 that provided a combined income statement benefit of approximately $13.7 million.

Refer to Note 1, Summary of Significant Accounting Policies, to the notes to consolidated financial statements for further details on the non-recurring adjustments.

Critical Accounting Policies and Significant Estimates

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For other intangible assets with definite lives, we assess for impairment only if events occur that indicate that the carrying amount of an asset may not be recoverable.

Our fiscal year 2024 assessment for impairment of goodwill, with respect to each of its reporting units, was performed using a qualitative approach to determine, as of the date of the assessment, whether it was more likely than not that the fair value of goodwill was less than its carrying value.

The quantitative test of goodwill for impairment requires us to estimate the fair value of our reporting units.

We test goodwill at the reporting unit level, which we define as one level below the operating segment.

Our reporting units are aligned with our product lines that are separately managed and reviewed.

As a result of the estimated impact of tariffs and other macroeconomic headwinds on the Company's forward-looking forecasts, in the second quarter of 2025, we performed a quantitative impairment test for certain of our reporting units within the Consumer Products and Entertainment segments.

The reporting units within the Consumer Products segment subject to the quantitative test included North America, Europe, Asia Pacific, and Latin America, as well as the Family Brands reporting unit within the Entertainment segment.

We have concluded that the North America, Europe, Asia Pacific, and Latin America reporting units have similar economic characteristics and should be aggregated for purposes of testing goodwill for impairment.

Our conclusion was based on a detailed analysis of the aggregation criteria set forth in the Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") Topic 280, Segment Reporting , and in FASB ASC Topic 350, Intangibles - Goodwill and Other .

These reporting units serve similar clients and have similar products, including similar sourcing and distribution methods and they have similar economic characteristics.

We determined that the carrying values of our regional Consumer Products reporting units, when aggregated during the second quarter of 2025 based upon similar economic characteristics, exceeded their respective fair values and recorded aggregate pre-tax non-cash impairment charges of $1,021.9 million.

Specifically, the fair values of North America and Europe reporting units were determined considering a discounted cash flow model which is primarily based on management’s future revenue and cost estimates, which included the estimated impact of tariff policies in effect and the related macroeconomic environment, and discount rate.

The fair values of the Asia Pacific and Latin America reporting units were determined considering a discounted cash flow model weighted equally with the market approach which is primarily based on multiples of comparable public companies.

The fair value of our Family Brands reporting unit, within the Entertainment segment, exceeded the carrying value of that reporting unit by approximately 15%.

As of December 28, 2025, $325.2 million of goodwill is allocated to the Family Brands reporting unit.

The fair value of the Family Brands reporting unit was determined considering a discounted cash flow model weighted equally with the market approach which is primarily based on multiples of comparable public companies.

Management closely monitors the operating results of all reporting units in addition to macroeconomic conditions and trade policy developments.

Further volatility of trade, geopolitical tensions, or negative global economic developments could cause significant further decreases in the operating results of our reporting units, which may result in a recognition of a goodwill impairment that could be material to the consolidated financial statements in future periods.

Critical assumptions used in the determination of the reporting units’ fair value included management’s estimated future revenue growth rates, estimated future margins, and discount rate.

Estimated future revenue growth and margins are based on management’s best estimate about current and future conditions.

During the second quarter of 2025, the regional consumer products reporting units included discount rates ranging from 10.5% to 14.0% and a terminal value revenue growth rate of 3.0%.

Additionally, the forecasted growth in operating profit margins towards the terminal value operating profit is aligned with industry averages.

For the Family Brands reporting unit, critical assumptions included a discount rate approximating 9.5%, a terminal value revenue growth rate of 3.0%, and a

terminal operating profit margin consistent with levels achieved in recent historical periods when excluding one-time impairment and disposal charges.

Although we believe the assumptions and estimates made were reasonable and appropriate, these estimates are based on a number of factors including historical experience and information obtained from reporting unit management.

Actual results could differ from these estimates, especially given uncertainty related to tariffs, global trade policy, and global macroeconomic conditions.

We determined the discount rate using our weighted average cost of capital adjusted for risk factors specific to the reporting unit, with comparison to market and industry data.

Further, during the second quarter of 2025, we proceeded to perform sensitivities in our impairment testing of the Family Brands reporting unit by (i) increasing the discount rate 250 basis points, (ii) decreasing the expected long-term growth rate 750 basis points, (iii) decreasing the annual revenue projections 400 basis points, and (iv) decreasing projected gross margins 1,000 basis points.

None of these sensitivities individually would have resulted in a conclusion that the goodwill in our Family Brands reporting unit was impaired.

The annual fiscal year 2025 assessment for impairment of goodwill, with respect to each of its reporting units, was performed using a qualitative approach to determine whether it was more likely than not that the fair value of goodwill was less than its carrying value.

