UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________

FORM 10-Q

__________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 25, 2022~~April 2, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-6682

__________________

HASBRO, INC.

(Exact name of registrant as specified in its charter)


Rhode Island		05-0155090
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1027 Newport Avenue
Pawtucket,	Rhode Island	02861
(Address of Principal Executive Offices)		(Zip Code)

(401) 431-8697

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.50 par value per share	HAS	The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [x] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No [x]

The number of shares of Common Stock, par value $.50 per share, outstanding as of ~~October 18, 2022~~April 27, 2023 was ~~138,113,722.~~138,608,781.

Forward Looking Statement Safe Harbor

Certain statements in this Form 10-Q contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, which may be identified by the use of forward-looking words or phrases, include statements relating to: our business and marketing strategies; ~~the ability~~anticipated payments to ~~achieve our financial and business goals and objectives; anticipated~~be received for content, expected financial performance or business prospects in future periods; ~~expectations relating to our operational excellence program, including anticipated cost savings~~the development and ~~cash costs to achieve savings; expectations relating to~~timing of planned consumer and digital gaming products ~~gaming~~ and entertainment ~~to be developed and delivered~~releases; changes in ~~the near term;~~leadership; expected benefits and ~~plans relating to acquired brands, properties~~cost-savings resulting from the Company’s Operational Excellence Program; expected benefits and ~~businesses; marketing~~cost-reductions from certain restructuring actions and ~~promotional efforts; research~~divestiture of non-core businesses or assets, such as parts of the Entertainment One film and ~~development activities; actions taken to mitigate the impact of inflation;~~television business; inventory; capital expenditures; working capital; ~~inventory;~~cash flow and liquidity; ~~financing sources;~~ timing of and amount of repayment of ~~indebtedness;~~indebtedness and production financings; capital allocation strategy, including plans for dividends and share repurchases; and other financial, tax, accounting and similar matters. Our actual actions or results may differ materially from those expected or anticipated in the forward-looking statements due to both known and unknown risks and uncertainties. Factors that might cause such a difference include, but are not limited to:

•our ability to successfully execute on our Blueprint 2.0 strategy, including to focus on and scale select business initiatives and brands to drive profitability;

•our ability to design, develop, manufacture, and ship products on a timely, cost-effective and profitable basis;

•our ability to successfully compete in the global play and entertainment industry, including with manufacturers, marketers, and sellers of toys and games, digital gaming products and digital media, as well as with film studios, television production companies and independent distributors and content producers;industry;

•our ability to successfully evolve and transform our business and capabilities to successfully address the global consumer landscape;

•inflation and downturns in global and regional economic conditions impacting one or more of the markets in which we sell products, which can negatively impact our retail customers and consumers, result in lower employment levels, consumer disposable income, retailer inventories and spending, including lower spending on purchases of our products;

•our dependence on third party relationships, including with third party manufacturers, licensors of brands, studios, content producers and entertainment distribution channels;

•the risk that any strike by, or lockout of, one or more of the unions that provide personnel essential to the production of films or television programs, such as the strike by the writers’ union in May 2023, could delay or halt our ongoing production activities; halts or delays, depending on the length of time, could cause a delay or interruption in our release of new films and television programs, which could impact our entertainment business;

•risks relating to the concentration of manufacturing for many of our products in the People’s Republic of China and our ability to successfully diversify sourcing of our products to reduce reliance on sources of supply in China;

•risks related to economic and public health conditions or regulatory changes in the markets in which we and our customers, partners, licensees, suppliers and manufacturers operate, such as inflation, rising interest rates, higher commodity prices, labor costs or transportation costs, the coronavirus or other outbreaks of disease, the occurrence of which could create work slowdowns, delays or shortages in production or shipment of products, increases in costs or delays in revenue;

•risks associated with international operations, such as currency conversion, currency fluctuations, the imposition of tariffs, quotas, shipping delays or difficulties, border adjustment taxes or other protectionist measures, and other challenges in the territories in which we operate;

•the success of our key partner brands, including the ability to secure, maintain and extend agreements with our key partners or the risk of delays, increased costs or difficulties associated with any of our or our partners’ planned digital applications or media initiatives;

•risks related to our leadership changes;

•our ability to attract and retain talented and diverse employees;

•our ability to realize the benefits of cost-savings and efficiency and/or revenue and operating profit enhancing initiatives;

•risks relating to the impairment and/or write-offs of products and content we acquire and produce;

•~~risks relating to investments, acquisitions and dispositions, including the ability to realize the anticipated benefits of acquired assets or businesses;~~

•the risk that acquisitions, dispositions and other investments we complete may not provide us with the benefits we expect, or the realization of such benefits may be significantly delayed. We may not achieve a successful sale or license of non-core assets, including certain film and television assets;

•our ability to protect our assets and intellectual property, including as a result of infringement, theft, misappropriation, cyber-attacks or other acts compromising the integrity of our assets or intellectual property;

•fluctuations in our business due to seasonality;

•the risk of product recalls or product liability suits and costs associated with product safety regulations;

•changes in tax laws or regulations, or the interpretation and application of such laws and regulations, which may cause us to alter tax reserves or make other changes which significantly impact our reported financial results;

•the impact of litigation or arbitration decisions or settlement actions;

•the concentration of our customers, potentially increasing the negative impact to our business of difficulties experienced by any of our customers or changes in their purchasing or selling patterns;

•the bankruptcy or other lack of success of one or more of our significant retailers, licensees and other partners; and

•other risks and uncertainties as may be detailed in our public announcements and U.S. Securities and Exchange Commission (“SEC”) filings.

The statements contained herein are based on our current beliefs and expectations. We undertake no obligation to make any revisions to the forward-looking statements contained in this Form 10-Q or to update them to reflect events or circumstances occurring after the date of this Form 10-Q.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

HASBRO, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Millions of Dollars Except Share Data)

(Unaudited)


		September 25, 2022		September 26, 2021		December 26, 2021			April 2, 2023		March 27, 2022		December 25, 2022
ASSETS	ASSETS							ASSETS
Current assets	Current assets							Current assets
Cash and cash equivalents including restricted cash of $6.1 million, $94.9 million and $35.8 million		$	551.6	$	1,181.2	$	1,019.2
Accounts receivable, less allowance for doubtful accounts of $21.8 million, $30.4 million and $22.9 million		1,188.8		1,476.6		1,500.4
Cash and cash equivalents including restricted cash of $13.4 million, $38.8 million and $14.5 million								Cash and cash equivalents including restricted cash of $13.4 million, $38.8 million and $14.5 million	$	386.2	$	1,057.9	$	513.1
Accounts receivable, less allowance for doubtful accounts of $21.7 million, $24.1 million and $20.0 million								Accounts receivable, less allowance for doubtful accounts of $21.7 million, $24.1 million and $20.0 million	685.2		931.7		1,132.4
Inventories	Inventories	844.5		544.1		552.1		Inventories	713.4		644.3		676.8
Prepaid expenses and other current assets	Prepaid expenses and other current assets	658.8		528.5		656.4		Prepaid expenses and other current assets	754.4		621.4		676.8
Assets held for sale		16.8		—		—

Total current assets	Total current assets	3,260.5		3,730.4		3,728.1		Total current assets	2,539.2		3,255.3		2,999.1
Property, plant and equipment, less accumulated depreciation of $640.3 million, $607.6 million and $630.0 million		411.8		441.9		421.1
Property, plant and equipment, less accumulated depreciation of $637.8 million, $641.5 million and $654.5 million								Property, plant and equipment, less accumulated depreciation of $637.8 million, $641.5 million and $654.5 million	509.1		422.6		422.8
Other assets	Other assets							Other assets
Goodwill	Goodwill	3,469.8		3,420.2		3,419.6		Goodwill	3,470.1		3,419.3		3,470.1
Other intangible assets, net of accumulated amortization of $1,094.6 million, $1,027.4 million and $1,050.4 million		1,079.7		1,209.5		1,172.0
Other intangible assets, net of accumulated amortization of $1,165.3 million, $1,075.2 million and $1,137.2 million								Other intangible assets, net of accumulated amortization of $1,165.3 million, $1,075.2 million and $1,137.2 million	801.0		1,136.6		814.6
Other	Other	1,404.3		1,428.4		1,297.0		Other	1,604.3		1,284.9		1,589.3
Total other assets	Total other assets	5,953.8		6,058.1		5,888.6		Total other assets	5,875.4		5,840.8		5,874.0
Total assets	Total assets	$	9,626.1	$	10,230.4	$	10,037.8	Total assets	$	8,923.7	$	9,518.7	$	9,295.9
LIABILITIES, NONCONTROLLING INTERESTS AND SHAREHOLDERS' EQUITY	LIABILITIES, NONCONTROLLING INTERESTS AND SHAREHOLDERS' EQUITY							LIABILITIES, NONCONTROLLING INTERESTS AND SHAREHOLDERS' EQUITY
Current liabilities	Current liabilities							Current liabilities
Short-term borrowings	Short-term borrowings	$	122.3	$	0.9	$	0.8	Short-term borrowings	$	134.5	$	104.1	$	142.4
Current portion of long-term debt	Current portion of long-term debt	122.6		187.6		200.1		Current portion of long-term debt	109.0		155.8		113.2
Accounts payable	Accounts payable	559.5		598.2		580.2		Accounts payable	360.1		411.7		427.3
Accrued liabilities	Accrued liabilities	1,537.5		1,663.7		1,674.8		Accrued liabilities	1,293.8		1,371.4		1,506.8
Liabilities held for sale		15.0		—		—

Total current liabilities	Total current liabilities	2,356.9		2,450.4		2,455.9		Total current liabilities	1,897.4		2,043.0		2,189.7
Long-term debt	Long-term debt	3,725.1		3,977.4		3,824.2		Long-term debt	3,682.4		3,737.9		3,711.2
Other liabilities	Other liabilities	545.1		722.5		670.7		Other liabilities	585.2		633.6		533.1
Total liabilities	Total liabilities	$	6,627.1	$	7,150.3	$	6,950.8	Total liabilities	$	6,165.0	$	6,414.5	$	6,434.0
Redeemable noncontrolling interests	Redeemable noncontrolling interests	—		22.9		23.9		Redeemable noncontrolling interests	—		23.5		—
Shareholders' equity	Shareholders' equity							Shareholders' equity
Preference stock of $2.50 par value. Authorized 5,000,000 shares; none issued	Preference stock of $2.50 par value. Authorized 5,000,000 shares; none issued	—		—		—		Preference stock of $2.50 par value. Authorized 5,000,000 shares; none issued	—		—		—
Common stock of $0.50 par value. Authorized 600,000,000 shares; issued 220,286,736 shares at September 25, 2022, September 26, 2021, and December 26, 2021		110.1		110.1		110.1
Common stock of $0.50 par value. Authorized 600,000,000 shares; issued 220,286,736 shares at April 2, 2023, March 27, 2022, and December 25, 2022								Common stock of $0.50 par value. Authorized 600,000,000 shares; issued 220,286,736 shares at April 2, 2023, March 27, 2022, and December 25, 2022	110.1		110.1		110.1
Additional paid-in capital	Additional paid-in capital	2,530.1		2,388.9		2,428.0		Additional paid-in capital	2,535.7		2,475.7		2,540.6
Retained earnings	Retained earnings	4,297.8		4,269.6		4,257.8		Retained earnings	3,951.8		4,220.9		4,071.4
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(324.9)		(208.6)		(235.3)		Accumulated other comprehensive loss	(237.4)		(246.9)		(254.9)
Treasury stock, at cost; 82,178,615 shares at September 25, 2022; 82,359,425 shares at September 26, 2021; and 82,066,136 shares at December 26, 2021		(3,637.1)		(3,541.0)		(3,534.7)
Treasury stock, at cost; 81,687,608 shares at April 2, 2023; 80,844,603 shares at March 27, 2022; and 82,106,383 shares at December 25, 2022								Treasury stock, at cost; 81,687,608 shares at April 2, 2023; 80,844,603 shares at March 27, 2022; and 82,106,383 shares at December 25, 2022	(3,629.4)		(3,513.8)		(3,634.4)
Noncontrolling interests	Noncontrolling interests	23.0		38.2		37.2		Noncontrolling interests	27.9		34.7		29.1
Total shareholders' equity	Total shareholders' equity	2,999.0		3,057.2		3,063.1		Total shareholders' equity	2,758.7		3,080.7		2,861.9
Total liabilities, noncontrolling interests and shareholders' equity	Total liabilities, noncontrolling interests and shareholders' equity	$	9,626.1	$	10,230.4	$	10,037.8	Total liabilities, noncontrolling interests and shareholders' equity	$	8,923.7	$	9,518.7	$	9,295.9

See accompanying condensed notes to consolidated financial statements.

HASBRO, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Millions of Dollars Except Per Share Data)

(Unaudited)


		Quarter Ended				Nine Months Ended					Quarter Ended
		September 25, 2022		September 26, 2021		September 25, 2022		September 26, 2021			April 2, 2023		March 27, 2022
Net revenues	Net revenues	$	1,675.9	$	1,970.0	$	4,178.2	$	4,407.0	Net revenues	$	1,001.0	$	1,163.1
Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of sales	Cost of sales	586.6		609.5		1,331.2		1,244.4		Cost of sales	285.3		333.1
Program cost amortization	Program cost amortization	146.5		187.9		365.7		396.1		Program cost amortization	122.5		138.5
Royalties	Royalties	135.1		171.8		335.3		392.2		Royalties	69.0		90.1
Product development	Product development	82.4		80.1		231.2		229.1		Product development	83.3		69.6
Advertising	Advertising	115.2		163.3		277.0		356.6		Advertising	82.8		77.6
Amortization of intangibles	Amortization of intangibles	26.9		27.7		81.2		90.3		Amortization of intangibles	23.1		27.1
Selling, distribution and administration	Selling, distribution and administration	365.8		361.8		1,000.1		1,004.7		Selling, distribution and administration	317.1		307.1
Loss on assets held for sale		23.1		—		23.1		—
Loss on disposal of business		—		—		—		101.8

Total costs and expenses	Total costs and expenses	1,481.6		1,602.1		3,644.8		3,815.2		Total costs and expenses	983.1		1,043.1
Operating profit	Operating profit	194.3		367.9		533.4		591.8		Operating profit	17.9		120.0
Non-operating expense (income):	Non-operating expense (income):									Non-operating expense (income):
Interest expense	Interest expense	41.9		43.3		125.2		137.3		Interest expense	46.3		41.6
Interest income	Interest income	(3.2)		(1.8)		(8.0)		(4.2)		Interest income	(6.0)		(2.1)
Other (income) expense, net	Other (income) expense, net	(10.0)		3.0		(9.5)		(35.3)		Other (income) expense, net	(1.4)		0.3
Total non-operating expense, net	Total non-operating expense, net	28.7		44.5		107.7		97.8		Total non-operating expense, net	38.9		39.8
Earnings before income taxes		165.6		323.4		425.7		494.0
Earnings (loss) before income taxes										Earnings (loss) before income taxes	(21.0)		80.2
Income tax expense	Income tax expense	37.4		68.5		94.1		143.5		Income tax expense	0.7		17.3
Net earnings		128.2		254.9		331.6		350.5
Net earnings (loss) attributable to noncontrolling interests		(1.0)		1.7		(0.8)		4.0
Net earnings attributable to Hasbro, Inc.		$	129.2	$	253.2	$	332.4	$	346.5
Net earnings (loss)										Net earnings (loss)	(21.7)		62.9
Net earnings attributable to noncontrolling interests										Net earnings attributable to noncontrolling interests	0.4		1.7
Net earnings (loss) attributable to Hasbro, Inc.										Net earnings (loss) attributable to Hasbro, Inc.	$	(22.1)	$	61.2

Net earnings per common share:
Net earnings (loss) per common share:										Net earnings (loss) per common share:
Basic	Basic	$	0.93	$	1.83	$	2.39	$	2.51	Basic	$	(0.16)	$	0.44
Diluted	Diluted	$	0.93	$	1.83	$	2.39	$	2.51	Diluted	$	(0.16)	$	0.44
Cash dividends declared per common share	Cash dividends declared per common share	$	0.70	$	0.68	$	2.10	$	2.04	Cash dividends declared per common share	$	0.70	$	0.70

See accompanying condensed notes to consolidated financial statements.

HASBRO, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Earnings (Loss)

(Millions of Dollars)

(Unaudited)

Quarter Ended Nine Months Ended
September 25,
2022 September 26,
2021 September 25,
2022 September 26,
2021
Net earnings $ 128.2 $ 254.9 $ 331.6 $ 350.5
Other comprehensive earnings (loss):
Foreign currency translation adjustments, net of tax (72.0) (31.4) (103.0) (23.6)
Unrealized holding losses on available-for-sale securities, net of tax (0.1) (0.3) (0.3) (0.1)
Net gains on cash flow hedging activities, net of tax 12.6 5.2 20.6 7.8
Reclassifications to earnings, net of tax:
Net gains (losses) on cash flow hedging activities (5.9) 1.1 (7.2) 1.7
Amortization of unrecognized pension and postretirement amounts 0.1 0.2 0.3 0.6
Total other comprehensive loss, net of tax $ (65.3) $ (25.1) $ (89.6) $ (13.6)
Total comprehensive earnings (loss) attributable to noncontrolling interests (1.0) 1.7 (0.8) 4.0
Total comprehensive earnings attributable to Hasbro, Inc. $ 63.9 $ 228.1 $ 242.8 $ 332.9


	Quarter Ended
	April 2, 2023		March 27, 2022
Net earnings (loss)	$	(21.7)	$	62.9
Other comprehensive earnings (loss):
Foreign currency translation adjustments, net of tax	24.3		(10.7)
Unrealized holding gains on available-for-sale securities, net of tax	—		0.2
Net losses on cash flow hedging activities, net of tax	(4.6)		(1.2)

Reclassifications to earnings, net of tax:
Net gains on cash flow hedging activities	(2.1)		—
Amortization of unrecognized pension and postretirement amounts	(0.1)		0.1

Total other comprehensive earnings (loss), net of tax	$	17.5	$	(11.6)
Total comprehensive earnings attributable to noncontrolling interests	0.4		1.7
Total comprehensive earnings (loss) attributable to Hasbro, Inc.	$	(4.6)	$	49.6

See accompanying condensed notes to consolidated financial statements.

HASBRO, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Millions of Dollars)

(Unaudited)


		Nine months ended					Three months ended
		September 25, 2022		September 26, 2021			April 2, 2023		March 27, 2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net earnings		$	331.6	$	350.5
Adjustments to reconcile net earnings to net cash provided by operating activities:
Net earnings (loss)						Net earnings (loss)	$	(21.7)	$	62.9
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:						Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation of plant and equipment	Depreciation of plant and equipment	94.4		116.2		Depreciation of plant and equipment	23.9		25.1
Amortization of intangibles	Amortization of intangibles	81.2		90.3		Amortization of intangibles	23.1		27.1

Loss on assets held for sale		23.1		—
Loss on disposal of business		—		101.8

Program cost amortization	Program cost amortization	365.7		396.1		Program cost amortization	122.5		138.5
Deferred income taxes	Deferred income taxes	(66.6)		47.9		Deferred income taxes	(2.8)		(33.4)
Stock-based compensation	Stock-based compensation	66.2		56.2		Stock-based compensation	15.7		18.1

Other non-cash items	Other non-cash items	3.1		5.7		Other non-cash items	(0.5)		3.9
Change in operating assets and liabilities net of acquired balances:	Change in operating assets and liabilities net of acquired balances:					Change in operating assets and liabilities net of acquired balances:
Decrease (increase) in accounts receivable		201.8		(83.8)
Decrease in accounts receivable						Decrease in accounts receivable	454.6		559.8
Increase in inventories	Increase in inventories	(327.2)		(159.4)		Increase in inventories	(32.5)		(99.6)
Decrease in prepaid expenses and other current assets		34.4		56.7
(Increase) decrease in prepaid expenses and other current assets						(Increase) decrease in prepaid expenses and other current assets	(75.4)		42.1
Program spend, net	Program spend, net	(498.1)		(526.3)		Program spend, net	(266.3)		(169.4)
(Decrease) increase in accounts payable and accrued liabilities		(22.7)		310.5
Change in net deemed repatriation tax		(18.4)		(18.4)
Decrease in accounts payable and accrued liabilities						Decrease in accounts payable and accrued liabilities	(167.0)		(464.4)

Other	Other	(6.3)		(58.4)		Other	15.2		24.0
Net cash provided by operating activities	Net cash provided by operating activities	262.2		685.6		Net cash provided by operating activities	88.8		134.7
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Additions to property, plant and equipment	Additions to property, plant and equipment	(130.7)		(98.1)		Additions to property, plant and equipment	(53.2)		(29.2)
Acquisitions		(146.3)		—
Proceeds from sale of business, net of cash		—		379.2

Other	Other	11.2		(3.6)		Other	(2.4)		5.3
Net cash (utilized) provided by investing activities		(265.8)		277.5
Net cash utilized by investing activities						Net cash utilized by investing activities	(55.6)		(23.9)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from borrowings with maturity greater than three months	Proceeds from borrowings with maturity greater than three months	3.3		127.6		Proceeds from borrowings with maturity greater than three months	1.2		1.3
Repayments of borrowings with maturity greater than three months	Repayments of borrowings with maturity greater than three months	(182.0)		(1,062.1)		Repayments of borrowings with maturity greater than three months	(35.5)		(133.9)
Net proceeds from other short-term borrowings		121.6		(6.2)
Purchases of common stock		(125.0)		—
Net (repayments) proceeds from other short-term borrowings						Net (repayments) proceeds from other short-term borrowings	(7.7)		103.3

Stock-based compensation transactions	Stock-based compensation transactions	74.2		24.6		Stock-based compensation transactions	—		70.2
Dividends paid	Dividends paid	(288.6)		(280.7)		Dividends paid	(96.7)		(94.5)
Payments related to tax withholding for share-based compensation	Payments related to tax withholding for share-based compensation	(21.1)		(10.8)		Payments related to tax withholding for share-based compensation	(14.0)		(19.3)
Debt extinguishment costs		—		(9.1)

Other	Other	(25.4)		(6.8)		Other	(3.9)		(4.6)
Net cash utilized by financing activities	Net cash utilized by financing activities	(443.0)		(1,223.5)		Net cash utilized by financing activities	(156.6)		(77.5)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(16.2)		(8.1)		Effect of exchange rate changes on cash	(3.5)		5.4
Net decrease in cash, cash equivalents and restricted cash		(462.8)		(268.5)
Net change due to cash classified as held for sale		(4.8)		—
Net decrease in cash, cash equivalents and restricted cash		(467.6)		(268.5)
Net (decrease) increase in cash, cash equivalents and restricted cash						Net (decrease) increase in cash, cash equivalents and restricted cash	(126.9)		38.7

Cash, cash equivalents and restricted cash at beginning of year	Cash, cash equivalents and restricted cash at beginning of year	1,019.2		1,449.7		Cash, cash equivalents and restricted cash at beginning of year	513.1		1,019.2
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	551.6	$	1,181.2	Cash, cash equivalents and restricted cash at end of period	$	386.2	$	1,057.9

Supplemental information	Supplemental information					Supplemental information
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	107.1	$	123.7	Interest	$	34.3	$	30.5
Income taxes	Income taxes	$	157.2	$	124.1	Income taxes	$	26.0	$	29.2

See accompanying condensed notes to consolidated financial statements.

HASBRO, INC. AND SUBSIDIARIES

Consolidated Statements of Shareholders' Equity and Redeemable Noncontrolling Interests

(Millions of Dollars)

(Unaudited)


Three Months Ended September 25, 2022
Three Months Ended April 2, 2023													Three Months Ended April 2, 2023
		Common Stock		Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Treasury Stock	Noncontrolling Interests	Total Shareholders' Equity		Redeemable Noncontrolling Interests			Common Stock		Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Treasury Stock	Noncontrolling Interests	Total Shareholders' Equity		Redeemable Noncontrolling Interests
Balance, June 26, 2022		$	110.1	2,503.4	4,265.9	(259.6)	(3,636.2)	29.2	$	3,012.8	$	23.0
Balance, December 25, 2022													Balance, December 25, 2022	$	110.1	2,540.6	4,071.4	(254.9)	(3,634.4)	29.1	$	2,861.9	$	—

Net earnings attributable to Hasbro, Inc.		—		—	129.2	—	—	—	129.2		—
Net loss attributable to noncontrolling interests		—		—	—	—	—	(1.0)	(1.0)		—
Net loss attributable to Hasbro, Inc.													Net loss attributable to Hasbro, Inc.	—		—	(22.1)	—	—	—	(22.1)		—
Net earnings attributable to noncontrolling interests													Net earnings attributable to noncontrolling interests	—		—	—	—	—	0.4	0.4		—

Other comprehensive loss		—		—	—	(65.3)	—	—	(65.3)		—
Other comprehensive earnings													Other comprehensive earnings	—		—	—	17.5	—	—	17.5		—
Stock-based compensation transactions	Stock-based compensation transactions	—		(1.5)	—	—	(0.1)	—	(1.6)		—		Stock-based compensation transactions	—		(19.0)	—	—	5.0	—	(14.0)		—
Purchases of common stock		—		—	—	—	(1.0)	—	(1.0)		—

Stock-based compensation expense	Stock-based compensation expense	—		23.0	—	—	0.2	—	23.2		—		Stock-based compensation expense	—		15.7	—	—	—	—	15.7		—
Dividends declared	Dividends declared	—		0.7	(97.3)	—	—	—	(96.6)		—		Dividends declared	—		0.5	(97.5)	—	—	—	(97.0)		—
Distributions paid to noncontrolling owners and other foreign exchange	Distributions paid to noncontrolling owners and other foreign exchange	—		—	—	—	—	(5.2)	(5.2)		—		Distributions paid to noncontrolling owners and other foreign exchange	—		—	—	—	—	(1.6)	(1.6)		—
Buyout of redeemable noncontrolling interest	Buyout of redeemable noncontrolling interest	—		4.5	—	—	—	—	4.5		(23.0)		Buyout of redeemable noncontrolling interest	—		(2.1)	—	—	—	—	(2.1)		—
Balance, September 25, 2022		$	110.1	2,530.1	4,297.8	(324.9)	(3,637.1)	23.0	$	2,999.0	$	—
Balance, April 2, 2023													Balance, April 2, 2023	$	110.1	2,535.7	3,951.8	(237.4)	(3,629.4)	27.9	$	2,758.7	$	—

Three Months Ended September 26, 2021
Three Months Ended March 27, 2022													Three Months Ended March 27, 2022
		Common Stock		Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Treasury Stock	Noncontrolling Interests	Total Shareholders' Equity		Redeemable Noncontrolling Interests			Common Stock		Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Treasury Stock	Noncontrolling Interests	Total Shareholders' Equity		Redeemable Noncontrolling Interests
Balance, June 27, 2021		$	110.1	2,361.2	4,110.3	(183.5)	(3,547.6)	39.9	$	2,890.4	$	24.5
Balance, December 26, 2021													Balance, December 26, 2021	$	110.1	2,428.0	4,257.8	(235.3)	(3,534.7)	37.2	$	3,063.1	$	23.9

Net loss attributable to Hasbro, Inc.		—		—	253.2	—	—	—	253.2		—
Net earnings attributable to Hasbro, Inc.													Net earnings attributable to Hasbro, Inc.	—		—	61.2	—	—	—	61.2		—
Net earnings attributable to noncontrolling interests	Net earnings attributable to noncontrolling interests	—		—	—	—	—	0.4	0.4		1.3		Net earnings attributable to noncontrolling interests	—		—	—	—	—	1.2	1.2		0.5
Change in put option value													Change in put option value	—		(0.4)	—	—	—	—	(0.4)		—
Other comprehensive loss	Other comprehensive loss	—		—	—	(25.1)	—	—	(25.1)		—		Other comprehensive loss	—		—	—	(11.6)	—	—	(11.6)		—
Stock-based compensation transactions	Stock-based compensation transactions	—		7.4	—	—	6.6	—	14.0		—		Stock-based compensation transactions	—		30.0	—	—	20.9	—	50.9		—

Stock-based compensation expense	Stock-based compensation expense	—		19.1	—	—	—	—	19.1		—		Stock-based compensation expense	—		18.1	—	—	—	—	18.1		—
Dividends declared	Dividends declared	—		—	(93.9)	—	—	—	(93.9)		—		Dividends declared	—		—	(98.1)	—	—	—	(98.1)		—
Distributions paid to noncontrolling owners and other foreign exchange	Distributions paid to noncontrolling owners and other foreign exchange	—		1.2	—	—	—	(2.1)	(0.9)		(2.9)		Distributions paid to noncontrolling owners and other foreign exchange	—		—	—	—	—	(3.7)	(3.7)		(0.9)
Balance, September 26, 2021		$	110.1	2,388.9	4,269.6	(208.6)	(3,541.0)	38.2	$	3,057.2	$	22.9
Balance, March 27, 2022													Balance, March 27, 2022	$	110.1	2,475.7	4,220.9	(246.9)	(3,513.8)	34.7	$	3,080.7	$	23.5

~~HASBRO, INC. AND SUBSIDIARIES~~

~~Consolidated Statements of Shareholders' Equity and Redeemable Noncontrolling Interests~~

~~(Millions of Dollars)~~

~~(Unaudited)~~
Nine Months Ended September 25, 2022
Common
Stock Additional
Paid-in Capital Retained
Earnings Accumulated Other Comprehensive Loss Treasury
Stock Noncontrolling Interests Total
Shareholders'
Equity Redeemable Noncontrolling Interests
Balance, December 26, 2021 $ 110.1 2,428.0 4,257.8 (235.3) (3,534.7) 37.2 $ 3,063.1 $ 23.9
Net earnings attributable to Hasbro, Inc. — 332.4 — — — 332.4 —
Net loss attributable to noncontrolling interests — — — — — (1.4) (1.4) 0.6
Change in put option value — (0.4) — — — — (0.4) —
Other comprehensive loss — — — (89.6) — — (89.6) —
Stock-based compensation transactions — 31.0 — — 22.1 — 53.1 —
Purchases of common stock — — — — (125.0) — (125.0) —
Stock-based compensation expense — 65.8 — — 0.5 — 66.3 —
Dividends declared — 1.2 (292.4) — — — (291.2) —
Distributions paid to noncontrolling owners and other foreign exchange — — — — — (12.8) (12.8) (1.5)
Buyout of redeemable noncontrolling interest $ — 4.5 — — — — $ 4.5 $ (23.0)
Balance, September 25, 2022 $ 110.1 2,530.1 4,297.8 (324.9) (3,637.1) 23.0 $ 2,999.0 $ —
Nine Months Ended September 26, 2021
Common
Stock Additional
Paid-in Capital Retained
Earnings Accumulated Other
Comprehensive Loss Treasury
Stock Noncontrolling Interests Total
Shareholders'
Equity Redeemable Noncontrolling Interests
Balance, December 27, 2020 $ 110.1 2,329.1 4,204.2 (195.0) (3,551.7) 40.0 $ 2,936.7 $ 24.4
Net earnings attributable to Hasbro, Inc. — — 346.5 — — — 346.5 —
Net earnings attributable to noncontrolling interests — — — — — 2.4 2.4 1.6
Other comprehensive loss — — — (13.6) — — (13.6) —
Stock-based compensation transactions — 4.2 — — 9.6 — 13.8 —
Stock-based compensation expense — 55.1 — — 1.1 — 56.2 —
Dividends declared — — (281.1) — — — (281.1) —
Distributions paid to noncontrolling owners and other foreign exchange — 0.5 — — — (4.2) (3.7) (3.1)
Balance, September 26, 2021 $ 110.1 2,388.9 4,269.6 (208.6) (3,541.0) 38.2 $ 3,057.2 $ 22.9

HASBRO, INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(Unaudited)

(1) Basis of Presentation

In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the consolidated financial position of Hasbro, Inc. and all majority-owned subsidiaries ("Hasbro" or the "Company") as of ~~September 25,~~April 2, 2023 and March 27, 2022, ~~and September 26, 2021,~~ and the results of its operations and cash flows and shareholders' equity for the periods then ended in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and notes thereto. Actual results could differ from those estimates.