In performing the qualitative assessment, we identified and considered the significance of relevant key factors, events, and circumstances that affect the fair value of goodwill.

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Based on our qualitative fiscal year 2025 annual impairment analysis for goodwill, we concluded that it is more likely than not that the fair value of goodwill exceeded its carrying value.

See Note 7, Goodwill and Intangible Assets, in our consolidated financial statements for more information on the Company's goodwill.

Refer to Note 8, Goodwill and Intangible Assets, in our notes to consolidated financial statements for more information on the Company's goodwill.

Our fiscal year 2025 assessment for impairment of indefinite-lived intangible assets was based on a relief from royalty method, including key assumptions such as the long-term growth rates of future revenues, the royalty rate for such revenues, and a discount rate.

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NEW ACCOUNTING PRONOUNCEMENTS

For a discussion of recent accounting pronouncements and a discussion of the Company's significant accounting policies see Note 1, Summary of Significant Accounting Policies, in our consolidated financial statements.

For a discussion of recent accounting pronouncements and a discussion of the Company's significant accounting policies refer to Note 1, Summary of Significant Accounting Policies, in our notes to consolidated financial statements.

LIQUIDITY AND CAPITAL RESOURCES

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The Company has primarily funded its operations and liquidity needs through cash on hand and from cash flows from operations, and when needed, used commercial paper and borrowings under its available lines of credit.

As of December 29, 2024, the Company had $695.0 million of Cash and cash equivalents and $3,401.8 million of Long-term debt.

As of December 28, 2025, the Company had $776.6 million of Cash and cash equivalents, $105.4 million of Short-term investments and $3,281.9 million of total long-term debt.

The Company may issue debt or equity securities from time to time, to provide additional sources of liquidity when pursuing opportunities to enhance its long-term competitive position, while maintaining a strong balance sheet.

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

The impact of tariffs recognized by the Company in Cost of sales was approximately $44.9 million during 2025.

Significant changes in trade policy announced by the U.S.

government could adversely impact our forward-looking financial results, including the timing and extent of cash flows based upon timing in customer buying patterns and changes in our supply chain sourcing strategies.

Indebtedness and Credit Facilities

As of December 29, 2024, the Company had $3,401.8 million of Long-term debt due at varying times from 2026 through 2044.

In May 2024, the Company issued an aggregate of $500.0 million of senior unsecured debt securities that bears a fixed interest of 6.05% due 2034 (the "2034 Notes").

Proceeds from the 2034 Notes, along with existing cash available, were utilized to repay the aggregate of $500.0 million of 3.00% Notes Due 2024 (the "2024 Notes").

As of December 28, 2025, the Company had $3,281.9 million of debt due at varying times from 2026 through 2044.

The Company's third amended and restated revolving credit agreement with Bank of America, N.A.

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Amounts available and unused under the committed line, as of December 28, 2025 were approximately $1.25 billion, inclusive of borrowings under the Company’s commercial paper program.

On February 20, 2026, the Company amended and restated the Amended Revolving Credit Agreement which extended the maturity date through February 2031 and reduced the aggregate principal amount to $1.1 billion, with the potential for an incremental commitment increase of up to $550.0 million.

The Company also has other uncommitted lines from various banks, of which approximately $8.4 million was utilized in the form of letters of credit, on December 28, 2025.

In June 2025, the Company entered into a money market line of credit agreement (the “Money Market Credit Facility”) to provide the Company with access to uncommitted, short-term cash advances with an aggregate principal amount of up to $100.0 million.

The Money Market Credit Facility is intended to support the Company’s short-term liquidity needs, including working capital and general corporate purposes.

As of December 28, 2025, the Company did not have any outstanding credit under the Money Market Credit Facility.

Refer to Note 12, Long-Term Debt and Other Financing, to the consolidated financial statements for further information.

The Company 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.

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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 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.

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Such repurchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

During 2024, the Company repurchased $83.1 million of its 2026 Notes.

See Note 11, Long-Term Debt and Other Financing, in our consolidated financial statements for additional information on outstanding long-term debt and credit facilities.

During 2025, the Company repurchased $119.9 million in aggregate principal of its 2026 and 2027 Notes.

Refer to Note 12, Long-Term Debt and Other Financing, in our notes to consolidated financial statements for additional information on outstanding long-term debt and credit facilities.

The following table presents the cash flow activities for 2025 and 2024:

Net cash provided by (used in):

Net cash provided (utilized) by:

Operating activities

$ 893.2 $ 847.4

Investing activities

(284.4) (203.7)

Financing activities

(531.3) (497.5)

Effect of exchange rate changes on cash 4.1 3.4

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Cash flows provided by operating activities were $893.2 million in 2025 as compared to $847.4 million in 2024.

The increase in net cash provided by operating activities during 2024 after adjusting for non-cash items, was primarily attributable to improved net earnings in 2024 compared to 2023, and working capital benefits, primarily due to lower investments in entertainment content compared to 2023 as a result of the sale of the eOne Film and TV business, and reduced inventory due to management inventory initiatives.

The net earnings after adjusting for non-cash items increased to $1,213.5 million in 2025 compared to $787.9 million in 2024.

The changes in operating assets and liabilities yielded a net outflow of $320.3 million compared to an inflow of $59.5 million primarily attributable to an increase in Accounts receivable in 2025 compared to a decrease in Accounts Receivable in 2024, which is primarily the result of an overall net revenue increase.

The change in Accounts Receivable is coupled with a change in inventory purchases, which have increased period over period as the result of a strategic decision to build increased flexibility to better match product demand during higher seasonal periods, along with the impact of tariffs.

Operating cash flow was also impacted by the timing and magnitude of tax payments, including the payment of the net deemed repatriation tax, in 2025 when compared to 2024.

Investing Activities:

Net cash flows utilized for investing activities was $203.7 million in 2024 compared to net cash flows provided by investing activities of $117.6 million in 2023.

Investing activities in 2024 primarily reflects $571.0 million of purchases of short-term investments from proceeds of the issuance of the 2034 Notes, $583.0 million maturity of short-term investments used to repay the 2024 Notes, $87.2 million of additions of property, plant, and equipment, and $110.3 million for software development additions.

Investing activities in 2023 primarily reflect net proceeds of $329.6 million from the sale of the eOne Film and TV Business, $135.5 million of additions of property, plant, and equipment, and $73.8 million for software development additions.

We expect total cash capital expenditures in fiscal year 2025 to be between $225 million and $250 million.

Net cash flows utilized by investing activities were $284.4 million in 2025 as compared to $203.7 million in 2024.

Investing activities in 2025 primarily reflects $105.4 million of purchases of U.S.

Treasury bill investments, $63.3 million of additions of property, plant, and equipment, and $135.0 million of additions attributable to software development.

Investing activities in 2024 primarily reflects $87.2 million of additions of property, plant, and equipment and $110.3 million of additions attributable to software development.

Purchases of U.S.

Treasury bills of $571.0 million in the prior year were offset by maturities of those investments in the amount of $583.0 million within the same year.

Overall additions to software development increased in 2025 due to the timing of digital gaming projects.

We expect total cash capital expenditures in fiscal year 2026 to be approximately $250 million.

We expect to fund our capital expenditures with available cash or cash generated from operations.

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Net cash utilized by financing activities was $531.3 million and $497.5 million in 2025 and 2024, respectively.

Financing activities in 2024 primarily include $498.6 million of proceeds from issuance of the 2034 Notes, dividends paid of $389.9 million, repayments of long-term debt of $581.3 million related to the 3% Notes due 2024 of $500 million and the repurchase of $83.1 million of its Notes due 2026, and $14.4 million of payments related to tax withholdings for stock compensation coinciding with equity award vesting activity.

Financing activities in 2023 primarily include repayments of long-term debt of $359.6 million primarily related to the repayment of debt in connection with the sale of the eOne Film and TV Business, dividends paid of $388.0 million, and $16.8 million of payments related to tax withholdings for stock compensation coinciding with equity award vesting activity.

Financing activities in 2025 primarily include dividends paid of $392.5 million, aggregate repayments of long-term debt of $118.2 million related to the repurchase of a portion of its Notes due in 2026 and 2027, and $23.7 million of payments related to tax withholdings for stock compensation coinciding with equity award vesting activity.

Financing activities in 2024 primarily include repayments of long-term debt of $581.3 million related to the 3% Notes due 2024 of $500 million and the repurchase of $83.1 million of its Notes due 2026, net proceeds of $498.6 million from the issuance of the 2034 Notes, dividends paid of $389.9 million, and $14.4 million of payments related to tax withholdings for stock compensation coinciding with equity award vesting activity.

Contractual Obligations and Commitments

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Our long-term cash requirements under our various contractual obligations and commitments include:

• Debt – See Note 11, Long-Term Debt and Other Financing, in our consolidated financial statements for further detail of our debt, including letters of credit, and the timing of expected future principal payments.

• Operating lease obligations – Note 17, Leases, in our consolidated financial statements for further detail of our obligations and the timing of expected future payments.

• Debt – Refer to Note 12, Long-Term Debt and Other Financing, in our notes to consolidated financial statements for further detail of our debt, including letters of credit, and the timing of expected future principal payments.