The quarters ended ~~September 25,~~April 2, 2023 and March 27, 2022 were 14-week and ~~September 26, 2021 were each~~ 13-week ~~periods. The nine-month~~ periods, ~~ended September 25, 2022 and September 26, 2021 were each 39-week periods.~~respectively.

The results of operations for the quarter ended ~~September 25, 2022~~April 2, 2023 are not necessarily indicative of results to be expected for the full year ~~2022,~~2023, nor were those of the comparable ~~2021~~2022 period representative of those actually experienced for the full year ~~2021.~~2022.

Significant Accounting Policies

The Company's significant accounting policies are summarized in note 1 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December ~~26, 2021~~25, 2022 ("~~2021~~2022 Form 10-K").

Blueprint 2.0 and Operational Excellence

On October 4, 2022, following a ~~nine-month~~several months long strategic review of our business led by our CEO, the Company announced a ~~new~~ go-forward strategic plan guided by our new Blueprint 2.0, a consumer-centric framework for bringing compelling and expansive brand experiences to audiences around the world. During the review, the Company identified opportunities to focus and scale its business, enhance operational excellence, including through specialized organizational programs and supply chain ~~programs, and~~transformation, to drive ~~high-margin~~ growth and ~~profit.~~profit and enhance shareholder value. The Company ~~plans to focus~~is increasing strategic investment in its most valuable and profitable franchises across toys, games, entertainment and licensing, and ~~to exit~~exiting certain non-core aspects of the business. ~~Under this plan, a pre-tax charge of $55.3 million was recorded in the third quarter of 2022 associated with the program, comprised of a loss on assets held for sale of $23.1 million, severance~~

TV and other employee charges of $21.3 million, consulting fees of $7.2 million and asset impairments of $3.7 million. The impairment losses related to the exit of certain non-core businesses were recorded within the Entertainment segment and the severance and other employee charges and the consulting fees were recorded within the Corporate and Other segment. The businesses to be exited do not constitute a material part of the Company's operations. ~~See Note 4 and Item 2.~~ ~~Management's Discussion and Analysis~~ ~~in this Form 10-Q for further information.~~

~~D&D Beyond Acquisition~~Film Business

On ~~May 19,~~November 17, 2022, the Company ~~acquired D&D Beyond,~~announced an authorization by Hasbro's Board of Directors to initiate a ~~strategic, complementary acquisition~~marketing process to explore a sale of parts of our eOne TV and film business that do not directly support the Company’s Branded Entertainment strategy. In the event a transaction were to occur, Hasbro is expected to maintain the capability to develop and produce animation, digital shorts, scripted TV and theatrical films for audiences related to core Hasbro IP. The family brands business, including the brands PEPPA PIG and PJ MASKS, is not expected to be part of any sale transaction involving parts of the ~~premier digital content platform~~eOne film and television business. The sale process was ongoing as of the close of the first quarter of 2023 however, there can be no assurance that the process will result in a sale.

Brand Portfolio Realignment

Effective for the first quarter 2023, we realigned our brand portfolios to correspond with the evolution of our Blueprint 2.0 strategy. We are focusing on fewer, bigger, more profitable brands that showcase our leadership in preschool toys, action figures and accessories, games, arts & crafts, and outdoor action brands.

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

Franchise Brands - A refreshed group of our most financially significant brands which we consider to have the greatest long-term potential including DUNGEONS & DRAGONS, Hasbro Gaming, MAGIC: THE GATHERING, NERF, PEPPA PIG, PLAY-DOH, and TRANSFORMERS.

Partner Brands - The Partner Brands category includes those brands we license from other parties such as Disney's STAR WARS and MARVEL brands as well as other partners, for which ~~is expected to substantially accelerate our direct-to-fans capability for DUNGEONS & DRAGONS in physical~~we develop toy and ~~digital play. The all-cash transaction~~game products, with a focus on those key Partner Brands that give us the biggest growth potential and where we can lead and innovate in the ~~amount~~category.

Portfolio Brands - Our Portfolio Brands category includes those brands we own or control which we feel have upside in revenue and profitability that have not yet grown to the significance of $146.3 million was funded with cash on hand. The allocation of assets acquired includes $81.4 million to intangible assets, $64.7 million to goodwill, with the remainder allocated to property, plant, and equipment.

~~eOne Music Sale~~

On June 29, 2021, the Company completed the sale of its Entertainment One music business ("eOne Music") for net proceeds of $397.0 million, including the sales price of $385.0 million and $12.0 million of closing adjustments related to working capital and net debt calculations. The final proceeds were subject to further adjustment upon completion of closing working capital, which resulted in a net outflow of $0.9 million in the fourth quarter of 2021. Based on the value of the net assets held by eOne Music, which included goodwill and intangible assets allocated to eOne Music as part of the Company’s acquisition of Entertainment One in December 2019 (the “eOne Acquisition"), the Company recorded a pre-tax non-cash goodwill impairment charge of $101.8 million within Loss on Disposal of Business on the consolidated statements of operations for the nine ended September 26, 2021. The Company also recorded pre-tax cash transaction expenses of $9.5 million within Selling, Distribution and Administration expenses on the consolidated statements of operations for the second quarter of 2021. Thefranchise brand.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

~~impairment charge was recorded within the Entertainment segment~~Non-Hasbro Branded Film & TV - The Non-Hasbro Branded Film & TV category includes non-Hasbro-branded film, TV and ~~the transaction costs were recorded within the Corporate and Other segment. Fiscal year 2021 includes two quarters of financial results for the eOne Music Business.~~

~~Dividend Equivalent Units~~

~~Beginning with employee stock incentive awards granted in 2022, the payment of cash dividends to shareholders also results~~other entertainment related revenues. All Hasbro-branded content is included in the crediting of Dividend Equivalent Units (“DEUs”) to holders of restricted stock units ("RSUs") and contingent stock performance awards ("PSUs") granted under the Company's Restated 2003 Stock Incentive Plan, as amended, for employees as defined and described in Note 15 in the Company's Annual Report on Form 10-K for the year ended December 26, 2021. The DEUs will be credited as additional RSUs or PSUs and settled concurrently with the vesting of associated awards. DEUs are forfeited in the event the underlying RSUs or PSU's do not vest. The dividend equivalent value of forfeitable DEUs is treated as a reduction of retained earnings or, if the Company is in a retained deficit position, as a reduction of additional paid-in capital.portfolios noted above.

These consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The Company filed with the SEC audited consolidated financial statements for the fiscal year ended December ~~26, 2021~~25, 2022 in its ~~2021~~2022 Form 10-K, which includes all such information and disclosures and, accordingly, should be read in conjunction with the financial information included herein.

Recently Adopted Accounting Standards

As of ~~September 25, 2022,~~April 2, 2023, there were no recently adopted accounting standards that had a material effect on the Company’s financial statements.

Issued Accounting Pronouncements

~~In March~~As of ~~2020, the FASB~~April 2, 2023, there were no recently issued ~~Accounting Standards Update No. 2020-04 (ASU 2020-04) Reference Rate Reform (Topic 848):~~ ~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting.~~ The amendments in this update provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions, for a limited period of time, to ease the potential burden of recognizing the effects of reference rate reform on financial reporting. The amendments in this update apply to contracts, hedging relationships and other transactionsaccounting pronouncements that reference the London Inter-Bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued due to the global transition away from LIBOR and certain other interbank offered rates. An entity may elect to apply the amendments provided by this update beginning March 12, 2020 through December 31, 2022. The change from LIBOR to an alternate rate has not had a material ~~impact~~effect on the ~~Company's consolidated~~Company’s financial statements.

(2) Revenue Recognition

Contract Assets and Liabilities

In the ordinary course of business, the Company’s Consumer Products, Wizards of the Coast and Digital Gaming and Entertainment segments enter into contracts to license certain of the Company’s intellectual property, providing licensees right-to-use or access to such intellectual property for use in the production and sale of consumer products and digital game development, and for use within content for distribution over streaming platforms and for television and film. The Company also licenses owned television and film content for distribution to third parties in formats that include broadcast, digital streaming and theatrical. Through these arrangements, the Company may receive advanced royalty payments from licensees, either in advance of a licensees’ subsequent sales to customers or, prior to the completion of the Company’s performance obligation. In addition, the Company’s Wizards of the Coast and Digital Gaming segment may receive advanced payments from end users of its digital games at the time of the initial purchase or through in-application purchases. These digital gaming revenues are recognized over a period of time, determined based on player usage patterns or the estimated playing life of the user or when additional downloadable content is made available. The Company defers revenues on all licensee and digital gaming advanced payments until the respective performance obligations are satisfied. The Company records the aggregate deferred revenues as contract liabilities, with the current portion recorded within Accrued Liabilities and the long-term portion recorded as Other Non-current Liabilities in the Company’s consolidated balance sheets. The Company records contract assets, ~~in the case of~~primarily related to (1) minimum guarantees being recognized in advance of contractual invoicing, which are recognized ratably over the terms of the respective license periods, and (2) film and television distribution revenues recorded for content delivered, where payment will occur over the license term. The current portion of contract assets is recorded in Prepaid Expenses and Other Current Assets, respectively, and the long-term portion is recorded within Other Long-Term Assets.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

~~At September 25, 2022, September 26, 2021 and December 26, 2021 the Company had the following~~The changes in carrying amounts of contract assets and liabilities ~~in its consolidated balance sheets:~~

September 25, 2022 September 26, 2021 December 26, 2021
Assets
     Contract assets - current $ 361.2 $ 263.3 $ 286.9
     Contract assets - long term 157.5 108.1 104.2
           Total $ 518.7 $ 371.4 $ 391.1
Liabilities
     Contract liabilities - current $ 132.2 $ 147.0 $ 114.1
     Contract liabilities - long term 1.8 9.7 7.1
          Total $ 134.0 $ 156.7 $ 121.2

For the nine months ended September 25, 2022, the Company reclassified $469.9 million, including current year activity, from contract assets to accounts receivable, upon completion of contractual performance obligations. In addition, for the ~~nine months~~quarter ended ~~September 25, 2022, the Company recognized $59.0 million of contract liabilities that were included in the December 26, 2021 balances.~~April 2, 2023 are as follows:


	April 2, 2023
Assets
Balance at beginning of the year	$	594.4
Recognized in current year	213.8
Amounts reclassified to accounts receivable	(218.7)
Foreign currency impact	7.7
Ending Balance	$	597.2

Liabilities
Balance at beginning of the year	$	113.0
Recognized in current year	80.3
Amounts in beginning balance reclassified to revenue	(53.3)
Current year amounts reclassified to revenue	(22.5)

Foreign currency impact	(2.2)
Ending Balance	$	115.3

Unsatisfied performance obligations

Unsatisfied performance obligations relate primarily to in-production television content to be delivered in the future under existing agreements with partnering content providers such as broadcasters, distributors, television networks and subscription video on demand services. As of ~~September 25, 2022,~~April 2, 2023, unrecognized revenue attributable to unsatisfied performance obligations expected to be recognized in the future ~~were $371.2~~was $293.8 million. Of this amount, we expect to recognize ~~$204.7~~$244.4 million in the remainder of ~~2022, $159.5 million in~~ 2023, ~~$2.5~~$38.0 million in 2024, ~~and $4.5~~$11.3 million in ~~2025.~~2025 and $0.1 million in 2026. These amounts include only fixed consideration.

Accounts Receivable and Allowance for Credit Losses

The Company’s balance for accounts receivable on the consolidated balance sheets as of ~~September 25,~~April 2, 2023 and March 27, 2022 ~~and September 26, 2021~~ are primarily from contracts with customers. The Company had no material expense for credit losses for the quarters ~~or nine months~~ ended ~~September 25, 2022~~April 2, 2023 and ~~September 26, 2021.~~March 27, 2022.

Disaggregation of revenues

The Company disaggregates its revenues from contracts with customers by reportable segment: Consumer Products, Wizards of the Coast and Digital Gaming, and Entertainment. The Company further disaggregates revenues within its Consumer Products segment by major geographic region: North America, Europe, Latin America, and Asia Pacific; within its Wizards of the Coast and Digital Gaming segment by ~~line of business:~~category: Tabletop Gaming and Digital and Licensed Gaming; and within its Entertainment segment by category: Film & TV, Family Brands, and Other. Finally, the Company disaggregates its revenues by brand portfolio into ~~five~~four brand categories: Franchise Brands, Partner Brands, ~~Hasbro Gaming, Emerging~~Portfolio Brands, and ~~TV/Film/Entertainment.~~Non-Hasbro Branded Film & TV. We believe these collectively depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. See note 13 for further information.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(3) Earnings (Loss) Per Share

Net earnings (loss) per share data for the quarters ended April 2, 2023 and ~~nine months ended September 25,~~March 27, 2022 ~~and September 26, 2021~~ were computed as follows:

2022 2021
Quarter Basic Diluted Basic Diluted
Net earnings attributable to Hasbro, Inc. $ 129.2 129.2 $ 253.2 253.2
Average shares outstanding 138.3 138.3 138.1 138.1
Effect of dilutive securities:
Options and other share-based awards — 0.2 — 0.4
Equivalent Shares 138.3 138.5 138.1 138.5
Net earnings attributable to Hasbro, Inc. per common share $ 0.93 0.93 $ 1.83 1.83


		2022				2021					2023			2022
Nine Months		Basic		Diluted		Basic		Diluted
Net earnings attributable to Hasbro, Inc.		$	332.4	$	332.4	$	346.5	$	346.5
Quarter										Quarter	Basic		Diluted	Basic		Diluted
Net (loss) earnings attributable to Hasbro, Inc.										Net (loss) earnings attributable to Hasbro, Inc.	$	(22.1)	(22.1)	$	61.2	61.2

Average shares outstanding	Average shares outstanding	138.9		138.9		137.9		137.9		Average shares outstanding	138.6		138.6	139.3		139.3
Effect of dilutive securities:	Effect of dilutive securities:									Effect of dilutive securities:
Options and other share-based awards	Options and other share-based awards	—		0.2		—		0.4		Options and other share-based awards	—		—	—		0.3
Equivalent Shares	Equivalent Shares	138.9		139.1		137.9		138.3		Equivalent Shares	138.6		138.6	139.3		139.6

Net earnings attributable to Hasbro, Inc. per common share		$	2.39	$	2.39	$	2.51	$	2.51
Net (loss) earnings attributable to Hasbro, Inc. per common share										Net (loss) earnings attributable to Hasbro, Inc. per common share	$	(0.16)	(0.16)	$	0.44	0.44

For the ~~quarter~~quarters ended April 2, 2023 and ~~nine months ended September 25,~~March 27, 2022, options and restricted stock units totaling ~~2.9~~4.2 million and ~~2.8~~2.5 million, respectively, were excluded from the calculation of diluted earnings per share because to include them would have been anti-dilutive. ~~For~~Of the fiscal 2023 amount, 2.0 million shares would have been included in the calculation of diluted shares had the Company not had a net loss for the quarter ~~and nine months~~ ended ~~September 26, 2021,~~April 2, 2023. Assuming that these options and restricted stock units ~~totaling 2.1~~were included, under the treasury stock method, they would have resulted in an additional 0.1 million ~~and 2.2 million, respectively, were excluded from~~shares being included in the ~~calculation of~~ diluted earnings per share ~~because to include them would have been anti-dilutive.~~calculation for the quarter ended April 2, 2023.

~~Condensed Notes to Consolidated Financial Statements~~

~~(Millions of Dollars and Shares Except Per Share Data)~~

(4) Goodwill

During the first quarter of 2021, the Company realigned its financial reporting structure creating the following three principal reportable segments: Consumer Products, Wizards of the Coast and Digital Gaming and Entertainment. In our realignment, some, but not all, of our reporting units were changed. As a result of these changes, during 2021, the Company reallocated its goodwill among the revised reporting units based on the change in relative fair values of the respective reporting units.

Changes in the carrying amount of goodwill, by operating segment, for the ~~nine month periods~~quarters ended ~~September 25,~~April 2, 2023 and March 27, 2022 ~~and September 26, 2021~~ are as follows:

Consumer Products Wizards of the Coast and Digital Gaming Entertainment Total
2022
Balance at December 26, 2021 $ 1,584.9 307.3 1,527.4 $ 3,419.6
Acquired during the period — 64.7 — 64.7
Foreign exchange translation (0.4) (0.5) (1.8) (2.7)
Impairment during the period — — (11.8) (11.8)
Balance at September 25, 2022 $ 1,584.5 371.5 1,513.8 $ 3,469.8


	Consumer Products		Wizards of the Coast and Digital Gaming	Entertainment	Total
2023
Balance at December 25, 2022	$	1,584.7	371.5	1,513.9	$	3,470.1




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

Consumer Products Wizards of the Coast and Digital Gaming Entertainment Total
2021
Balance at December 27, 2020 $ 1,385.7 53.1 2,252.9 $ 3,691.7
Goodwill allocation 199.4 254.2 (453.6) —
Foreign exchange translation (0.1) 0.2 (0.6) (0.5)
Impairment during the period — — (101.8) (101.8)
Goodwill associated with the disposal of business — — (169.2) (169.2)
Balance at September 26, 2021 $ 1,585.0 307.5 1,527.7 $ 3,420.2


	Consumer Products		Wizards of the Coast and Digital Gaming	Entertainment	Total
2022
Balance at December 26, 2021	$	1,584.9	307.3	1,527.4	$	3,419.6
Foreign exchange translation	(0.1)		0.2	(0.4)	(0.3)
Balance at March 27, 2022	$	1,584.8	307.5	1,527.0	$	3,419.3

During the third quarter of 2022, the Company determined to exit certain non-core businesses within the Entertainment segment resulting in the classification of certain assets as Assets Held for Sale. A revaluation of the effected businesses resulted in a pre-tax non-cash goodwill impairment charge of $11.8 million, recorded within Loss on Assets Held for Sale in the Consolidated Statement of Operations, and within the Entertainment segment for the quarter ended September 25, 2022.

On May 19, 2022, the Company completed its acquisition of D&D Beyond for $146.3 million, which was funded with cash on hand. Based on the valuation of these assets, $64.7 million was allocated to goodwill within the Wizards of the Coast and Digital Gaming segment during the second quarter of 2022.

During the second quarter of 2021, the Company entered into a definitive agreement to sell eOne Music. Based on the value of the net assets held by eOne Music, which included goodwill and intangible assets allocated to eOne Music as part of the eOne Acquisition, the Company recorded a pre-tax non-cash goodwill impairment charge of $101.8 million, during the second quarter of 2021, within Loss on Disposal of Business in the Consolidated Statements of Operations, and within the Entertainment segment. On June 29, 2021, during the Company's fiscal third quarter, the eOne Music sale was completed and associated goodwill and intangible assets were removed from the consolidated financial statements.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(5) Other Comprehensive Earnings (Loss)

Components of other comprehensive earnings (loss) are presented within the consolidated statements of comprehensive ~~earnings.~~earnings (loss). The following table presents the related tax effects on changes in other comprehensive earnings (loss) for the quarters ended April 2, 2023 and ~~nine months ended September 25, 2022 and September 26, 2021.~~March 27, 2022.


		Quarter Ended			Nine months ended				Quarter Ended
		September 25, 2022		September 26, 2021	September 25, 2022		September 26, 2021		April 2, 2023		March 27, 2022

Other comprehensive earnings (loss), tax effect:	Other comprehensive earnings (loss), tax effect:							Other comprehensive earnings (loss), tax effect:
Tax expense on unrealized holding gains	Tax expense on unrealized holding gains	$	—	0.1	$	0.1	—	Tax expense on unrealized holding gains	$	—	$	(0.1)
Tax expense on cash flow hedging activities		(1.7)		(0.3)	(2.1)		(0.7)
Tax benefit on cash flow hedging activities								Tax benefit on cash flow hedging activities	1.2		0.9

Reclassifications to earnings, tax effect:	Reclassifications to earnings, tax effect:							Reclassifications to earnings, tax effect:
Tax expense (benefit) on cash flow hedging activities	Tax expense (benefit) on cash flow hedging activities	0.6		(0.3)	0.5		(0.3)	Tax expense (benefit) on cash flow hedging activities	0.1		(0.2)

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

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

Total tax effect on other comprehensive earnings								Total tax effect on other comprehensive earnings	$	1.3	$	0.6

Changes in the components of accumulated other comprehensive earnings (loss), net of tax for the ~~nine months~~quarters ended ~~September 25,~~April 2, 2023 and March 27, 2022 ~~and September 26, 2021~~ are as follows:


									Pension and Postretirement Amounts		Gains (Losses) on Derivative Instruments	Unrealized Holding Gains (Losses) on Available- for-Sale Securities	Foreign Currency Translation Adjustments	Total Accumulated Other Comprehensive Loss
2023								2023
Balance at December 25, 2022								Balance at December 25, 2022	$	(3.0)	(12.0)	(0.1)	(239.8)	$	(254.9)
Current period other comprehensive earnings (loss)								Current period other comprehensive earnings (loss)	(0.1)		(6.7)	—	24.3	17.5
Balance at April 2, 2023								Balance at April 2, 2023	$	(3.1)	(18.7)	(0.1)	(215.5)	$	(237.4)
		Pension and Postretirement Amounts		Gains (Losses) on Derivative Instruments	Unrealized Holding Gains (Losses) on Available- for-Sale Securities	Foreign Currency Translation Adjustments	Total Accumulated Other Comprehensive Loss
2022	2022							2022
Balance at December 26, 2021	Balance at December 26, 2021	$	(35.1)	(6.0)	0.2	(194.4)	(235.3)	Balance at December 26, 2021	$	(35.1)	(6.0)	0.2	(194.4)	$	(235.3)
Current period other comprehensive earnings (loss)		0.3		13.4	(0.3)	(103.0)	(89.6)
Balance at September 25, 2022		$	(34.8)	7.4	(0.1)	(297.4)	(324.9)

2021
Balance at December 27, 2020		$	(40.7)	(22.1)	0.3	(132.5)	(195.0)

Current period other comprehensive earnings (loss)	Current period other comprehensive earnings (loss)	0.6		9.5	(0.1)	(23.6)	(13.6)	Current period other comprehensive earnings (loss)	0.1		(1.2)	0.2	(10.7)	(11.6)
Balance at September 26, 2021		$	(40.1)	(12.6)	0.2	(156.1)	(208.6)
Balance at March 27, 2022								Balance at March 27, 2022	$	(35.0)	(7.2)	0.4	(205.1)	$	(246.9)

Gains (Losses) on Derivative Instruments

At ~~September 25, 2022,~~April 2, 2023, the Company had remaining net deferred ~~gains~~losses on foreign currency forward contracts, net of tax, of ~~$22.4~~$4.0 million in accumulated other comprehensive earnings (loss) ("AOCE"). These instruments hedge payments related to inventory purchased in the ~~third~~first quarter of ~~2022~~2023 or forecasted to be purchased during the remainder of ~~2022 through~~ 2023, intercompany expenses expected to be paid or received during ~~2022,~~2023, television and movie production costs paid in ~~2022~~2023 or expected to be paid in ~~2023 or~~ 2024, and cash receipts for sales made at the end of the ~~third~~first quarter of ~~2022~~2023 or forecasted to be made in the remainder of ~~2022.~~2023. These amounts will be reclassified into the consolidated statements of operations upon the sale of the related inventory, the recognition of the related production costs or the recognition of the related sales or intercompany expenses to be paid or received.

~~Condensed Notes to Consolidated Financial Statements~~

~~(Millions of Dollars and Shares Except Per Share Data)~~

In addition to foreign currency forward contracts, the Company entered into hedging contracts on future interest payments related to the 3.15% Notes that were repaid in full in the aggregate principal amount of $300.0 million ~~during the first quarter of~~in 2021 (See note 7), and the 5.10% Notes due 2044. At the date of debt issuance, these contracts were terminated and the fair value on the date of settlement was deferred in AOCE and is being amortized to interest expense over the life of the related notes using the effective interest rate method. At ~~September 25, 2022,~~April 2, 2023, deferred losses, net of tax of ~~$15.0~~$14.7 million related to these instruments remained in AOCE. For each of the quarters ended ~~September 25,~~April 2, 2023 and March 27, 2022, ~~and September 26, 2021,~~ previously deferred losses of $0.2 million related to these instruments were reclassified from AOCE to net earnings. ~~For the nine-month periods ended September 25, 2022~~

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and ~~September 26, 2021, previously deferred losses of $0.5 million and $1.0 million, respectively, related to these instruments were reclassified from AOCE to net earnings.~~Shares Except Per Share Data)

Of the net deferred ~~gains~~losses included in AOCE at ~~September 25, 2022,~~April 2, 2023, the Company expects net ~~gains~~losses of approximately ~~$22.4~~$4.2 million to be reclassified to the consolidated statements of operations within the next 12 months. However, the amount ultimately realized in earnings is dependent on the fair value of the hedging instruments on the settlement dates.

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

(6) Accrued Liabilities

Components of accrued liabilities for the periods ended ~~September~~April 2, 2023, March 27, 2022 and December 25, 2022 ~~September 26, 2021 and December 26, 2021~~ were as follows:

September 25, 2022 September 26, 2021 December 26, 2021
Participations and residuals $ 266.7 $ 272.9 $ 299.1
Royalties 238.4 203.9 253.0
Deferred revenue 132.2 147.0 114.1
Dividends 96.7 93.8 94.0
Other taxes 69.2 69.9 95.0
Advertising 103.5 148.5 60.4
Cancellation charges 65.5 50.5 57.2
Severance 39.1 33.0 32.0
Accrued Expenses IIC & IIP 51.9 52.9 74.9
Freight 47.7 72.6 107.5
Accrued income taxes 58.6 55.3 30.9
Lease liability - Current 40.4 43.9 43.9
Bonus accrual 70.4 128.5 168.5
General vendor accruals 44.1 36.3 29.8
Interest 38.7 38.8 30.0
Accrued salaries 28.0 15.1 27.6
Defined contribution plans 26.7 33.1 31.0
Production payables 23.8 26.0 14.3
Other 95.9 141.7 111.6
Total accrued liabilities $ 1,537.5 $ 1,663.7 $ 1,674.8


	April 2, 2023		March 27, 2022		December 25, 2022
Participations and residuals	$	275.7	$	301.4	$	300.2
Royalties	131.0		162.0		195.4
Deferred revenue	113.7		97.6		111.3
Dividends	97.0		97.6		96.7
Cancellation charges	84.6		55.7		89.2
Severance	82.4		27.6		100.3
Other taxes	71.6		74.1		82.1
Accrued expenses - IIP & IIC	60.6		70.7		80.8
General vendor accruals	50.1		32.6		44.3
Interest	40.8		38.8		31.0
Lease liability - current	37.9		45.0		39.6
Advertising	36.7		58.6		53.2
Accrued income taxes	33.5		33.1		44.8
Freight	22.7		65.6		28.5
Payroll and management incentives	15.4		56.9		66.7





Other	140.1		154.1		142.7
Total accrued liabilities	$	1,293.8	$	1,371.4	$	1,506.8

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(7) Financial Instruments

The Company's financial instruments include cash and cash equivalents, accounts receivable, short-term borrowings, accounts payable and certain accrued liabilities. At ~~September~~April 2, 2023, March 27, 2022 and December 25, 2022, ~~September 26, 2021 and December 26, 2021,~~ the carrying cost of these instruments approximated their fair value. The Company's financial instruments at ~~September~~April 2, 2023, March 27, 2022 and December 25, 2022 ~~September 26, 2021 and December 26, 2021~~ also include certain assets and liabilities measured at fair value (see notes 10 and 11) as well as long-term borrowings. The carrying costs, which are equal to the outstanding principal amounts, and fair values of the Company's long-term borrowings as of ~~September~~April 2, 2023, March 27, 2022 and December 25, 2022 ~~September 26, 2021 and December 26, 2021~~ are as follows:

September 25, 2022 September 26, 2021 December 26, 2021
Carrying
Cost Fair
Value Carrying
Cost Fair
Value Carrying
Cost Fair
Value
3.90% Notes Due 2029 $ 900.0 804.6 $ 900.0 1,001.7 $ 900.0 991.7
3.55% Notes Due 2026 675.0 633.4 675.0 737.2 675.0 725.6
3.00% Notes Due 2024 500.0 481.1 500.0 529.1 500.0 521.2
6.35% Notes Due 2040 500.0 497.8 500.0 702.3 500.0 692.8
3.50% Notes Due 2027 500.0 461.5 500.0 546.2 500.0 539.2
5.10% Notes Due 2044 300.0 258.3 300.0 375.0 300.0 374.5
6.60% Debentures Due 2028 109.9 114.1 109.9 137.2 109.9 136.7
Variable % Notes Due December 30, 2024 (1)
325.0 325.0 505.0 505.0 397.5 397.5
Production Financing Facilities 62.6 62.6 204.7 204.7 170.1 170.1
Total long-term debt $ 3,872.5 3,638.4 $ 4,194.6 4,738.4 $ 4,052.5 4,549.3
Less: Deferred debt expenses 24.8 — 29.6 — 28.2 —
Less: Current portion 122.6 — 187.6 — 200.1 —
Long-term debt $ 3,725.1 3,638.4 $ 3,977.4 4,738.4 $ 3,824.2 4,549.3

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


	April 2, 2023			March 27, 2022			December 25, 2022
	Carrying Cost		Fair Value	Carrying Cost		Fair Value	Carrying Cost		Fair Value
3.90% Notes Due 2029	$	900.0	817.3	$	900.0	901.7	$	900.0	808.2
3.55% Notes Due 2026	675.0		634.2	675.0		677.2	675.0		635.3
3.00% Notes Due 2024	500.0		482.8	500.0		498.0	500.0		482.2
6.35% Notes Due 2040	500.0		501.7	500.0		604.2	500.0		498.4
3.50% Notes Due 2027	500.0		470.8	500.0		496.5	500.0		465.8

5.10% Notes Due 2044	300.0		261.2	300.0		321.7	300.0		261.1

6.60% Debentures Due 2028	109.9		112.8	109.9		125.4	109.9		112.1

Variable % Notes Due December 30, 2024	280.0		280.0	340.0		340.0	310.0		310.0
Production Financing Facilities	49.0		49.0	95.8		95.8	53.2		53.2
Total long-term debt	$	3,813.9	3,609.8	$	3,920.7	4,060.5	$	3,848.1	3,626.3
Less: Deferred debt expenses	22.5		—	27.0		—	23.7		—
Less: Current portion	109.0		—	155.8		—	113.2		—
Long-term debt	$	3,682.4	3,609.8	$	3,737.9	4,060.5	$	3,711.2	3,626.3

In November 2019, in conjunction with the Company's acquisition of eOne, the Company issued an aggregate of $2.4 billion of senior unsecured debt securities (the "Notes") consisting of the following tranches: $300.0 million of notes due 2022 (the "2022 Notes") that bear interest at a fixed rate of 2.60%, $500.0 million of notes due 2024 (the "2024 Notes") that bear interest at a fixed rate of 3.00%, $675.0 million of notes due 2026 (the "2026 Notes") that bear interest at a fixed rate of 3.55% and $900.0 million of notes due 2029 (the "2029 Notes") that bear interest at a fixed rate of 3.90%. Net proceeds from the issuance of the Notes, after deduction of $20.0 million of underwriting discount and fees, totaled $2.4 billion. These costs are being amortized over the life of the Notes outstanding, which range from five years to ten years from the date of issuance. During 2021, the Company repaid in full the $300.0 million of 2022 Notes and recorded $9.1 million of debt extinguishment costs within other expense (income) in the Consolidated Statements of Operations.

The Notes bear interest at the stated rates but may be subject to upward adjustment if the credit rating of the Company is reduced by Moody's or Standard & Poors. The adjustment can be from 0.25% to 2.00% based on the extent of the ratings decrease. The Company may redeem the Notes at its option at the greater of the principal amount of the Notes or the present value of the remaining scheduled payments discounted using the effective interest rate on applicable U.S. Treasury bills at the time of repurchase, plus (1) 25 basis points (in the case of the 2024 Notes); (2) 30 basis points (in the case of the 2026 Notes); and (3) 35 basis points (in the case of the 2029 Notes). In addition, on and after October 19, 2024 for the 2024 Notes, September 19, 2026 for the 2026 Notes and August 19, 2029 for the 2029 Notes, such series of Notes will be redeemable, in whole at any time or in part from time to time, at the Company's option at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus any accrued and unpaid interest.

~~Condensed Notes to Consolidated Financial Statements~~

~~(Millions of Dollars and Shares Except Per Share Data)~~

In September 2019, the Company entered into a $1.0 billion Term Loan Agreement (the "Term Loan Agreement”) with Bank of America N.A. (“Bank of America”), as administrative agent, and certain financial institutions as lenders, pursuant to which such lenders committed to provide, contingent upon the completion of the eOne Acquisition and certain other customary conditions to funding, (1) a three-year senior unsecured term loan facility in an aggregate principal amount of $400.0 million (the “Three-Year Tranche”) and (2) a five-year senior unsecured term loan facility in an aggregate principal amount of $600.0 million (the “Five-Year Tranche” and together with the Three-Year Tranche, the “Term Loan Facilities”). The full amount of the Term Loan Facilities was drawn down on December 30, 2019, the closing date of the eOne Acquisition. As of September 25, 2022, the Company has fully repaid the Three-Year Tranche $400.0 million principal term loan, and of the Five-Year Tranche $600.0 million principal balance, the Company has repaid a total of ~~$275.0~~$320.0 million in the following increments: $22.5 million in 2020; $180.0 million in 2021; $87.5 million in 2022; and ~~$72.5~~$30.0 million of principal amortization payments in the first ~~nine months~~quarter of ~~2022, consisting~~2023.

Condensed Notes to Consolidated Financial Statements

(Millions of ~~$50.0 million of the principal balance~~Dollars and ~~principal amortization payments of $22.5 million.~~Shares Except Per Share Data)

Loans under the remaining Five-Year Tranche bear interest at the Company’s option, at either the ~~Eurocurrency~~adjusted Term Secured Overnight Financing Rate ("SOFR"), plus an applicable margin, or the Base Rate, plus a per annum applicable rate that fluctuates between 100.0 basis points and 187.5 basis points, in the case of loans priced at the ~~Eurocurrency Rate,~~SOFR, and between 0.0 basis points and 87.5 basis points, in the case of loans priced at the Base Rate, in each case, based upon the non-credit enhanced, senior unsecured long-term debt ratings of the Company by Fitch Ratings Inc., Moody’s Investor Service, Inc. and S&P Global Rankings, subject to certain provisions taking into account potential differences in ratings issued by the relevant rating agencies or a lack of ratings issued by such rating agencies. Loans under the Five-Year Tranche require principal amortization payments that are payable in equal quarterly installments of 5.0% per annum of the original principal amount thereof for each of the first two years after funding, increasing to 10.0% per annum of the original principal amount thereof for each subsequent year. The Term Loan Agreement contains affirmative and negative covenants typical of this type of facility, including: (i) restrictions on the Company’s and its domestic subsidiaries’ ability to allow liens on their assets, (ii) restrictions on the incurrence of indebtedness, (iii) restrictions on the Company’s and certain of its subsidiaries’ ability to engage in certain mergers, (iv) the requirement that the Company maintain a Consolidated Interest Coverage Ratio of no less than 3.00:1.00 as of the end of any fiscal quarter and (v) the requirement that the Company maintain a Consolidated Total Leverage Ratio of no more than, depending on the gross proceeds of equity securities issued after the effective date of the acquisition of eOne, 5.65:1.00 or 5.40:1.00 for each of the first, second and third fiscal quarters ended after the funding of the Term Loan Facilities, with periodic step downs to 3.50:1.00 for the fiscal quarter ending December 31, 2023 and thereafter. As of ~~September 25, 2022~~April 2, 2023, the Company was in compliance with the financial covenants contained in the Term Loan Agreement.

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

Current portion of long-term debt at ~~September 25, 2022~~April 2, 2023 of ~~$122.6~~$109.0 million, as shown on the consolidated balance sheet, represents the current portion of required quarterly principal amortization payments for the Five-Year Tranche of the Term Loan Facilities and production financing facilities. All of the Company’s other long-term borrowings have contractual maturities that occur subsequent to 2023 with the exception of certain of the Company's production financing facilities and annual principal payments related to the Term Loan Facilities.

The fair values of the Company's long-term debt are considered Level 3 fair values (see note 10 for further discussion of the fair value hierarchy) and are measured using the discounted future cash flows method. In addition to the debt terms, the valuation methodology includes an assumption of a discount rate that approximates the current yield on a similar debt security. This assumption is considered an unobservable input in that it reflects the Company's own assumptions about the inputs that market participants would use in pricing the asset or liability. The Company believes that this is the best information available for use in the fair value measurement.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

Production Financing

In addition to the Company's financial instruments, the Company uses production financing facilities to fund its film and television productions which are arranged on an individual production basis by either special purpose production subsidiaries, each secured by future revenues of such production subsidiaries, which are non-recourse to the Company's assets, or through a senior revolving credit facility dedicated to production financing obtained in November 2021. The Company's senior revolving film and television production credit facility (the “RPCF”) with MUFG Union Bank, N.A., as administrative agent and lender and certain other financial institutions, as lenders thereto (the “Revolving Production Financing Agreement”) provides the Company with commitments having a maximum aggregate principal amount of $250.0 million. The Revolving Production Financing Agreement also provides the Company with the option to request a commitment increase up to an aggregate additional amount of $150.0 million subject to agreement of the lenders. The Revolving Production Financing Agreement extends through November 22, 2024. The Company uses the RPCF to fund certain of the Company’s original film and TV production costs. Borrowings under the RPCF are non-recourse to the Company's assets. Going forward, the Company expects to utilize the RPCF for the majority of its production financing needs.

Production financing facilities typically have maturities of less than two years, while the titles are in production, and are repaid once delivered and all credits, broadcaster pre-sales and international sales have been received. The production financing facilities as of ~~September~~April 2, 2023, March 27, 2022 and December 25, 2022 ~~September 26, 2021 and December 26, 2021~~ are as follows:

September 25, 2022 September 26, 2021 December 26, 2021
Production financing (net of cash)
Production financing facilities $ 184.9 $ 204.7 $ 170.1
Production financing included in the consolidated balance sheet as:
Non-current $ — $ 47.0 $ —
Current 184.9 157.7 170.1
Total $ 184.9 $ 204.7 $ 170.1


	April 2, 2023		March 27, 2022		December 25, 2022
Production financing facilities included in the consolidated balance sheet as:
Current liabilities	$	183.5	$	199.1	$	195.6

Interest is charged at bank prime rate plus a margin based on the risk of the respective production. The weighted average interest rate on all production financing as of ~~September 25, 2022~~April 2, 2023 was ~~2.5%~~5.9%.

The Company has Canadian dollar and U.S. dollar production financing loans with various banks. The carrying amounts are denominated in the following currencies:

Canadian Dollars U.S. Dollars Total
As of September 25, 2022 $ 19.3 $ 43.3 $ 62.6


	Canadian Dollars		U.S. Dollars		Total
As of April 2, 2023	$	14.8	$	168.7	$	183.5

The following table represents the movements in production financing loans during the first ~~nine months~~quarter of ~~2022:~~2023:

Production Financing

December ~~26, 2021~~25, 2022

~~170.1~~195.6

Drawdowns

~~204.5~~42.8

Repayments

~~(189.2)~~(54.8)

Foreign exchange differences

~~(0.5)~~(0.1)

Balance at ~~September 25, 2022~~April 2, 2023

~~184.9~~183.5

The Company expects to repay all of its currently outstanding production financing loans by the ~~third~~first quarter of ~~2023.~~2024.

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

Investments in productions and investments in acquired content rights are predominantly monetized on a title-by-title basis and are recorded within other assets in the Company's consolidated balance sheets, to the extent they are considered recoverable against future revenues. These amounts are being amortized to program cost amortization using a model that reflects the consumption of the asset as it is released through various channels including broadcast licenses, theatrical release and home entertainment. Amounts capitalized are reviewed periodically on an individual title basis and any portion of the unamortized

~~Condensed Notes to Consolidated Financial Statements~~

~~(Millions of Dollars and Shares Except Per Share Data)~~

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

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

The Company's unamortized investments in productions and investments in acquired content rights consisted of the following at ~~September 25,~~April 2, 2023, March 27, 2022, ~~September 26, 2021,~~ and December ~~26, 2021:~~25, 2022:


		September 25, 2022		September 26, 2021		December 26, 2021			April 2, 2023		March 27, 2022		December 25, 2022
Investment in Films and Television Programs:	Investment in Films and Television Programs:							Investment in Films and Television Programs:
Individual Monetization	Individual Monetization							Individual Monetization
Released, net of amortization	Released, net of amortization	$	486.3	$	512.6	$	481.7	Released, net of amortization	$	613.3	$	489.1	$	584.5
Completed and not released	Completed and not released	1.2		20.1		18.5		Completed and not released	53.0		12.7		23.3
In production	In production	176.9		202.1		151.6		In production	85.8		157.8		199.4
Pre-production	Pre-production	109.7		91.9		84.0		Pre-production	126.4		87.7		41.3
		774.1		826.7		735.8			878.5		747.3		848.5
Film/TV Group Monetization ~~(1)~~	Film/TV Group Monetization ~~(1)~~							Film/TV Group Monetization ~~(1)~~
Released, net of amortization	Released, net of amortization	24.5		—		32.2		Released, net of amortization	17.6		31.5		25.8

In production	In production	24.5		—		13.0		In production	24.0		15.8		22.2

		49.0		—		45.2			41.6		47.3		48.0
Investment in Other Programming	Investment in Other Programming							Investment in Other Programming
Released, net of amortization	Released, net of amortization	12.9		3.9		5.3		Released, net of amortization	13.2		5.2		9.8
Completed and not released	Completed and not released	0.3		0.4		0.4		Completed and not released	—		0.4		—
In production	In production	8.4		5.9		12.6		In production	8.2		14.4		11.8
Pre-production	Pre-production	1.5		2.5		1.7		Pre-production	3.9		1.8		3.3
		23.1		12.7		20.0			25.3		21.8		24.9

Total Program Investments	Total Program Investments	$	846.2	$	839.4	$	801.0	Total Program Investments	$	945.4	$	816.4	$	921.4

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

The Company recorded ~~$365.7~~$122.5 million of program cost amortization related to released programming in the ~~nine months~~quarter ended ~~September 25, 2022,~~April 2, 2023, consisting of the following:

Investment in Production Investment in Content Other Total
Program cost amortization $ 321.8 $ 43.9 $ — $ 365.7


	Investment in Production		Investment in Content		Total
Program cost amortization	$	110.9	$	11.6	$	122.5

(9) Income Taxes

The Company and its subsidiaries file income tax returns in the United States and various state and international jurisdictions. In the normal course of business, the Company is regularly audited by U.S. federal, state and local, and international tax authorities in various tax jurisdictions.

Our effective tax rate ("ETR") from continuing operations was ~~22.1%~~(3.4)% for the ~~nine months~~quarter ended ~~September 25, 2022~~April 2, 2023 and ~~29.0%~~21.6% for the ~~nine months~~quarter ended ~~September 26, 2021.~~March 27, 2022.

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

•during the ~~nine months~~quarter ended ~~September 25,~~April 2, 2023, the Company recorded a net discrete tax expense of $3.3 million, primarily associated with stock-based compensation coupled with a pre-tax loss for the quarter; and

•during the quarter ended March 27, 2022, the Company recorded a net discrete tax benefit of ~~$6.7~~$2.3 million, primarily associated with ~~(i)~~ the release of certain valuation allowances during the first quarter; (ii) the decrease to our liability for uncertain tax positions that resulted from statutes of limitations expiring in certain jurisdictions; and (iii) a benefit on the loss of assets held for sale in the third quarter; andquarter.

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

~~Condensed Notes to Consolidated Financial Statements~~

~~(Millions of Dollars and Shares Except Per Share Data)~~

19% to 25% as of April 1, 2023; (ii) a one-time tax charge related to an ongoing tax audit; (iii) release of a valuation allowance on net operating losses that offset income received from a one-time legal settlement; and (iv) certain tax benefits, including the reversal of uncertain tax positions and operational tax planning. The year-to-date 2021 ETR also included a goodwill impairment charge on the sale of the eOne Music from which there was no corresponding tax benefit.

In May 2019, a public referendum held in Switzerland approved the Swiss Federal Act on Tax Reform and AHV Financing ("TRAF") proposals previously approved by the Swiss Parliament. The Swiss tax reform measures were effective on January 1, 2020. Changes in tax reform include the abolishment of preferential tax regimes for holding companies, domicile companies and mixed companies at the cantonal level. The enacted changes in Swiss federal and cantonal tax, including cantonal transitional provisions adopted in 2021, were not material to the Company's financial statements.

The Company is no longer subject to U.S. federal income tax examinations for years before 2012. With few exceptions, the Company is no longer subject to U.S. state or local and non-U.S. income tax examinations by tax authorities in its major jurisdictions for years before 2016. The Company is currently under income tax examination by the Internal Revenue Service and in several U.S. state and local and non-U.S. jurisdictions.

On August 16, 2022, President Biden signed into law the Inflation Reduction Act, which included various tax provisions. The two main tax provisions, a 15% alternative corporate minimum tax based on financial statement income

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and ~~a 1% excise tax on corporate stock buy backs, are not expected to have a material impact to the Company.~~Shares Except Per Share Data)

(10) Fair Value of Financial Instruments

The Company measures certain financial instruments at fair value. The fair value hierarchy consists of three levels: Level 1 fair values are based on quoted market prices in active markets for identical assets or liabilities that the entity has the ability to access; Level 2 fair values are those based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities; and Level 3 fair values are based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. There have been transfers between levels within the fair value hierarchy.

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

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

At ~~September~~April 2, 2023, March 27, 2022 and December 25, 2022, ~~September 26, 2021 and December 26, 2021,~~ the Company had the following assets and liabilities measured at fair value in its consolidated balance sheets (excluding assets for which the fair value is measured using net asset value per share):


		Fair Value Measurements Using:						Fair Value Measurements Using:
		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
September 25, 2022
April 2, 2023							April 2, 2023
Assets:	Assets:						Assets:
Available-for-sale securities	Available-for-sale securities	$	—	—	—	—	Available-for-sale securities	$	1.3	1.3	—	—
Derivatives	Derivatives	38.8		—	38.8	—	Derivatives	3.2		—	3.2	—
Total assets	Total assets	$	38.8	—	38.8	—	Total assets	$	4.5	1.3	3.2	—

Liabilities:	Liabilities:						Liabilities:
Derivatives	Derivatives	$	0.4	—	0.4	—	Derivatives	$	5.2	—	5.2	—
Option agreement	Option agreement	1.7		—	—	1.7	Option agreement	1.7		—	—	1.7
Total liabilities	Total liabilities	$	2.1	—	0.4	1.7	Total liabilities	$	6.9	—	5.2	1.7

September 26, 2021
March 27, 2022							March 27, 2022
Assets:	Assets:						Assets:
Available-for-sale securities	Available-for-sale securities	$	2.0	2.0	—	—	Available-for-sale securities	$	1.6	1.6	—	—
Derivatives	Derivatives	9.8		—	9.8	—	Derivatives	9.9		—	9.9	—
Total assets	Total assets	$	11.8	2.0	9.8	—	Total assets	$	11.5	1.6	9.9	—

Liabilities:	Liabilities:						Liabilities:
Derivatives	Derivatives	$	1.7	—	1.7	—	Derivatives	$	4.6	—	4.6	—
Option agreement	Option agreement	21.8		—	—	21.8	Option agreement	1.7		—	—	1.7
Total liabilities	Total liabilities	$	23.5	—	1.7	21.8	Total liabilities	$	6.3	—	4.6	1.7

December 26, 2021
December 25, 2022							December 25, 2022
Assets:	Assets:						Assets:
Available-for-sale securities	Available-for-sale securities	$	1.9	1.9	—	—	Available-for-sale securities	$	1.7	1.7	—	—
Derivatives	Derivatives	10.9		—	10.9	—	Derivatives	7.9		—	7.9	—
Total assets	Total assets	$	12.8	1.9	10.9	—	Total assets	$	9.6	1.7	7.9	—

Liabilities:	Liabilities:						Liabilities:
Derivatives	Derivatives	$	2.6	—	2.6	—	Derivatives	$	2.9	—	2.9	—
Option agreement	Option agreement	1.7		—	—	1.7	Option agreement	1.7		—	—	1.7
Total Liabilities	Total Liabilities	$	4.3	—	2.6	1.7	Total Liabilities	$	4.6	—	2.9	1.7

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

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

The Company's derivatives consist of foreign currency forward and option contracts. The Company uses current forward rates of the respective foreign currencies to measure the fair value of these contracts. The Company’s option agreement relates to an equity method investment in Discovery Family Channel ("Discovery"). The option agreement is included in other liabilities at ~~September~~April 2, 2023, March 27, 2022 and December 25, 2022, ~~September 26, 2021 and December 26, 2021,~~ and is valued using an option pricing model based on the fair value of the related investment. Inputs used in the option pricing model include the volatility and fair value of the underlying company which are considered unobservable inputs as they reflect the Company's own assumptions about the inputs that market participants would use in pricing the asset or liability. The Company believes that this is the best information available for use in the fair value measurement. ~~Due to the 2021 revaluation of the Discovery investment and resulting impairment charges, the Company reduced the option's fair value by $20.1 million during the fourth quarter of 2021.~~ There were no changes in these valuation techniques during the quarter ended ~~September 25, 2022.~~April 2, 2023.

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

2022 2021
Balance at beginning of year $ (1.7) $ (20.6)
Gain from change in fair value — (1.2)
Balance at end of third quarter $ (1.7) $ (21.8)


	2023		2022
Balance at beginning of year	$	(1.7)	$	(1.7)

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

(11) Derivative Financial Instruments

Hasbro uses foreign currency forward contracts and foreign exchange option contracts to mitigate the impact of currency rate fluctuations on firmly committed and projected future foreign currency transactions. These over-the-counter contracts, which hedge future currency requirements related to purchases of inventory, product sales, television and film production cost and production financing loans (see note 7) as well as other cross-border transactions not denominated in the functional currency of the business unit, are primarily denominated in United States and Hong Kong dollars, and Euros. All contracts are entered into with a number of counterparties, all of which are major financial institutions. The Company believes that a default by a single counterparty would not have a material adverse effect on the financial condition of the Company. Hasbro does not enter into derivative financial instruments for speculative purposes.

Cash Flow Hedges

All of the Company's designated foreign currency forward contracts are considered to be cash flow hedges. These instruments hedge a portion of the Company's currency requirements associated with anticipated inventory purchases, product sales, certain production financing loans and other cross-border transactions, primarily for the remainder of ~~2022,~~ 2023, and to a lesser extent, into 2024.

At ~~September~~April 2, 2023, March 27, 2022 and December 25, 2022, ~~September 26, 2021 and December 26, 2021,~~ the notional amounts and fair values of the Company's foreign currency forward contracts designated as cash flow hedging instruments were as follows:


		September 25, 2022			September 26, 2021			December 26, 2021				April 2, 2023			March 27, 2022			December 25, 2022
Hedged transaction	Hedged transaction	Notional Amount		Fair Value	Notional Amount		Fair Value	Notional Amount		Fair Value	Hedged transaction	Notional Amount		Fair Value	Notional Amount		Fair Value	Notional Amount		Fair Value
Inventory purchases	Inventory purchases	$	144.7	12.6	$	261.8	6.0	$	199.1	10.4	Inventory purchases	$	141.5	(5.1)	$	196.9	7.8	$	166.3	(2.7)
Sales	Sales	101.9		5.2	164.5		(0.5)	104.5		(1.9)	Sales	74.5		0.4	104.3		(2.4)	99.2		1.2
Production financing and other	Production financing and other	106.7		7.2	261.4		0.3	217.0		2.3	Production financing and other	123.7		0.8	188.0		2.5	116.8		1.5
Total	Total	$	353.3	25.0	$	687.7	5.8	$	520.6	10.8	Total	$	339.7	(3.9)	$	489.2	7.9	$	382.3	—

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

The Company has a master agreement with each of its counterparties that allows for the netting of outstanding forward contracts. The fair values of the Company's foreign currency forward contracts designated as cash flow hedges are recorded in the consolidated balance sheets at ~~September~~April 2, 2023, March 27, 2022 and December 25, 2022 ~~September 26, 2021 and December 26, 2021~~ as follows:


		September 25, 2022		September 26, 2021		December 26, 2021			April 2, 2023		March 27, 2022		December 25, 2022
Prepaid expenses and other current assets	Prepaid expenses and other current assets							Prepaid expenses and other current assets
Unrealized gains	Unrealized gains	$	24.5	$	8.6	$	13.8	Unrealized gains	$	2.7	$	12.7	$	4.3
Unrealized losses	Unrealized losses	(1.2)		(3.7)		(3.1)		Unrealized losses	(1.8)		(2.8)		(1.8)
Net unrealized gains	Net unrealized gains	$	23.3	$	4.9	$	10.7	Net unrealized gains	$	0.9	$	9.9	$	2.5

Other assets	Other assets							Other assets
Unrealized gains	Unrealized gains	$	1.9	$	2.0	$	0.2	Unrealized gains	$	—	$	—	$	0.3
Unrealized losses	Unrealized losses	(0.1)		(0.1)		—		Unrealized losses	—		—		—
Net unrealized gains	Net unrealized gains	$	1.8	$	1.9	$	0.2	Net unrealized gains	$	—	$	—	$	0.3

Accrued liabilities	Accrued liabilities							Accrued liabilities
Unrealized gains	Unrealized gains	$	0.9	$	0.3	$	—	Unrealized gains	$	2.5	$	0.9	$	1.6
Unrealized losses	Unrealized losses	(1.0)		(1.3)		(0.1)		Unrealized losses	(7.3)		(2.7)		(4.4)
Net unrealized losses	Net unrealized losses	$	(0.1)	$	(1.0)	$	(0.1)	Net unrealized losses	$	(4.8)	$	(1.8)	$	(2.8)

Other liabilities								Other liabilities
Unrealized gains								Unrealized gains	$	—	$	—	$	—
Unrealized losses								Unrealized losses	—		(0.2)		—
Net unrealized losses								Net unrealized losses	$	—	$	(0.2)	$	—

Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings (loss) to net earnings for the quarters ended April 2, 2023 and ~~nine months ended September 25,~~March 27, 2022 ~~and September 26, 2021~~ as follows:


		Quarter Ended				Nine Months Ended				Quarter Ended
		September 25, 2022		September 26, 2021		September 25, 2022		September 26, 2021		April 2, 2023		March 27, 2022
Statements of Operations Classification	Statements of Operations Classification								Statements of Operations Classification
Cost of sales	Cost of sales	$	5.9	$	(2.0)	$	8.5	(4.4)	Cost of sales	$	2.5	$	(0.4)
Net revenues	Net revenues	1.0		0.1		0.8		1.4	Net revenues	0.1		(0.4)
Other	Other	(0.2)		0.8		(0.9)		2.0	Other	(0.2)		(0.5)
Net realized (losses) gains	Net realized (losses) gains	$	6.7	$	(1.1)	$	8.4	(1.0)	Net realized (losses) gains	$	2.4	$	(1.3)

Undesignated Hedges

The Company also enters into foreign currency forward contracts to minimize the impact of changes in the fair value of intercompany loans due to foreign currency changes. The Company does not use hedge accounting for these contracts as changes in the fair values of these contracts are substantially offset by changes in the fair value of the intercompany loans. Additionally, to manage transactional exposure to fair value movements on certain monetary assets and liabilities denominated in foreign currencies, the Company has implemented a balance sheet hedging program. The Company does not use hedge accounting for these contracts as changes in the fair values of these contracts are offset by changes in the fair value of the balance sheet items. As of ~~September~~April 2, 2023, March 27, 2022 and December 25, 2022 ~~September 26, 2021 and December 26, 2021~~ the total notional amounts of the Company's undesignated derivative instruments were ~~$601.3~~$723.3 million, ~~$663.2~~$665.0 million and ~~$632.0~~$765.6 million, respectively.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

At ~~September~~April 2, 2023, March 27, 2022 and December 25, 2022, ~~September 26, 2021 and December 26, 2021,~~ the fair values of the Company's undesignated derivative financial instruments were recorded in the consolidated balance sheets as follows:


		September 25, 2022		September 26, 2021		December 26, 2021			April 2, 2023		March 27, 2022		December 25, 2022
Prepaid expenses and other current assets	Prepaid expenses and other current assets							Prepaid expenses and other current assets
Unrealized gains	Unrealized gains	$	19.6	$	6.5	$	—	Unrealized gains	$	6.5	$	—	$	10.9
Unrealized losses	Unrealized losses	(6.0)		(3.4)		—		Unrealized losses	(4.3)		—		(5.9)
Net unrealized gains	Net unrealized gains	$	13.6	$	3.1	$	—	Net unrealized gains	$	2.2	$	—	$	5.0

Accrued liabilities	Accrued liabilities							Accrued liabilities
Unrealized gains	Unrealized gains	$	—	$	—	$	3.5	Unrealized gains	$	—	$	6.6	$	—
Unrealized losses	Unrealized losses	(0.2)		(0.8)		(6.0)		Unrealized losses	(0.3)		(9.2)		—
Net unrealized losses	Net unrealized losses	$	(0.2)	$	(0.8)	$	(2.5)	Net unrealized losses	$	(0.3)	$	(2.6)	$	—

Total unrealized gains (losses), net	Total unrealized gains (losses), net	$	13.4	$	2.3	$	(2.5)	Total unrealized gains (losses), net	$	1.9	$	(2.6)	$	5.0

The Company recorded net gains (losses) of ~~$28.7~~$4.4 million and ~~$49.2~~$(2.6) million on these instruments to other (income) expense, net for the ~~quarter~~quarters ended April 2, 2023 and ~~nine months ended September 25,~~March 27, 2022, ~~respectively, and net gains of $3.6 million and $2.9 million for the quarter and nine months ended September 26, 2021,~~ respectively, relating to the change in fair value of such derivatives, substantially offsetting gains and losses from the change in fair value of intercompany loans to which the contracts relate.

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

(12) Leases

The Company occupies offices and uses certain equipment under various operating lease arrangements. The Company has no material finance leases. The Company's leases have remaining lease terms of 1 to 1715 years, some of which include options to extend lease terms or options to terminate current lease terms at certain times, subject to notice requirements set out in the lease agreement. Payments under certain of the lease agreements may be subject to adjustment based on a consumer price index or other inflationary indices. The lease liability for such lease agreements as of the adoption date, was based on fixed payments as of the adoption date. Any adjustments to these payments based on the related indices will be recorded to expense as incurred. Leases with an expected term of 12 months or less are not capitalized. Lease expense under such leases is recorded straight line over the life of the lease. The Company capitalizes non-lease components for equipment leases, but expenses non-lease components as incurred for real estate leases.

The rent expense under such arrangements and similar arrangements that do not qualify as leases under ASU 2016-02, net of sublease income amounted to ~~$24.2~~$23.5 million and ~~$67.4~~$22.3 million for the ~~quarter~~quarters ended April 2, 2023 and ~~nine months ended September 25,~~March 27, 2022, ~~respectively, and $21.8 million and $66.0 million for the quarter and nine months ended September 26, 2021,~~ respectively, and was not material to the Company's financial statements. Expenses related to short-term leases (expected terms less than 12 months) or variable lease payments was not material in the ~~quarter~~quarters ended April 2, 2023 or ~~nine months ended September 25, 2022 or September 26, 2021.~~March 27, 2022.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

Information related to the Company’s leases for the quarters ended ~~September 25,~~April 2, 2023 and March 27, 2022 ~~and September 26, 2021~~ is as follows:


		Quarter Ended						Nine Months Ended						Quarter Ended
		September 25, 2022			September 26, 2021			September 25, 2022			September 26, 2021			April 2, 2023			March 27, 2022
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:												Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Operating cash flows from operating leases	$	12.7		$	13.7		$	39.4		39.9		Operating cash flows from operating leases	$	12.8		$	13.4
Right-of-use assets obtained in exchange for lease obligations:	Right-of-use assets obtained in exchange for lease obligations:												Right-of-use assets obtained in exchange for lease obligations:
Operating leases net of lease modifications	Operating leases net of lease modifications	$	0.4		$	10.4		$	—		21.8		Operating leases net of lease modifications	$	65.6		$	9.1

Weighted Average Remaining Lease Term	Weighted Average Remaining Lease Term												Weighted Average Remaining Lease Term
Operating leases	Operating leases	4.5 years			5.6 years			4.5 years			5.6 years		Operating leases	7.3 years			5.4 years
Weighted Average Discount Rate	Weighted Average Discount Rate												Weighted Average Discount Rate
Operating leases	Operating leases	3.4		%	3.1		%	3.4		%	3.1	%	Operating leases	3.7		%	2.9		%

The following is a reconciliation of future undiscounted cash flows to the operating liabilities, and the related right of use assets, included in our consolidated balance sheets as of ~~September 25, 2022:~~April 2, 2023:


		September 25, 2022			April 2, 2023
2022 (excluding the nine months ended September 25, 2022)		$	12.2
2023		42.3
2023 (excluding the three months ended April 2, 2023)				2023 (excluding the three months ended April 2, 2023)	$	34.4
2024	2024	29.5		2024	39.4
2025	2025	24.6		2025	33.2
2026	2026	19.2		2026	27.8
2027 and thereafter		24.2
2027				2027	19.6
2028 and thereafter				2028 and thereafter	69.2
Total future lease payments	Total future lease payments	152.0		Total future lease payments	223.6
Less imputed interest	Less imputed interest	18.2		Less imputed interest	36.4
Present value of future operating lease payments	Present value of future operating lease payments	133.8		Present value of future operating lease payments	187.2
Less current portion of operating lease liabilities (1)	Less current portion of operating lease liabilities (1)	40.4		Less current portion of operating lease liabilities (1)	37.9
Non-current operating lease liability (2)	Non-current operating lease liability (2)	93.4		Non-current operating lease liability (2)	149.3
Operating lease right-of-use assets, net (3)	Operating lease right-of-use assets, net (3)	$	120.1	Operating lease right-of-use assets, net (3)	$	174.5

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

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

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

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(13) Segment Reporting

Hasbro is a global play and entertainment company with a broad portfolio of brands and entertainment content spanning toys, games, licensed products ranging from traditional to digital, as well as film and television entertainment. Effective for the three months ended March 28, 2021, the Company realigned its reportable segment structure to: (1) align with changes to its business structure subsequent to the integration of eOne; and (2) reflect changes to its reporting structure and provide transparency into how operating performance is measured. The Company's three principal reportable segments are (i) Consumer Products, (ii) Wizards of the Coast and Digital Gaming, and (iii) Entertainment.

The Consumer Products segment engages in the sourcing, marketing and sales of toy and game products around the world. The Consumer Products business also promotes the Company's brands through the out-licensing of our trademarks, characters and other brand and intellectual property rights to third parties, through the sale of branded consumer products such as toys and apparel. The Wizards of the Coast and Digital Gaming business engages in the promotion of the Company's brands through the development of trading card, role-playing and digital game experiences based on Hasbro and Wizards of the Coast games. Additionally, the Company out-licenses certain brands to other third-party digital game developers who transform Hasbro brand-based characters and other intellectual properties, into digital gaming experiences. The Entertainment segment engages in the development, acquisition, production, ~~financing,~~ distribution and sale of world-class entertainment content including film, scripted and unscripted television, family programming, digital content and live entertainment.

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

Results shown for the quarter ended ~~September 25, 2022~~April 2, 2023 are not necessarily representative of those which may be expected for the full year ~~2022,~~2023, nor were those of the comparable ~~2021~~2022 periods representative of those actually experienced for the full year ~~2021.~~2022. Similarly, such results are not necessarily those which would be achieved were each segment an unaffiliated business enterprise.

Information by segment and a reconciliation to reported amounts for the quarters ended April 2, 2023 and ~~nine months ended September 25,~~March 27, 2022 ~~and September 26, 2021~~ are as follows:


		Quarter Ended									Quarter Ended
		September 25, 2022				September 26, 2021					April 2, 2023				March 27, 2022
Net revenues	Net revenues	External		Affiliate (c)		External		Affiliate (c)		Net revenues	External		Affiliate (b)		External		Affiliate (b)
Consumer Products	Consumer Products	$	1,160.8	$	113.2	$	1,282.7	$	(149.6)	Consumer Products	$	520.4	$	73.3	$	672.8	$	91.9
Wizards of the Coast and Digital Gaming	Wizards of the Coast and Digital Gaming	303.5		39.4		360.2		(38.0)		Wizards of the Coast and Digital Gaming	295.2		47.8		262.8		29.8
Entertainment	Entertainment	211.6		14.6		327.1		(13.7)		Entertainment	185.4		13.1		227.5		13.9
Corporate and Other (a)	Corporate and Other (a)	—		(167.2)		—		201.3		Corporate and Other (a)	—		(134.2)		—		(135.6)
		$	1,675.9	$	—	$	1,970.0	$	—		$	1,001.0	$	—	$	1,163.1	$	—

Nine Months Ended
September 25, 2022 September 26, 2021
Net revenues External
Affiliate (c)
External
Affiliate (c)
Consumer Products $ 2,567.8 $ 350.3 $ 2,625.8 $ (316.8)
Wizards of the Coast and Digital Gaming 986.1 122.1 1,008.7 (93.1)
Entertainment 624.3 41.3 772.5 (40.4)
Corporate and Other (a)
— (513.7) — 450.3
$ 4,178.2 $ — $ 4,407.0 $ —


	Quarter Ended
Operating profit (loss)	April 2, 2023		March 27, 2022
Consumer Products (a)	$	(46.0)	$	8.6
Wizards of the Coast and Digital Gaming	76.8		106.4
Entertainment (a)	(8.7)		12.2
Corporate and Other (a)	(4.2)		(7.2)
	$	17.9	$	120.0

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

Quarter Ended Nine Months Ended
Operating profit (loss) September 25,
2022 September 26,
2021 September 25,
2022 September 26,
2021
Consumer Products (a)
$ 136.8 $ 210.4 $ 138.9 $ 260.5
Wizards of the Coast and Digital Gaming 102.2 159.4 434.2 462.3
Entertainment (a)
(28.9) 22.4 (2.4) (74.3)
Corporate and Other (a)
(15.8) (24.3) (37.3) (56.7)
$ 194.3 $ 367.9 $ 533.4 $ 591.8


Total assets	Total assets	September 25, 2022		September 26, 2021		December 26, 2021		Total assets	April 2, 2023		March 27, 2022		December 25, 2022
Consumer Products ~~(b)~~	Consumer Products ~~(b)~~	$	5,817.9	$	4,754.0	$	4,925.5	Consumer Products ~~(b)~~	$	5,533.3	$	4,817.9	$	5,757.7
Wizards of the Coast and Digital Gaming	Wizards of the Coast and Digital Gaming	2,646.6		915.1		1,585.1		Wizards of the Coast and Digital Gaming	3,256.8		1,877.7		2,968.7
Entertainment (a)	Entertainment (a)	6,158.5		5,570.0		6,052.8		Entertainment (a)	6,272.7		6,214.4		6,273.3
Corporate and Other (a)	Corporate and Other (a)	(4,996.9)		(1,008.7)		(2,525.6)		Corporate and Other (a)	(6,139.1)		(3,391.3)		(5,703.8)
		$	9,626.1	$	10,230.4	$	10,037.8		$	8,923.7	$	9,518.7	$	9,295.9

(a) Certain long-term assets, including property, plant and equipment, goodwill and other intangibles, which benefit multiple operating segments, are included in both Entertainment and Corporate and Other. Allocations of certain Corporate and Other expenses, related to these assets are made to the individual operating segments at the beginning of the year based on budgeted amounts. Any differences between actual and budgeted amounts are reflected in Corporate and Other because allocations are translated from the U.S. Dollar to local currency at budgeted rates when recorded. Beginning in 2022, the Company has allocated certain of the intangible amortization costs related to the assets acquired in the eOne Acquisition, between the Consumer Products and Entertainment segments. Corporate and Other also includes the elimination of inter-company balance sheet amounts.

(b) During the second quarter of 2021, the Company adjusted certain inter-segment balance sheet amounts which impacted the Consumer Products and Corporate and Other total asset values. These adjustments did not impact the Company's total assets.

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

The following table represents consolidated Consumer Products segment net revenues by major geographic region for the quarters ended April 2, 2023 and ~~nine months ended September 25, 2022 and September 26, 2021:~~March 27, 2022:


		Quarter Ended				Nine Months Ended					Quarter Ended
		September 25, 2022		September 26, 2021		September 25, 2022		September 26, 2021			April 2, 2023		March 27, 2022
North America	North America	$	693.3	$	805.0	$	1,531.8	$	1,559.1	North America	$	279.1	$	405.2
Europe	Europe	271.6		304.2		610.4		669.2		Europe	131.6		176.7
Asia Pacific	Asia Pacific	82.8		75.5		201.6		208.7		Asia Pacific	63.3		52.2
Latin America	Latin America	113.1		98.0		224.0		188.8		Latin America	46.4		38.7
Net revenues	Net revenues	$	1,160.8	$	1,282.7	$	2,567.8	$	2,625.8	Net revenues	$	520.4	$	672.8

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


	Quarter Ended
	April 2, 2023		March 27, 2022
Tabletop Gaming	$	217.9	$	192.2
Digital and Licensed Gaming	77.3		70.6
Net revenues	$	295.2	$	262.8

The following table represents consolidated Entertainment segment net revenues by category for the quarters ended ~~September 25, 2022~~April 2, 2023 and ~~September 26, 2021:~~March 27, 2022:

Quarter Ended Nine Months Ended
September 25,
2022 September 26,
2021 September 25,
2022 September 26,
2021
Tabletop Gaming $ 246.3 $ 269.4 $ 800.3 $ 760.1
Digital and Licensed Gaming 57.2 90.8 185.8 248.6
Net revenues $ 303.5 $ 360.2 $ 986.1 $ 1,008.7


	Quarter Ended
	April 2, 2023		March 27, 2022
Film and TV	$	168.4	$	190.2
Family Brands	17.0		23.2
Music and Other	—		14.1
Net revenues	$	185.4	$	227.5

Effective for the first quarter of 2023, the Company realigned its brand portfolios to correspond with the Blueprint 2.0 strategy. Net Revenues by Brand Portfolio below have been restated to present net revenues and operating profit under the realigned structure. See note 1 for more information on the Company's brand portfolio realignment.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

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

Quarter Ended Nine Months Ended
September 25,
2022 September 26,
2021 September 25,
2022 September 26,
2021
Film and TV $ 188.6 $ 255.4 $ 527.0 $ 586.1
Family Brands 13.6 60.5 59.6 105.4
Music and Other 9.4 11.2 37.7 81.0
Net revenues $ 211.6 $ 327.1 $ 624.3 $ 772.5

The following table presents consolidated net revenues by brand ~~and entertainment~~ portfolio for the quarters ended April 2, 2023 and ~~nine months ended September 25, 2022 and September 26, 2021:~~March 27, 2022:


		Quarter Ended				Nine Months Ended					Quarter Ended
		September 25, 2022		September 26, 2021		September 25, 2022		September 26, 2021
Net revenues										Net revenues	April 2, 2023		March 27, 2022
Franchise Brands ~~(1)~~	Franchise Brands ~~(1)~~	$	814.1	$	925.1	$	2,101.1	$	2,125.4	Franchise Brands ~~(1)~~	$	613.4	$	650.4
Partner Brands	Partner Brands	349.9		366.7		775.8		766.7		Partner Brands	132.7		206.5
Hasbro Gaming (2)		211.3		281.9		480.7		565.3
Emerging Brands (1)		123.4		134.4		291.8		297.2
TV/Film/Entertainment		177.2		261.9		528.8		652.4
Portfolio Brands										Portfolio Brands	92.0		112.6

Non-Hasbro Branded Film & TV										Non-Hasbro Branded Film & TV	162.9		193.6
Total	Total	$	1,675.9	$	1,970.0	$	4,178.2	$	4,407.0	Total	$	1,001.0	$	1,163.1

~~(1)~~ ~~Effective in the first quarter of 2022, the Company moved PEPPA PIG into Franchise Brands~~Net revenues from Emerging Brands. For comparability, net revenues for the quarter and nine months ended September 26, 2021 have been restated to reflect the elevation of PEPPA PIG from Emerging Brands to Franchise Brands, which amounted to a change of $43.1 million and $102.0 million, respectively.

~~(2)~~Hasbro's ~~total gaming~~Total Gaming category, ~~which includes~~including all gaming ~~net revenues, both those reported in Hasbro Gaming and those reported elsewhere,~~revenue, most notably DUNGEONS & DRAGONS, MAGIC: THE GATHERING and ~~MONOPOLY which are reported within Franchise Brands,~~Hasbro Gaming, totaled ~~$508.6~~$386.5 million and ~~$1,415.7~~$378.8 million for the ~~quarter~~quarters ended April 2, 2023 and ~~nine months ended September 25,~~March 27, 2022, ~~respectively. For the quarter and nine months ended September 26, 2021, total gaming revenues were $658.6~~respectively, of which MAGIC: THE GATHERING contributed $229.1 million and ~~$1,543.3~~$197.2 million, respectively.

(14) Restructuring Actions

During the third quarter of 2022, the Company took certain restructuring actions related to the Company's strategic review which resulted in severance and other employee charges of $21.3 million recorded in Selling, Distribution and Administration within the Corporate and Other segment and a loss of $26.7 million of non-cash charges related to the sale or disposal of non-strategic businesses, recorded as assets held for sale of $23.1 million and program cost amortization of $3.7 million recorded within the Entertainment segment. These businesses do not constitute a material part of the Company's operations. See Note 1 for additional information related to these charges.

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

As of ~~September 25, 2022,~~April 2, 2023, the Company had a remaining balance of ~~$26.8~~$8.2 million in ~~termination payments~~severance and other employee expenses related to these programs, after making payments of $0.9 million during the first three months of 2023.

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

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


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

Payments made in the first three months of 2023	(16.2)
Remaining amounts to be paid as of April 2, 2023	$	68.7

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

OBJECTIVE

Our objective within the following discussion is to provide an analysis of the Company’s Results of Operations, Financial Condition, and Cash Flows from management's perspective, which should be read in conjunction with the Company’s consolidated financial statements and notes thereto, included in Part I, Item 1 of this Form 10-Q.

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

EXECUTIVE SUMMARY

Hasbro, Inc. (“Hasbro”) is a global ~~branded entertainment~~Branded Entertainment leader whose mission is to entertain and connect generations of fans through the wonder of storytelling and exhilaration of play. ~~We deliver~~Hasbro delivers engaging brand experiences for global audiences ~~through~~across gaming, consumer products and entertainment, with a portfolio of iconic brands including MAGIC: THE GATHERING, DUNGEONS & DRAGONS, Hasbro Gaming, NERF, TRANSFORMERS, PLAY-DOH and PEPPA PIG, as well as premier partner brands.

Hasbro is guided by ~~its~~our purpose to create joy and community for all people around the world, one game, one toy, one story at a time.

For more than a decade, we have been consistently recognized for our corporate citizenship, including being named one of the 100 Best Corporate Citizens by 3BL Media, one of the World’s Most Ethical Companies by Ethisphere Institute and one of the 50 Most Community-Minded Companies in the U.S. by the Civic 50.

~~Blueprint 2.0~~Recent Developments

Executive Leadership

On April 12, 2023, the Company announced the appointment of Gina Goetter as Chief Financial Officer, effective May 18, 2023, following the Company’s Annual Meeting of Shareholders. Ms. Goetter joins Hasbro from Harley Davidson, Inc., where she served as Chief Financial Officer. Prior to her time at Harley Davidson, Ms. Goetter served in senior leadership roles at Tyson Foods, Inc. and ~~Operational Excellence~~General Mills, Inc.

On April 12, 2023, the Company announced the appointment of Tim Kilpin as President, Toy, Licensing & Entertainment, effective April 24, 2023. Mr. Kilpin joins Hasbro from PlayMonster Group, LLC, where he served as Executive Chairman and Chief Executive Officer. Previously, Mr. Kilpin held senior leadership positions within the toy and entertainment industry at companies that include Activision Blizzard, Inc., Mattel, Inc. and The Walt Disney Company.

Strategic Review

On October 4, 2022, following a ~~nine-month~~several months long strategic review of our business led by our CEO, we announced a ~~new~~ go-forward strategic plan guided by our new Blueprint 2.0, a consumer-centric framework for bringing compelling and expansive brand experiences to ~~consumers and~~ audiences around the world. ~~This consumer-centric approach~~Our Blueprint 2.0 strategy focuses on ~~fewer, bigger brands, expanded licensing, Hasbro branded entertainment,~~what has driven our business for the past one hundred years and ~~driving high-margin growth in games, digital and direct to consumer.~~

Inwill serve as our foundation going forward: Play. During our review we identified opportunities to focus and scale our business, enhance operational excellence, including through specialized organizational programs and supply chain ~~programs, and~~transformation, to drive growth and ~~profit.~~profit and enhance shareholder value. We ~~plan to focus~~are increasing strategic investment onin our most valuable and profitable franchises across toys, games, entertainment and licensing, and ~~to exit~~exiting certain non-core aspects of the business.

Hasbro Transformation Office

Under ~~this~~our new strategic plan, we ~~plan~~launched the Hasbro Transformation Office (HTO), a team of leaders dedicated to running a disciplined, purpose-built company that is simpler, more efficient and redesigned to drive long-term sustainable growth in markets in which we compete. Our HTO aligns and delivers on our Operational Excellence program, an enterprise-wide cost-saving initiative intended to improve our business financially, operationally and culturally from our current state and designed to deliver ~~annual run-rate cost savings of~~ $250 million to $300 million in run-rate cost savings by the end of 2025. ~~To achieve these savings, we expect to incur approximately $200 million in cash charges through 2024, with approximately $20 million paid in 2022, $120 million paid in 2023, and~~During the ~~balance of $60 million paid in 2024. A pre-tax charge of $55.3 million was recorded in the third~~first quarter of 2023, we realized an additional $35 million of run-rate cost savings.

TV and Film Business

On November 17, 2022, ~~associated with~~we announced an authorization by Hasbro's Board of Directors to initiate a marketing process to explore a sale of parts of our eOne TV and film business that do not directly support the ~~program, primarily from~~Company’s Branded Entertainment strategy. In the event a ~~loss on assets held~~transaction were to occur, Hasbro is expected to maintain the capability to develop and produce animation, digital shorts, scripted TV and theatrical films for ~~sale as well as severance~~audiences related to core Hasbro IP. The family brands business, including the brands PEPPA PIG and ~~other employee charges.~~

~~Coronavirus Pandemic~~

Since the onset of the novel coronavirus (COVID-19) pandemic in early 2020, our business has been adversely impacted by the challenges and risks associated with both the initial, and the continuing effects of the spread of the virus worldwide. Certain effects of the COVID-19 pandemic, including difficulties in shipping and distributing products due to ongoing constraints in port capacity, shipping containers and truck transportation, have continued into 2022. These and other disruptions led to higher costs for both ocean and air freight and delays in the availability of products, which can result in delayed sales and, in some cases, lost sales. In response to these and other challenges, we have developed and continue to evaluate and execute plans to mitigate the negative impacts of COVID-19 to our business, which we believe will help manage the adverse impacts to our financial results for fiscal year 2022. For example, the Company implemented certain price increases during the first nine months of 2022 and in 2021, to mitigate product input and freight cost increases. Additionally, during the first half of 2022, the Company accelerated certain inventory purchases to ensure sufficient finished goods and raw material availability, ahead ofPJ MASKS, is not expected periods of high consumer demand due to supply chain constraints, driving higher inventory balances within certain markets as compared to prior year. The Company plans to launch incremental year-over-year advertising and promotional activity behind key holiday toy and game items to drive our newest innovation while reducing inventory on hand at Hasbro and at retail.

~~The effect of COVID-19 on our business continues~~ to be fluid and it is difficult to forecast the impact it could have on our future operations. However, since the initial outbreak, we have maintained sufficient liquidity and access to capital resources and we continue to closely monitor customer health and collectabilitypart of ~~receivables. Please see Part I, Item 1A. Risk Factors and Part I, Item 1. Business, in the Company's Form 10-K for the fiscal year ended December 26, 2021 for further information.~~any sale transaction

~~D&D Beyond Acquisition~~

~~During~~involving parts of the ~~second~~eOne film and television business. The sale process was ongoing as of the close of the first quarter of ~~2022,~~2023 however, there can be no assurance that the ~~Company completed~~process will result in a sale.

Workforce Reduction

In alignment with the ~~strategic, complementary acquisition~~objectives of ~~D&D Beyond (the "D&D Beyond Acquisition"),~~our Operational Excellence program, on January 26, 2023, we announced the ~~premier digital content platform~~undertaking of certain organizational changes which will result in the elimination of approximately 1,000 positions from our global workforce in 2023, or approximately 15% of global full-time employees.

Brand Portfolio Realignment

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

◦Franchise Brands - A refreshed group of our most profitable brands that includes DUNGEONS & DRAGONS, Hasbro Gaming, MAGIC: THE GATHERING, NERF, PEPPA PIG, PLAY-DOH, and TRANSFORMERS.

◦Partner Brands - The Partner Brands category includes those brands we license from other parties such as Disney's STAR WARS and MARVEL as well as other partners, for which we develop toy and game products, with a focus on those key Partner Brands that give us the largest growth potential and where we can lead and innovate in ~~an all-cash transaction for a purchase price of $146.3 million. The D&D Beyond Acquisition is expected to substantially accelerate direct-to-fans capability for DUNGEONS & DRAGONS~~the category.

◦Portfolio Brands - Our Portfolio Brands category includes those brands we own or control which we feel have upside in ~~physical~~revenue and ~~digital play~~. ~~See note 1~~profitability that have not yet grown to the ~~consolidated financial statements~~significance of a franchise brand.

◦Non-Hasbro Branded Film & TV - The Non-Hasbro Branded Film & TV category includes non-Hasbro-branded film, TV and other entertainment related revenues. All Hasbro-branded content is included in ~~Part I of this Form 10-Q for further discussion.~~

the portfolios noted above.

During each of the periods presented in this Form 10-Q there were certain charges incurred which impacted operating ~~results.~~segment results in the Company’s Consumer Products, Entertainment and Corporate and Other segments. These charges are ~~detailed~~discussed below in ~~the~~ Results of Operations - Consolidated.

~~Third~~First quarter ~~2022~~2023 highlights:

•~~Third~~First quarter net revenues of ~~$1.7~~$1.0 billion decreased ~~15%~~14% compared to the ~~third~~first quarter of ~~2021~~2022 and included an unfavorable foreign currency translation of ~~$53.7~~$15.8 million. Absent the unfavorable impact of foreign currency exchange, ~~third~~first quarter net revenues decreased ~~12%~~13%.

•Consumer Products segment net revenues declined ~~10%~~23% to ~~$1,160.8~~$520.4 million. Wizards of the Coast and Digital Gaming segment net revenues ~~declined 16%~~increased 12% to ~~$303.5~~$295.2 million; and Entertainment segment net revenues declined ~~35%~~19% to ~~$211.6~~$185.4 million.

•Net revenues from Franchise Brands ~~decreased 12%~~declined 6%; Partner Brands net revenues ~~decreased 5%~~declined 36%; ~~Hasbro Gaming net revenues decreased 25%; Emerging~~Portfolio Brands net revenues ~~decreased 8%~~declined 18%; and ~~TV/Film/~~Other Entertainment ~~portfolio~~ net revenues ~~decreased 32%~~declined 16%.

•Operating profit was ~~$194.3~~$17.9 million, or ~~11.6%~~1.8% of net revenue in the ~~third~~first quarter of ~~2022~~2023 compared to operating profit of ~~$367.9~~$120.0 million, or ~~18.7%~~10.3% of net revenue, in the ~~third~~first quarter of ~~2021.~~2022.

•Operating ~~Profit~~results in the Consumer Products segment decreased ~~35%~~greater than 100% to ~~$136.8~~an operating loss of $46.0 million; Wizards of the Coast and Digital Gaming segment operating profit decreased ~~36%~~28% to ~~$102.2~~$76.8 million; Entertainment segment operating results decreased greater than 100% to an operating loss of ~~$28.9~~$8.7 million; and Corporate and Other operating losses improved ~~by 35%~~42% to an operating loss of ~~$15.8~~$4.2 million.

•~~Operating profit in the third quarter of 2022 was negatively impacted by~~Certain charges totaling $55.3 million ($49.4 million after-tax) related to the Company's operational excellence program comprised of charges related to the exit of certain non-core businesses and discontinued projects within the Entertainment segment combined with severance and other employee charges and consultant fees within the Corporate and Other segment. These charges resulted from the Company's nine-month strategic review. See Results of Operations - Consolidated below for details of these charges.

•~~Certain other charges impacted~~impacting operating segment performance for the ~~third~~first quarter of ~~2022~~2023 and ~~2021,~~2022, in the Company’s Consumer Products, Entertainment and Corporate and Other segments, ~~which~~ are discussed ~~further~~ below in ~~Segment Results.~~Results of Operations - Consolidated.

•~~Net earnings~~The net loss attributable to Hasbro, Inc. of ~~$129.2~~$22.1 million, or ~~$0.93~~$(0.16) per ~~diluted~~ share, in the ~~third~~first quarter of ~~2022~~2023 compared to net earnings of ~~$253.2~~$61.2 million, or ~~$1.83 per diluted share, in the third quarter of 2021.~~

~~First nine months 2022 highlights:~~

•Net revenues decreased 5% to $4,178.2 million in first nine months of 2022 compared to $4,407.0 million in the first nine months of 2021. The decrease in net revenues included $103.8 million of unfavorable foreign currency translation. Absent the impact of foreign currency exchange, net revenues decreased 3%.

•Net revenues in the Consumer Products segment decreased 2% to $2,567.8 million; Wizards of the Coast and Digital Gaming segment net revenues decreased 2% to $986.1 million; and Entertainment segment net revenues decreased 19% to $624.3 million.

•Net revenues from Franchise Brands decreased 1%; Partner Brands net revenues increased 1%; Hasbro Gaming net revenues decreased 15%; Emerging brands net revenues decreased 2%; and TV/Film/Entertainment portfolio net revenues decreased 19% during the first nine months of 2022.

•Operating profit was $533.4 million, or 12.8% of net revenues, in the first nine months of 2022 compared to operating profit of $591.8 million, or 13.4% of net revenues, in the first nine months of 2021.

•Operating profit in the Consumer Products segment decreased 47% to $138.9 million; Wizards of the Coast and Digital Gaming segment operating profit decreased 6% to $434.2 million; Entertainment segment operating results improved 97% to an operating loss of $2.4 million; and Corporate and Other operating losses improved by 34% to an operating loss of $37.3 million.

•Operating profit in the first nine months of 2022 was negatively impacted by charges totaling $55.3 million ($49.4 million after-tax) related to the Company’s operational excellence program comprised of charges related to the exit of certain non-core businesses and discontinued projects within the Entertainment segment combined with severance and other employee charges and consultant fees within the Corporate and Other segment.~~These charges resulted from the Company's nine-month strategic review. See Results of Operations - Consolidated below for details of these charges.~~

•Operating profit in the first nine months of 2021 was negatively impacted by a pre-tax non-cash impairment charge of $101.8 million and pre-tax cash transaction expenses of $9.5 million ($7.3 million after-tax) associated with the sale of eOne Music.

•Certain other charges impacted operating segment performance for the first nine months of 2022 and 2021, in the Company’s Consumer Products, Entertainment and Corporate and Other segments, which are discussed further below in Segment Results.

•~~Net earnings attributable to Hasbro, Inc. was $332.4 million, or $2.39~~$0.44 per diluted share, in the first ~~nine months~~quarter of 2022 compared to net earnings attributable to Hasbro, Inc. of $346.5 million, or $2.51 per diluted share, in the first nine months of 2021. The net earnings in the first nine months of 2021 included the loss on assets held for sale from the Music business, as discussed above.2022.

The impact of changes in foreign currency exchange rates used to translate the consolidated statements of operations is quantified by translating the current period revenues at the prior period exchange rates and comparing this amount to the prior period reported revenues. The Company believes that the presentation of the impact of changes in exchange rates, which are beyond the Company’s control, is helpful to an investor’s understanding of the performance of the underlying business.

SUMMARY OF FINANCIAL PERFORMANCE

A summary of the results of operations is illustrated below for the quarters ended April 2, 2023 and ~~nine-month periods ended September 25, 2022 and September 26, 2021.~~March 27, 2022.

Quarter Ended Nine Months Ended
September 25, 2022 September 26, 2021 September 25, 2022 September 26, 2021
Net revenues $ 1,675.9 $ 1,970.0 $ 4,178.2 $ 4,407.0
Operating profit 194.3 367.9 533.4 591.8
Earnings before income taxes 165.6 323.4 425.7 494.0
Net earnings 128.2 254.9 331.6 350.5
Net (loss) earnings attributable to noncontrolling interests (1.0) 1.7 (0.8) 4.0
Net earnings attributable to Hasbro, Inc. 129.2 253.2 332.4 346.5
Diluted earnings per share 0.93 1.83 2.39 2.51


	Quarter Ended
	April 2, 2023		March 27, 2022
Net revenues	$	1,001.0	$	1,163.1
Operating profit	17.9		120.0
(Loss) earnings before income taxes	(21.0)		80.2
Net (loss) earnings	(21.7)		62.9
Net earnings attributable to noncontrolling interests	0.4		1.7
Net (loss) earnings attributable to Hasbro, Inc.	(22.1)		61.2
Diluted (loss) earnings per share	(0.16)		0.44

RESULTS OF OPERATIONS – CONSOLIDATED

Net (loss) earnings and diluted (loss) earnings per share attributable to Hasbro, Inc. for the quarters ended April 2, 2023 and ~~nine-month periods ended September 25,~~March 27, 2022 ~~and September 26, 2021~~ include certain charges as described below.

~~2022~~2023

•~~After-tax~~Net charges of ~~$49.4 million, or $0.36 per diluted share for both the quarter and nine-month periods ended September 25, 2022 consisting of:~~

◦a Loss on Assets Held for Sale of $21.1 million comprised of a non-cash goodwill impairment loss of $11.8 million and other asset impairments of $9.3 million, related to the exit of non-core businesses within the Entertainment segment. The assets and liabilities of these business were revalued and disclosed separately on the balance sheet;

◦~~asset impairment charges of $3.7 million related to projects discontinued as part of the Company's strategic review included in Program Cost Amortization within the Entertainment segment;~~

◦severance and other employee charges of $19.1 million associated with cost-savings initiatives across the Company included within Selling, Distribution and Administration within the Corporate and Other segment; and,

◦~~program related consultant fees of $5.5 million included within Selling, Distribution and Administration within the Corporate and Other segment.~~

•~~After-tax charges of $14.3~~$13.3 million, or $0.10 per diluted share, ~~and $45.5 million, or $0.33 per diluted share,~~ of intangible amortization costs ~~for the quarter and nine-month periods ended September 25, 2022, respectively,~~ related to the intangible assets acquired in the eOne Acquisition. ~~Beginning in 2022, these intangible amortization costs have been~~These expenses are allocated between the Consumer Products and Entertainment segments, to match the revenue generated from such intangible assets.

•~~After-tax~~Net charges of ~~$3.3 million, $0.02 per diluted share and $8.9~~$8.1 million, or $0.06 per diluted share, ~~for~~of Operational Excellence program related consultant and transformation office expenses included within Selling, Distribution and Administration within the ~~quarter~~Corporate and ~~nine-month periods ended September 25, 2022, respectively,~~Other segment.

•Net charges of $1.7 million, or $0.01 per diluted share, of expense associated with retention awards granted in connection with the eOne Acquisition. These expenses are included within Selling, Distribution and Administration within the Corporate and Other segment.

~~2021~~2022

•~~After-tax~~Net charges of ~~$16.3~~$15.9 million, or ~~$0.12 per diluted share and $55.0 million, or $0.40~~$0.11 per diluted share of intangible amortization costs ~~for the quarter and nine-month periods ended September 26, 2021, respectively,~~ related to the intangible assets acquired in the eOne ~~Acquisition. In 2021, these~~acquisition. These expenses are allocated between the Consumer Products and Entertainment segments, to match the revenue generated from such intangible ~~amortization costs were recorded within the Entertainment segment.~~assets.

•~~After-tax~~Net charges of ~~$1.7~~$2.3 million, ~~$0.01~~$0.02 per diluted share ~~and $5.0 million, or $0.04 per diluted share, for the quarter and nine-month periods ended September 26, 2021, respectively,~~ of expense associated with retention awards granted in connection with the eOne ~~Acquisition.~~acquisition. These expenses are included within Selling, Distribution and Administration within the Corporate and Other segment.

•After-tax charge of $109.1 million, or $0.79 per diluted share for the nine-month period ended September 26, 2021, comprised of a non-cash goodwill impairment charge of $101.8 million and transaction expenses of $7.3 million, associated with the sale of eOne Music. The goodwill impairment charge of $101.8 million was based on revalued assets and liabilities of eOne Music as of the second quarter of 2021.

•A net charge of $39.4 million, or $0.28 per diluted share, for quarter and nine-month periods ended September 26, 2021, of income tax expense as a result of revaluation of Hasbro’s UK tax attributes in accordance with the Finance Act 2021 enacted by the United Kingdom on June 10, 2021.

~~Third Quarter 2022~~

The quarters ended ~~September 25,~~April 2, 2023 and March 27, 2022 were 14-week and ~~September 26, 2021 were each~~ 13-week ~~periods.~~periods, respectively.

Consolidated net revenues for the ~~third~~first quarter of ~~2022~~2023 declined ~~15%~~14% to ~~$1,675.9~~$1,001.0 million from ~~$1,970.0~~$1,163.1 million for the ~~third~~first quarter of ~~2021~~2022 and included an unfavorable ~~$53.7~~$15.8 million impact from foreign currency translation as a result of weakening currencies, primarily in Europe.

Operating profit for the ~~third~~first quarter of ~~2022~~2023 was ~~$194.3~~$17.9 million, or ~~11.6%~~1.8% of net revenues, compared to operating profit of ~~$367.9~~$120.0 million, or ~~18.7%~~10.3% of net revenues, for the ~~third~~first quarter of ~~2021.~~2022. In addition to the charges ~~to operating profit~~ described above, ~~the~~ operating ~~profit decrease~~results in the ~~third~~first quarter of ~~2022 was the result of~~2023 reflect lower revenue volumes, ~~and a reduction in gross margin driven by increased product costs and higher sales allowances, most notably~~primarily within the Consumer Products segment ~~partially offset by lower program cost amortization related~~and to ~~lower revenues~~a lesser extent, within the Entertainment ~~segment.Also contributing~~segment, higher sales allowances and closeout sales to sell through inventory, higher product development costs due to increased investments within the ~~decrease in operating profit were increased inventory obsolescence charges~~Wizards of the Coast business, higher advertising costs associated with ~~higher inventory levels, as well as~~the release of the Dungeons & Dragons: Honor Among Thieves motion picture and higher marketing and sales ~~expense.~~expenses. These impacts to operating ~~profit~~results were partially offset by lower ~~advertising expense and lower~~ royalty ~~expense reflecting~~expenses as result of the ~~mix and timing~~decline of ~~entertainment deliveries~~Partner Brand sales, during the first quarter of 2023 due in ~~the quarter compared~~part to the ~~third quarter of 2021.~~Company's strategic decision to exit certain licenses.

The following table presents net revenues by ~~brand and entertainment portfolio~~product category for the quarters ended ~~September 25, 2022~~April 2, 2023 and ~~September 26, 2021.~~March 27, 2022.

Quarter Ended
September 25, 2022 September 26, 2021 %
Change
Franchise Brands $ 814.1 $ 925.1 -12 %
Partner Brands 349.9 366.7 -5 %
Hasbro Gaming 211.3 281.9 -25 %
Emerging Brands 123.4 134.4 -8 %
TV/Film/Entertainment 177.2 261.9 -32 %
Total $ 1,675.9 $ 1,970.0 -15 %

Brand portfolio net revenues for the third quarter of 2021 have been restated to reflect the elevation of PEPPA PIG from Emerging Brands to Franchise Brands, effective for the first quarter of 2022. As a result, third quarter 2021 net revenues of $43.1 million were reclassified from Emerging Brands to Franchise Brands.


	Quarter Ended
	April 2, 2023		March 27, 2022		% Change
Franchise Brands	$	613.4	$	650.4	-6	%
Partner Brands	132.7		206.5		-36	%
Portfolio Brands	92.0		112.6		-18	%
Non-Hasbro Branded Film & TV	162.9		193.6		-16	%
Total	$	1,001.0	$	1,163.1	-14	%

FRANCHISE BRANDS: Net revenues in the Franchise Brands portfolio decreased ~~12%~~6% in the ~~third~~first quarter of ~~2022~~2023 compared to the ~~third~~first quarter of ~~2021.~~2022. Drivers of the net revenue decrease include lower net revenues from ~~MAGIC: THE GATHERING~~NERF products, ~~reflecting a shift in set release cadence during the third quarter of 2022 compared to the third quarter of 2021, as well as~~ lower net revenues from ~~NERF~~certain Hasbro Gaming brands, most notably MONOPOLY, and ~~MONOPOLY products. In addition, the decrease in Franchise Brands~~to a lesser extent, lower net revenues ~~includes lower sales of MY LITTLE PONY content compared to the third quarter of 2021, which benefited~~ from ~~the September 2021 release of~~ ~~MY LITTLE PONY: A NEW GENERATION~~PLAY-DOH and ~~the associated product line.~~PEPPA PIG products as retailers focused on reducing inventory. These net revenue decreases were partially offset by higher net revenues from ~~PLAY-DOH~~MAGIC: THE GATHERING which grew 16% driven by the first quarter 2023 set release of Phyrexia: All Will Be One, as well as from sustained demand for previously released sets, and ~~PEPPA PIG~~to a lesser extent, higher net revenues from DUNGEONS & DRAGONS and TRANSFORMERS products.

PARTNER BRANDS: Net revenues from the Partner Brands portfolio decreased 5%36% in the ~~third~~first quarter of ~~2022~~2023 compared to the ~~third~~first quarter of ~~2021.~~2022. Within the Partner Brands portfolio, there are a number of brands which are reliant on related entertainment, including television and movie releases. As such, net revenues from partner brands fluctuate depending on entertainment popularity, release dates and related product line offerings. Historically these entertainment-based brands experience higher revenues during years in which new content is released in theaters, for broadcast, and on streaming platforms.

During the ~~third~~first quarter of ~~2022,~~2023, Partner Brands net revenue decreases were driven by lower sales of the Company's products for ~~BEYBLADE and GHOSTBUSTERS as well as lower sales of the Company's products for~~ DISNEY FROZEN and DISNEY ~~PRINCESS. These net revenue decreases were partially offset by higher net revenues from~~PRINCESS due to the ~~Company's line~~expiration of ~~STAR WARS products supported by~~ the ~~entertainment lineup from Lucasfilms including,~~ ~~THE BOOK of BOBA FETT,~~ ~~released~~related license agreements in ~~the first fiscal quarter of~~December 2022, ~~and the launch of the~~ ~~STAR WARS~~ ~~series~~ ~~OBI-WAN KENOBI~~ ~~series during the second quarter of 2022, both streaming on Disney+. In addition, higher~~lower net revenues from the Company's products for MARVEL ~~benefited ahead of the release of~~ ~~BLACK PANTHER: WAKANDA FOREVER, expected in November 2022 and reflect momentum in the SPIDER-MAN franchise which benefited from entertainment releases including the children’s animated television series, Marvel's~~ ~~SPIDEY and HIS AMAZING FRIENDS and~~ ~~Marvel Studios'~~ ~~SPIDER-MAN: NO WAY HOME,~~ ~~released in December 2021~~. ~~To a lesser extent, the Company's products for Marvel's AVENGERS benefited from the July 2022 release of~~ ~~THOR: LOVE AND THUNDER.~~

~~HASBRO GAMING:~~ Net revenues in the Hasbro Gaming portfolio decreased 25% in the third quarter of 2022 compared to the third quarter of 2021 driven primarily by net revenue decreases from JENGA, LIFE and certain other Hasbro Gaming products. These net revenue decreases were partially offset by higher net revenues from Avalon Hill and DUNGEON & DRAGONS.

Net revenues for Hasbro’s total gaming category, including the Hasbro Gaming portfolio as reported above and all other gaming revenue, most notably revenues from MAGIC: THE GATHERING and MONOPOLY products, which are included in the Franchise Brands portfolio, totaled $508.6 million for the third quarter of 2022, a decrease of 23%, as compared to $658.6 million in the third quarter of 2021.

~~EMERGING BRANDS:~~ Net revenues from the Emerging Brands portfolio decreased 8% during the third quarter of 2022 compared to the third quarter of 2021. Net revenue decreases were primarily driven by PJ MASKS, core PLAYSKOOL and GI JOE products, partially offset by higher net revenues from EASY BAKE products.

~~TV/FILM/ENTERTAINMENT:~~ Net revenues from the TV/Film/Entertainment portfolio decreased 32% compared to the third quarter of 2021. The third quarter 2022 net revenue decrease was driven by lower third quarter 2022 film deliveries compared to the third quarter of 2021, which included film deliveries such as ~~Come From Away~~ ~~and~~ ~~Finch,~~ with no comparable film deliveries during the third quarter of 2022. Lower unscripted deliveries in the third quarter of 2022, primarily due to production timing also contributed to the decline. These decreases were partially offset by scripted production deliveries in the third quarter of 2022 that include ~~Cruel Summer~~ ~~season two~~,~~The Rookie~~ ~~season five and~~ ~~The Rookie: Feds~~ ~~season one.~~

~~First Nine Months of 2022~~

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

~~For the first nine months of 2022, consolidated net revenues decreased 5%~~ compared to the first nine months of 2021 and reflect an unfavorable variance of $103.8 million as a result of foreign currency translation due to weaker currencies across the Company's European and, to a lesser extent, Asia Pacific markets when compared to the first nine months of 2021.

~~Operating profit for the first nine months~~quarter of 2022, ~~was $533.4 million, or 12.8%~~which benefited from a robust slate of net revenues, compared to an operating profit of $591.8 million, or 13.4% of net revenues, for the first nine months of 2021. In addition to the charges to operating profit described above, the operating profit decrease was primarily driven by lower revenue volumes and a reductionentertainment releases without comparable releases in ~~gross margin driven by increased product costs and higher sales allowances, most notably within the Consumer Products segment.~~Also contributing to the decrease in operating profit were higher freight costs and to a lesser extent, higher marketing and sales and warehousing costs. These negative impacts to operating profit were partially offset by lower program amortization costs within the Entertainment segment, reflecting the mix of programming deliveries during the first nine months, lower royalty expenses, lower advertising costs and reduced administration expenses

~~The following table presents net revenues by brand and entertainment portfolio for the first nine months of 2022 and 2021.~~

Nine Months Ended
September 25, 2022 September 26, 2021 %
Change
Franchise Brands $ 2,101.1 2,125.4 -1 %
Partner Brands 775.8 766.7 1 %
Hasbro Gaming 480.7 565.3 -15 %
Emerging Brands 291.8 297.2 -2 %
TV/Film/Entertainment 528.8 652.4 -19 %
Total $ 4,178.2 4,407.0 -5 %

~~Brand portfolio net revenues for first nine months of 2021 have been restated to reflect the elevation of PEPPA PIG from Emerging Brands to Franchise Brands, effective for~~ the first quarter of ~~2022. As a result, net revenues of $102.0 million from the first nine months of 2021 were reclassified from Emerging Brands to Franchise Brands.~~

~~FRANCHISE BRANDS:~~ Net revenues in the Franchise Brands portfolio decreased 1% in the first nine months of 2022 compared to 2021. The net revenue decrease was primarily driven by lower net revenues from MONOPOLY and NERF products2023, and to a lesser extent, lower net revenues from ~~TRANSFORMERS and BABY ALIVE products. These decreases were partially offset by higher net revenues from PLAY-DOH and PEPPA PIG products.~~

~~PARTNER BRANDS:~~ ~~Net revenues from the Partner Brands portfolio increased 1% during the first nine months of 2022 compared to 2021. Partner Brands net revenue increases were primarily driven by~~ the Company's products for ~~MARVEL, led by momentum in the SPIDER-MAN franchise which benefited from entertainment releases including the children’s animated television series, Marvel's~~ ~~SPIDEY and HIS AMAZING FRIENDS~~ ~~as well as Marvel Studios'~~ ~~SPIDER-MAN: NO WAY HOME,~~ ~~released in December 2021, while the Company's products for Marvel's AVENGERS benefited from the release of Marvel Studios'~~ ~~THOR: LOVE AND THUNDER, in July 2022, the May 2022 release of~~ ~~DOCTOR STRANGE in the MULTIVERSE of MADNESS~~ ~~and from sales of the Company's products for BLACK PANTHER, ahead of the release of~~ ~~BLACK PANTHER: WAKANDA FOREVER, expected in November 2022. To a lesser extent, net revenues from the Company's line of~~ STAR WARS ~~products increased as a result of the lineup of new entertainment from Lucasfilms including~~ and BEYBLADE.

~~THE BOOK of BOBA FETT~~PORTFOLIO BRANDS: ~~and the~~ ~~STAR WARS~~ ~~series~~ ~~OBI-WAN KENOBI, both streaming on Disney+. In addition, Partner~~Portfolio Brands net revenues benefited from the introduction of the Company's line of FORTNITE action figures during the first nine months of 2022. These increases were partially offset by net revenue declines from the Company's products for DISNEY FROZEN and DISNEY PRINCESS as well as net revenue declines from BEYBLADE, and to a lesser extent, GHOSTBUSTERS and TROLLS products during the first nine months of 2022.

~~HASBRO GAMING:~~ ~~Net revenues in the Hasbro Gaming portfolio~~ decreased ~~15%~~18% in the first ~~nine months~~quarter of ~~2022~~2023 compared to the first ~~nine months~~quarter of ~~2021 driven primarily by lower~~2022. Lower net revenues from ~~the~~ ~~Dungeons & Dragons: Dark Alliance~~ ~~digital game launched during the second quarter 2021 with no comparable release in 2022,~~PJ MASKS and BABY ALIVE products as well as lower net revenues from ~~JENGA, LIFE and~~ certain other ~~Hasbro Gaming products. These decreases~~Portfolio Brands products were partially offset by higher net revenue from GI JOE products.

NON-HASBRO BRANDED FILM & TV: Net revenues from ~~AVALON HILL'S HeroQuest products during the first nine months of 2022.~~

Net revenues for Hasbro’s total gaming category, including the Hasbro Gaming portfolio as reported above and all other gaming revenue, most notably from MAGIC: THE GATHERING and MONOPOLY products, which are included in the Franchise Brands portfolio, were $1,415.7 million, a decrease of 8%,Non-Hasbro Branded Film & TV decreased 16% in the first ~~nine months~~quarter of ~~2022 versus $1,543.3 million in the first nine months of 2021.~~

~~EMERGING BRANDS:~~ ~~Net revenues from theEmerging Brands portfolio declined 2% for the first nine months of 2022~~2023 compared to the first ~~nine months~~quarter of ~~2021.Net revenue declines during the first nine months of~~ 2022 ~~were~~ driven by lower ~~sales of GI JOE products and to a lesser extent, core PLAYSKOOL and PJ MASKS products, partially offset by higher~~ net revenues from ~~POWER RANGERS products.~~

~~TV/FILM/ENTERTAINMENT:~~ ~~Net~~film production deliveries reflecting fewer new entertainment releases in 2023 compared to 2022. In addition, lower net revenues from unscripted programming, due to the ~~TV/Film/Entertainment portfolio decreased 19% for~~timing of deliveries, contributed to the decrease in the first ~~nine months~~quarter of ~~2022~~2023 compared to the first nine months of 2021. Lower net revenues in 2022 were driven by the sale of eOne Music in the first nine months of 2021, which represented $65.2 million or 10% of TV, Film and Entertainment portfolio net revenues during the first nine months of 2021. In the first nine months of 2022, net revenue declines were driven by lower film deliveries compared to the third quarter ~~of 2021, as well as lower scripted television deliveries, primarily due to timing of deliveries during the first nine months~~ of 2022. These decreases were partially offset by higher net revenues from ~~unscripted television as a result of increased television production~~scripted programming deliveries that include The Rookie season five, The Rookie: Feds, and A Gentleman in ~~North America and the U.K. compared to the first nine months of 2021, where deliveries were limited or delayed due to the impact of the COVID-19 pandemic.~~Moscow.

SEGMENT RESULTS

Beginning in 2022, intangible amortization costs related to the intangible assets acquired in the eOne Acquisition have been allocated between the Consumer Products and Entertainment segments to match the revenue generated from such intangible assets. In 2021, comparable intangible amortization costs were recorded within the Entertainment segment.

~~Third Quarter 2022~~

The following table presents net external revenues and operating profit (loss) for the Company's principal segments for the quarters ended ~~September 25, 2022~~April 2, 2023 and ~~September 26, 2021:~~March 27, 2022:

Quarter Ended
September 25, 2022 September 26, 2021 %
Change
Net revenues
Consumer Products $ 1,160.8 $ 1,282.7 -10 %
Wizards of the Coast and Digital Gaming 303.5 360.2 -16 %
Entertainment 211.6 327.1 -35 %
Operating Profit (Loss)
Consumer Products $ 136.8 $ 210.4 -35 %
Wizards of the Coast and Digital Gaming 102.2 159.4 -36 %
Entertainment (28.9) 22.4 >-100%
Corporate and Other (15.8) (24.3) 35 %


	Quarter Ended
	April 2, 2023		March 27, 2022		% Change
Net revenues
Consumer Products	$	520.4	$	672.8	-23	%
Wizards of the Coast and Digital Gaming	295.2		262.8		12	%
Entertainment	185.4		227.5		-19	%

Operating Profit (Loss)
Consumer Products	$	(46.0)	$	8.6	>-100%
Wizards of the Coast and Digital Gaming	76.8		106.4		-28	%
Entertainment	(8.7)		12.2		>-100%
Corporate and Other	(4.2)		(7.2)		42	%

Consumer Products Segment

The following table presents the Consumer Products segment net revenues by major geographic region for the quarters ended ~~September 25, 2022~~April 2, 2023 and ~~September 26, 2021.~~March 27, 2022.


		Quarter Ended				Quarter Ended
		September 25, 2022		September 26, 2021				April 2, 2023		March 27, 2022
North America	North America	$	693.3	805.0			North America	$	279.1	$	405.2
Europe	Europe	271.6		304.2			Europe	131.6		176.7
Asia Pacific	Asia Pacific	82.8		75.5			Asia Pacific	63.3		52.2
Latin America	Latin America	113.1		98.0			Latin America	46.4		38.7
Net revenues	Net revenues	$	1,160.8	$	1,282.7		Net revenues	$	520.4	$	672.8

The Consumer Products segment net revenues declined ~~10%~~23% to ~~$1,160.8~~$520.4 million for the ~~third~~first quarter of ~~2022~~2023 compared to ~~$1,282.7~~$672.8 million for the ~~third~~first quarter of ~~2021~~2022 and included the impact of an unfavorable ~~$40.0~~$8.4 million currency translation, most notably from the Company's European markets, ~~and~~reflecting efforts to ~~a lesser extent, the Company's Asia Pacific and Latin American markets.~~reduce retail inventory levels. Absent the impact of foreign currency exchange, Consumer Products segment net revenues declined ~~$81.9~~$144.1 million or 6%21% during the ~~third~~first quarter of ~~2022.~~2023.

Drivers of the net revenue decrease include lower sales of ~~Hasbro Gaming~~NERF and PLAY-DOH products, ~~primarily from the Company's tabletop gaming brands such as JENGA, LIFE, OPERATION and certain other Hasbro Gaming brands,~~ lower sales of ~~NERF~~the Company's products for DISNEY PRINCESS and ~~MONOPOLY products,~~DISNEY FROZEN, following the expiration of associated license agreements in December 2022, and lower sales of the Company's products for MARVEL and STAR WARS compared to the first quarter of 2022, which benefited from a variety of entertainment releases without a comparable slate in the first quarter of 2023. To a lesser extent, lower net revenues from BEYBLADE ~~DISNEY PRINCESS~~ and ~~DISNEY FROZEN.~~certain Hasbro Gaming tabletop products contributed to the decrease. These net revenue decreases were partially offset by higher sales of ~~PEPPA PIG~~TRANSFORMERS, GI JOE and ~~PLAY-DOH~~DUNGEON & DRAGONS products, ~~and~~ higher sales of the Company's products for ~~STAR WARS~~GHOSTBUSTERS as well as the introduction of the Company's products for INDIANA JONES ahead of the film Indiana Jones and ~~MARVEL.~~the Dial of Destiny, expected in June 2023. Overall segment net revenue declines were primarily attributable to North America and to a lesser extent, the Company's European markets, partially offset by higher net revenues from the Company's Asia Pacific and Latin American markets during the ~~third~~first quarter of ~~2022.~~2023.

The Consumer Products segment operating ~~profit~~loss for the ~~third~~first quarter of ~~2022~~2023 was ~~$136.8~~$46.0 million or ~~11.8%~~8.8% of segment net revenues, compared to segment operating profit of ~~$210.4~~$8.6 million or ~~16.4%~~1.3% of segment net revenues, for the ~~third~~first quarter of ~~2021. As noted above, to align with the revenue generated from the assets acquired~~2022. The decrease in operating results in the ~~eOne Acquisition, Consumer Products segment operating profit in the third~~first quarter of 2022 includes $9.0 million of intangible asset amortization costs. In 2021, the comparable costs were reported in the Entertainment segment results. The remaining operating profit decrease in the third quarter of 20222023 was driven by lower net revenues, ~~and higher sales allowances and obsolescence charges, as well as~~including higher levels of closeout ~~sales.~~sales and sales allowances combined with increased obsolescence charges associated with inventory management initiatives implemented primarily in North America and Europe. These negative impacts were partially offset by ~~price increases implemented during~~savings realized from the ~~second half~~Company's Operational Excellence program, lower royalty expenses reflecting the mix of ~~2021 and the first nine months of 2022 combined with~~products sold, lower advertising and promotion ~~expense.~~expense and lower freight costs during the first quarter of 2023, due to the trending improvements in global supply

chain and distribution, as well as overall improvements to managed expenses in the Company's Asia Pacific and Latin American regions.

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 the quarters ended ~~September 25, 2022~~April 2, 2023 and ~~September 26, 2021.~~March 27, 2022.


		Quarter Ended				Quarter Ended
		September 25, 2022		September 26, 2021				April 2, 2023		March 27, 2022
Tabletop Gaming	Tabletop Gaming	$	246.3	$	269.4		Tabletop Gaming	$	217.9	$	192.2
Digital and Licensed Gaming	Digital and Licensed Gaming	57.2		90.8			Digital and Licensed Gaming	77.3		70.6
Net revenues	Net revenues	$	303.5	$	360.2		Net revenues	$	295.2	$	262.8

Wizards of the Coast and Digital Gaming segment net revenues ~~declined 16%~~increased 12% in the ~~third~~first quarter of ~~2022~~2023 to ~~$303.5~~$295.2 million from ~~$360.2~~$262.8 million in the ~~third~~first quarter of ~~2021~~2022 and included the impact of an unfavorable ~~$8.7~~$3.1 million foreign currency translation. Absent the impact of foreign currency exchange, Wizards of the Coast and Digital Gaming segment net revenues ~~declined $48.0~~increased $35.5 million or ~~13%~~14% during the ~~third~~first quarter of ~~2022.~~2023.

The net revenue ~~decrease~~increase in the Wizards of the Coast and Digital Gaming segment during the ~~third~~first quarter of ~~2022~~2023 was attributable to ~~lower~~higher net revenues from Wizards of the Coast tabletop gaming products, most notably, MAGIC: THE GATHERING, driven by ~~release~~the number and timing of set releases compared to the ~~third~~first quarter of ~~2021, and lower~~2022. In addition, higher digital ~~and licensed~~ gaming net revenues contributed to the increase, primarily reflecting the addition of net revenues from ~~Magic: The Gathering Arena~~ ~~and~~D&D Beyond, acquired during the second quarter of 2022. These increases were partially offset by lower net revenues from Dungeons & Dragons: Dark Alliance, launched during the first half of ~~2021.~~2021, and lower licensing net revenues from certain of the Company's licensed digital gaming brands.

Wizards of the Coast and Digital Gaming segment operating profit was ~~$102.2~~$76.8 million, or ~~33.7%~~26.0% of segment net revenues for the ~~third~~first quarter of ~~2022,~~2023, compared to operating profit of ~~$159.4~~$106.4 million, or ~~44.3%~~40.5% of segment net revenues, for the ~~third~~first quarter of ~~2021.~~2022. The operating profit decrease during the ~~third~~first quarter of ~~2022~~2023 was ~~the result of lower sales combined with~~driven by higher product development costs, higher administrative expenses and higher advertising expense as we continue to invest in ~~digital gaming~~Wizards of the Coast and Digital Gaming initiatives, ~~and~~including in talent, to support long-term growth within the ~~segment, as well as~~segment. In addition, higher ~~royalty expenses related to the release of~~ ~~Magic: The Gathering Universes Beyond: Warhammer 40,000,~~product costs and ~~higher~~ intangible asset amortization expense related to the acquisition of D&D ~~Beyond. These cost increases were partially offset by lower depreciation expenses and reduced advertising and promotion costs~~Beyond contributed to the operating profit decrease during the ~~third~~first quarter of ~~2022.~~2023.

Entertainment Segment

The following table presents Entertainment segment net revenues by category for the quarters ended ~~September 25, 2022~~April 2, 2023 and ~~September 26, 2021.~~March 27, 2022.


		Quarter Ended				Quarter Ended
		September 25, 2022		September 26, 2021				April 2, 2023		March 27, 2022
Film and TV	Film and TV	$	188.6	$	255.4		Film and TV	$	168.4	$	190.2
Family Brands	Family Brands	13.6		60.5			Family Brands	17.0		23.2
Music and Other	Music and Other	9.4		11.2			Music and Other	—		14.1
Net revenues	Net revenues	$	211.6	$	327.1		Net revenues	$	185.4	$	227.5

Entertainment segment net revenues declined ~~35%~~19% to ~~$211.6~~$185.4 million for the ~~third~~first quarter of ~~2022,~~2023, compared to ~~$327.1~~$227.5 million for the ~~third~~first quarter of ~~2021~~2022 and included the impact of an unfavorable ~~$5.0~~$4.3 million foreign currency translation. Absent the impact of foreign currency exchange, Entertainment segment net revenues declined ~~$110.5~~$37.6 million or ~~34%~~17% during the ~~third~~first quarter of ~~2022.~~2023.

The net revenue decrease during the ~~third~~first quarter of ~~2022~~2023 was primarily the result of lower ~~film~~unscripted television net revenues due to the timing of deliveries compared to the ~~third quarter of 2021, which included films such as~~ ~~Come From Away~~ ~~and~~ ~~Finch,~~ ~~with no comparable film deliveries during the third~~first quarter of 2022, and lower film production net revenues reflecting fewer film deliveries in the first quarter of 2023 compared to the first quarter of 2022 which included films such as Deep Water and Clifford the Big Red Dog. These net revenue declines were partially offset by higher scripted net revenues from ~~streaming~~deliveries that include, The Rookie season five; The Rookie: Feds; and A Gentleman in Moscow. In addition, lower entertainment content sales ~~compared to~~within the ~~third quarter of 2021 which benefited from the September 2021 release of~~ ~~MY LITTLE PONY: A NEW GENERATION.~~ ~~Additionally, lower transactional and licensing net revenues on acquired films, and lower net revenues from unscripted television deliveries compared to the third quarter of 2021~~Family Brands category contributed to the ~~decline.~~decline in the first quarter of 2023, due to the renewal of certain multi-year content deals in the first quarter of 2022, with no comparable activity in 2023.

Entertainment segment operating losses were ~~$28.9~~$8.7 million, or ~~13.7%~~4.7% of segment net revenues for the ~~third~~first quarter of ~~2022~~2023, compared to operating profit of ~~$22.4~~$12.2 million, or ~~6.8%~~5.4% of segment net revenues for the ~~third~~first quarter of ~~2021.~~2022.

The decrease in Entertainment segment operating results during the ~~third~~first quarter of ~~2022~~2023 primarily ~~reflect~~reflects lower net revenues, driven by the ~~mix~~timing and volume of programming delivered, ~~as well as~~and higher advertising expense, driven by support for the ~~loss on assets held for sale~~theatrical release of $23.1 million and asset impairment charges of $3.7 million, recorded during the third quarter of 2022 related to the exit of certain non-core businesses within the Entertainment segment as part of the Company's strategic review. In addition, Entertainment segment operating results reflect the allocation of $9.0 million of intangible asset amortization costs to the Consumer Products segmentDungeons & Dragons: Honor Among Thieves in ~~2022, as described above.~~March 2023. These impacts to operating results were partially offset by lower ~~advertising and administrative costs and lower~~ royalty expense due to the decrease in entertainment deliveries during the ~~third~~first quarter of 2022.

Corporate and Other Segment

The Corporate and Other segment operating losses were ~~$15.8~~$4.2 million for the ~~third~~first quarter of ~~2022~~2023 compared to operating losses of ~~$24.3~~$7.2 million for the ~~third~~first quarter of ~~2021.~~2022. The improvement in operating results in the ~~third~~first quarter of ~~2022~~2023 was primarily the result of lower administrative expenses, ~~and lower advertising costs,~~partially offset by ~~severance~~Operational Excellence program related consultant fees and ~~other employee charges and consultant fees~~transformation office expenses associated with Company's ~~strategic review and related~~ cost-savings initiatives described ~~above.~~

~~First Nine Months 2022~~

~~The following table presents net revenues and operating profit (loss) for the Company's principal segments for each of the nine-month periods ended September 25, 2022 and September 26, 2021.~~

Nine Months Ended
September 25, 2022 September 26, 2021 %
Change
Net revenues
Consumer Products segment $ 2,567.8 $ 2,625.8 -2 %
Wizards of the Coast and Digital Gaming segment 986.1 1,008.7 -2 %
Entertainment segment *
624.3 772.5 -19 %
Operating Profit (Loss)
Consumer Products segment $ 138.9 $ 260.5 -47 %
Wizards of the Coast and Digital Gaming segment 434.2 462.3 -6 %
Entertainment segment *
(2.4) (74.3) 97 %
Corporate and Other (37.3) (56.7) 34 %

* Entertainment segment net revenues and operating loss, for the nine-month period ended September 26, 2021 include $65.2 million and ($91.8) million, respectively, from eOne Music, which was sold at the beginning of the third quarter of 2021.

~~Consumer Products Segment~~

~~The following table presents the Consumer Products segment net revenues by major geographic region for the nine-month periods ended September 25, 2022 and September 26, 2021.~~

Nine Months Ended
September 25, 2022 September 26, 2021
North America $ 1,531.8 $ 1,559.1
Europe 610.4 669.2
Asia Pacific 201.6 208.7
Latin America 224.0 188.8
Net Revenues $ 2,567.8 $ 2,625.8

The Consumer Products segment net revenues decreased 2% to $2,567.8 million for the first nine months of 2022 compared to $2,625.8 million for the first nine months of 2021 and included the impact of an unfavorable $72.6 million currency translation. Absent the impact of foreign currency exchange, Consumer Products segment net revenues increased $14.5 million or 1%.

~~In the first nine months of 2022, the Consumer Products segment benefited from higher sales of the Company's Partner Brands for MARVEL and STAR WARS,~~above, as well as higher sales of PEPPA PIG and PLAY-DOH products. To a lesser extent, higher sales of MY LITTLE PONY, POWER RANGERS and PJ MASKS products contributed to the increase. Offsetting these increases were lower sales of certain Partner Brands, notably, the Company's products for DISNEY FROZEN, DISNEY PRINCESS and BEYBLADE and lower sales of MONOPOLY, NERF, TRANSFORMERS and certain Hasbro Gaming products. Net revenue declines in North America and, to a lesser extent, in Asia Pacific markets were partially offset by higher net revenues in Latin American markets during the first nine months of 2022. In Europe, absent the unfavorable foreign currency exchange impact of $58.0 million, net revenues remained flat.

Consumer Products segment operating profit for the first nine months of 2022 was $138.9 million or 5.4% of segment net revenues, compared to segment operating profit of $260.5 million or 9.9% of segment net revenues, for the first nine months of 2021. The decrease in operating profit in the first nine months of 2022 was driven by lower sales volumes and higher sales allowances combined with increased obsolescence charges related to higher inventory balances, primarily across Europe and North America. In addition, the operating profit decrease was the result of increased marketing and sales ~~costs, increased warehouse~~ expenses and higher product costs, including higher distribution costs driven by increased freight costs, primarily in Europe. As noted above, in alignment with the revenue generated from the assets acquired in the eOne Acquisition, Consumer

~~Products segment operating profit for the first nine months of 2022 includes $28.9 million of intangible amortization, which was reported in 2021~~ within the ~~Entertainment segment results. This allocation of intangible amortization drove a 1.1% decline in operating margin for the Consumer Products~~ segment. These negative impacts were partially offset by price increases implemented during the second half 2021 and during the first nine months of 2022 and lower advertising and promotion costs as the Company aligned consumer products advertising closer to key holiday and retailer planned promotional periods.

~~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 the nine-month periods ended September 25, 2022 and September 26, 2021.~~

Nine Months Ended
September 25, 2022 September 26, 2021
Tabletop Gaming $ 800.3 $ 760.1
Digital and Licensed Gaming 185.8 248.6
Net revenues $ 986.1 $ 1,008.7

Wizards of the Coast and Digital Gaming segment net revenues decreased 2% in the first nine months of 2022 to $986.1 million from $1,008.7 million in the first nine months of 2021 and included the impact of an unfavorable $19.9 million foreign currency translation. Absent the impact of foreign currency exchange, Wizards of the Coast and Digital Gaming Segment net revenues were relatively flat.

Net revenues in the Wizards of the Coast and Digital Gaming segment during the first nine months of 2022 were driven primarily by higher net revenues from Wizards of the Coast tabletop gaming products, most notably, MAGIC: THE GATHERING, due to the number of strong performing card set releases. These net revenue increases were offset by lower DUNGEONS & DRAGONS tabletop gaming net revenues and lower digital gaming net revenues from ~~Magic: The Gathering Arena~~ ~~and~~ ~~Dungeons & Dragons: Dark Alliance, released during 2021 without comparable releases in 2022.~~

Wizards of the Coast and Digital Gaming segment operating profit was $434.2 million, or 44.0% of segment net revenues for the first nine months of 2022, compared to operating profit of $462.3 million, or 45.8% of segment net revenues for the first nine months of 2021. The operating profit decrease during the first nine months of 2022 was the result of higher inventory costs and higher royalty expenses attributable to sales of ~~Magic: The Gathering Universes Beyond: Warhammer 40,000~~, and higher product development costs. These increases were partially offset by lower advertising expenses and lower depreciation costs compared to the first nine months of 2021, where the Company incurred higher costs associated with the launch of the mobile version of ~~Magic: The Gathering Arena~~ ~~and~~ ~~Dungeons & Dragons: Dark Alliance~~.

~~Entertainment Segment~~

~~The following table presents Entertainment segment net revenues by category for the nine-month periods ended September 25, 2022 and September 26, 2021.~~

Nine Months Ended
September 25, 2022 September 26, 2021
Film and TV $ 527.0 $ 586.1
Family Brands 59.6 105.4
Music and Other * 37.7 81.0
Net revenues $ 624.3 $ 772.5

*Music and Other category net revenues for the nine-month period ended September 26, 2021 includes $65.2 million from eOne Music, which was sold at the beginning of the third quarter of 2021.

Entertainment segment net revenues for the nine months ended September 25, 2022 decreased 19% to $624.3 million from $772.5 million for the nine months ended September 26, 2021, and included the impact of an unfavorable $11.4 million foreign currency translation. Absent the impact of foreign currency exchange, Entertainment segment net revenues declined $136.8 million or 18% during the third quarter of 2022.

The segment net revenue decrease during the first nine months of 2022 was driven by the sale of eOne Music business in the third quarter of 2021 which accounted for $65.2 million or 8.4% of segment net revenues in the first nine months of 2021. In

addition, lower film deliveries, the timing of certain scripted television content deliveries and lower net revenues from streaming content sales compared to the third quarter of 2021 which benefited from the September 2021 release of ~~MY LITTLE PONY: A NEW GENERATION. These decreases were partially offset by higher net revenues from unscripted programming deliveries and higher net revenues from touring live shows during the first nine months of 2022.~~

Entertainment segment operating losses were $2.4 million, or 0.4% of net revenues, for the nine months ended September 25, 2022, compared to operating losses of $74.3 million, or 9.6% of segment net revenues, for the nine months ended September 26, 2021. The improved operating results during the first nine months of 2022 were driven by the second quarter 2021, non-cash impairment charge of $101.8 million associated with the sale of eOne Music, the allocation of $28.8 million of intangible asset amortization costs to the Consumer Products segment during the first nine months of 2022, as well as lower royalty expenses and lower program amortization costs, reflecting the mix of programming delivered during the first nine months of 2022. These impacts to segment operating results were partially offset by a loss on assets held for sale of $23.1 million and asset impairment charges of $3.7 million recorded during the third quarter of 2022 related to the implementation of the Company's Operational Excellence program, as well as the impact of the sale of the eOne Music business described above.

~~Corporate and Other Segment~~

Operating losses in the Corporate and Other Segment for the first nine months of 2022 were $37.3 million, compared to operating losses of $56.7 million for the first nine months of 2021. The decline in operating losses during the first nine months of 2022 was the result of lower royalty and administrative expenses and lower advertising costs, partially offset by severance and other employee related charges and consultant fees associated with Company's strategic review and related cost-savings initiatives described above. Operating losses in 2021 included transaction costs associated with the sale of eOne Music described above.

OPERATING COSTS AND EXPENSES

~~Third Quarter 2022~~

The Company's costs and expenses, stated as percentages of net revenues, are illustrated below for the quarters ended ~~September 25, 2022~~April 2, 2023 and ~~September 26, 2021.~~March 27, 2022.


		Quarter Ended					Quarter Ended
		September 25, 2022		September 26, 2021			April 2, 2023		March 27, 2022
Cost of sales	Cost of sales	35.0	%	30.9	%	Cost of sales	28.5	%	28.6	%
Program cost amortization	Program cost amortization	8.7	%	9.5	%	Program cost amortization	12.2	%	11.9	%
Royalties	Royalties	8.1	%	8.7	%	Royalties	6.9	%	7.7	%
Product development	Product development	4.9	%	4.1	%	Product development	8.3	%	6.0	%
Advertising	Advertising	6.9	%	8.3	%	Advertising	8.3	%	6.7	%
Amortization of intangibles	Amortization of intangibles	1.6	%	1.4	%	Amortization of intangibles	2.3	%	2.3	%
Loss on assets held for sale		1.4	%	—	%

Selling, distribution and administration	Selling, distribution and administration	21.8	%	18.4	%	Selling, distribution and administration	31.7	%	26.4	%

Cost of sales for the ~~third~~first quarter of ~~2022~~2023 was ~~$586.6~~$285.3 million, or ~~35.0%~~28.5% of net revenues, compared to ~~$609.5~~$333.1 million, or ~~30.9%~~28.6% of net revenues, for the ~~third~~first quarter of ~~2021.~~2022. The cost of sales decrease in dollars was driven primarily by lower sales volumes and cost savings realized from the Company's Operational Excellence Program, partially offset by the impact of higher closeout sales and higher sales allowances during the ~~third~~first quarter of ~~2022~~2023 compared to the ~~third~~first quarter of ~~2021. The cost~~2022. Cost of sales ~~increase~~remained consistent as a percent of net ~~revenues was the result of higher inventory obsolescence charges and higher product costs, most notably in the Company's Consumer Products business.~~revenues.

Program cost amortization decreased to ~~$146.5~~$122.5 million, or ~~8.7%~~12.2% of net revenues, for the ~~third~~first quarter of ~~2022~~2023 from ~~$187.9~~$138.5 million, or ~~9.5%~~11.9% of net revenues, for the ~~third~~first quarter of ~~2021.~~2022. Program costs are capitalized as incurred and amortized primarily using the individual-film-forecast method which matches costs to the related recognized revenue. The decrease in dollars ~~and as a percent of net revenues~~ during the ~~third~~first quarter of ~~2022~~2023 was driven by lower sales ~~volume~~ within the Entertainment segment, due primarily to the timing of deliveries ~~and~~compared to the first quarter of 2022. As a percent of net revenues, the increase in program cost amortization during the first quarter of 2023 was driven by the mix of entertainment content delivered, compared to the third quarter of 2021. These decreases were partially offset by $3.7 million of asset impairment charges recorded during the third quarter of 2022, related to discontinued projects associated with the exit of non-core business within the Entertainment segment.delivered.

Royalty expense for the ~~third~~first quarter of ~~2022~~2023 decreased to ~~$135.1~~$69.0 million, or ~~8.1%~~6.9% of net revenues, compared to ~~$171.8~~$90.1 million, or ~~8.7%~~7.7% of net revenues, for the ~~third~~first quarter of ~~2021.~~2022. Fluctuations in royalty expense are generally related to the volume of content releases and deliveries and entertainment-driven products sold. The decrease in royalty expense during the ~~third~~first quarter

of ~~2022~~2023 reflects lower sales of Partner Brands products, the exit of certain licenses and the lower number and mix of ~~Film~~film and TVtelevision deliveries ~~during the quarter, partially offset by higher royalty expenses related~~compared to the ~~release~~first quarter of ~~Magic: The Gathering Universes Beyond: Warhammer 40,000~~.2022.

Product development expense for the ~~third~~first quarter of ~~2022~~2023 was ~~$82.4~~$83.3 million, or ~~4.9%~~8.3% of net revenues, compared to ~~$80.1~~$69.6 million, or ~~4.1%~~6.0% of net revenues, for the ~~third~~first quarter of ~~2021.~~2022. The increase was ~~primarily related to~~driven by higher investments and costs to support the Company's Wizards of the Coast tabletop and digital gaming ~~initiatives, partially offset by lower product development costs within the Consumer Products segment.~~initiatives.

Advertising expense for the ~~third~~first quarter of ~~2022~~2023 was ~~$115.2 million, or 6.9% of net revenues, compared to $163.3~~$82.8 million, or 8.3% of net revenues, compared to $77.6 million, or 6.7% of net revenues, for the ~~third~~first quarter of ~~2021.~~2022. Advertising spend is generally impacted by revenue mix and the number and type of entertainment releases delivered. The advertising expense ~~decrease~~increase during the ~~third~~first quarter of 2023 was driven by advertising costs within the Entertainment and Wizards of the Coast and Digital Gaming segments, in support of the theatrical release of Dungeons & Dragons: Honor Among Thieves andadvertising costs associated with D&D Beyond, acquired during the second quarter of 2022, ~~was driven~~as well as higher advertising expense in support of certain other Wizards of the Coast and Digital

Gaming initiatives. These increases were partially offset by lower ~~expense~~advertising expenses within the Consumer Products segment, primarily due to lower revenues and Entertainment segments. In the Consumer Products segment, advertising and promotion costs declined as the Company managed its consumer products advertising closer to key holiday and retailer planned promotional periods. In the Entertainment segment, higher advertising expensemix of sales during the ~~third~~first quarter ~~2021 was driven by support for the September 2021 release~~ of ~~MY LITTLE PONY: A NEW GENERATION,~~ ~~with no comparable releases in 2022.~~2023.

Amortization of intangible assets decreased to ~~$26.9~~$23.1 million, or ~~1.6%~~2.3% of net revenues, for the ~~third~~first quarter of ~~2022,~~2023, compared to ~~$27.7~~$27.1 million, or ~~1.4%~~2.3% of net revenues, for the ~~third~~first quarter of ~~2021.~~2022. The decrease in ~~2022~~2023 reflects lower expense due to the ~~impact~~partial impairment of ~~certain~~the Company's definite-lived Power Rangers intangible assets ~~which were fully amortized~~ during ~~2021,~~the fourth quarter of 2022, partially offset by additional expense associated with assets acquired through the D&D Beyond Acquisition during the second quarter of 2022.

The loss on assets held for sale of $23.1 million, or 1.4% of net revenues, represents non-cash impairment charges associated with the exit of certain non-core businesses within the Entertainment segment.

Selling, distribution and administration expenses increased to ~~$365.8~~$317.1 million, or ~~21.8%~~31.7% of net revenues for the ~~third~~first quarter of ~~2022,~~2023, from ~~$361.8~~$307.1 million, or ~~18.4%~~26.4% of net revenues, for the ~~third~~first quarter of ~~2021.~~2022. The increase in selling, distribution and administration expenses primarily reflects consultant and transformation office charges totaling ~~$28.5~~$10.6 million ~~related to~~associated with the ~~exit of certain non-core businesses within the Entertainment segment, consisting of $21.3 million of severance charges and $7.2 million of consultant fees.~~Company's Operational Excellence program. In addition to these charges, higher personnel costs and higher marketing and sales costs ~~most notably~~ within the ~~Consumer Products~~Wizards of the Coast and Digital Gaming segment contributed to the increase. These increases were partially offset by lower compensation expense combined with lower ~~depreciation expense in the third quarter of 2022 compared to the third quarter of 2021, associated with the launch of~~ ~~Dungeons & Dragons: Dark Alliance.~~

~~First Nine Months of 2022~~

~~The Company's~~shipping costs ~~and expenses, stated as percentages of net revenues, are illustrated below for the nine-month periods ended September 25, 2022 and September 26, 2021.~~

Nine Months Ended
September 25, 2022 September 26, 2021
Cost of sales 31.9 % 28.2 %
Program cost amortization 8.8 % 9.0 %
Royalties 8.0 % 8.9 %
Product development 5.5 % 5.2 %
Advertising 6.6 % 8.1 %
Amortization of intangibles 1.9 % 2.0 %
Loss on assets held for sale 0.6 % — %
Loss on disposal of a business — % 2.3 %
Selling, distribution and administration 23.9 % 22.8 %

Cost of sales for the nine months ended September 25, 2022 increased to $1,331.2 million, or 31.9% of net revenues, from $1,244.4 million, or 28.2% of net revenues for the nine months ended September 26, 2021. The cost of sales increase in dollars and as a percent of net revenues was due to higher product input costs, including higher freight and material costs and higher inventory obsolescence charges to address excess inventory, most notably within Europe and the U.S.

Program cost amortization decreased in the first nine months of 2022 to $365.7 million, or 8.8% of net revenues, from $396.1 million, or 9.0% of net revenues, in the first nine months of 2021. The program cost amortization decrease during the first nine months of 2022, was driven by the volume and mix of programming revenues during the first nine months of 2022 compared to the first ~~nine months of 2021, partially offset by $3.7 million of asset impairment charges recorded during the third~~ quarter of 2022 ~~related~~where costs were higher due to ~~discontinued projects associated with the exit of non-core business within the Entertainment segment.~~

Royalty expense for the nine months ended September 25, 2022 was $335.3 million, or 8.0% of net revenues, compared to $392.2 million, or 8.9% of net revenues, for the nine months ended September 26, 2021. The decrease in royalty expense in dollars was driven by the impact of the sale of eOne Music and the mix of Film and TV deliveries during the first nine months of 2022. In addition, certain licensing agreements acquired through the eOne Acquisition expired, which carried higher royalty expenses in prior periods. These decreases were partially offset by higher royalty expenses related to the release of ~~Magic: The Gathering Universes Beyond: Warhammer 40,000~~. The decrease in royalty expense as a percent of net revenues during the first nine months of 2022 was the result of a higher percentage of product sales that do not carry significant royalty expenses.

Product development expense for the nine months ended September 25, 2022 was $231.2 million, or 5.5% of net revenues, from $229.1 million, or 5.2% of net revenues, for the nine months ended September 26, 2021. Product development expense in the first nine months of 2022 was consistent with the first nine months of 2021, reflecting the Company’s continued investment in innovation and anticipated growth across our brand and entertainment portfolios.

Advertising expense for the nine months ended September 25, 2022 was $277.0 million, or 6.6% of net revenues, compared to $356.6 million, or 8.1% of net revenues, for the nine months ended September 26, 2021. The advertising expense decrease during the first nine months of 2022 was driven by lower expense within the Entertainment segment related to the sale of the eOne Music business combined with a shift in the type of entertainment releases delivered and higher advertising expense during the third quarter 2021, driven by support for the September 2021 release of ~~MY LITTLE PONY: A NEW GENERATION~~ with no comparable releases in 2022. In addition, the advertising expense decrease was the result of lower expense within the Wizards of the Coast and Digital Gaming segment, compared to the first nine months of 2021, where advertising expense was driven by support for the launch of the mobile version of ~~Magic: The GatheringArena~~ ~~and~~ ~~Dungeons & Dragons: Dark Alliance,~~ with no comparable releases in 2022. Additionally, in 2022 the Company managed its consumer products advertising programs closer to key holiday and retailer planned promotional periods which contributed the decrease during the first nine months of 2022.

Amortization of intangible assets was $81.2 million, or 1.9% of net revenues, for the nine months ended September 25, 2022 compared to $90.3 million, or 2.0% of net revenues, in the first nine months of 2021. The decrease in 2022 is related to the discontinuation of amortization related to the eOne Music intangible assets following the sale of eOne Music in the third quarter of 2021. This decline was partially offset by additional expense associated with assets acquired through the D&D Beyond Acquisition during the second quarter of 2022.

For the nine months ended September 25, 2022, the Company's selling, distribution and administration expenses remained relatively flat at $1,000.1 million, or 23.9% of net revenues compared to $1,004.7 million, or 22.8% of net revenues, for the nine months ended September 26, 2021. Selling, distribution and administration expenses in the first nine months of 2022 includes charges of $28.5 million related to the exit of certain non-core businesses within the Entertainment segment consisting of $21.3 million of severance charges and $7.2 million of consultant fees. In addition to these charges, the 2022 expense reflects higher marketing and sales costs, most notably within the Consumer Products segment, partially offset by lower depreciation expense during the first nine months of 2022 compared to the first nine months of 2021, associated with the launch of ~~Dungeons & Dragons: Dark Alliance.~~

The loss on assets held for sale of $23.1 million, or 0.6% of net revenues, represents non-cash impairment charges associated with the exit of certain non-core businesses within the Entertainment segment.

~~The loss on disposal of business of $101.8 million, or 2.3% of net revenues during the first nine months of 2021, represents a non-cash impairment charge associated with the disposition of eOne Music.~~global supply chain disruptions.

NON-OPERATING EXPENSE (INCOME)

Interest expense for the ~~third~~first quarter ~~and first nine months~~ of ~~2022~~2023 totaled ~~$41.9~~$46.3 million ~~and $125.2 million, respectively,~~ compared to ~~$43.3 million and $137.3~~$41.6 million in the ~~third~~first quarter ~~and first nine months~~ of ~~2021, respectively.~~2022. The ~~decrease~~increase in interest expense during the ~~third quarter and~~ first ~~nine months of 2022 primarily reflects long-term debt repayments made during the fourth~~ quarter of ~~2021 and the first nine months of 2022,~~2023 reflects higher interest expense related to borrowings ~~utilized for~~from the ~~eOne Acquisition.~~Company's production financing credit facilities.

Interest income was ~~$3.2 million and $8.0~~$6.0 million for the ~~third~~first quarter ~~and first nine months~~ of ~~2022, respectively,~~2023 compared to ~~$1.8 million and $4.2~~$2.1 million in the ~~third~~first quarter ~~and first nine months~~ of ~~2021, respectively.~~2022. Higher interest income in 2022 primarily reflects higher average interest rates in ~~2022~~2023 compared to ~~2021 contributed to the increase for the three and nine-month periods.~~2022.

Other (income), net was ~~$(10.0) million and $(9.5)~~$(1.4) million for the ~~third~~first quarter ~~and first nine months~~ of ~~2022, respectively,~~2023 compared to other expense, ~~(income),~~ net of ~~$3.0 million and $(35.3)~~$0.3 million in the ~~third~~first quarter of 2022. The increase in 2023 was driven primarily by the revaluation of certain contingent consideration liability balances and first nine months of 2021, respectively. The decrease in 2022 was primarily driven by a $26.7 million gain from a legal settlement realized during the first nine months of 2021 with no comparable gain in 2022 and lowerhigher earnings from the Company's joint venture with Discovery, partially offset by higher foreign exchange ~~gains during the first nine months of 2022 compared to~~ losses during the first ~~nine months of 2021. Other income during the third~~ quarter of ~~2022 reflects~~2023 compared to the ~~$9.1 million expense in the third~~first quarter of ~~2021 for debt extinguishment costs in connection with the early repayment of the Company's $300.0 million of 2.6% notes, with no~~

~~comparable cost in 2022 and foreign exchange gains during the third quarter of 2022 compared to losses during the third of 2021.~~2022.

INCOME TAXES

Income tax expense totaled ~~$37.4~~$0.7 million on pre-tax ~~income~~loss of ~~$165.6~~$21.0 million in the ~~third~~first quarter of ~~2022~~2023, compared to income tax expense of ~~$68.5~~$17.3 million on pre-tax income of ~~$323.4~~$80.2 million in the ~~third~~first quarter of 2021. For the first nine months of 2022, income tax expense totaled $94.1 million on pre-tax income of $425.7 million, compared to an income tax expense of $143.5 million on pretax income of $494.0 million for the first nine months of 2021.2022. Both periods were impacted by discrete tax events including the accrual of potential interest and penalties on uncertain tax positions. During the first ~~nine months~~quarter of ~~2022, favorable~~2023, unfavorable discrete tax adjustments were a net ~~benefit~~expense of ~~$6.7~~$3.3 million, compared to a net ~~expense~~benefit of ~~$8.8~~$2.3 million in the first ~~nine months~~quarter of ~~2021.~~2022. The unfavorable discrete tax adjustments for the first quarter of 2023 are primarily associated with stock-based compensation. The favorable discrete tax adjustments for the first ~~nine months~~quarter of 2022 ~~are~~were primarily associated with ~~(i)~~ the release of certain valuation allowances during the first quarter; (ii) the decrease to our liability for uncertain tax positions that resulted from statutes of limitations expiring in certain jurisdictions; and (iii) a benefit on the loss on assets held for sale in the ~~third~~ quarter. The unfavorable discrete tax adjustments for the first nine months of 2021 were primarily associated with (i) the revaluation of net deferred tax liabilities as a result of the United Kingdom's ("UK") enactment of Finance Act 2021 during the second quarter, which increases the UK corporate income tax rate from 19% to 25% as of April 1, 2023; (ii) a one-time tax charge related to an ongoing tax audit; (iii) a release of a valuation allowance on net operating losses that offsets income received from a one-time legal settlement; and (iv) certain tax benefits, including the reversal of uncertain tax positions and operational tax planning. In addition, included in first nine months of 2021 is a goodwill impairment charge on the sale of eOne Music, recorded in the second quarter of 2021 for which there is no corresponding tax benefit. Absent discrete items, the tax rates for the first ~~nine months~~quarter of 2023 and 2022 were 12.2% and ~~2021 were 22.3% and 23.3%~~24.4%, respectively. The decrease in the base rate ~~to 22.3%~~of 12.2% for the first ~~nine months~~quarter of ~~2022~~2023 is primarily due to the mix of jurisdictions ~~where~~in which the Company earned its ~~profits.~~

~~On August 16, 2022, President Biden signed into law~~profits and lower overall earnings in the Inflation Reduction Act, which included various tax provisions. The two main tax provisions, a 15% alternative corporate minimum tax based on financial statement income and a 1% excise tax on corporate stock buy backs, are not expected to have a material impact to the Company.first quarter of 2023.

OTHER INFORMATION

Business Seasonality and Shipments

Within the retail sector, the Company’s revenue pattern from toys and games and licensed consumer products continues to ~~show~~indicate the second half of the year to be more significant to its overall business for the full year. The Company expects that this concentration will continue. 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. 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.

~~Prior to the onset of the COVID-19 pandemic, quick~~Quick response inventory management practices being used by retailers, along with growth in ecommerce ~~resulted~~result in the increasing trend of order placement for immediate delivery and fewer orders being placed well in advance of shipment. Retailers ~~preferred~~prefer timing their orders for fulfillment by suppliers closer to the time of purchase by consumers. To the extent that retailers ~~did~~do not sell as much of their year-end inventory purchases during the holiday selling season as they ~~had anticipated,~~anticipate, their demand for additional product earlier in the following fiscal year could be curtailed, thus negatively impacting the Company’s future revenues. ~~However, more recently~~In 2022, the Company's inventory levels and retailer order patterns ~~reflect~~reflected the impact of global ~~supply chain disruptions, which began in late 2020~~consumer

demand as ~~economies slowly recovered from COVID-19 shutdowns, while consumer demand~~it began to outpace the capacity of the global supply chain infrastructure. Supply chain constraints, including overcrowding of cargo ports and shipping container and truck transportation shortages led to higher costs for ocean, air and over the road freight and delays in the availability of products, due to extended inventory transit times. These and other disruptions continued to some extent through the third quarter of 2022. During the first half of 2022, the Company accelerated certain inventory purchases, to ensure sufficient finished goods and raw material availability ahead of expected periods of high consumer demand. However, during the ~~third quarter~~second half of 2022, the effects of supply chain disruptions began to subside, most notably the U.S, and Europe, leading to higher inventory levels heading into fiscal 2023, as compared to prior years. ~~As a result, the~~The Company is ~~launching incremental year-over-year promotional activity behind key holiday toy~~continuing to closely manage its inventory levels through closeout sales and ~~game items~~by monitoring consumer purchase patterns, to ~~reduce~~ensure adequate supply of new product while clearing excess supply to mitigate the risk of inventory ~~on hand and at retail.~~

obsolescence.

Unlike the Company's retail sales patterns, revenue patterns from the Company's entertainment businesses fluctuate based on the timing and popularity of television, film, streaming and digital content releases. Release dates are determined by factors including the timing of holiday periods, geographical release dates and competition in the market.

Russian Sanctions

As a result of the military conflict in Ukraine, which has led to sanctions and other penalties being levied by the United States, European Union and other countries against Russia, the Company ~~has~~ paused all shipments and new content distribution into Russia. The impact to the Company’s operating results includes a loss of both revenue and operating profit. As of ~~the nine-month period ended September~~December 25, 2022, the Company ~~has~~had exhausted all locally held inventories, recovered all receivables and released all reserves in Russia. ~~For the full year 2021, our revenue in Russia was $115 million, with approximately 70% earned in the second half of the year.~~ Any longstanding disruptions may magnify the impact of other risks described in this Quarterly Report on Form 10-Q and in the Company's Annual Report on Form 10-K for the year ended December ~~26, 2021.~~25, 2022.

Accounting Pronouncement Updates

As of ~~September 25, 2022,~~April 2, 2023, there were no recently adopted accounting standards that had a material effect on the Company’s financial statements. The Company's significant accounting policies are summarized in note 1 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December ~~26, 2021.~~25, 2022.

Recently Issued Accounting Pronouncements

~~In March~~As of ~~2020, the FASB~~April 2, 2023, there were no recently issued ~~Accounting Standards Update No. 2020-04 (ASU 2020-04) Reference Rate Reform (Topic 848):~~ ~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting.~~ The amendments in this update provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions, for a limited period of time, to ease the potential burden of recognizing the effects of reference rate reform on financial reporting. The amendments in this update apply to contracts, hedging relationships and other transactionsaccounting pronouncements that ~~reference the London Inter-Bank Offered Rate ("LIBOR") or another reference rate~~are expected to be discontinued due to the global transition away from LIBOR and certain other interbank offered rates. An entity may elect to apply the amendments provided by this update beginning March 12, 2020 through December 31, 2022. The change from LIBOR to an alternate rate has not hadhave a material impact on the Company's consolidated financial statements.

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically generated a significant amount of cash from operations. In the first ~~nine~~three months of ~~2022~~2023 and ~~2021,~~2022, the Company primarily funded its operations and liquidity needs through cash on hand and from cash flows from operations, and when needed, used borrowings under its available lines of credit. In addition, the Company’s Entertainment operating segment used production financing to fund certain of its television and film productions which are typically arranged on an individual production basis by using either the Company's revolving film and television production credit facility or through special purpose production subsidiaries. For more information on the Company's production financing facilities, including expected future repayments, see note 7 to the consolidated financial statements included in Part I, Item 1. Financial Statements, of this Form 10-Q.

~~The~~During the remainder of 2023, the Company expects to continue to fund its working capital needs primarily through available cash, cash flows from operations and from production financing facilities and, if needed, by issuing commercial paper or borrowing under its revolving credit agreement. In the event that the Company is not able to issue commercial paper, the Company intends to utilize its available lines of credit. The Company believes that the funds available to it, including cash expected to be generated from operations, funds available through its commercial paper program or its available lines of credit and production financing, are adequate to meet its working capital needs for the remainder of ~~2022,~~2023, including the repayment of the current portion of long-term debt of ~~$122.6~~$109.0 million, as shown on the consolidated balance sheets which represents the current portion of required quarterly principal amortization payments for our term loan facilities and other ~~short-term~~ production financing facilities, each as described below. The Company may also issue debt or equity securities from time to time, to provide additional sources of liquidity when pursuing opportunities to enhance our long-term competitive position, while maintaining a strong balance sheet. However, unexpected events or circumstances such as material operating losses or increased capital or other expenditures, or the inability to otherwise access the commercial paper market, may reduce or eliminate the availability of external financial resources. In addition, significant disruptions to credit markets may also reduce or eliminate the availability of external financial resources. 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.

As of ~~September 25, 2022,~~April 2, 2023, the Company's cash and cash equivalents totaled ~~$551.6~~$386.2 million, of which ~~$6.1~~$13.4 million is restricted under the Company’s production financing facilities.

Prior to 2017, deferred income taxes had not been provided on the majority of

undistributed earnings of international subsidiaries as such earnings were indefinitely reinvested by the Company. Accordingly, such international cash balances were

not available to fund cash requirements in the United States unless the Company was to change its reinvestment policy. The Company has maintained sufficient sources of cash in the United States to fund cash requirements without the need to repatriate any funds. The Tax Cuts and Jobs Act of 2017 ("the Tax Act") provided significant changes to the U.S. tax system including the elimination of the ability to defer U.S. income tax on unrepatriated earnings by imposing a one-time mandatory deemed repatriation tax on undistributed foreign earnings. As of ~~September 25, 2022,~~April 2, 2023, the Company had a total liability of $137.7 million related to this tax, $34.4 million is reflected in current liabilities while the remaining long-term payable related to the Tax Act of $103.3 million is presented within other liabilities, non-current on the consolidated balance sheets included in Part I, Item 1. Financial Statements, of this Form 10-Q. As permitted by the Tax Act, the Company will pay the transition tax in annual interest-free installments through 2025. As a result, in the future, the related earnings in foreign jurisdictions will be made available with greater investment flexibility. The majority of the Company’s cash and cash equivalents held outside of the United States as of ~~September 25, 2022~~April 2, 2023 are denominated in the U.S. dollar.

Because of the seasonality in the Company's cash flow, management believes that on an interim basis, rather than discussing only its cash flows, a better understanding of its liquidity and capital resources can be obtained through a discussion of the various balance sheet categories. Also, as several of the major categories, including cash and cash equivalents, accounts receivable, inventories and short-term borrowings, fluctuate significantly from quarter to quarter, due to the seasonality of its business, management believes that a comparison to the comparable period in the prior year is generally more meaningful than a comparison to the prior year-end.

The table below outlines key financial information (in millions of dollars) pertaining to our consolidated balance sheets including the period-over-period changes.


		September 25, 2022		September 26, 2021		% Change			April 2, 2023		March 27, 2022		% Change
Cash and cash equivalents (including restricted cash of $6.1 and $94.9)		$	551.6	$	1,181.2	-53	%
Cash and cash equivalents (including restricted cash of $13.4 and $38.8)								Cash and cash equivalents (including restricted cash of $13.4 and $38.8)	$	386.2	$	1,057.9	-63	%
Accounts receivable, net	Accounts receivable, net	1,188.8		1,476.6		-19	%	Accounts receivable, net	685.2		931.7		-26	%
Inventories	Inventories	844.5		544.1		55	%	Inventories	713.4		644.3		11	%
Prepaid expenses and other current assets	Prepaid expenses and other current assets	658.8		528.5		25	%	Prepaid expenses and other current assets	754.4		621.4		21	%
Other assets	Other assets	1,404.3		1,428.4		-2	%	Other assets	1,604.3		1,284.9		25	%
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	2,097.0		2,261.9		-7	%	Accounts payable and accrued liabilities	1,653.9		1,783.1		-7	%
Other liabilities	Other liabilities	545.1		722.5		-25	%	Other liabilities	585.2		633.6		-8	%

Accounts receivable decreased ~~19%~~26% to ~~$1,188.8~~$685.2 million ~~at September 25, 2022,~~as of April 2, 2023, compared to ~~$1,476.6~~$931.7 million ~~at September 26, 2021.~~as of March 27, 2022. The decrease in accounts receivable was driven by lower sales ~~and improved collections~~ during the first ~~nine~~three months of ~~2022.~~2023. Days sales outstanding decreased from 6873 days at ~~September 26, 2021~~March 27, 2022 to 6567 days at ~~September 25, 2022.~~April 2, 2023.

Inventories increased ~~55%~~11% to ~~$844.5~~$713.4 million as of ~~September 25, 2022,~~April 2, 2023, compared to ~~$544.1~~$644.3 million ~~at September 26, 2021.~~as of March 27, 2022. The increase in ~~2022~~during the first quarter of 2023 was driven primarily by higher inventory balances ~~reflects accelerated inventory purchases attributable to~~within the ~~Company's Consumer Products and~~ Wizards of the Coast ~~businesses,~~and Digital Gaming segment, most notably in anticipation of several upcoming MAGIC: THE GATHERING set releases, due to ~~mitigate~~release schedule timing differences compared to the ~~impact of certain global supply chain challenges experienced throughout 2021 and into 2022. Beginning in the third~~first quarter of 2022 ~~certain global supply chain constraints began~~and to ~~subside, most notably~~a lesser extent, DUNGEONS & DRAGONS product as well as TRANSFORMERS product ahead of the Transformers: Rise of the Beasts film expected in ~~the U.S. and Europe, which also contributed to the Company's higher inventory levels at September 25, 2022.~~June 2023.

Prepaid expenses and other current assets increased ~~25%~~21% to ~~$658.8~~$754.4 million ~~at September 25, 2022~~as of April 2, 2023 from ~~$528.5~~$621.4 million ~~at September 26, 2021.~~as of March 27, 2022. The increase was driven by higher accrued royalty and licensing balances, primarily attributable to the Company's Entertainment business, as well as the reclassification of certain accrued income balances from long-term to current and higher indirect tax receivable balances for certain tax jurisdictions. These increases were partially offset by lower accrued tax credit balances related to film and television production costs, due to ~~increased~~decreased productions and timing of tax credit ~~claims,~~claims.

Other assets increased 25% to $1,604.3 million as of April 2, 2023 from $1,284.9 million as of March 27, 2022. The increase was primarily driven by higher capitalized film and television production balances due to increased investments in productions compared to the first quarter of 2022, increased investments in film and television development as well as higher ~~accrued royalty and licensing~~deferred tax balances ~~primarily attributable to the Company's Entertainment business~~ and higher ~~unrealized gains on foreign exchange contracts.~~non-current receivable balances within the Entertainment segment. These increases were partially offset by lower prepaid royalty balances in relation to the Company’s MARVEL, POWER RANGERS and DISNEY PRINCESS royalty agreements, the reclassification of certain Entertainment assets as Assets Held for Sale in relation to the exit of certain non-core businesses within the Entertainment segment and from lower prepaid tax balances during the third quarter 2022.

~~Other assets decreased 2% to $1,404.3 million at September 25, 2022 from $1,428.4 million at September 26, 2021. The decrease was primarily driven~~ by a lower balance for the Company's investment in Discovery Family Channel due to ~~an impairment charge recorded in the fourth quarter of 2021 and~~ distributions received ~~in the first nine months of 2022, partially offset by higher deferred tax balances and higher non-current receivable balances within the Entertainment segment.~~during 2022.

Accounts payable and accrued liabilities decreased 7% to ~~$2,097.0~~$1,653.9 million ~~at September 25,~~as of April 2, 2023 from $1,783.1 million as of March 27, 2022 ~~from $2,261.9 million at September 26, 2021~~ driven by lower ~~incentive bonus accruals,~~accounts payable balances associated with the Company's global cost savings initiatives and the timing of payments, lower accrued ~~advertising~~royalty balances ~~reflecting lower levels~~as a result of partner brand product sales declines, including the

~~expense in 2022,~~expiration of certain partner brand licensing agreements, lower accrued freight balances ~~due to improving~~as a result of improved supply chain conditions ~~within certain markets,~~compared to the first quarter of 2022 as well as ~~the reclassification of certain Entertainment liabilities as Liabilities Held for Sale, in relation to the exit of certain non-core businesses within the Entertainment segment.~~lower accrued advertising and lower incentive bonus accrual balances. These decreases were partially offset by higher ~~accrued royalty~~severance accrual balances related to ~~sales of partner brand products during~~ the ~~first nine months of 2022.~~Company's cost savings initiatives mentioned above.

Other liabilities decreased ~~25%~~8% to ~~$545.1~~$585.2 million ~~at September 25, 2022~~as of April 2, 2023 from ~~$722.5~~$633.6 million ~~at September 26, 2021.~~as of March 27, 2022. The decrease was primarily driven by lower long-term deferred tax balances reflecting the amortization of deferred tax liabilities and the impact of foreign exchange revaluation, primarily related to the British Pound, lower long-term lease liability balances, a lower transition tax liability balance reflecting the reclassification of the 2022 installment payment due April 2023 and lower long-term pension liability balances. These decreases were partially offset by an increase to the liability for uncertain tax positions and a ~~lower Discovery option agreement balance due to a revaluation of the Discovery Family Channel investment during the fourth quarter of 2021.~~higher long-term lease liability balance.

Cash Flow

The following table summarizes the changes in the Consolidated Statement of Cash Flows, expressed in millions of dollars, for the ~~nine-month~~three-month periods ended ~~September 25, 2022~~April 2, 2023 and ~~September 26, 2021.~~March 27, 2022.


		September 25, 2022		September 26, 2021			April 2, 2023		March 27, 2022
Net cash provided by (utilized for):	Net cash provided by (utilized for):					Net cash provided by (utilized for):
Operating activities	Operating activities	$	262.2	$	685.6	Operating activities	$	88.8	$	134.7
Investing activities	Investing activities	(265.8)		277.5		Investing activities	(55.6)		(23.9)
Financing activities	Financing activities	(443.0)		(1,223.5)		Financing activities	(156.6)		(77.5)

Net cash provided by operating activities in the first ~~nine~~three months of ~~2022~~2023 was ~~$262.2~~$88.8 million compared to ~~$685.6~~$134.7 million in the first ~~nine~~three months of ~~2021.~~2022. The ~~$423.4~~$45.9 million decrease in net cash provided by operating activities was primarily attributable to ~~higher working capital requirements, including higher inventory spend and cash utilized for payables and accrued liabilities.~~lower earnings during the first quarter of 2023.

Net cash utilized for investing activities was ~~$265.8~~$55.6 million in the first ~~nine~~three months of ~~2022~~2023 compared to net cash ~~provided by~~utilized for investing activities of ~~$277.5~~$23.9 million in the first ~~nine~~three months of ~~2021. The increase in cash used reflects a cash payment of $146.3 million related to the D&D Beyond Acquisition during the second quarter of~~ 2022. ~~Investing activities in 2021 include $379.2 million of proceeds, net of cash sold, from the sale of eOne Music.~~ Additions to property, plant and equipment were ~~$130.7~~$53.2 million in the first ~~nine~~three months of ~~2022~~2023 compared to ~~$98.1~~$29.2 million in the first ~~nine~~three months of ~~2021.~~2022, reflecting increased investments in the Company's digital gaming initiatives within the Wizards of the Coast and Digital Gaming segment.

Net cash utilized for financing activities was ~~$443.0~~$156.6 million in the first ~~nine~~three months of ~~2022~~2023 compared to ~~$1,223.5~~$77.5 million in the first ~~nine~~three months of ~~2021.~~2022. Financing activities in the first ~~nine~~three months of 2023 include a $30.0 million principal amortization payment toward the Five-Year Tranche loan described below, as well as drawdowns of $42.8 million and repayments of $54.8 million related to production financing loans. Financing activities in the first quarter of 2022 include payments totaling ~~$72.5~~$57.5 million related to the $1.0 billion in term loans ~~described below,~~ consisting of a $50.0 million principal and a quarterly principal amortization payment of ~~$22.5~~$7.5 million toward the Five-Year Tranche loan, ~~as well as~~in addition to drawdowns of ~~$204.5~~$112.2 million and repayments of ~~$189.2~~$84.0 million, related to production financing ~~loans and cash payments of $125.0 million to repurchases the Company's common stock.~~

~~Financing activities in the first nine months of 2021 include:~~

•~~early repayment of $300.0 million aggregate principal of 2.60% Notes due 2022 and related debt extinguishment costs of $9.1 million during the third quarter;~~

•~~repayment of $300.0 million aggregate principal amount of 3.15% Notes due 2021, during the first quarter;~~

•payments totaling $372.5 million related to the $1.0 billion in term loans described below consisting of $300.0 million for the remaining principal balance of the Three-Year Tranche loans and $50.0 million principal and quarterly principal amortization payments totaling $22.5 million toward the Five-Year Tranche loan; and

•~~drawdowns of $127.6 million and repayments of $89.6 million related to production financing~~ loans.

Dividends paid in the first ~~nine~~three months of ~~2022~~2023 totaled ~~$288.6~~$96.7 million, compared to ~~$280.7~~$94.5 million in the first ~~nine~~three months of ~~2021~~2022 reflecting a higher dividend rate ~~commencing with~~during the ~~May 2022 dividend payment.~~

first three months of 2023.

Sources and Uses of Cash

The Company commits to inventory production, advertising and marketing expenditures in support of its consumer products business, prior to the peak fourth quarter retail selling season. Accounts receivable ~~typically~~ increase during the third and fourth quarter as customers increase their purchases to meet expected consumer demand ~~expected~~ in the holiday selling season. Due to the concentrated timeframe of this selling period, payments for these accounts receivable are generally not due until the fourth quarter or early in the first quarter of the subsequent year. This timing difference between expenditures and cash collections on accounts receivable sometimes makes it necessary for the Company to borrow amounts during the latter part of the year. In the Company's entertainment business, cash expenditures ~~of cash~~ for productions are often made well in advance of sale and delivery of the content ~~produced. Trading~~produced whereas trading card and digital gaming revenues have shorter collection periods, but product development expense often occurs years prior to release and revenue generation. During the first ~~nine~~three months of ~~2022~~2023 and ~~2021,~~2022, the Company primarily used cash from operations and, to a lesser extent, borrowings under available lines of credit, in particular production financing vehicles, to fund its working capital.

The Company has an agreement with a group of banks which provides for a commercial paper program (the "Program"). Under the Program, at the request of the Company and subject to market conditions, the banks may either purchase from the Company, or arrange for the sale by the Company, of unsecured commercial paper notes. The Company may issue notes from time to time up to an aggregate principal amount outstanding at any given time of $1.0 billion. The maturities of the notes may vary but may not exceed 397 days. The notes are sold under customary terms in the commercial paper market and are issued at

a discount to par, or alternatively, sold at par and bear varying interest rates based on a fixed or floating rate basis. The interest rates vary based on market conditions and the ratings assigned to the notes by the credit rating agencies at the time of issuance. Subject to market conditions, the Company intends to utilize the Program as its primary short-term borrowing facility and does not intend to sell unsecured commercial paper notes in excess of the available amount under the revolving credit agreement discussed below. If, for any reason, the Company is unable to access the commercial paper market, the Company intends to use the revolving credit agreement to meet the Company's short-term liquidity needs. At ~~September 25, 2022,~~April 2, 2023, the Company had no outstanding borrowings related to the Program.

The Company has a second amended and restated revolving credit agreement with Bank of America, N.A., as administrative agent, swing line lender and a letter of credit issuer and lender and certain other financial institutions, as lenders thereto (the "Amended Revolving Credit Agreement"), which provides the Company with commitments having a maximum aggregate principal amount of $1.5 billion. The Amended Revolving Credit Agreement also provides for a potential additional incremental commitment increase of up to $500.0 million subject to agreement of the lenders. The Amended Revolving Credit Agreement contains certain financial covenants setting forth leverage and coverage requirements, and certain other limitations typical of an investment grade facility, including with respect to liens, mergers and incurrence of indebtedness. The Amended Revolving Credit Agreement extends through September 20, 2024. The Company was in compliance with all covenants as of ~~September 25, 2022.~~April 2, 2023. The Company had no borrowings outstanding under its committed revolving credit facility as of ~~September 25, 2022.~~April 2, 2023. However, letters of credit outstanding under this facility as of ~~September 25, 2022~~April 2, 2023 were approximately ~~$3.1~~$4.0 million. Amounts available and unused under the committed line, at ~~September 25, 2022~~April 2, 2023 were approximately $1.5 billion, inclusive of borrowings under the Company’s commercial paper program. The Company also has other uncommitted lines from various banks, of which approximately ~~$8.3~~$12.2 million was utilized at ~~September 25, 2022.~~April 2, 2023. Of the amount utilized under, or supported by, the uncommitted lines, approximately ~~$7.5~~$9.4 million and ~~$0.8~~$2.8 million represent letters of credit and outstanding short-term borrowings, respectively.

In September of 2019, the Company entered into a $1.0 billion Term Loan Agreement (the "Term Loan Agreement") with Bank of America N.A. (“Bank of America”), as administrative agent, and certain financial institutions as lenders, pursuant to which such lenders committed to provide, contingent upon the completion of the eOne Acquisition and certain other customary conditions to funding, (1) a three-year senior unsecured term loan facility in an aggregate principal amount of $400.0 million (the “Three-Year Tranche”) and (2) a five-year senior unsecured term loan facility in an aggregate principal amount of $600.0 million (the “Five-Year Tranche” and together with the Three-Year Tranche, the “Term Loan Facilities”). On December 30, 2019, the Company completed the acquisition of eOne and on that date, borrowed the full amount of $1.0 billion under the Term Loan Facilities. As of ~~September 25, 2022,~~April 2, 2023, the Company has fully repaid the Three-Year Tranche $400.0 million principal term loan, and of the Five-Year Tranche $600.0 million principal balance, the Company has repaid a total of ~~$275.0~~$320.0 million in the following increments: $22.5 million in 2020; $180.0 million in 2021; ~~and, $72.5~~$87.5 million in 2022; and, $30.0 million during the first ~~nine~~three months of ~~2022 consisting of $50.0 million principal and a quarterly principal amortization payment of $22.5 million.~~2023. The Company is subject to certain financial covenants contained in this agreement and as of ~~September 25, 2022,~~April 2, 2023, the Company was in compliance with these covenants. The terms of the Term Loan Facilities are described in note 7 to the consolidated financial statements included in Part I of this Form 10-Q.

During November 2019, in conjunction with the Company's acquisition of eOne, the Company issued an aggregate of $2.4 billion of senior unsecured debt securities (collectively, the "Notes") consisting of the following tranches: $300 million of notes due 2022 (the "2022 Notes") that bear interest at a fixed rate of 2.60%; $500 million of notes due 2024 (the "2024 Notes") that

bear interest at a fixed rate of 3.00%; $675 million of notes due 2026 (the "2026 Notes") that bear interest at a fixed rate of 3.55%; and $900 million of notes due 2029 (the "2029 Notes") that bear interest at a fixed rate of 3.90%. During the third quarter of 2021 the Company repaid in full, its 2022 Notes in the aggregate principal amount of $300.0 million, including early redemption premiums and accrued interest of $10.8 million. The terms of the Notes are described in note 7 to the consolidated financial statements in Part I of this Form 10-Q.

The Company uses production financing facilities to fund its film and television productions which are arranged on an individual production basis by either special purpose production subsidiaries, each secured by the assets and future revenues of such production subsidiaries, which are non-recourse to the Company's assets, or through a senior revolving credit facility obtained in November 2021, dedicated to production financing. The Company's senior revolving film and television production credit facility (the “RPCF”) with MUFG Union Bank, N.A., as administrative agent and lender and certain other financial institutions, as lenders thereto (the “Revolving Production Financing Agreement”) provides the Company with commitments having a maximum aggregate principal amount of $250.0 million. The Revolving Production Financing Agreement also provides the Company with the option to request a commitment increase up to an aggregate additional amount of $150.0 million subject to agreement of the lenders. The Revolving Production Financing Agreement extends through November 22, 2024. The Company uses the RPCF to fund certain of the Company’s original film and TV production costs. Borrowings under the RPCF are non-recourse to the Company's assets. The Company expects to utilize the revolving production financing facility for the majority of its future production financing needs. During the first ~~nine~~three months of ~~2022,~~2023, the Company had total drawdowns of ~~$204.5~~$42.8 million and repayments of ~~$189.2~~$54.8 million towards these production financing facilities. As of ~~September 25, 2022,~~April 2, 2023, the Company had outstanding production financing borrowings related to these facilities of ~~$184.9~~$183.5 million, ~~$62.6~~$49.0 million of

which are recorded within the current portion of long-term debt and ~~$122.3~~$134.5 million are recorded within short-term borrowings in the Company's consolidated balance sheets, included in Part I of this Form 10-Q.

The Company has principal amounts of long-term debt as of ~~September 25, 2022~~April 2, 2023 of ~~$3.9~~$3.8 billion, due at varying times from 2024 through 2044. Of the total principal amount of long-term debt, ~~$122.6~~$109.0 million is current at ~~September 25, 2022~~April 2, 2023 of which $60.0 million is related to principal amortization of the 5-year term loans due December 2024 and ~~$62.6~~$49.0 million represents the Company's outstanding production financing facilities at April 2, 2023. In addition to the early repayment of the 2022 Notes described ~~above. During~~above, during the first quarter of 2021, the Company repaid in full, its 3.15% Notes in the aggregate principal amount of $300.0 million due in May 2021, including accrued interest. ~~All of~~See note 7 to the Company’s ~~other~~consolidated financial statements in Part I of this Form 10-Q for additional information on long-term ~~borrowings have contractual maturities that occur subsequent to the third quarter of 2024, with the exception of certain of the Company’s production financing facilities discussed above.~~debt and long-term debt interest repayment, respectively.

The Company also had letters of credit and other similar instruments of approximately ~~$10.6~~$13.4 million and purchase commitments of approximately ~~$357.4~~$331.7 million outstanding at ~~September 25, 2022.~~April 2, 2023.

Other contractual obligations and commercial commitments, as detailed in the Company's ~~2021~~2022 Form 10-K, did not materially change outside of certain payments made in the normal course of business and as otherwise set forth in this report.

The Company has a long history of returning cash to its shareholders through quarterly dividends and share repurchases. ~~Hasbro increased the~~Hasbro's next quarterly dividend ~~rate from $0.68 per share to~~of $0.70 per share ~~effective for~~is payable on May 15, 2023 to shareholders of record as of May 1, 2023. In addition to the dividend, ~~paid in May 2022. The~~the Company ~~also~~periodically returns cash to shareholders through its share repurchase program. As part of this initiative, since 2005 the Company's Board of Directors (the "Board") adopted numerous share repurchase authorizations with a cumulative authorized repurchase amount of $4.3 billion. The most recent authorization was approved in May 2018 for $500 million. ~~Following the Company's acquisition of eOne, the Company temporarily suspended its share repurchase program to prioritize deleveraging. In~~At April 2022, given the Company's progress towards reducing debt, the Company resumed its share repurchase activity and has since repurchased approximately 1.4 million shares at a total cost of $125.0 million and at an average price of $87.46 per share. At September 25, 2022, the Company had2, 2023, $241.6 million ~~remaining~~remained available under these share repurchase authorizations. ~~Share~~There were no share repurchases ~~are subject to market conditions,~~made during the ~~availability~~first quarter of ~~funds and other uses of funds.~~2023. The Company has no obligation to repurchase shares under the authorization, and the timing, actual number, and value of the shares that are repurchased, if any, will depend on a number of factors, including the price of the Company’s stock and the Company's generation of, and uses for, cash.

The Company believes that cash from operations, and, if necessary, its committed line of credit and other borrowing facilities, will allow the Company to meet its obligations over the next twelve months.

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES

The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. As such, management is required to make certain estimates, judgments and assumptions that it believes are reasonable based on the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the periods presented. The significant accounting policies which management believes are the most critical to aid in fully understanding and evaluating the Company's reported financial results include film and television production costs, recoverability of goodwill

and intangible assets and income ~~taxes and business combinations.~~taxes. Additionally, the Company identified the valuation of the Company’s equity method investment in Discovery Family Channel as a significant accounting estimate. These critical accounting policies are the same as those detailed in the Company's ~~2021~~2022 Form 10-K.

FINANCIAL RISK MANAGEMENT

The Company is exposed to market risks attributable to fluctuations in foreign currency exchange rates primarily as the result of sourcing products priced in U.S. dollars, Hong Kong dollars and Euros while marketing and selling those products in more than twenty currencies. Results of operations may be affected primarily by changes in the value of the U.S. dollar, Euro, British pound sterling, Canadian dollar, Japanese Yen, Brazilian real and Mexican peso and, to a lesser extent, other currencies in Latin American and Asia Pacific countries.

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. 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. dollar. The Company believes, however, that the on-going 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. A significant change in foreign exchange rates can materially impact the Company's revenues and earnings due to translation of foreign-denominated revenues and expenses. The Company does not hedge against translation impacts of foreign exchange. From time to time, affiliates of the Company may make or receive intercompany loans in currencies other than their functional currency. The Company manages this exposure at the time the loan is made by using foreign exchange contracts.

The Company reflects derivatives 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 ~~September 25, 2022,~~April 2, 2023, these contracts had net unrealized ~~gains~~losses of ~~$38.4~~$2.0 million, of which ~~$36.9~~$3.1 million of unrealized gains are recorded in prepaid expenses and other current assets, ~~$1.8~~$0.1 million of unrealized gains are recorded in other assets and ~~$0.3~~$5.2 million of unrealized losses are recorded in accrued liabilities. Included in accumulated other comprehensive loss at ~~September 25, 2022~~April 2, 2023 are deferred ~~gains,~~losses, net of tax, of ~~$22.4~~$4.0 million, related to these derivatives.

At ~~September 25, 2022,~~April 2, 2023, the Company had ~~principal amounts of~~fixed-rate long-term debt of ~~$3.9~~$3.8 billion. In May 2014, the Company issued an aggregate $600.0 million of long-term debt which consisted of $300.0 million of 3.15% Notes, subsequently repaid in 2021, and $300.0 million of 5.10% Notes due 2044. Prior to the May 2014 debt issuance, the Company entered into forward-starting interest rate swap agreements with a total notional value of $500.0 million to hedge the anticipated underlying U.S. Treasury interest rate. These interest rate swaps were matched with this debt issuance and were designated and effective as hedges of the change in future interest payments. At the date of issuance, the Company terminated these swap agreements and their fair value at the date of issuance was recorded in accumulated other comprehensive loss and is being amortized through the consolidated statements of operations using an effective interest rate method over the life of the related debt. Included in accumulated other comprehensive loss at ~~September 25, 2022~~April 2, 2023 are deferred losses, net of tax, of ~~$15.0~~$14.7 million related to these derivatives.

INFLATION

The ~~impact of inflation on the~~ Company's business operations ~~has~~for the periods presented have been ~~significant during the first nine months of 2022 compared to prior years. However,~~impacted by inflationary pressures however, due to mitigating actions taken by the Company, such as price increases ~~where deemed necessary,~~implemented during 2022, the impact of general price inflation on our financial position and results of operations has been reduced. The Company continues to monitor the impact of inflation to its business operations on an ongoing basis and may need to adjust ~~its~~ prices further to mitigate the impact of changes to the rate of inflation in future periods. However, future volatility of general price inflation could affect consumer purchases of our products and spending on entertainment. Additionally, the impact of inflation on costs and availability of materials, costs for shipping and warehousing and other operational overhead, could adversely affect the Company's financial results.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The information required by this item is included in Part I, Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and is incorporated herein by reference.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures

The Company maintains disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of ~~September 25, 2022.~~April 2, 2023. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective.

Changes in internal control over financial reporting

There were no changes in the Company's internal control over financial reporting, as defined in Rule 13a-15(f) promulgated under the Exchange Act, during the quarter ended ~~September 25, 2022~~April 2, 2023 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is currently party to certain legal proceedings, none of which it believes to be material to its business or financial condition.

Item 1A. Risk Factors.

In connection with information set forth in this Quarterly Report on Form 10-Q, the risk factors discussed under Item 1A. Risk Factors, in Part I of our ~~2021~~2022 Form 10-K and in our subsequent filings, including in this filing, should be considered. The risks set forth in our ~~2021~~2022 Form 10-K and in our subsequent filings, including in this filing, could materially and adversely affect our business, financial condition, and results of operations. There are no material changes from the risk factors as previously disclosed in our ~~2021~~2022 10-K, in any of our subsequently filed reports or as otherwise set forth in this Quarterly ~~Report.~~Report, except as set forth below.

Our entertainment business could be adversely affected by strikes or other union job actions.

Any strike by, or lockout of, one or more of the unions that provide personnel essential to the production of films or television programs, such as the strike by the writers’ union in May 2023, could delay or halt our ongoing production activities. Halts or delays, depending on the length of time, could cause a delay or interruption in our release of new films and television programs, which could impact our entertainment business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~Repurchases Made in the Quarter (in whole dollars and number of shares)~~

Period (a) Total
Number of
Shares (or
Units)
Purchased (b)
Average
Price Paid
per Share
(or Unit) (c) Total
Number of
Shares (or
Units)
Purchased
as Part of
Publicly
Announced
Plans or
Programs (d)
Maximum
Number (or
Approximate
Dollar
Value) of
Shares (or
Units) that
May Yet Be
Purchased
Under the
Plans or
Programs
July 2022
6/27/22 – 7/24/22 11,679 $ 85.70 11,679 $ 241,621,269
August 2022
7/25/22 – 8/28/22 — $ — — $ 241,621,269
September 2022
8/29/22 – 9/25/22 — $ — — $ 241,621,269
Total 11,679 $ 85.70 11,679 $ 241,621,269

In May 2018, the Company announced that its Board of Directors authorized the repurchase of an additional $500 million of common ~~stock.~~stock, its most recent share repurchase authorization. Purchases of the Company's common stock may be made from time to time, subject to market conditions. These shares may be repurchased in the open market or through privately negotiated transactions. The Company has no obligation to repurchase shares under this authorization and there is no expiration date for this repurchase authorization. The timing, actual number, and value of shares that are repurchased will depend on a number of factors, including the price of the Company's stock and the Company’s generation of, and uses for, cash.

There were no repurchases of the Company’s Common Stock during the quarters ended April 2, 2023 and March 27, 2022. At April 2, 2023, Hasbro had $241.6 million remaining available under its share repurchase authorization.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits



3.1			Restated Articles of Incorporation of the Company. (Incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the period ended July 2, 2000, File No. 1-6682.)

3.2			Amendment to Articles of Incorporation, dated June 28, 2000. (Incorporated by reference to Exhibit 3.4 to the Company's Quarterly Report on Form 10-Q for the period ended July 2, 2000, File No. 1-6682.)

3.3			Amendment to Articles of Incorporation, dated May 19, 2003. ~~(Incorporated~~(Incorporated by reference to Exhibit 3.3 to the Company's Quarterly Report on Form 10-Q for the period ended June 29, 2003, File No. 1-6682.)

3.4			Second Amended and Restated Bylaws of the Company (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated September 30, 2022, File No. 1-6682).

3.5			Certificate of Designations of Series C Junior Participating Preference Stock of Hasbro, Inc. dated June 29, 1999. (Incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the period ended July 2, 2000, File No. 1-6682.)

3.6			Certificate of Vote(s) authorizing a decrease of class or series of any class of shares. (Incorporated by reference to Exhibit 3.3 to the Company's Quarterly Report on Form 10-Q for the period ended July 2, 2000, File No 1-6682.)

4.1			Indenture, dated as of July 17, 1998, by and between the Company and The Bank of New York Mellon Trust Company, N.A. as successor Trustee to Citibank, N.A. as Trustee. (Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated July 14, 1998, File No. 1-6682.)

4.2			Indenture, dated as of March 15, 2000, by and between the Company and The Bank of New York Mellon Trust Company, N.A. as successor Trustee to the Bank of Nova Scotia Trust Company of New York. (Incorporated by reference to Exhibit 4(b)(i) to the Company's Annual Report on Form 10-K for the fiscal year ended December 26, 1999, File No. 1-6682.)

4.3			First Supplemental Indenture, dated as of September 17, 2007, between the Company and The Bank of New York Mellon Trust Company, N.A. as successor Trustee to the Bank of Nova Scotia Trust Company of New York. (Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed September 17, 2007, File No. 1-6682.)

4.4			Second Supplemental Indenture, dated as of May 13, 2009, between the Company and The Bank of New York Mellon Trust Company, N.A. as successor Trustee to the Bank of Nova Scotia Trust Company of New York. (Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed May 13, 2009, File No. 1-6682.)

4.5			Third Supplemental Indenture, dated as of March 11, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. as successor Trustee to the Bank of Nova Scotia Trust Company of New York. ~~(Incorporated~~(Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed March 11, 2010, File No. 1-6682.)

4.6			Fourth Supplemental Indenture, dated May 13, 2014, between the Company and The Bank of New York Mellon Trust Company, N.A. as successor Trustee to the Bank of Nova Scotia Trust Company of New York. (Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed May 13, 2014, file No. 1-6682.)

4.7			Fifth Supplemental Indenture, dated September 13, 2017, between the Company and The Bank of New York Mellon Trust Company, N.A. as successor Trustee to the Bank of Nova Scotia Trust Company of New York. (Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed September 13, 2017, file No. 1-6682.)

4.8			Sixth Supplemental Indenture dated as of November 19, 2019, among the Company and The Bank of New York Mellon Trust Company, N.A. and U.S. Bank, National Association, supplementing the Indenture dated as of March 15, 2000. (Incorporated by reference to Exhibit 1.2 to the Company’s Current Report on Form 8-K filed November 19, 2019, File No. 1-6682.)

10.1**			Transitional Advisory Services Agreement between the Company and Deborah Thomas (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 14, 2023, File No. 1-6682 .)

10.2**			Letter Agreement with Gina Goetter, dated April 3, 2023.

10.3**			Letter Agreement with Tim Kilpin, dated March 29, 2023.

10.4**			Form of 2023 Stock Option Agreement under the Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan.

10.5**			Form of 2023 Restricted Stock Unit Award under the Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan.


10.6**			Form of 2023 Contingent Stock Performance Award under the Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan.

10.7			First Amendment to Credit Agreement, dated April 12, 2023 (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 14, 2023, File No. 1-6682)

10.8			First Amendment to Term Loan Agreement, dated April 12, 2023 (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on April 14, 2023, File No. 1-6682)

















31.1*			Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2*			Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

32.1*			Certification of the Chief Executive Officer Pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934.

32.2*			Certification of the Chief Financial Officer Pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934.

101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document.



101.SCH			XBRL Taxonomy Extension Schema Document

101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB			XBRL Taxonomy Extension Labels Linkbase Document

101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF			XBRL Taxonomy Extension Definition Linkbase Document

* Furnished herewith

** Indicates management contract or compensatory plan, contract or arrangement

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			HASBRO, INC.
			(Registrant)

Date: ~~October 26, 2022~~May 3, 2023			By: /s/ Deborah Thomas
			Deborah Thomas
			Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)


Nine Months Ended September 25, 2022
	Common Stock		Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Treasury Stock	Noncontrolling Interests	Total Shareholders' Equity		Redeemable Noncontrolling Interests
Balance, December 26, 2021	$	110.1	2,428.0	4,257.8	(235.3)	(3,534.7)	37.2	$	3,063.1	$	23.9
Net earnings attributable to Hasbro, Inc.	—			332.4	—	—	—	332.4		—
Net loss attributable to noncontrolling interests	—		—	—	—	—	(1.4)	(1.4)		0.6
Change in put option value	—		(0.4)	—	—	—	—	(0.4)		—
Other comprehensive loss	—		—	—	(89.6)	—	—	(89.6)		—
Stock-based compensation transactions	—		31.0	—	—	22.1	—	53.1		—
Purchases of common stock	—		—	—	—	(125.0)	—	(125.0)		—
Stock-based compensation expense	—		65.8	—	—	0.5	—	66.3		—
Dividends declared	—		1.2	(292.4)	—	—	—	(291.2)		—
Distributions paid to noncontrolling owners and other foreign exchange	—		—	—	—	—	(12.8)	(12.8)		(1.5)
Buyout of redeemable noncontrolling interest	$	—	4.5	—	—	—	—	$	4.5	$	(23.0)
Balance, September 25, 2022	$	110.1	2,530.1	4,297.8	(324.9)	(3,637.1)	23.0	$	2,999.0	$	—

Nine Months Ended September 26, 2021
	Common Stock		Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Treasury Stock	Noncontrolling Interests	Total Shareholders' Equity		Redeemable Noncontrolling Interests
Balance, December 27, 2020	$	110.1	2,329.1	4,204.2	(195.0)	(3,551.7)	40.0	$	2,936.7	$	24.4

Net earnings attributable to Hasbro, Inc.	—		—	346.5	—	—	—	346.5		—
Net earnings attributable to noncontrolling interests	—		—	—	—	—	2.4	2.4		1.6
Other comprehensive loss	—		—	—	(13.6)	—	—	(13.6)		—
Stock-based compensation transactions	—		4.2	—	—	9.6	—	13.8		—

Stock-based compensation expense	—		55.1	—	—	1.1	—	56.2		—
Dividends declared	—		—	(281.1)	—	—	—	(281.1)		—
Distributions paid to noncontrolling owners and other foreign exchange	—		0.5	—	—	—	(4.2)	(3.7)		(3.1)
Balance, September 26, 2021	$	110.1	2,388.9	4,269.6	(208.6)	(3,541.0)	38.2	$	3,057.2	$	22.9


Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
July 2022
6/27/22 – 7/24/22	11,679	$	85.70	11,679	$	241,621,269
August 2022
7/25/22 – 8/28/22	—	$	—	—	$	241,621,269
September 2022
8/29/22 – 9/25/22	—	$	—	—	$	241,621,269
Total	11,679	$	85.70	11,679	$	241,621,269