• Operating lease obligations – Refer to Note 18, Leases, in our notes to consolidated financial statements for further detail of our obligations and the timing of expected future payments.

• Pension plans and other postretirement benefit contributions – We sponsor a defined benefit plan that pays benefits to eligible employees at retirement.

In addition, we provide certain postretirement health and welfare benefits to eligible retirees and their dependents.

See Note 16, Retirement Plans, in our consolidated financial statements for further detail of our obligations and the timing of expected future payments.

Refer to Note 17, Retirement Plans, in our consolidated financial statements for further detail of our obligations and the timing of expected future payments.

• Minimum Guarantee Payments – The Company enters into license agreements with strategic partners, inventors, designers and others for the use of intellectual properties in its products.

Certain of these

agreements contain provisions for the payment of guaranteed or minimum royalty amounts.

See Note 20, Commitments and Contingencies, in our consolidated financial statements for further detail of our obligations and the expected timing of expected future payments.

Certain of these agreements contain provisions for the payment of guaranteed or minimum royalty amounts.

Refer to Note 21, Commitments and Contingencies, in our notes to consolidated financial statements for further detail of our obligations and the expected timing of expected future payments.

• Purchase and Other Obligations – The Company also has various third-party, inventory and tooling purchase commitments in the ordinary course of business.

See Note 20, Commitments and Contingencies, in our consolidated financial statements for further detail of our obligations and the expected timing of expected future payments.

Refer to Note 21, Commitments and Contingencies, in our notes to consolidated financial statements for further detail of our obligations and the expected timing of expected future payments.

• Uncertain Tax Positions – As of December 28, 2025, the Company has a liability of $49.0 million of potential tax, interest and penalties for uncertain tax positions that have been taken or are expected to be taken in various income tax returns.

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

At December 29, 2024, the Company estimates that a hypothetical immediate 10% depreciation of the U.S.

As of December 28, 2025, the Company estimates that a hypothetical immediate 10% depreciation of the U.S.

dollar against all foreign currencies included in these foreign exchange forward contracts could result in an approximate $23.3 million decrease in the fair value of these instruments.

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

The Company believes, however, that the on-going risk on the net exposure should not be material to its financial condition.

The Company believes, however, that the ongoing risk on the net exposure should not be material to its financial condition.

In addition, the Company’s revenues and costs have been and will likely continue to be affected by changes in foreign currency rates.

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

The Company reflects all derivatives at their fair value as an asset or liability on the Consolidated Balance Sheets.

The Company reflects all derivative financial instruments at their fair value as an asset or liability on the Consolidated Balance Sheets.

The Company does not speculate in foreign currency exchange contracts.

At December 29, 2024, these contracts had net unrealized gains of $0.5 million, of which $1.7 million are recorded in Prepaid expenses and other current assets, $1.2 million are recorded in Accrued liabilities.

Included in Accumulated other comprehensive loss at December 29, 2024 are deferred losses of $4.4 million, net of tax, related to these derivatives.

At December 29, 2024, the Company had fixed rate long-term debt of $3,401.8 million.

The Company does not have any interest rate swaps on its existing long-term debt.

As of December 28, 2025, these contracts had net unrealized losses of $7.1 million, of which $0.7 million of unrealized gains recorded in Prepaid expenses and other current assets, $0.9 million of unrealized gains are recorded in Other assets, $8.0 million of unrealized losses are recorded in Accrued liabilities, and $0.7 million of unrealized losses are recorded in Other liabilities.

Included in Accumulated other comprehensive loss at December 28, 2025 are deferred losses of $8.3 million, net of tax, related to these derivative financial instruments.

As of December 28, 2025, the Company had fixed rate long-term debt of $3,281.9 million.

Industry Trends, the Economy and Inflation

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The concentration of sales in the second half of the year increases the risk of (a) underproduction of popular items, (b) overproduction of less popular items, and (c) failure to achieve tight and compressed shipping schedules.

The business of the Company is

characterized by customer order patterns which vary from year to year largely because of differences in the degree of consumer acceptance of a product line, product availability, marketing strategies, inventory levels, policies of retailers and differences in overall economic conditions.

The business of the Company is characterized by customer order patterns which vary from year to year largely because of differences in the degree of consumer acceptance of a product line, product availability, marketing strategies, inventory levels, policies of retailers and differences in overall economic conditions.

Larger retailers generally maintain lower inventories throughout the year and purchase a greater percentage of product within or close to the fourth quarter holiday consumer buying season, which includes Christmas.

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

The impact of inflation on the Company's business operations was significant during 2024.

The Company monitors the impact of inflation to its business operations on an ongoing basis and may need to implement actions such as price adjustments to mitigate the impact of changes to the rate of inflation in future periods.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis