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What changed in Hasbro's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Hasbro's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+572 added−611 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-22)

Top changes in Hasbro's 2023 10-K

572 paragraphs added · 611 removed · 377 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

98 edited+65 added−85 removed55 unchanged
Biggest changeAs a result, our products not only compete with those offerings produced by other toy and game manufacturers and companies offering branded family play and entertainment, we also compete, particularly in meeting the demands of older children, with entertainment offerings of many technology companies, such as makers of tablets, mobile devices, video games and other digital gaming products and screens, and social media companies. 20 Table of Contents The changing trends in consumer preferences with respect to entertainment and low barriers to entry as well as the emergence of new technologies and different mediums for viewing content, such as the growing number of streaming platform options, continually creates new opportunities for existing competitors and start-ups to develop products and offerings that compete with our entertainment and toy and game offerings.
Biggest changeAs a result, our products not only compete with those offerings produced by other toy and game manufacturers and companies offering branded family play and entertainment, we also compete, particularly in meeting the demands of older children, with entertainment offerings of many technology companies, such as makers of tablets, mobile devices, video games and other digital gaming products and screens, and social media companies.
The value of Hasbro is fully activated when we can take a brand across multiple elements of Blueprint 2.0 including consumer products such as toys, games and licensed products; digital gaming; entertainment and experiences; and our Hasbro Direct business.
The value of Hasbro is fully activated when we can take a brand across multiple elements of Blueprint 2.0 including consumer products such as digital gaming; toys, games and licensed products; entertainment and experiences; and our Hasbro Direct business.
Key goals and objectives in this area include: • Ensure 100% third-party suppliers and major subcontractors are audited on an annual basis through unannounced audits, supplemented by spot, oversight audits. • Require 100% of third-party suppliers and major subcontractors to participate and complete the Hasbro Ethical Sourcing Academy, a 30-hour, e-learning social compliance course, which trains and reinforces Hasbro’s rigorous ethical sourcing requirements.
Key goals and objectives in this area include: • Ensure 100% of third-party suppliers and major subcontractors are audited on an annual basis through unannounced audits, supplemented by spot, oversight audits. • Require 100% of third-party suppliers and major subcontractors to participate and complete the Hasbro Ethical Sourcing Academy, a 30-hour, e-learning social compliance course, which trains and reinforces Hasbro’s rigorous ethical sourcing requirements.
Given the ease of entry into our business we view our primary competition as coming from toy and game companies, digital gaming providers and content providers who are creating play and entertainment experiences that compete with our brand-driven storytelling and product experiences for consumer attention and spending.
Given the ease of entry into our business, we view our primary competition as coming from toy and game companies, digital gaming developers and content providers who are creating play and entertainment experiences that compete with our brand-driven storytelling and product experiences for consumer attention and spending.
Further corporate governance information, including our articles of incorporation, bylaws, governance guidelines, committee charters, and code of business conduct and ethics, is also available on our investor relations website https://hasbro.gcs-web.com, under “Corporate — Investors — Corporate Governance.” The contents of our website are not intended to be incorporated by reference into this Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. 27 Table of Contents
Further corporate governance information, including our articles of incorporation, bylaws, governance guidelines, committee charters, and code of business conduct and ethics, is also available on our investor relations website https://hasbro.gcs-web.com, under “Corporate — Investors — Corporate Governance.” The contents of our website are not intended to be incorporated by reference into this Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. 25 Table of Contents
In cases where we license our intellectual property to a third party, we enter into contracts with licensees that pay us either a sales-based or usage-based royalty, or a combination of both, for use of the brands, and, in some cases, the license arrangements are subject to minimum guaranteed amounts or fixed fees, over the term of the license.
In cases where we license our intellectual property to a third party, we enter into contracts with licensees that pay us either a sales-based or usage-based royalty, or a combination of both, for use of the brands, and, in some cases, the license arrangements are subject to minimum guaranteed amounts or fixed fees, over the term of the license. • Digital Gaming .
Focus Area: Compensation, Health, Safety & Well-being of Employees Employee attraction, development and retention has long been a key Hasbro priority.
Focus Area: Compensation, Health, Safety & Well-being of Employees Employee attraction, development, motivation and retention has long been a key Hasbro priority.
These brands generate revenues from Advertising Video-On-Demand (“AVOD”) through platforms such as YouTube and SVOD revenues from the sale of content to video streaming platforms. Our portfolio of preschool brand driven content also includes PJ MASKS, BABY ALIVE and PLAY-DOH and the development of new preschool programs and properties. • Hasbro Direct .
These brands generate revenues from Advertising Video-On-Demand (“AVOD”) through platforms such as YouTube and SVOD revenues from the sale of content to video streaming platforms. Our portfolio of preschool brand driven content also includes BABY ALIVE and PLAY-DOH and the development of new preschool programs and properties. • Hasbro Direct .
Our family brands team develops, produces and distributes animation content for children’s properties on a worldwide basis which results in multiple touchpoints across Blueprint 2.0. The principal brands include MY LITTLE PONY and PEPPA PIG whose content entertains children worldwide and generates revenues through licensing and merchandising programs across multiple retail categories.
Our family brands team develops, produces and distributes Hasbro brand-based animation content for children’s properties on a worldwide basis which results in multiple touchpoints across Blueprint 2.0. The principal brands include PEPPA PIG and MY LITTLE PONY whose content entertains children worldwide and generates revenues through licensing and merchandising programs across multiple retail categories.
Product Development and Royalties Development Our success is dependent on continuous innovation in our play and entertainment offerings and requires ongoing development of new brands and products alongside the redesign of existing products to drive consumer interest and market acceptance.
Product Development and Royalties Development Our success is dependent on continuous innovation in our storytelling and play offerings and requires ongoing development of new brands and products alongside the redesign of existing products to drive consumer interest and market acceptance.
Financial Statements , of this Form 10-K. Working Capital Requirements; Seasonality Our working capital needs are financed through available cash and cash generated from operations, primarily through the sale of toys and games and secondarily through our consumer products licensing and entertainment operations, and, when necessary, by issuing commercial paper or borrowing under our revolving credit agreement.
Financial Statements , of this Form 10-K. 14 Table of Contents Working Capital Requirements; Seasonality Our working capital needs are financed through available cash generated from operations, primarily through the sale of toys and games and secondarily through our consumer products licensing and entertainment operations, and, when necessary, by issuing commercial paper or borrowing under our revolving credit agreement.
Hasbro has used, and intends to continue to use, our investor relations website, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.
Hasbro has used, and intends to continue to use, our investor relations website, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation Fair Disclosure.
To successfully execute our gaming strategy, we consider brands which capitalize on existing trends while evolving our approach using consumer insights and data analytics and offering gaming experiences addressed to consumer demand for face-to-face, trading card and digital game experiences played as board, off-the-board, digital, card, electronic, trading card and role-playing games.
To successfully execute our gaming strategy, we consider brands which capitalize on existing trends while evolving our approach using consumer insights and data analytics, technology advancements and offering game-play experiences addressed to consumer demand for face-to-face, trading card and digital game experiences played as board, off-the-board, digital, card, electronic, trading card and role-playing games.
Therefore, we typically incur losses with respect to a particular film prior to and during the film’s theatrical release and profitability for the film may not be realized until after its theatrical release window.
Therefore, we historically incur losses with respect to a particular film prior to and during the film’s theatrical release and profitability for the film may not be realized until after its theatrical release window.
In addition, intersegment transactions are eliminated within the Corporate and Other segment. 16 Table of Contents • Additional Segment Information . ◦ To further extend our range of products in the various segments of our business, we sell a portion of our toy and game products to retailers on a direct import basis from the Far East.
In addition, intersegment transactions are eliminated within the Corporate and Other segment. • Additional Segment Information . ◦ To further extend our range of products in the various segments of our business, we sell a portion of our toy and game products to retailers on a direct import basis from the Far East.
The Children’s Television Act of 1990 and the rules and regulations of the United States Federal Communications Commission, the rules and regulations of the Federal Trade Commission, as well as the laws of certain other countries, also place limitations on television commercials during children’s programming and on advertising in other forms to children, and on the collection of information from children, such as restrictions on collecting information from children under the age of thirteen subject to the provisions of the Children’s Online Privacy Protection Act.
The Children’s Television Act of 1990 and the rules and regulations of the United States Federal Communications Commission, the rules and regulations of the Federal Trade Commission, as well as the laws of certain other countries, also place limitations on television commercials during children’s programming and on advertising in 23 Table of Contents other forms to children, and on the collection of information from children, such as restrictions on collecting information from children under the age of thirteen subject to the provisions of the Children’s Online Privacy Protection Act ("COPPA").
Investors and others should note that we announce material financial information to our investors using our investor relations website at www.hasbro.com, under “Corporate — Investors”, SEC filings, press releases, public conference calls and webcasts. We use these channels as well as social media to communicate with our shareholders and the public about our Company, our products and other matters.
Investors and others should note that we announce material financial information to our investors using our investor relations website at https://hasbro.gcs-web.com, under “Corporate — Investors”, SEC filings, press releases, public conference calls and webcasts. We use these channels as well as social media to communicate with our shareholders and the public about our Company, our products and other matters.
During 2022, the majority of our products were manufactured in third-party facilities in the Far East, primarily China, Vietnam and India, using a Hong Kong based wholly-owned subsidiary operation for quality control and order coordination purposes.
During 2023, the majority of our products were manufactured in third-party facilities in the Far East, primarily China, Vietnam and India, using a Hong Kong based wholly-owned subsidiary operation for design, quality control and order coordination purposes.
The FHSA provides for the repurchase by the manufacturer of articles that are banned. 25 Table of Contents Consumer product safety laws also exist in some states and cities within the United States and in many international markets including Canada, Australia and Europe.
The FHSA provides for the repurchase by the manufacturer of articles that are banned. Consumer product safety laws also exist in some states and cities within the United States and in many international markets including Canada, Australia and Europe.
Products are strategically cross promoted by spotlighting specific products alongside related offerings in a manner that promotes the sale of not only the selected item, but also those complementary products. As described earlier, our Blueprint 2.0 strategy includes focusing on reinforcing storylines associated with our brands through several mediums, including television, film, digital gaming and live action experiences.
Products are strategically cross promoted by spotlighting specific products alongside related offerings in a manner that promotes the sale of not only the selected item, but also those complementary products. As described earlier, our strategy includes focusing on reinforcing storylines associated with our brands through several mediums, including digital and tabletop gaming, consumer products, television, film and live action experiences.
Williams worked in different executive capacities at Microsoft Corporation, from 2018 to 2022, including most recently as General Manager and Vice President, Gaming Ecosystem Commercial Team. (4) Prior to joining Hasbro in 2022, Ms. Atkinson served as Senior Vice President of Global HR Services at Dell Technologies, from 1999 to 2021.
Williams worked in different executive capacities at Microsoft Corporation, from 2018 to 2022, including most recently as General Manager and Vice President, Gaming Ecosystem Commercial Team. (5) Prior to joining Hasbro in 2021 as the Executive Vice President of Global Talent, Ms. Atkinson served as Senior Vice President of Global HR Services at Dell Technologies, from 1999 to 2021.
Operational Excellence • Execute operational savings initiatives, including supply chain transformation, to improve operating results and reinvest in our business. 7 Table of Contents People • Invest in our people at all levels of our organization and continue to foster a diverse and inclusive culture that drives accountability and focuses on profitability.
Operational Excellence • Execute operational savings initiatives, including supply chain transformation, to improve operating results and reinvest in our business. People • Invest in and empower our people at all levels of our organization and continue to foster a diverse and inclusive culture that drives accountability and focuses on profitability.
Businesses that create compelling content can readily translate that content into a full range of product offerings. Competition is based primarily on meeting consumer preferences and on the quality and play value of our products and experiences. To a lesser extent, competition is also based on product pricing.
Businesses that create compelling content have the potential to translate that content into a full range of product offerings. Competition is based primarily on meeting consumer preferences and on the quality and play value of our products and experiences. To a lesser extent, competition is also based on product pricing.
Other aspects of our Blueprint 2.0 that help drive our storytelling experiences include digital content, location-based entertainment, and publishing. ◦ Digital Content . We understand the importance of digital content to drive fan engagement, including in gaming and across other media, and of integrating such content with our products.
Other aspects of our strategy that help drive our storytelling experiences include digital content, location-based entertainment, and publishing. ◦ Digital Content . We understand the importance of digital content to drive fan engagement, including in gaming and across other media, and of integrating such content with our products.
In addition, the Company’s Entertainment operating segment uses production financing to fund certain of its television and film productions which are typically arranged on an individual production basis by either special purpose production subsidiaries or through a senior revolving credit facility obtained in November 2021, dedicated to production financing.
In addition, during 2023 the Company’s Entertainment segment used production financing to fund certain of its television and film productions which are typically arranged on an individual production basis by either special purpose production subsidiaries or through a senior revolving credit facility obtained in November 2021, dedicated to production financing.
Hasbro's purpose of creating joy and community for all people around the world, one game, one toy, one story at a time starts with consumers and our fans, who represent multigenerational audiences that sit at the center of Blueprint 2.0.
Hasbro's purpose of creating joy and community for all people around the world, one game, one toy, one story at a time starts with consumers and our fans, who represent multigenerational audiences that sit at the center of our strategy.
Understanding our fans, expanding our fan base and delivering for them is the key driver behind our evolution as a Branded Entertainment company. The development and execution of our brands are informed by our brand insights platform, a proprietary consumer insights and data analytics system which helps us understand the behavior of our consumers.
Understanding our fans, expanding our fan base and delivering for them is the key driver behind our evolution as a brand-driven toy and game company. The development and execution of our brands are informed by our brand insights platform, a proprietary consumer insights and data analytics system which helps us understand the behavior of our consumers.
(5) Prior thereto, Senior Vice President, Chief Legal Officer and Secretary from 2018 to 2019 and Senior Vice President and Deputy General Counsel from 2010 to 2018. 26 Table of Contents Availability of Information Our internet address is http://www.hasbro.com.
(7) Prior thereto, Senior Vice President, Chief Legal Officer and Secretary from 2018 to 2019 and Senior Vice President and Deputy General Counsel from 2010 to 2018. 24 Table of Contents Availability of Information Our internet address is http://www.hasbro.com.
Reportable Segments In 2022, our four reportable segments were: • Consumer Products • Wizards of the Coast and Digital Gaming • Entertainment • Corporate and Other 15 Table of Contents Segment Description of Segment Consumer Products • Engages in the sourcing, marketing and sales of toy and game products around the world.
Reportable Segments In 2023, our four reportable segments were: • Consumer Products • Wizards of the Coast and Digital Gaming • Entertainment • Corporate and Other 13 Table of Contents Segment Description of Segment Consumer Products • Engages in the sourcing, marketing and sales of toy and game products around the world.
Many of the major U.S. studios are part of large, diversified corporate groups with a variety of other operations, including television networks and cable channels that can provide both in-house distribution capability and varied sources of earnings that may allow them to better offset fluctuations in the financial performance of their film and television operations.
Many of the major U.S. studios are part of large, diversified corporate groups with a variety of other operations, including television networks and cable channels that can provide both in-house 17 Table of Contents production and distribution capabilities and varied sources of earnings that may allow them to better offset fluctuations in the financial performance of their film and television operations.
Rights to such designs and ideas, when acquired or licensed by us, are usually exclusive and the agreements require us to pay the designer a royalty on our net sales of the item. These designer royalty agreements may also provide for advance royalties and minimum guarantees.
Rights to such designs and ideas, when acquired or licensed by us, are usually exclusive for 15 Table of Contents particular categories and the agreements require us to pay the designer a royalty on our net sales of the item. These designer royalty agreements may also provide for advance royalties and minimum guarantees.
Our subsidiary, Wizards of the Coast (“Wizards”), is a critical part of our gaming business, driving innovation and growth through its popular role-playing and fantasy card-collecting games such as MAGIC: THE GATHERING, Hasbro's first billion-dollar brand which benefited from numerous tent-pole set releases exceeding $100.0 million per set during 2022, and DUNGEONS & DRAGONS.
Our subsidiary, Wizards of the Coast (“Wizards”), is a critical part of our gaming business, driving innovation and growth through its popular role-playing and fantasy card-collecting games such as MAGIC: THE GATHERING, Hasbro's first billion-dollar brand which benefited from multiple tentpole set releases exceeding $100.0 million per set during 2023, and DUNGEONS & DRAGONS.
Additionally, we out-license certain of our brands to other third-party digital game developers who transform Hasbro brand-based characters and other intellectual properties, into digital gaming experiences.
Additionally, we out-license certain of our brands to other third-party digital game developers who transform Hasbro brand-based characters and other intellectual properties, into digital gaming experiences such as Monopoly Go! .
Hasbro delivers engaging brand experiences for global audiences through 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.
We are Creating Magic Through Play by delivering engaging brand experiences for global audiences across gaming, consumer products and entertainment, with a portfolio of iconic brands including MAGIC: THE GATHERING, Hasbro Gaming, PLAY-DOH, NERF, TRANSFORMERS, DUNGEONS & DRAGONS, and PEPPA PIG, as well as premier partner brands.
Hasbro Transformation Office Under our new strategic plan, we 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.
Hasbro Transformation Office; Operational Excellence Program Under our new strategic plan, in late 2022 we launched the Hasbro Transformation Office ("HTO"), a team of leaders dedicated to running a disciplined, purpose-built company that is simpler, more efficient and 7 Table of Contents redesigned to drive long-term sustainable growth in markets in which we compete.
Aligned with the Operational Excellence pillar of our Blueprint 2.0 transformation, we are refining all aspects of our 19 Table of Contents integrated supply chain from planning and designing to sourcing and delivering, with a multi-year plan to deliver improved capabilities and provide a productivity pipeline to fuel growth at Hasbro.
Aligned with our Operational Excellence pillar, we are refining all aspects of our integrated supply chain from planning and designing to sourcing and delivering, with a multi-year plan to deliver improved capabilities and provide a productivity pipeline to fuel growth at Hasbro.
Governance ESG governance starts with our Board of Directors (Board), with specific oversight by our Nominating, Governance and Social Responsibility Committee of the Board (Governance Committee). ESG topics, such as climate, human rights and Diversity, Equity and Inclusion (DE&I), are regular agenda items at Governance Committee meetings. The Governance Committee analyzes these issues and makes recommendations to the full Board.
Governance ESG governance starts with our Board of Directors ("Board"), with specific oversight by our Nominating, Governance and Social Responsibility Committee of the Board ("Governance Committee"). ESG topics, such as climate and environment, human rights and Diversity, Equity and Inclusion ("DE&I"), are regular agenda items at Governance Committee meetings.
To the extent that retailers did not sell as much of their year-end inventory purchases during the holiday selling season as they had anticipated, their demand for additional product earlier in the following fiscal year could be curtailed, thus negatively impacting the Company’s future revenues.
To the extent that retailers do not sell as much of their year-end inventory purchases during the holiday selling season as they had anticipated, their demand for additional product in the following fiscal year could be curtailed, thus negatively impacting the Company’s future revenues. We expect that retailers will continue to follow this strategy.
Governance Our governance of human capital management falls within the governance structure for ESG overall. The Governance Committee of the Board oversees the company’s human capital policies and practices, including the Company’s approach to promoting diversity, equity and inclusion in the workplace. The Compensation Committee of the Board oversees our compensation programs.
The following discusses our governance of human capital management and our key focus areas and priorities. Governance Our governance of human capital management falls within the governance structure for ESG overall. The Governance Committee of the Board oversees the company’s human capital policies and practices, including the Company’s approach to promoting diversity, equity and inclusion in the workplace.
Item 1. Business. Overview Hasbro, Inc. (“Hasbro”) is a global Branded Entertainment leader whose mission is to entertain and connect generations of fans through the wonder of storytelling and exhilaration of play.
Item 1. Business. Overview Hasbro, Inc. (“Hasbro”) is a toy and game company whose mission is to entertain and connect generations of fans through the wonder of storytelling and exhilaration of play.
In 2022 and 2021, the second half of the year accounted for approximately 57% and 62% of full year revenues, respectively, with the third and fourth quarters accounting for approximately 28% and 29%, respectively, of full year net revenues in 2022 and 31% of full year revenues in each of the third and fourth quarters of 2021.
In 2023 and 2022, the second half of the year accounted for approximately 56% and 57% of full year revenues, respectively, with the third and fourth quarters accounting for approximately 30% and 26%, respectively, of full year net revenues in 2023 and 28% and 29%, respectively, of full year revenues in each of the third and fourth quarters of 2022.
Risk Factors, of this Form 10-K for a further discussion of risks relating to customer concentration. Advertising We advertise many of our products extensively and brands through digital marketing and on television.
Please see Part I, Item 1A. Risk Factors, of this Form 10-K for a further discussion of risks relating to customer concentration. Advertising We advertise many of our products and brands through digital marketing, social media and on television.
Our own sales forces account for the majority of sales of our products with remaining sales generated by independent distributors who, for the most part, sell our products in areas of the world where we do not otherwise maintain a direct presence.
Our own sales forces account for the majority of sales of our products with remaining sales generated by independent distributors who, for the most part, sell our products in areas of the world where we do not otherwise maintain a direct presence. The majority of our product sales are to large chain stores, distributors, e-retailers and wholesalers.
Employees As of year-end 2022, we employed approximately 6,490 people worldwide, with approximately 53% of our employees in North America (45% in the United States; 8% in Canada), 22% in Europe, 18% in Asia Pacific, and 6% in Latin America (includes Mexico).
Employees As of year-end 2023, we employed approximately 5,502 people worldwide, with approximately 53% of our employees in North America (47% in the United States; 6% in Canada), 22% in Europe, 19% in Asia Pacific, and 6% in Latin America (includes Mexico).
The ability to build a brand and leverage in-house capabilities to create multiple categories of engagement with consumers and fans is unique to Hasbro and optimizes our economics today and in the future. Below is a summary of key areas of focus for activating our brands across Blueprint 2.0. • Toys and Games .
The ability to build a brand and leverage in-house capabilities to create multiple categories of engagement with consumers and fans is an advantage for Hasbro and helps to optimize our economics. Below is a summary of key areas of focus for activating our brands. • Toys and Games .
Net revenues from the Company’s major customers are reported within the Consumer Products segment, Wizards of the Coast & Digital Gaming segment and the Entertainment segment. Ecommerce sales continues to represent a significant portion of overall sales to these customers as consumers are continuing to purchase more products online compared to pre-pandemic levels. Please see Part I, Item 1A.
Net revenues from the Company’s major customers are reported within the Consumer Products segment, Wizards of the Coast & Digital Gaming segment and the Entertainment segment. Ecommerce sales continues to represent a significant portion of overall sales to these customers as annually, consumers are continuing to purchase more products online compared to visiting retail store locations.
Our Consumer Products business also promotes our 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.
Our Consumer Products business also promotes our brands through the out-licensing of our trademarks, characters and other brand and intellectual property rights to third parties, through the sale of branded consumer products such as toys and apparel. Additionally, through license agreements with third parties, we develop and sell products based on popular third-party brands.
Global Day of Joy takes place every December, and employees from each Hasbro office participate in service projects to benefit a variety of organizations. In 2022, 84% of eligible employees around the world completed more than 350 service projects.
Global Day of Joy is Hasbro’s annual, company-wide day of service and has become a cherished tradition. Global Day of Joy takes place every December, and employees from each Hasbro office participate in service projects to benefit a variety of organizations. In 2023, 80% of eligible employees around the world completed more than 350 service projects.
Our toys and games include action figures, arts and crafts and creative play products, dolls, play sets, preschool toys, plush products, sports action blasters and accessories, vehicles and toy-related specialty products, games and many other consumer products which represent an array of internationally recognizable brands that capture the imagination of our consumers worldwide. 9 Table of Contents Within toys and games, as a leading producer of new and innovative gaming brands and play experiences, our gaming business continues to transform game play.
Our toys and games include action figures, arts and crafts and creative play products, dolls, play sets, preschool toys, plush products, sports action blasters and accessories, vehicles and toy-related specialty products, games and many other consumer products which represent an array of internationally recognizable brands that capture the imagination of our consumers worldwide.
Licensing our brands to global publishers is another way to bring our brands to consumers in a meaningful way through various publishing formats, from puzzle and trivia books to children's stories, adult novels and comics. 11 Table of Contents • Blueprint 2.0 in Action .
Licensing our brands to global publishers is another way to bring our brands to consumers in a meaningful way through various publishing formats, from puzzle and trivia books to children's stories, adult novels and comics. 11 Table of Contents Brand Portfolios In 2023, we realigned our brand portfolios to correspond with the evolution of our strategy.
For our U.S. workforce, we also disclose our diversity by job type (based on the EEO-1 filing), which is available in our publicly available ESG Progress Report 2021-2022. The contents of our ESG Progress Report are not incorporated herein. Approximately 11% of our employees globally are covered by unions or collective bargaining agreements.
For our U.S. workforce, we also disclose our diversity by job type (based on the EEO-1 filing), which is available on our public-facing corporate website. Approximately 11% of our employees globally are covered by unions or collective bargaining agreements.
Corporate and Other • Provides management and administrative services to the Company's principal reporting segments described above. The segment consists of unallocated corporate expenses and administrative costs and activities not considered when evaluating segment performance as well as certain assets benefiting more than one segment.
The segment consists of unallocated corporate expenses and administrative costs and activities not considered when evaluating segment performance as well as certain assets benefiting more than one segment.
Prior to the onset of the COVID-19 pandemic, quick response or just-in-time inventory management practices being used by retailers, along with growth in ecommerce resulted in the increasing trend of order placement for immediate delivery and fewer orders being placed well in advance of shipment.
Moreover, quick response or just-in-time inventory management practices being used by retailers, along with growth in ecommerce results in the increasing trend of order placement for immediate delivery and fewer orders being placed well in advance of shipment. Retailers prefer timing their orders for fulfillment by suppliers closer to the time of purchase by consumers.
Beginning in late 2022, as part of Hasbro's new go-forward strategic plan we launched a multi-year initiative aimed at transforming our global supply chain into a best-in-class network which we expect to deliver competitive advantages through performance efficiency, operating model integration and organizational accountability.
Supply Chain and Manufacturing Beginning in late 2022, we launched a multi-year initiative aimed at transforming our global supply chain into a best-in-class network that delivers competitive advantages through performance efficiency, operating model integration and organizational accountability.
Below are some ESG highlights from 2022: 21 Table of Contents Recent recognition for Hasbro’s leadership in promoting and advancing the interests of our stakeholders, our communities and our planet include: Focus Area: Climate and Environment Carbon Reduction: • We recognize the impact our business can have on the environment and are working to reduce our footprint.
We integrate ESG across our business and are proud of our strategic initiatives that are intended to further our purpose and make a positive impact for our employees, consumers, investors, and planet. 18 Table of Contents Below are some ESG highlights from 2023: 19 Table of Contents Recent recognition for Hasbro’s leadership in promoting and advancing the interests of our stakeholders, our communities and our planet include: Focus Area: Climate and Sustainability Carbon Reduction: • We recognize the impact our business can have on the environment and are working to reduce our footprint.
We provide opportunities for our employees to grow their careers. We invest in the development of our employees by providing in-house training and opportunities to participate in third-party programs, including specialized training as well as broader academic pursuits. Focus Area: Philanthropy and Social Impact Giving back to our local and global communities is core to our heritage and our culture.
We invest in developing our employees by providing blended learning opportunities and in-house trainings and by offering third-party programs, including specialized trainings and broader academic pursuits. Focus Area: Philanthropy and Social Impact Giving back to our local and global communities is core to our heritage and our culture.
Focus Area: Talent Development and Performance Management We are committed to the continued development of our people. Strategic talent reviews and succession planning occur on a planned cadence annually – globally and across all business areas. The CEO and Chief People Officer convene meetings with senior company leadership and the Board to review top company talent.
Focus Area: Talent Development and Performance Management We are committed to the continued development of our people. Strategic talent assessments and succession planning occur on a planned cadence biannually – globally and across all business areas.
Licensing • Scale licensing of our brands through a growing portfolio of partners from theme park operators to toy companies, for consumers to experience our brands and drive communities of friendship and fandom around them.
Digital Gaming • Continue to cultivate our digital gaming business, through AAA games, games as a service and licensing relationships that activate our brands. 8 Table of Contents Licensing • Scale licensing of our brands through a growing portfolio of partners from theme park operators to toy companies, for consumers to experience our brands and drive communities of friendship and fandom around them.
We support our colleagues’ well-being, which includes mental, physical and financial wellness, through a number of programs, including: ◦ Wellness programming in our major offices, facilitated by the global Employee Wellness Network. ◦ Robust employee assistance programs, including virtual therapy sessions, that help employees experiencing stress or other mental health needs. ◦ Childcare solutions, including in-home and back-up care, as well as back-up adult and elder care for employees balancing work with childcare or elder care needs. ◦ Webinars for managers to help identify risk factors and types of mental health issues. ◦ Financial wellness resources offered by third-party partners that can assist our employees with retirement and other financial planning services. ◦ A commitment to flexible work arrangements to help employees with work-life balance and to take care of health needs. ◦ Hybrid or remote work set-up for many of our employees to ensure a flexible and agile work environment.
Our employee assistance program also provides coaching for both personal and professional needs and is offered to all of our employee’s household members. ◦ Childcare solutions, including in-home and back-up care, as well as back-up adult and elder care for employees balancing work with childcare or elder care needs. 22 Table of Contents ◦ Webinars for managers to help identify risk factors and types of mental health issues. ◦ Financial wellness resources offered by third-party partners that can assist our employees with retirement and other financial planning services. ◦ A commitment to flexible work arrangements to help employees with work-life balance and to take care of health needs. ◦ Hybrid or remote work set-up for many of our employees to ensure a flexible and agile work environment.
Our commitment to disciplined, strategic investments, when activated across our Blueprint 2.0 differentiates Hasbro as a purpose-driven business with diversified capabilities focused on driving profitable growth and enhancing shareholder value.
Our commitment to disciplined, strategic investments, differentiates Hasbro as a purpose-driven business with diversified capabilities focused on driving long-term, sustainable and profitable growth and enhancing shareholder value. We are focused on a number of key areas.
Our entertainment business, through eOne, is a global independent studio specializing in the development, production, distribution and sales of entertainment content. With our cross-platform capabilities our entertainment business leverages film and television production and sales, digital content and children's programming to create compelling entertainment and drive creativity across brands with merchandising and licensing tie-ins. ◦ Film and Television .
With our cross-platform capabilities our entertainment business leverages film and television production and sales, digital content and children's programming to create compelling entertainment and drive creativity and overall awareness across brands with merchandising and licensing tie-ins. ◦ Film and Television . Our go-forward primary focus is on the development, production and co-production of content based upon Hasbro brands.
Failure to comply with any of those restrictions can subject us to severe liabilities. Further, we maintain programs to comply with various United States federal, state, local and international requirements relating to the environment, health, safety and other matters. Our Canadian television and film operations benefit from certain funding and tax credits for certain productions in Canada.
Failure to comply with any of those restrictions can subject us to severe liabilities. Further, we maintain programs to comply with various United States federal, state, local and international requirements relating to the environment, health, safety and other matters. Our Executive Officers The following persons are our executive officers. Such executive officers are elected annually.
Focus Area: Human Rights and Ethical Sourcing • Our Human Rights and Ethical Sourcing program launched over 30 years ago and is dedicated to ensuring that facilities involved in the production of our toys, games and licensed consumer products comply with Hasbro’s Global Business Ethics Principles.
Climate Risk and Resilience: • We continue to work to integrate the Task Force on Climate-related Financial Disclosures ("TCFD") framework into our overall enterprise risk management ("ERM") process. 20 Table of Contents Focus Area: Human Rights and Ethical Sourcing • Our Human Rights and Ethical Sourcing program launched over 30 years ago and is dedicated to ensuring that facilities involved in the production of our toys, games and licensed consumer products comply with Hasbro’s Global Business Ethics Principles.
All of these materials are readily available but may be subject to significant fluctuations in price. There are certain chemicals (including phthalates and BPA) that national, state and local governments have restricted or are seeking to restrict or limit the use of; however, we do not believe these restrictions have or will materially impact our business.
There are certain chemicals (including phthalates and BPA) that national, state and local governments have restricted or are seeking to restrict or limit the use of; however, we do not believe these restrictions have or will materially impact our business. We generally enter into agreements with suppliers at the beginning of a fiscal year that establish prices for that year.
Human Capital Management Overview Our key human capital management objectives for our direct workforce are to attract, develop and retain diverse talent. The experience, dedication and diverse backgrounds of our employees are at the heart of our success, energizing everything we do, from developing innovative products to creating immersive game, consumer products and entertainment experiences.
The experience, dedication and diverse experiences and backgrounds of our employees are at the heart of our success, energizing everything we do, from developing innovative products to creating immersive game, consumer products and entertainment experiences. Our teams are inspired by our purpose of creating joy and community for all people around the world.
Our brands obtain marketing and advertising support through entertainment appearing on major networks globally, theatrical releases as well as on various other digital platforms, such as Netflix and Apple TV. A recent example of this was the November 2022 release of the computer-animated television series Transformers: EarthSpark on Paramount+ in partnership with Nickelodeon and Paramount.
Our brands obtain marketing and advertising support through entertainment appearing on major 16 Table of Contents networks globally, theatrical releases as well as on various other digital platforms, such as Netflix and Apple TV. A recent example of this was the September 2023 premier of the television series, Power Rangers Cosmic Fury season 30, released on the Netflix streaming platform.
When conducting our global compensation reviews, we analyze salary information by a variety of factors, including gender globally and ethnicity in the United States.
When conducting our global compensation reviews, we analyze salary information by a variety of factors, including gender globally and ethnicity in the United States. When designing our compensation and employee benefit programs, we also look beyond the fundamentals of these important components and consider the bigger picture of how these programs contribute to the overall employee experience.
In addition, under a 10 Table of Contents separate agreement entered with Paramount, we plan to release Transformers: Rise of the Beasts , a feature length film expected in Summer of 2023. ◦ Family Brands Animation .
Under this relationship we released Dungeons & Dragons: Honor Among Thieves , in early 2023, and under a separate agreement entered with Paramount, we released the feature length film, Transformers: Rise of the Beasts , in the Summer of 2023. ◦ Family Brands Animation .
Thomas (2) 59 Executive Vice President and Chief Financial Officer Since 2013 Cynthia Williams (3) 55 President and Chief Operating Officer of Wizards of the Coast and Digital Gaming Since 2022 Najuma Atkinson (4) 51 Chief People Officer Since 2022 Tarrant Sibley (5) 54 Executive Vice President and Chief Legal Officer and Secretary Since 2019 (1) Prior thereto, President and Chief Operating Officer of Wizards of the Coast and Digital Gaming from 2021, and President of Wizards of the Coast from 2014 to 2021.
Name Age Position and Office Held Period Serving in Current Position Christian Cocks (1) 50 Chief Executive Officer Since 2022 Gina Goetter (2) 47 Executive Vice President and Chief Financial Officer Since 2023 Tim Kilpin (3) 63 President, Toy, Licensing & Entertainment Since 2023 Cynthia Williams (4) 56 President and Chief Operating Officer of Wizards of the Coast and Digital Gaming Since 2022 Najuma Atkinson (5) 52 Chief People Officer Since 2022 Matthew Austin (6) 51 Chief Revenue Officer Since 2023 Tarrant Sibley (7) 55 Executive Vice President and Chief Legal Officer and Secretary Since 2019 (1) Prior thereto, President and Chief Operating Officer of Wizards of the Coast and Digital Gaming from 2021, and President of Wizards of the Coast from 2014 to 2021.
As our organization continues to evolve, we remain steadfast in our ambition to provide a supportive and inclusive community where everyone can show up authentically as themselves and deliver their best work. The following discusses our governance of human capital management and our key focus areas and priorities.
Our inclusive culture sets us up to deliver excellence, build impactful brands and expand our leadership in play, entertainment and beyond. As our organization continues to evolve, we remain steadfast in our ambition to provide a supportive and inclusive community where everyone can show up authentically as themselves and deliver their best work.
As of year-end, approximately 53% of our global workforce was female, 45% of our employees in managerial roles (director level and above) were female, and racially/ethnically diverse employees represented approximately 22% of the Company's U.S. workforce, of which 15% were in managerial roles.
As of year-end, approximately 50% of our global workforce was female, and 44% of our total managerial roles (director level and above) were female. Of our U.S. workforce, 23% were 21 Table of Contents racially/ethnically diverse, and, of those reporting race/ethnicity, 15% of U.S. managerial roles (director level and above) were racially/ethnically diverse.
LBE includes licensing our brands to theme parks, water parks, hotels and resorts, family entertainment centers, retail, dining and entertainment, shows, exhibits and exhibitions. These experiences bring our brands to life and further immerse our consumers in our storytelling in a capital efficient manner. ◦ Publishing .
These experiences bring our brands to life and further immerse our consumers in our storytelling in a capital efficient manner. ◦ Publishing .
Due to the concentrated timeframe of this selling period, payments for these 17 Table of Contents accounts receivable are generally not due until later in the fourth quarter or early in the first quarter of the subsequent year.
Due to the concentrated timeframe of this selling period, payments for these accounts receivable are generally not due until later in the fourth quarter or early in the first quarter of the subsequent year, as a result of these timing differences between expenses paid and revenues collected, from time to time it may be necessary to borrow varying amounts during the year.
The majority of our product sales are to large chain stores, distributors, e-retailers and wholesalers. 18 Table of Contents Customer Concentration During 2022, net revenues from our top five retail customers accounted for approximately 35% of our consolidated global net revenues, including our largest customers, Wal-Mart Stores, Inc. and Amazon.com who represented 11% and 10%, respectively, of consolidated global net revenues.
Customer Concentration During 2023, net revenues from our top five retail customers accounted for approximately 34% of our consolidated global net revenues, including our largest customers, Wal-Mart Stores, Inc. and Amazon.com who together represented 22% of consolidated global net revenues, with each accounting for 11%.
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.
Hasbro will continue to develop and produce animation, digital shorts, scripted TV and theatrical films for audiences related to core Hasbro IP. All retained Hasbro-branded content is included in the portfolios noted above.
Our CEO and Chief People Officer chair our internal DE&I Steering Committee, a committee comprised of global management leaders from various parts of the business. The DE&I Steering Committee is responsible for setting 23 Table of Contents and reviewing the Company’s DE&I strategy and performance and identifying any gaps and opportunities.
Our ESG Committee is responsible for developing and executing our global ESG strategy, including our human rights and ethical sourcing programs for the workers across our supply and value chain. Our CEO and Chief People Officer chair our internal DE&I Steering Committee, a committee comprised of global management leaders from various parts of the business.
In addition, Hasbro Pulse offers consumers access to product related livestreams such as fan oriented virtual conventions and product and merchandise reveals, as well as the opportunity to participate in HasLab, the Hasbro crowdfunding platform which brings limited-edition collectibles into the hands of fans. ◦ SECRET LAIR - our internet-based storefront where MAGIC: THE GATHERING fans can purchase exclusive and limited versions of cards. ◦ Magic: The Gathering Arena - the free-to-play online adaptation of the MAGIC: THE GATHERING card game. ◦ D&D Beyond - the premier digital content platform for DUNGEONS & DRAGONS. • Other Blueprint 2.0 Areas .
In addition, Hasbro Pulse offers consumers access to product related livestreams such as fan oriented virtual conventions and product and merchandise reveals, as well as the opportunity to participate in HasLab, the Hasbro crowdfunding platform which brings limited-edition collectibles into the hands of fans.
Our Senior Vice President of DE&I and Multicultural Strategy is responsible for executing the strategy and presenting our DE&I progress to the Board twice yearly.
The DE&I Steering Committee is responsible for setting and reviewing the Company’s DE&I strategy and performance and identifying any gaps and opportunities. Our Senior Vice President of DE&I and Purpose is responsible for executing the strategy and presenting our DE&I progress to the Board at least annually.
With the recent addition of D&D Beyond along with our Secret Lair web-based storefront for MAGIC: THE GATHERING cards and our Magic the Gathering: Arena digital game, we are expanding our capabilities beyond the traditional ecommerce outlet to serve our consumers and activate brands across Blueprint 2.0.
With these platforms, we are expanding and enhancing our capabilities beyond the traditional ecommerce outlet to serve our consumers and activate brands across Blueprint 2.0.
For example, we have developed and launched digital versions of the MAGIC: THE GATHERING card game, including Magic: The Gathering Arena and related mobile application, which also complement the Company's direct-to-customer relationships.
In addition, we continue to develop and enhance other digital games internally and through third parties. For example, we have developed and launched the digital version of the MAGIC: THE GATHERING card game, Magic: The Gathering Arena and its related mobile application, both of which complement the Company's direct-to-customer relationships with our new and long-time, MAGIC: THE GATHERING fan-base.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur ability to successfully implement and execute these plans and initiatives in a timely basis, if at all, is dependent on many factors, including, among other things: • our ability to successfully innovate, design, develop, price, commercialize and grow a select group of brands across our Blueprint 2.0 to global consumers in a wide array of markets; • our ability to successfully grow our digital gaming and direct-to-consumer businesses; • our ability to obtain and analyze data and insights from consumers to enable us to make informed decisions about priorities and consumer preferences; • our ability to gain market share in focus categories: Action Figures & Accessories; Arts & Crafts; Games; Outdoor & Sports; Preschool Toys; • our ability to simplify our supply chain logistics and manage inventory; • the ability of our workforce to focus and execute on priority transformational projects across the business; • the attraction and retention of key personnel with core skills and competencies in the areas of focus, including in tabletop and digital gaming, consumer products and entertainment focused on Hasbro IP; • our ability to successfully license, divest, sell, or otherwise cease certain parts of the business that are not as profitable as other areas or are not core to the business, such as certain film and television assets of eOne; and • the other risks identified in this report.
Biggest changeOur ability to successfully implement and execute these plans and initiatives in a timely basis, if at all, is dependent on many factors, including, among other things: • our ability to successfully innovate, design, develop, price, commercialize and grow a select group of brands across our Blueprint to global consumers in a wide array of markets; • our ability to successfully grow our digital gaming business; • our ability to optimize our toy business, including through right-sizing our cost structure and creating efficiencies in our operations; • our ability to implement appropriate systems and processes to obtain and analyze data and insights from consumers to enable us to make informed decisions about priorities and consumer preferences; • our ability to gain market share in our focus categories; • our ability to simplify our supply chain logistics; • our ability to successfully manage inventory; • the ability of our workforce to focus and execute on priority transformational projects across the business, and to sustain changes to maximize savings; • the attraction and retention of key personnel with core skills and competencies in the areas of focus; and • our ability to successfully license, divest, sell, or otherwise cease certain parts of the business that are not as profitable as other areas or are not core to the business.
Our financial performance may be adversely affected by our relationships with these studios, content producers and distribution channels. Some of our content producers and digital gaming developers are affiliates of major studios that develop their own content or games.
Our financial performance may be adversely affected by our relationships with these studios, content producers and distribution channels. Some of our digital gaming developers and content producers are affiliates of major studios that develop their own games or content.
In particular, our increased indebtedness could: • make it more difficult and/or costly for us to pay or refinance our debts as they become due, particularly during adverse economic and industry conditions, because a decrease in revenues or increase in costs could cause cash flow from operations to be insufficient to make scheduled debt service payments; • require a substantial portion of our available cash to be used for debt service payments, thereby reducing the availability of our cash to fund working capital, capital expenditures, development projects, acquisitions or other strategic opportunities, dividend payments, share repurchases and other general corporate purposes; • result in downgrades in the credit ratings on our indebtedness, which could limit our ability to borrow additional funds on favorable terms or at all (including in order to refinance our other debt), increase the interest rates under our credit facilities and under any new indebtedness we may incur; • make it more difficult for us to raise capital to fund working capital, make capital expenditures, pay dividends, pursue strategic initiatives or for other purposes; • result in higher interest expense, which could be further increased in case of current or future borrowings subject to variable rates of interest; • require that materially adverse terms, conditions or covenants be placed on us under our debt instruments, which could include, for example, limitations on additional borrowings or limitations on our ability to create liens, pay dividends, repurchase our common stock or make investments, any of which could hinder our access to capital markets or our flexibility in the conduct of our business and make us more vulnerable to economic downturns and adverse competitive industry conditions; and • jeopardize our ability to pay our indebtedness if our business experienced a severe downturn.
In particular, our increased indebtedness could: • make it more difficult and/or costly for us to pay or refinance our debts as they become due, particularly during adverse economic and industry conditions, because a decrease in revenues or increase in costs could cause cash flow from operations to be insufficient to make scheduled debt service payments; • require a substantial portion of our available cash to be used for debt service payments, thereby reducing the availability of our cash to fund working capital, capital expenditures, development projects, acquisitions or other strategic opportunities, dividend payments, share repurchases and other general corporate purposes; • result in downgrades in the credit ratings on our indebtedness, which could limit our ability to borrow additional funds on favorable terms or at all (including in order to refinance our other debt), increase the interest rates under our credit facilities and under any new indebtedness we may incur; • make it more difficult for us to raise capital to fund working capital, make capital expenditures, pay dividends, pursue strategic initiatives or for other purposes; • result in higher interest expense, which could be further increased in case of current or future borrowings subject to variable rates of interest; • require that materially adverse terms, conditions or covenants be placed on us under our debt instruments, which could include, for example, limitations on additional borrowings, pay dividends, repurchase our common stock or make investments, any of which could hinder our access to capital markets or our flexibility in the conduct of our business and make us more vulnerable to economic downturns and adverse competitive industry conditions; and • jeopardize our ability to pay our indebtedness if our business experienced a severe downturn.
The entertainment industry continues to experience frequent change driven by technological development and audience viewing preferences, including developments with respect to the formats through which films, television programming, and other episodic content are delivered to consumers. With rapid technological changes and dramatically expanded digital content offerings, the scale and scope of these changes have accelerated in recent years.
The entertainment industry continues to experience frequent change driven by technological development and audience viewing preferences, including developments with respect to the formats through which films, television programming, and other episodic content are delivered to consumers. With rapid technological changes and expanded digital content offerings, the scale and scope of these changes have accelerated in recent years.
We compete in the U.S. and internationally with a wide array of large and small manufacturers, marketers, and sellers of toys and games, products which combine traditional and digital play, digital gaming products, and other entertainment and consumer products, as well as with retailers who offer such products under their own private labels often at lower prices.
We compete in the U.S. and internationally with a wide array of large and small manufacturers, marketers, and sellers of toys and games, products which combine traditional and digital play, digital gaming products, and other consumer products, as well as with retailers who offer such products under their own private labels often at lower prices.
In addition to existing competitors, the barriers to entry for new participants in the play and entertainment industry are low, and the increasing importance of digital media and the heightened connection between digital media and consumer interest, has further increased the ability for new participants to enter our markets, and has broadened the array of companies we compete with.
In addition to existing competitors, the barriers to entry for new participants in the play industry are low, and the increasing importance of digital media and the heightened connection between digital media and consumer interest, has further increased the ability for new participants to enter our markets, and has broadened the array of companies we compete with.
These systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, malware and other cybersecurity breaches, catastrophic events such as hurricanes, fires, floods, earthquakes, tornadoes, acts of war or terrorism and usage errors by our employees or partners.
These systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, malware and other cybersecurity attacks and breaches, catastrophic events such as hurricanes, fires, floods, earthquakes, tornadoes, acts of war or terrorism and usage errors by our employees or partners.
Recessions or even fear or anticipation of recessions, inflation, rising interest rates and mortgage rates, credit crises and other economic downturns, or disruptions in credit markets, in the U.S. and in other markets in which we operate can result in lower levels of economic activity, lower employment levels, less consumer disposable income, and lower consumer confidence.
Recessions or even fear or anticipation of recessions, inflation, rising or fluctuating interest rates and mortgage rates, credit crises and other economic downturns, or disruptions in credit markets, in the U.S. and in other markets in which we operate can result in lower levels of economic activity, lower employment levels, less consumer disposable income, and lower consumer confidence.
Additionally, we cannot guarantee that any acquisition, disposition or investment we may make will be successful or beneficial, and acquisitions, dispositions and investments can consume significant amounts of management attention and other resources, which may negatively impact other aspects of our business.
We cannot guarantee that any acquisition, disposition or investment we may make will be successful or beneficial, and acquisitions, dispositions and investments can consume significant amounts of management attention and other resources, which may negatively impact other aspects of our business.
We have experienced increases in material costs and shortages for some of our products, due in part to higher wages being paid due to labor shortages in China and Vietnam, as well as periodic and unpredictable manufacturing shut-downs or slow-downs due to COVID-19.
We experienced increases in material costs and shortages for some of our products, due in part to higher wages being paid due to labor shortages in China and Vietnam, as well as periodic and unpredictable manufacturing shut-downs or slow-downs due to COVID-19.
The occurrence of these types of events can result, and in the case of the coronavirus has resulted in, disruptions and damage to our business, due to, among other things: • difficulties in shipping and distributing products due to ongoing port capacity, and labor, shipping container and truck transportation shortages, resulting in 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 result in lost sales; • disruptions in supply of products, due to closures or reductions in operations at third-party manufacturing facilities across several geographies including, but not limited to, China, Vietnam, India, the United States and Ireland; • adverse sales impact due to changes in consumer purchasing behavior and availability of products to consumers; • uncertain inventory availability or difficulty in anticipating demand, which can result in too little or too much supply at a given time; • interruptions, delays or postponements of entertainment productions and releases; and • challenges of working remotely.
The occurrence of these types of events can result, and in the case of COVID-19 has resulted in, disruptions and damage to our business, due to, among other things: • difficulties in shipping and distributing products due to ongoing port capacity, and labor, shipping container and truck transportation shortages, resulting in 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 result in lost sales; • disruptions in supply of products, due to closures or reductions in operations at third-party manufacturing facilities across several geographies including, but not limited to, China, Vietnam, India, the United States and Ireland; • adverse sales impact due to changes in consumer purchasing behavior and availability of products to consumers; • uncertain inventory availability or difficulty in anticipating demand, which can result in too little or too much supply at a given time; • interruptions, delays or postponements of entertainment productions and releases; and • challenges of working remotely.
Various economic conditions in the markets we, our employees, consumers, customers, suppliers and manufacturers operate, could have a significant negative impact on our revenues, profitability and business.
Various economic conditions in the markets in which we, our employees, consumers, customers, suppliers and manufacturers operate, could have a significant negative impact on our revenues, profitability and business.
These international operations, including operations in emerging markets, have unique consumer preferences and business climates, present additional challenges and are subject to risks that may significantly harm our sales, increase our costs or otherwise damage our business, including: • Currency conversion risks and currency fluctuations; • The imposition of tariffs, quotas, border adjustment taxes or other protectionist measures; • Potential challenges to our transfer pricing determinations and other aspects of our cross-border transactions, which can materially increase our taxes and other costs of doing business; • Political instability, civil unrest and economic instability, such as has been experienced between Russia and Ukraine, which has resulted in a suspension of our business activities in Russia; • Greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; 32 Table of Contents • Complications in complying with different laws in varying jurisdictions and in dealing with changes in governmental policies and the evolution of laws and regulations and related enforcement, as such laws and policies relate to our products and approval of entertainment; • Difficulties understanding the retail climate, consumer trends, local customs and competitive conditions in foreign markets which may be quite different from the U.S.; • Natural disasters and the greater difficulty and cost in recovering therefrom; • Difficulties in moving materials and products from one country to another, including port congestion, strikes, labor shortages and other events causing transportation delays and interruptions; • Increased investment and operational complexity to make our products compatible with systems in various countries and compliant with local laws; and • Changes in international labor costs and other costs of doing business internationally.
These international operations, including operations in emerging markets, have unique consumer preferences and business climates, present additional challenges and are subject to risks that may significantly harm our sales, increase our costs or otherwise damage our business, including: • Currency conversion risks and currency fluctuations; 30 Table of Contents • The imposition of tariffs, trade sanctions, quotas, border adjustment taxes or other protectionist measures; • Potential challenges to our transfer pricing determinations and other aspects of our cross-border transactions, which can materially increase our taxes and other costs of doing business; • Political instability, civil unrest and economic instability, such as has recently been experienced between Russia and Ukraine, which has resulted in a suspension of our business activities in Russia; • Greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; • Complications in complying with different laws in varying jurisdictions and in dealing with changes in governmental policies and the evolution of laws and regulations and related enforcement, as such laws and policies relate to our products and approval of entertainment; • Difficulties understanding the retail climate, consumer trends, local customs and competitive conditions in foreign markets which may be different from the U.S.; • Natural disasters and the greater difficulty and cost in recovering therefrom; • Difficulties in moving materials and products from one country to another, including port congestion, strikes, labor shortages and other events causing transportation delays and interruptions; • Increased investment and operational complexity to make our products compatible with systems in various countries and compliant with local laws; and • Changes in international labor costs and other costs of doing business internationally.
Our loss of key management or other key employees, inability to drive success through our new leaders, or our inability to retain or hire talented people with the skill sets we need for our diverse and changing business, could significantly harm our business. 34 Table of Contents If we fail to develop diverse top talent, we may be unable to compete and our business may be harmed.
Our loss of key management or other key employees, inability to drive success through our new leaders, or our inability to retain or hire talented people with the skill sets we need for our diverse and changing business, could significantly harm our business. 32 Table of Contents If we fail to develop diverse top talent, we may be unable to compete and our business may be harmed.
Further, the imposition of tariffs, border adjustment taxes, trade sanctions or other regulations or economic penalties by the U.S. or the European Union against products imported by us from China or other foreign countries, or the loss of “normal trade relations” status with China or other foreign countries in which we operate, could significantly increase our cost of products imported into the U.S. or Europe, shift more orders from direct import to domestic sales, put additional shipping and warehousing burdens on us, delay the time of our sales to retailers, result in lost sales, and otherwise harm our business.
Further, the imposition of tariffs, border adjustment taxes, trade sanctions or other regulations or economic penalties by the U.S. or the European Union against products imported by us from China or other foreign countries, or the loss of “normal trade relations” status with China or other foreign countries in which we operate, could significantly 31 Table of Contents increase our cost of products imported into the U.S. or Europe, shift more orders from direct import to domestic sales, put additional shipping and warehousing burdens on us, delay the time of our sales to retailers, result in lost sales, and otherwise harm our business.
There can be no assurance that television programs and films we produce or distribute will obtain favorable reviews or ratings, that films we produce or distribute will be popular with consumers and perform well at the box office or in other distribution channels, or that broadcasters will license the rights to broadcast any of our television programs in development or renew licenses to broadcast programs in our library.
There can be no assurance that television programs and films we or our partners develop, produce or distribute will obtain favorable reviews or ratings, that films we develop, produce or distribute will be popular with consumers and perform well at the box office or in other distribution channels, or that broadcasters will license the rights to broadcast any of our television programs in development or renew licenses to broadcast programs in our library.
We cannot be certain that the key talented individuals at these companies would continue to work for us after the acquisition or that they would develop popular and profitable products, entertainment or services in the future. Acquisitions of businesses and brands could also be adversely affected by changes in our business strategy.
We cannot be certain that the key talented individuals at these companies would continue to work for us after the acquisition or that they would develop popular and profitable products, entertainment or services in the future. Acquisitions of businesses and brands could also be adversely affected by changes in our business strategy or external factors.
We maintain systems and processes designed to protect this data, but notwithstanding such protective measures, there is a risk of intrusion, cyber-attacks or tampering that could compromise the integrity and privacy of this data. Cyber-attacks continue to increase in their frequency, sophistication and intensity, and are becoming increasingly difficult to detect.
We and our partners maintain systems and processes designed to protect this data, but notwithstanding such protective measures, there is a risk of intrusion, cyber-attacks or tampering that could compromise the integrity and privacy of this data. Cyber-attacks continue to increase in their frequency, sophistication and intensity, and are becoming increasingly difficult to detect.
If we fail to accurately assess and effectively respond to changes in technology and consumer behavior in the entertainment industry, our business may be harmed. The industries in which we compete are highly competitive. If we are unable to compete effectively with existing or new competitors, our revenues, market share and profitability could decline.
If we fail to accurately assess and effectively respond to changes in technology and consumer behavior in the entertainment industry, our business may be harmed. The industries in which we compete are highly competitive. If we are unable to compete effectively with existing or new competitors, our revenues, market share and profitability could decline. The play industry is highly competitive.
The impact of reductions in force or failing to retain key employees can be high due to increased risk of loss of important information, key knowledge and relationships, loss of creative talent, lost productivity, hiring and training costs, all of which could result in lower profitability or otherwise harm the business.
The impact of reductions in workforce or failing to retain key employees can be high due to increased risk of loss of important information, key knowledge and relationships, loss of creative talent, lost productivity, hiring and training costs, all of which could result in lower profitability or otherwise harm the business.
As a large multinational corporation, we are subject to regulatory investigations, litigation and arbitration disputes, including potential liability from personal injury or property damage claims by the users of products that have been or may be developed by us, claims by third parties that our products infringe upon or misuse such third parties’ property or rights, or claims by former employees for employment related matters.
As a large multinational corporation, we are subject to regulatory investigations, litigation and arbitration disputes, including potential liability from personal injury or property damage claims by the users of products that have been or may be developed by us, claims by third parties that our products infringe upon or misuse such third parties’ property or rights, claims by former employees for employment related matters or claims relating to media content.
We may not realize the full benefit of our licenses if the licensed material has less market appeal than expected or if revenue from the licensed products is not sufficient to earn out the minimum guaranteed royalties.
We may not realize the full benefit of our licenses if the licensed material has less market appeal than expected, if revenue from the licensed products is not sufficient to earn out the minimum guaranteed royalties or if licenses are not renewed.
The license agreements we enter to obtain these rights usually require us to pay minimum royalty guarantees that may be substantial, and in some cases may be greater than what we are ultimately able to recoup from actual sales, which could result in write-offs which, in turn, would harm our results of operations.
The license agreements we enter to obtain these rights usually require us to pay minimum royalty guarantees that may be substantial, and in some cases may be greater than what we are ultimately able to recoup from actual 28 Table of Contents sales, which could result in write-offs which, in turn, would harm our results of operations.
Further, if we are unable to negotiate favorable carrier agreements, deliver products on time or otherwise satisfy demand for our products, our business may be harmed. If we are unable to adapt our business to the continued shift to ecommerce and direct-to-consumer, our business may be harmed.
Further, if we are unable to negotiate favorable carrier agreements, deliver products on time or otherwise satisfy demand for our products, our business may be harmed. If we are unable to adapt our business to the continued shift to direct-to-consumer, our business may be harmed.
Unforeseen delays or difficulties in the development process, significant increases in the planned cost of development, or changes in anticipated consumer demand for our products and new brands may cause the introduction date for products to be later than anticipated, may reduce or eliminate the profitability of such products, result in excess inventory, or, in some situations, may cause a product or new brand introduction to be discontinued.
Unforeseen delays or difficulties in the development process, significant increases in the planned cost of development, or changes in anticipated consumer demand for our products and new brands may cause the introduction date for products to be later than anticipated, may reduce or eliminate the profitability of such 29 Table of Contents products, result in excess inventory, or, in some situations, may cause a product or new brand introduction to be discontinued.
Given that our toy and game manufacturing is conducted by third-party manufacturers, health conditions, such as the coronavirus, and other factors affecting social and economic activity where our manufacturers are located may affect the movement of people and products into and from those locations to our major markets, including North America and Europe.
Given that our toy and game manufacturing is conducted by third-party manufacturers, health conditions, such as COVID-19, and other factors affecting social and economic activity where our manufacturers are located may affect the movement of people and products into and from those locations to our major markets, including North America and Europe.
In such a situation, it may be that we would be unable to access funding under our existing credit facilities, and it might not be possible to find alternative sources of funding. 39 Table of Contents We also may choose to finance our capital needs, from time to time, through the issuance of debt securities.
In such a situation, it may be that we would be unable to access funding under our existing credit facilities, and it might not be possible to find alternative sources of funding. We also may choose to finance our capital needs, from time to time, through the issuance of debt securities.
Please refer to the cautionary statements made under the heading "Special Note Regarding Forward-Looking Statements" for more information on the qualifications and limitations on forward-looking statements. Strategic Risks Related to Our Business Our business will suffer if we are not successful in executing our Blueprint 2.0 strategy and transformation initiatives.
Please refer to the cautionary statements made under the heading "Special Note Regarding Forward-Looking Statements" for more information on the qualifications and limitations on forward-looking statements. Strategic Risks Related to Our Business Our business will suffer if we are not successful in executing our strategy and transformation initiatives.
Although we utilize our brand insights platform to gather data and analytics to help us make informed decisions, it is very difficult to predict consumer acceptance with certainty due to, among other things, the ever-increasing utilization of technology at younger and younger ages, social media and digital media in entertainment offerings, and the 28 Table of Contents increasing breadth of entertainment available to consumers.
Although we utilize our brand insights platform to gather data and analytics to help us make informed decisions, it is very difficult to predict consumer acceptance with certainty due to, among other things, the ever-increasing utilization of technology at younger and younger ages, social media and digital media in entertainment offerings, and the increasing breadth of products and entertainment available to consumers.
We can provide no assurance that we will be able to 31 Table of Contents increase prices in the future and we cannot assure that price increases we have already taken, will offset the entirety of additional costs we have incurred, and may incur in the future to mitigate the supply chain disruption.
We can provide no assurance that we will be able to increase prices in the future and we cannot assure that price increases we have already taken, will offset the entirety of additional costs we have incurred, and may incur in the future to mitigate the supply chain disruption.
The collection of personally identifiable information from anyone, including adults, is under increasing regulation in many markets, such as the General Data Protection Regulation adopted by the European Union, and data protection laws in the United States and in a number of other counties.
The collection of personally identifiable information from anyone, including adults, is under increasing regulation in many markets, such as the General Data Protection Regulation adopted by the European Union, and data protection laws in the United States 37 Table of Contents and in a number of other counties.
The efficient operation and successful growth of our business depends on these information systems, including our ability to operate them effectively and to select and implement appropriate upgrades or new technologies and systems and adequate disaster recovery systems successfully.
The efficient operation and successful growth of our business depends on these information systems, including our ability and the ability of our third-party outsourcers to operate them effectively and to select and implement appropriate upgrades or new technologies and systems and adequate disaster recovery systems successfully.
Evolving consumer tastes and shifting interests, coupled with an ever-changing and expanding pipeline of entertainment and consumer properties and products which compete for consumer interest and acceptance, create an environment in which some products and entertainment offerings can fail to achieve consumer acceptance, and other products and entertainment offerings can be popular during a certain period of time but then be rapidly replaced.
Evolving consumer tastes and shifting interests, coupled with an ever-changing and expanding pipeline of products, technology and entertainment which compete for consumer interest and acceptance, create an environment in which some products, technology and entertainment offerings can fail to achieve consumer acceptance or can be popular during a certain period of time but then be rapidly replaced.
While we obtain assurances from those parties that they have systems and processes in place to protect such data, and where applicable, that they will take steps to assure the protections of such data by third parties, those partners may also be subject to data intrusion or otherwise compromise the protection of such data.
While we obtain assurances from those parties that they have systems and processes in place to protect such data, and where applicable, that they will take steps to assure the protections of such data by third parties, those outsourcers and partners may also be subject to data intrusion or otherwise compromise the protection of 33 Table of Contents such data.
The risk of data loss or breaches is heightened during uncertain economic times, changes in business strategy and reductions in force.
The risk of data loss or breaches is heightened during uncertain economic times, changes in business strategy and reductions in workforce.
Inflation, such as what consumers in the U.S. and other economies are experiencing, can cause significant increases in the costs of other products which are required by consumers, such as gasoline, home heating fuels, or groceries, may reduce household spending on the discretionary products and entertainment we offer.
Inflation, such as what consumers in the U.S. and other economies have recently experienced, can cause significant increases in the costs of other products which are required by consumers, such as gasoline, home heating fuels, or groceries, may reduce household spending on the discretionary products and entertainment we offer.
Many of these competitors release a large number of films annually and command a significant share of box office revenues, streaming revenues, and television airtime, as well as other independent film and television production or distribution companies.
Many of these competitors release a large number of content offerings annually and command a significant share of box office revenues, streaming revenues, and television airtime, as well as other independent film and television production or distribution companies.
We and our business partners maintain significant amounts of data electronically in locations around the world and in the cloud. This data relates to all aspects of our business, including current and future products and entertainment under development, and also contains certain customer, consumer, supplier, partner and employee data.
We and our third-party outsourcers and other business partners maintain significant amounts of data electronically in locations around the world and in the cloud. This data relates to all aspects of our business, including current and future products and entertainment under development, and also contains certain customer, consumer, supplier, partner and employee data.
Financial Risks Relating to our Business Our quarterly and annual operating results may fluctuate due to seasonality in our business. Sales of our toys, games and other entertainment products are extremely seasonal, with a majority of retail sales occurring during the period from September through December in anticipation of the holiday season.
Financial Risks Relating to our Business Our quarterly and annual operating results may fluctuate due to seasonality in our business. Sales of our products are extremely seasonal, with a majority of retail sales occurring during the period from September through December in anticipation of the holiday season.
The overall effect that technological development and new digital 29 Table of Contents distribution platforms have on the revenue and profits we derive from our entertainment content, including from merchandise sales derived from such content, and the additional costs associated with changing markets, media platforms and technologies, is unpredictable.
The overall effect that technological development and new digital distribution platforms have on the revenue and profits we derive from our entertainment content, including from merchandise sales derived from such content, and the additional costs associated with changing markets, media platforms and technologies, is unpredictable.
We may also be subject to involuntary product recalls or may voluntarily conduct a product recall. While costs associated with product recalls have generally not been material to our business, the costs associated with future product recalls 40 Table of Contents individually or in the aggregate in any given fiscal year could be significant.
We may also be subject to involuntary product recalls or may voluntarily conduct a product recall. While costs associated with product recalls have generally not been material to our business, the costs associated with future product recalls individually or in the aggregate in any given fiscal year could be significant.
Global and Economic Risks Relating to our Business The global coronavirus outbreak or other similar outbreaks of communicable infections, diseases, or public health pandemics in the markets in which we and our employees, consumers, customers, partners, licensees, suppliers and manufacturers operate, could substantially harm our business.
Global and Economic Risks Relating to our Business Outbreaks of communicable infections, diseases, or public health pandemics in the markets in which we and our employees, consumers, customers, partners, licensees, suppliers and manufacturers operate, could substantially harm our business.
In 2022, our sales were adversely impacted due to the strength of the U.S. dollar compared to certain foreign currencies in territories in which we operate.
In recent years, our sales were adversely impacted due to the strength of the U.S. dollar compared to certain foreign currencies in territories in which we operate.
If we are unable to navigate through global supply chain challenges, our business may be harmed. During the past couple of years, we have faced global supply chain challenges with the production and delivery of some products being delayed due to logistics, including labor, trucking and container shortages, port congestion and other shipping disruptions.
If we are unable to navigate through global supply chain challenges, our business may be harmed. In recent years, we faced global supply chain challenges with the production and delivery of some products being delayed due to logistics, including labor, trucking and container shortages, port congestion and other shipping disruptions.
Any compromise of the confidential data of our customers, consumers, suppliers, partners, employees or ourselves, or failure to prevent or mitigate the loss of or damage to this data through breach of our 35 Table of Contents information technology systems or other means could substantially disrupt our operations, harm our customers, consumers, employees and other business partners, damage our reputation, violate applicable laws and regulations, subject us to potentially significant costs and liabilities and result in a loss of business that could be material.
Any compromise of the confidential data of our customers, consumers, suppliers, partners, employees or ourselves, or failure to prevent or mitigate the loss of or damage to this data through breach of our third party outsourcers and other business partners’ information technology systems could substantially disrupt our operations, harm our customers, consumers, employees and other business partners, damage our reputation, violate applicable laws and regulations, subject us to potentially significant costs and liabilities and result in a loss of business that could be material.
Newer and less experienced vendors are more 33 Table of Contents susceptible to product quality, logistics and other issues, due in part to their less mature infrastructure or unfamiliarity with our product standards.
Newer and less experienced vendors are more susceptible to product quality, logistics and other issues, due in part to their less mature infrastructure or unfamiliarity with our product standards.
As a result of the seasonal nature of our business, we would be significantly and adversely affected, in a manner disproportionate to the impact on a company with sales spread more evenly throughout the year, by unforeseen events such as a natural disaster, a terrorist attack, economic shock or pandemic that harms the retail environment 37 Table of Contents or consumer buying patterns during our key selling season, or by events such as strikes or port delays or other supply chain challenges that interfere with the shipment of goods, particularly from the Far East, during the critical months leading up to the holiday shopping season.
As a result of the seasonal nature of our business, we would be significantly and adversely affected, in a manner disproportionate to the impact on a company with sales spread more evenly throughout the year, by unforeseen events such as a natural disaster, a terrorist attack, economic shock or pandemic that harms the retail environment or consumer buying patterns during our key selling season, or by events such as labor or union strikes, or delays or other issues in the supply chain, particularly from the Far East, during the critical months leading up to the holiday shopping season.
If our technology and systems used to support ecommerce order processing, including through PULSE, are not effective, our ability to deliver products on time on a cost-effective basis may be adversely affected. Failure to continue to adapt our systems and supply chain and successfully fulfill ecommerce sales could harm our business.
Similarly, if our technology and systems used to support direct-to-consumer order processing are not effective, our ability to deliver products on time on a cost-effective basis may be adversely affected. Failure to continue to adapt our systems and supply chain and successfully fulfill ecommerce sales could harm our business.
We cannot guarantee that we will be able to issue commercial paper on favorable terms, or at all, at any given point in time. We also have a revolving credit agreement which provides for a $1,500.0 million committed revolving credit facility.
We 36 Table of Contents cannot guarantee that we will be able to issue commercial paper on favorable terms, or at all, at any given point in time. We also have a revolving credit agreement which provides for a $1,250.0 million committed revolving credit facility.
Complying with these regulations imposes costs on us which can reduce our profitability and our failure to successfully comply with any such legal requirements could subject us to monetary liabilities and other sanctions that could further harm our business and financial condition.
Complying with these regulations imposes costs on us which can reduce our profitability and our failure to successfully comply with any such legal requirements could subject us to monetary liabilities and other sanctions that could further harm our business and financial condition. Failure to achieve our sustainability goals could result in reputational damage.
As part of our transformation efforts, we are in the process of optimizing our supply chain by improving our systems and sourcing to enable efficient product deployment, enhance product quality and safety, drive efficiency in transportation and our fulfilment centers, and strengthen our direct-to-consumer operations.
As part of our transformation efforts, we are continuing to optimize our supply chain by improving our systems and sourcing to enable efficient product deployment, enhance product quality and safety, drive efficiency in transportation and our fulfillment centers, and strengthen our direct-to-consumer operations.
Additionally, as we continue to transform our business to execute on our Blueprint 2.0 strategy, we have reduced our headcount and may otherwise lose employees due to our decision to eliminate or reduce the amount of work performed relative to non-core aspects our business.
Additionally, as we continue to transform our business to execute on our strategic plan, we have reduced our headcount and may otherwise lose employees due to our decision to eliminate or reduce the amount of work performed relative to non-core aspects of our business and the optimization of our business.
Natural disasters or health pandemics, such as COVID-19, impacting our manufacturers had and can have a significant negative impact on our business.
Natural disasters or health pandemics impacting our manufacturers had and can have a significant negative impact on our business.
Our business may be harmed if the studios, content producers and distribution channels with which we work stop or reduce the amount of work they do with us or otherwise demand less favorable terms to us.
Our business may be harmed if the studios, content producers and distribution channels with which we work stop or reduce the amount of work they do with us or otherwise demand less favorable terms to us. If our vendors or third-party outsourcing partners fail to perform, our business may be harmed.
Consumer interests change rapidly and acceptance of products and entertainment offerings are influenced by outside factors, making it difficult to design and develop products, play patterns and entertainment offerings which are and will continue to be popular with children, families and audiences.
Consumer interests change rapidly and acceptance of products and entertainment offerings are influenced by outside factors, making it difficult to design and develop innovative products, play patterns and entertainment offerings which are and will continue to be popular with children, families and audiences. Central to our mission is to Create Magic Through Play.
We cannot guarantee that we will be able to manufacture, source and ship new or continuing products in a timely manner and on a cost-effective basis to meet constantly changing consumer demands. This risk is heightened by our customers’ compressed shipping schedules and the seasonality of our business.
If we do not operate our supply chain in an effective manner, we will not be able to manufacture, source and ship new or continuing products in a timely manner and on a cost-effective basis to meet constantly changing consumer demands. This risk is heightened by our customers’ compressed shipping schedules and the seasonality of our business.
We rely extensively on various information technology systems and software applications to manage many aspects of our business, including product development, management of our supply chain, sale and delivery of our products, royalty and financial reporting and various other processes and transactions. As part of our transformation efforts, we are also upgrading some of our technology and systems.
We rely extensively on various information technology systems and software applications to manage many aspects of our business, including product development, management of our supply chain, sale and delivery of our products, analytics, royalty and financial reporting and various other processes and transactions.
An inability to develop, introduce and ship planned products, product lines and new brands in a timely and cost-effective manner may damage our business. In developing products, product lines and new brands we have anticipated dates for the associated product and brand introductions.
An inability to develop, introduce and ship planned products, product lines and new brands in a timely and cost-effective manner could result in excess inventory, a shortage of products or otherwise damage our business. In developing products, product lines and new brands we have anticipated dates for the associated product and brand introductions.
To be successful, we must correctly anticipate the types of products (including toys, games, collectibles and technologically advanced and digital games), play patterns and entertainment which will capture consumers’ interests and imagination, and quickly develop and introduce innovative products and engaging entertainment which can compete successfully for consumers’ limited time, attention and spending.
To be successful, we must correctly 26 Table of Contents anticipate the types of products, play patterns and entertainment which will capture consumers’ interests and imagination, and quickly develop and introduce innovative products and engaging entertainment which can compete successfully for consumers’ limited time, attention and spending.
We may lose opportunities to capitalize on changing market dynamics, technological innovations or consumer tastes if we do not adapt our content offerings or distribution capabilities in a timely manner.
We may lose opportunities to capitalize on changing market dynamics, technological innovations or consumer tastes if we do not adapt to such changes in a timely manner.
Similarly, if our product offerings and entertainment fail to correctly anticipate consumer interests, our revenues and earnings will be reduced. Our business will suffer if we are unable to develop digital and technologically advanced and innovative products.
Similarly, if our product offerings and entertainment fail to correctly anticipate consumer interests, our revenues and earnings will be reduced. Our business will suffer if we are unable to innovate, develop and invest in digital gaming.
Rising fuel and raw material prices, due to inflation or otherwise, for paperboard and other components such as resin used in plastics or electronic 36 Table of Contents components, increased transportation and shipping costs, and increased labor costs in the markets in which our products are manufactured all may increase the costs we incur to produce and transport our products, which in turn may reduce our margins, reduce our profitability and harm our business.
Rising fuel and raw material prices, due to inflation or otherwise, for paperboard and other components such as resin used in plastics or electronic components, increased transportation and shipping costs, and increased labor costs in the markets in which our products are manufactured all may increase the costs we incur to produce and transport our products, which in turn may reduce our margins, reduce our profitability and harm our business. 34 Table of Contents Changes in U.S., global or regional economic conditions could impact discretionary consumer spending and harm our business and financial performance.
The global outbreak of the coronavirus which continues to adversely impact global populations, and any other variants or outbreaks of communicable infections, diseases or other adverse public health conditions in markets in which we, our employees, consumers, customers, partners, licensees, licensors, suppliers and manufacturers operate, has had and could in the future have a significant negative impact on our business, revenues and profitability.
Outbreaks of communicable infections, diseases or other adverse public health conditions, such as COVID-19, in markets in which we, our employees, consumers, customers, partners, licensees, licensors, suppliers and manufacturers operate, has had and could in the future have a significant negative impact on our business, revenues and profitability.
We incurred significant indebtedness to finance our acquisition of eOne in 2019. While we continue to pay down this indebtedness, the increase in our debt service obligations resulting from additional indebtedness could have a material adverse effect on our results of operations and financial condition.
While we continue to pay down this indebtedness, including through the use of proceeds from the sale of certain parts of eOne, the increase in our debt service obligations resulting from additional indebtedness could have a material adverse effect on our results of operations and financial condition.
Declines in the profitability of acquired brands or businesses or our decision to reduce our focus or exit these brands or businesses, such as certain non-core entertainment assets of the business, may impact our ability to recover the carrying value of the related assets and could result in an impairment charge.
Changes in strategy, shifting focus to certain lines of business, lower projections in an area of the business, declines in the profitability of acquired brands or businesses or our decision to reduce our focus or exit these brands or 35 Table of Contents businesses, such as certain non-core entertainment assets of the business, has in the past impacted and may in the future impact our ability to recover the carrying value of the related assets and could result in an impairment charge.
We cannot guarantee that we will recruit, hire or retain the key personnel we need to succeed. We have experienced significant changes in our leadership in a relatively short period of time.
We cannot guarantee that we will recruit, hire or retain the key personnel we need to succeed. We have experienced significant changes in our leadership in a relatively short period of time, with most key members of executive leadership having been appointed within the past couple of years.
That means these new vendors must successfully develop the capability to manufacture our products to the quality and safety standards we require and within the tight timeframe required by our customers.
Working with vendors who have not historically manufactured products for us means these new vendors must successfully develop the capability to manufacture our products to the quality and safety standards we require and within the tight timeframe required by our customers.
Our entertainment business is also subject to seasonal variations based on the timing of television, film, streaming and digital content releases. Release dates are determined by several factors, including the timing of holiday periods, geographical release dates and competition in the market, and more recently, the timing of release dates has been affected by the pandemic.
Our entertainment business is also subject to variations based on the timing of television, film, streaming and digital content releases or other factors, such as labor or union strikes. Release dates are determined by several factors, including the timing of holiday periods, geographical release dates and competition in the market.
Cyber-attacks could include the deployment of harmful malware and key loggers, ransomware, a denial-of-service attack, a malicious website, the use of social engineering and other means to affect the confidentiality, integrity and availability of our technology systems and data. Cyber-attacks could also include supply chain attacks, which could cause a delay in the manufacturing of our products.
Cyber-attacks could include the deployment of harmful malware and key loggers, ransomware, a denial-of-service attack, a malicious website, artificial intelligence, the use of social engineering and other means to affect the confidentiality, integrity and availability of our or third-party technology systems and data.
Additionally, as a licensee of entertainment-based properties, we cannot guarantee that a particular property or brand will translate into successful toy, game or other family entertainment products, and underperformance of any such products may result in reduced revenues and operating profit for us. 30 Table of Contents We may not realize the anticipated benefits of acquisitions, dispositions or investments in joint ventures, or those benefits may be delayed or reduced in their realization.
Additionally, as a licensee of entertainment-based properties, we cannot guarantee that a particular property or brand will translate into successful toy, game or other family entertainment products, and underperformance of any such products may result in reduced revenues and operating profit for us.
Additionally, the logistics of supplying more product within shorter time periods increases the risk that we will fail to achieve tight and compressed shipping schedules, which also may reduce our sales and harm our financial performance.
Additionally, the logistics of supplying more product within shorter time periods increases the risk that we will fail to achieve tight and compressed shipping schedules, which also may reduce our sales and harm our financial performance. The ability to accurately predict levels of inventory remains challenging in the current economic environment, and, in 2023, resulted in write-offs of excess inventory.
As a result, customers are timing their orders so that they are being filled by suppliers, such as us, closer to the time of purchase by consumers.
Similarly, ecommerce retailers tend to hold less inventory and take inventory closer to the time of sale to consumers than traditional retailers. As a result, customers are timing their orders so that they are being filled by suppliers, such as us, closer to the time of purchase by consumers.
We promote a diverse and inclusive work environment. To compete successfully, we must continuously develop a diverse group of talented people. To that end, we have set goals and objectives with respect to hiring and retention of talented, diverse employees, which we believe will foster new ideas and perspectives that will benefit our business. Competition for diverse talent is intense.
We promote a diverse and inclusive work environment. To compete successfully, we must continuously develop a diverse group of talented people representative of our fans and customers which we believe will foster new ideas and perspectives that will benefit our business, including through enhanced product innovation. Competition for diverse talent is intense.
We depend upon a relatively small retail customer base to sell the majority of our products. For the fiscal year ended December 25, 2022, Walmart, Inc. and Amazon.com, Inc. accounted for approximately 11% and 10%, respectively, of our consolidated net revenues. Similarly, sales of certain products of our Wizards business depend in part on the success of specialty hobby stores.
For the fiscal year ended December 31, 2023, Walmart, Inc. and Amazon.com, Inc. each accounted for approximately 11% of our consolidated net revenues. Similarly, sales of certain products of our Wizards business depend in part on the success of specialty hobby stores.
Our entertainment business faces global competition from major film studios and television production companies as well as other independent distributors and independent content producers.
Our entertainment business, which following the sale of our eOne film and television business is primarily focused on Hasbro and family-oriented content, faces global competition from major film studios and television production companies as well as other independent distributors and independent content producers.
Similarly, our expenses can be significantly impacted, in U.S. dollar terms, by exchange rates, meaning the profitability of our business in U.S. dollar terms can be negatively impacted by exchange rate movements which we do not control.
Similarly, our expenses can be significantly impacted, in U.S. dollar terms, by exchange rates, meaning the profitability of our business in U.S. dollar terms can be negatively impacted by exchange rate movements which we do not control. Depreciation in key currencies may have a significant negative impact on our revenues and earnings as they are reported in U.S. dollars.
In the digital gaming and entertainment industries, experienced personnel and top creative talent are in high demand and competition for their talent is intense. The increasing prevalence of remote and hybrid work creates further challenges in retaining employees as some employees desire more flexibility in their employment and the ability to work remotely or hybrid opens up more employment opportunities.
The continuing prevalence of remote and hybrid work creates further challenges in retaining employees as some employees desire more flexibility in their employment and the ability to work remotely or hybrid opens up more employment opportunities.
Technological as well as other changes caused by the pandemic have caused significant disruption to the retail distribution of entertainment offerings and have caused, and could in the future cause, a negative impact on sales of our products and other forms of monetization of content, especially those which are reliant on box office success.
Similarly, some film releases go direct to streaming channels as opposed to theaters or at the same time as theaters or have gone to streaming channels after only a short period of time in the theaters. 27 Table of Contents Technological as well as other trends in the industry have caused significant disruption to the retail distribution of entertainment offerings and have caused, and could in the future cause, a negative impact on sales of our products and other forms of monetization of content, especially those which are reliant on box office success.
In addition, we provide confidential and proprietary information to our third-party business partners in certain cases where doing so is necessary to conduct our business.
Cyber-attacks could also include supply chain attacks, which could cause a delay in the manufacturing of our products. In addition, we provide confidential and proprietary information to our third-party outsourcers and business partners in certain cases where doing so is necessary to conduct our business.
Changes in U.S., global or regional economic conditions could impact discretionary consumer spending and harm our business and financial performance. Our financial performance is impacted by the level of discretionary consumer spending in the markets in which we operate.
Our financial performance is impacted by the level of discretionary consumer spending in the markets in which we operate.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. Hasbro owns its corporate headquarters in Pawtucket, Rhode Island consisting of approximately 343,000 square feet, which is used by corporate functions as well as the Consumer Products and Entertainment segments.
Biggest changeItem 2. Properties. Hasbro owns its corporate headquarters in Pawtucket, Rhode Island consisting of approximately 343,000 square feet, which is used by corporate functions as well as the Consumer Products segment. The Company owns an adjacent building consisting of approximately 23,000 square feet which is also used by corporate functions.
The primary international locations for facilities in the Consumer Products segment are in Australia, Brazil, France, Germany, Mexico, Spain, the People’s Republic of China, and the United Kingdom, all of which are comprised of both office and warehouse space. In addition, the Company also leases offices in Switzerland and the Netherlands which are primarily used for corporate functions.
The primary international locations for facilities in the Consumer Products segment are in Australia, Brazil, France, Germany, Mexico, Spain, the People’s Republic of China, and the United Kingdom, all of which comprise both office and warehouse space. In addition, the Company also leases offices in Switzerland and the Netherlands which are primarily used for corporate functions.
The Company is currently party to certain legal proceedings, none of which we believe to be material to our business or financial condition. Item 4. Mine Safety Disclosures. None 42 Table of Contents PART II
The Company is currently party to certain legal proceedings, none of which we believe to be material to our business or financial condition. Item 4. Mine Safety Disclosures. None 40 Table of Contents PART II
The Company also leases approximately 126,000 square feet in Renton, Washington as well as 25,000 square feet in Austin, Texas used primarily by the Wizards of the Coast and Digital Gaming segment for office space.
The Company also leases approximately 111,000 square feet of office space in Renton, Washington as well as 25,000 square feet in Austin, Texas used primarily by the Wizards of the Coast and Digital Gaming segment.
The Corporate and Other segment leases an aggregate of 81,700 square feet of office and warehouse space in Hong Kong as well as 48,000 square feet of office space leased in the People’s Republic of China. 41 Table of Contents Outside of the properties listed above, the Company leases or owns property in over 35 countries.
The Corporate and Other segment leases an aggregate of 94,000 square feet of office and warehouse space in Hong Kong as well as 48,000 square feet of office space leased in the People’s Republic of China. Outside of the properties listed above, the Company leases or owns property in over 35 countries.
The above properties consist, in general, of brick, cinder block or concrete block buildings which the Company believes are in good condition and well maintained.
The above properties consist, in general, of brick, concrete and steel buildings which the Company believes are in good condition and well maintained.
The Company's significant leased properties include a facility in Providence, Rhode Island consisting of approximately 136,000 square feet which is used primarily by the Consumer Products segment, as well as the Entertainment and Corporate and Other segments.
The Company's significant leased properties include a facility in Providence, Rhode Island consisting of approximately 136,000 square feet which is used primarily by Commercial and Supply Chain functions, as well as the Consumer Products segment.
In addition, the Company leases warehouse space aggregating approximately 3,270,000 square feet in Georgia, California, Texas, Illinois and Quebec that are used by the Consumer Products segment. The Company leases approximately 95,000 square feet in Toronto and 80,000 square feet in Burbank, California that are used by the Entertainment segment.
In addition, the Company leases warehouse space aggregating approximately 3,081,000 square feet in California, Illinois, Georgia and Massachusetts that are used primarily by the Consumer Products segment. The Company leases approximately 80,000 square feet in Burbank, California used by the Consumer Products and Entertainment segments.
Removed
The Company also owns an adjacent building consisting of approximately 23,000 square feet and leases a building in East Providence, Rhode Island consisting of approximately 120,000 square feet, both of which are used by corporate functions.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe 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. Following the Company’s acquisition of eOne, the Company temporarily suspended its share repurchase program to prioritize deleveraging.
Biggest changeThere were no repurchases of the Company’s Common Stock during 2023. The Company has no obligation to repurchase shares under this authorization. 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.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. The Company’s common stock, par value $0.50 per share (the “Common Stock”), is traded on The NASDAQ Global Select Market under the symbol “HAS”. As of February 16, 2023, there were approximately 7,470 shareholders of record of the Company’s Common Stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. The Company’s common stock, par value $0.50 per share (the “Common Stock”), is traded on The NASDAQ Global Select Market under the symbol “HAS”. As of February 13, 2024, there were approximately 7,305 shareholders of record of the Company’s Common Stock.
On February 9, 2023, our Board declared a dividend of $0.70 per share, which is payable on May 15, 2023 to shareowners of record on May 1, 2023. Issuer Repurchases of Common Stock In May 2018, the Company announced that its Board of Directors authorized the repurchase of up to an additional $500 million in Common Stock.
On February 13, 2024, we announced that our Board of Directors declared a dividend of $0.70 per share, which is payable on May 15, 2024 to shareholders of record on May 1, 2024. In 2024, the Company expects future dividend declarations will be made closer in time to the record date of the dividend than has historically been declared.
Removed
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.
Added
Issuer Repurchases of Common Stock Purchases of the Company’s Common Stock may be made from time to time, subject to market conditions, to offset dilution caused by stock issuances related to its equity compensation program and when management believes it is a good use of cash.
Removed
During 2022, given the Company’s progress toward reducing debt, the Company resumed its share repurchase activity and repurchased approximately 1.4 million shares of Hasbro Common Stock in the open market during the second and third quarters at a total cost of $125.0 million and at an average price of $87.46 per share.
Added
In May 2018, the Company announced that its Board of Directors authorized the repurchase of up to an additional $500 million in Common Stock which may either be repurchased in the open market or through privately negotiated transactions. As of December 31, 2023, Hasbro had $241.6 million remaining available under these share repurchase authorizations.
Removed
There were no repurchases of the Company’s Common Stock in the first and fourth quarters of 2022. At December 25, 2022, Hasbro had $241.6 million remaining available under these share repurchase authorizations. Item 6. Reserved

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

168 edited+115 added−113 removed80 unchanged
Biggest changeThe increase in net revenues includes a favorable foreign currency translation of $54.7 million. ◦ Net revenues in the Consumer Products segment increased 9% to $3,981.6 million; Wizards of the Coast and Digital Gaming segment increased 42% to $1,286.6 million; and Entertainment segment net revenues increased 27% to $1,152.2 million. ◦ Emerging Brands net revenues increased 22%; TV/Film/Entertainment portfolio net revenues increased 24%; Franchise Brands net revenues increased 23%; Partner Brands net revenues increased 8%; and Hasbro Gaming net revenues increased 4%. 44 Table of Contents ◦ Hasbro’s total gaming portfolio, including the Hasbro Gaming portfolio as reported above, and all other gaming revenue, most notably MAGIC: THE GATHERING and MONOPOLY, increased 19%, and totaled $2,098.9 million. • Operating profit was $763.3 million, or 11.9% of net revenues in 2021 compared to operating profit of $501.8 million, or 9.2% of net revenues in 2020. ◦ Operating Profit in the Wizards of the Coast and Digital Gaming segment increased 30% to $547.0 million; Consumer Products segment increased 30% to $401.4 million; Entertainment segment operating losses decreased 35% to $91.8 million and Corporate and Other operating losses increased 9% to $93.3 million. • Net earnings attributable to Hasbro, Inc. increased in 2021 to $428.7 million, or $3.10 per diluted share, compared to $222.5 million, or $1.62 per diluted share in 2020.
Biggest changeThe decline in net revenues includes a favorable foreign currency translation of $20.6 million. ◦ Net revenues in the Consumer Products segment decreased 19% to $2,886.4 million; Wizards of the Coast and Digital Gaming segment increased 10% to $1,457.6 million; and Entertainment segment net revenues decreased 31% to $659.3 million. 42 Table of Contents ◦ Franchise Brands net revenues decreased 3%; Partner Brands net revenues decreased 35%; Portfolio Brands net revenues decreased 17%; and Non-Hasbro Branded Film and TV net revenues declined 35%. ◦ Hasbro’s total gaming portfolio, including the Hasbro Gaming portfolio as reported above, and all other gaming revenue, most notably MAGIC: THE GATHERING and MONOPOLY, totaled $2,074.4 million, an increase of 4%. • Operating losses were $1,538.8 million, or 30.8% of net revenues in 2023 and declined compared to operating profit of $407.7 million, or 7.0% of net revenues in 2022. ◦ Operating profit in the Consumer Products segment declined greater than 100% to an operating loss of $64.7 million; Wizards of the Coast and Digital Gaming segment operating profit declined 2% to $525.7 million; Entertainment segment operating losses declined to an operating loss of $1,911.5 million; and Corporate and Other operating losses improved 76% to an operating loss of $88.3 million. ◦ Operating profit in 2023 was negatively impacted by non-cash goodwill and asset impairment charges of $1,307.2 million recorded within the Entertainment segment consisting of: $231.2 million related to the goodwill impairment of the eOne Film & TV business included in Impairment of goodwill; $65.0 million related to an impairment of the Company's definite-lived intangible, eOne Trademark, included in Selling, distribution and administration; a goodwill impairment charge of $960.0 million due to impairment of the Company's Family Brands business included in Impairment of goodwill; and, impairment charges of $51.0 million related to the impairment of the Company's PJ MASKS definite-lived intangible asset, included within Selling, distribution and administration.
Financial Statements , of this Form 10-K for further information on the Company’s Discovery option. • A net charge of $39.4 million or $0.28 per diluted share of income tax expense as a result of revaluation of Hasbro’s UK tax attributes in accordance with the Finance Act of 2021 enacted by the United Kingdom on June 10, 2021.
Financial Statements , of this Form 10-K for further information on the Company’s Discovery option. • A net charge of $39.4 million or $0.28 per diluted share 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.
Some of these differences are permanent, such as expenses that are not deductible on the Company’s tax returns, while other differences are temporary and will reverse over time, such as depreciation expense. These differences that will reverse over time are recorded as deferred tax assets and liabilities on the consolidated balance sheets.
Some of these differences are permanent, such as expenses that are not deductible on the Company’s tax returns, while other differences are temporary and will reverse over time, such as depreciation expense. The differences that will reverse over time are recorded as deferred tax assets and liabilities on the consolidated balance sheets.
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.
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 senior revolving film and television production credit facility or through special purpose production subsidiaries.
In 2022, Partner Brands net revenue declines were driven by lower sales of the Company's products for DISNEY FROZEN and DISNEY PRINCESS as the related license neared the end of its term, lower sales of BEYBLADE products, and to a lesser extent, lower sales of GHOSTBUSTERS products.
In 2022, Partner Brands net revenue declines were driven by lower sales of the Company's products for DISNEY FROZEN and DISNEY PRINCESS as the related license neared the end of its term, in addition to lower sales of BEYBLADE products, and to a lesser extent, lower sales of GHOSTBUSTERS products.
In association with this program the Company incurred net charges of $89.2 million comprised of the following: ◦ Net severance expense and other employee charges of $79.8 million, or $0.57 per diluted share, associated with cost-savings initiatives across the Company; and 45 Table of Contents ◦ Net charges of $9.4 million, or $0.07 per diluted share, of program related consultant and transformation office expenses. • In association with the Company's acquisition of eOne, the Company incurred related expenses of $72.3 million, comprised of the following: ◦ Net expenses of $59.4 million, or $0.43 per diluted share, of incremental intangible amortization costs related to the intangible assets acquired in the eOne acquisition; and ◦ A net charge of $12.9 million, or $0.09 per diluted share, of stock based compensation expenses. 2021 • A net charge of $116.1 million, or $0.84 per diluted share, comprised of a non-cash goodwill impairment charge of $108.8 million and transaction expenses of $7.3 million, associated with the closing of the sale of eOne's music business (e-One Music).
In association with this program the Company incurred net charges of $89.2 million comprised of the following: ◦ Net severance expense and other employee charges of $79.8 million, or $0.57 per diluted share, associated with cost-savings initiatives across the Company; and ◦ Net charges of $9.4 million, or $0.07 per diluted share, of program related consultant and transformation office expenses. • In association with the Company's acquisition of eOne, the Company incurred related expenses of $72.3 million, comprised of the following: ◦ Net expenses of $59.4 million, or $0.43 per diluted share, of incremental intangible amortization costs related to the intangible assets acquired in the eOne acquisition; and ◦ A net charge of $12.9 million, or $0.09 per diluted share, of stock based compensation expenses. 2021 • A net charge of $116.1 million, or $0.84 per diluted share, comprised of a non-cash goodwill impairment charge of $108.8 million and transaction expenses of $7.3 million, associated with the closing of the sale of eOne's music business ("e-One Music").
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 increase during the third and fourth quarter as customers increase their purchases to meet expected consumer demand in their holiday selling season.
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 quarters as customers increase their purchases to meet expected consumer demand in the holiday selling season.
Additionally, in connection with the Company's Blueprint 2.0 strategy shift, Consumer Products segment operating profit includes charges of $14.9 million of incremental asset charges related to product cancellations, consisting of inventory and asset write offs related to the Company's plans to focus on fewer, bigger brands.
Additionally, in connection with the Company's Blueprint 2.0 strategy shift, Consumer Products segment operating profit included charges of $14.9 million of incremental asset charges related to product cancellations, consisting of inventory and asset write offs related to the Company's plans to focus on fewer, bigger brands.
The decrease in interest expense during 2022 primarily reflects long-term debt repayments made throughout 2021, primarily related to borrowings utilized for the eOne acquisition, partially offset by higher interest expense related to borrowings from the Company's production financing credit facilities.
The decrease in 2022 compared to 2021 primarily reflects long-term debt repayments made throughout 2021, primarily related to borrowings utilized for the eOne acquisition, partially offset by higher interest expense related to borrowings from the Company's production financing credit facilities.
Inventories increased 23% in 2022 compared to 2021 primarily reflecting accelerated inventory purchases attributable to the Company's Consumer Products and Wizards of the Coast businesses to mitigate the impact of certain global supply chain challenges experienced throughout 2021 and into 2022.
Inventories increased 23% in 2022 compared to 2021, primarily reflecting accelerated inventory purchases attributable to the Company's Consumer Products and Wizards of the Coast businesses, to mitigate the impact of certain global supply chain challenges experienced in 2021.
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 68 Table of Contents exchange. From time to time, affiliates of the Company may make or receive intercompany loans in currencies other than their functional currency.
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.
These estimated liabilities, as well as the related interest, are adjusted in light of changing facts and circumstances such as the progress of a tax audit. 66 Table of Contents 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.
These estimated liabilities, as well as the related interest, are adjusted in light of changing facts and circumstances such as the progress of a tax audit. 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.
This charge was comprised of a pre-tax impairment of the investment held in Discovery of $74.1 million, which resulted in a pre-tax reduction to the Company’s Discovery option agreement liability of $20.1 million. See note 7 to the consolidated financial statements included in Part II, Item 8.
This charge was comprised of a pre-tax impairment of the investment held in Discovery of $74.1 45 Table of Contents million, which resulted in a pre-tax reduction to the Company’s Discovery option agreement liability of $20.1 million. See note 7 to the consolidated financial statements included in Part II, Item 8.
These negative effects were partially offset by the impact of the expiration of certain Consumer Products licensing agreements acquired through the eOne acquisition, which carried higher royalty expenses in prior periods and higher net revenues from licensing agreements related to certain of the Company's Franchise Brands, most notably TRANSFORMERS.
These negative effects were partially offset by the impact of the expiration of certain Consumer Products licensing agreements acquired through the eOne acquisition, which carried higher royalty expenses in prior periods and higher net revenues from licensing agreements related to certain of the Company's Franchise Brands.
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 59 Table of Contents external financial resources.
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.
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.
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 63 Table of Contents agreement discussed below.
The business of the Company is characterized by customer order patterns which vary from year to year largely because of differences in the degree of consumer acceptance of a product line, product availability, marketing strategies, inventory levels, policies of retailers and differences in overall economic conditions.
The business of the Company is characterized by customer order patterns which vary from year to year largely because of differences in the degree of consumer acceptance of a product line, product availability, marketing strategies, inventory levels, policies of 68 Table of Contents retailers and differences in overall economic conditions.
Revenues from the Company’s top five retail customers, accounted for approximately 35% of its consolidated net revenues in 2022, 36% in 2021 and 35% of its consolidated net revenues in 2020. The Company monitors the creditworthiness of its customers and adjusts credit policies and limits as it deems appropriate.
Revenues from the Company’s top five retail customers, accounted for approximately 34% of its consolidated net revenues in 2023, 35% in 2022 and 36% of its consolidated net revenues in 2021. The Company monitors the creditworthiness of its customers and adjusts credit policies and limits as it deems appropriate.
Fluctuations in royalty expense generally relate to the volume of entertainment-driven products sold in a given period, especially if the Company is selling 55 Table of Contents product tied to one or more major motion picture releases in the period.
Fluctuations in royalty expense generally relate to the volume of entertainment-driven products sold in a given period, especially if the Company is selling product tied to one or more major motion picture releases in the period.
The decrease in segment operating profit in 2022 was the result of higher inventory costs and higher product development costs as we continue to invest in tabletop and digital gaming initiatives and talent to support long-term growth within the segment, as well as higher royalty expense due to the growth of MAGIC: THE GATHERING UNIVERSES BEYOND .
The decrease in segment operating profit in 2022 was the result of higher inventory costs and higher product development costs in support of the Company's tabletop and digital gaming initiatives and talent to support long-term growth within the segment, as well as higher royalty expense due to the growth of MAGIC: THE GATHERING UNIVERSES BEYOND .
During the fourth quarter of 2022, the Company performed a qualitative goodwill assessment with respect to each of its reporting units.
During the fourth quarter of 2023, the Company performed a qualitative goodwill assessment with respect to each of its reporting units.
LIQUIDITY AND CAPITAL RESOURCES The Company has historically generated a significant amount of cash from operations. In 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.
LIQUIDITY AND CAPITAL RESOURCES The Company has historically generated a significant amount of cash from operations. In 2023, the Company primarily funded its operations and liquidity needs through cash on hand and from cash flows from operations, commercial paper, and when needed, used borrowings under its available lines of credit.
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.
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, within the Entertainment segment for the quarter ended September 25, 2022.
The Company’s revenue pattern continues to show the second half of the year to be more significant to its overall business for the full year. In 2022, approximately 57% of the Company’s full year net revenues were recognized in the second half of the year. The Company expects that this concentration will continue.
The Company’s revenue pattern continues to show the second half of the year to be more significant to its overall business for the full year. In 2023, approximately 56% of the Company’s full year net revenues were recognized in the second half of the year. The Company expects that this concentration will continue.
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 disposal of certain Entertainment assets in relation to the exit of certain non-core businesses within the Entertainment segment and from lower prepaid income tax balances during 2022.
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 disposal of certain Entertainment assets in relation to the exit of certain non-core businesses within the Entertainment segment and from lower prepaid income tax balances during 2022. Other assets decreased 46% in 2023 compared to 2022.
The advertising expense decrease during 2022 was driven by lower expense within the Consumer Products segment, reflecting the implementation of the Company's Blueprint 2.0 strategy shift to focus on fewer, bigger brands and lower advertising expense in the Entertainment segment related to the sale of the eOne Music business and a shift in the type of entertainment releases delivered in 2022.
The Advertising expense decrease during 2022 was driven by lower expense within the Consumer Products segment, reflecting the implementation of the Company's strategic shift to focus on fewer, bigger brands and lower advertising expense in the Entertainment segment related to the sale of the eOne Music business and a shift in the type of entertainment releases delivered in 2022.
To the extent that retailers do not sell as much of their year-end inventory purchases during this holiday selling season as they had anticipated, their demand for additional product earlier in the following fiscal year may be curtailed, thus negatively impacting the Company’s future revenues. In 2022, the Company's inventory levels increased 23% compared to 2021.
To the extent that retailers do not sell as much of their year-end inventory purchases during this holiday selling season as they had anticipated, their demand for additional product earlier in the following fiscal year may be curtailed, thus negatively impacting the Company’s future revenues. In 2023, the Company's inventory levels decreased 51% compared to 2022.
When performing a quantitative impairment test, goodwill is tested for impairment by comparing the carrying value to the estimated fair value of the reporting unit which is calculated using an income approach. Other intangible assets with indefinite lives are tested for impairment by comparing their carrying value to their estimated fair value.
When performing a quantitative impairment test, goodwill is tested for impairment by comparing the 65 Table of Contents carrying value to the estimated fair value of the reporting unit which is calculated using an income approach and market approach. Other intangible assets with indefinite lives are tested for impairment by comparing their carrying value to their estimated fair value.
Fluctuations in depreciation of plant and equipment correlate with the percentage of additions to property, plant and equipment relating to tools, dies and molds which have shorter useful lives and accelerated depreciation. Net cash (utilized) provided by financing activities was $(553.3) million, $(1,459.8) million, and $405.9 million in 2022, 2021 and 2020, respectively.
Fluctuations in depreciation of plant and equipment correlate with the percentage of additions to property, plant and equipment relating to tools, dies and molds which have shorter useful lives and accelerated depreciation. Net cash utilized by financing activities was $818.1 million, $553.3 million, and $1,459.8 million in 2023, 2022 and 2021, respectively.
The Corporate and Other segment operating losses during 2022 were primarily related to impairment charges of $281.0 million related to the Company's Power Rangers intangible asset, severance charges of $94.1 million and transformation office and consultant fees of $12.3 million associated with Company's Blueprint 2.0 strategy shift and operational excellence program related cost-savings initiatives described above, as well as $14.6 million of expense associated with retention awards granted in connection with the eOne acquisition.
The Corporate and Other segment operating losses during 2022 were primarily related to impairment charges of $281.0 million related to the Company's Power Rangers intangible asset, severance charges of $94.1 million and transformation office and consultant fees of $12.3 million associated with Company's restructuring actions and operational excellence program related cost-savings initiatives, as well as $14.6 million of expense associated with retention awards granted in connection with the eOne acquisition.
TV/Film/Entertainment: Net revenues from the TV/Film/Entertainment portfolio declined 17% in 2022 compared to 2021. Lower net revenues in 2022 were driven by the sale of eOne Music during the third quarter of 2021, which represented $65.2 million or 6% of TV, Film and Entertainment portfolio net revenues during 2021.
Non-Hasbro Branded Film & TV: Net revenues from the Non-Hasbro Branded Film & TV portfolio declined 17% in 2022 compared to 2021. Lower net revenues in 2022 were driven by the sale of eOne Music during the third quarter of 2021, which represented $65.2 million or 6% of portfolio net revenues during 2021.
Prepaid expenses and other current assets increased 3% in 2022 compared to 2021. 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 accrued income balances from long-term to current.
In 2022, prepaid expenses and other current assets increased 3% 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.
Within the Partner Brands portfolio, there are a number of brands which are reliant on related entertainment, including movie and television releases. As such, net revenues fluctuate from year-to-year by brand, depending on entertainment popularity, release dates and the success of related product line offerings.
Partner Brands: The Partner Brands portfolio net revenues declined 35% in 2023 compared to 2022. Within the Partner Brands portfolio, there are a number of brands which are reliant on related entertainment, including movie and television releases. As such, net revenues fluctuate from year-to-year by brand, depending on entertainment popularity, release dates and the success of related product line offerings.
Included in accumulated other comprehensive loss at December 25, 2022 are deferred losses, net of tax, of $14.9 million related to these derivatives. Industry Trends, the Economy and Inflation The principal market for the Company’s toys and games and licensed consumer products, is the retail sector.
Included in Accumulated other comprehensive loss at December 31, 2023 are deferred losses, net of tax, of $14.2 million related to these derivatives. Industry Trends, the Economy and Inflation The principal market for the Company’s toys and games and licensed consumer products, is the retail sector.
During 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.
During 2024, the Company expects to continue to fund its working capital needs primarily through available cash, cash flows from operations and, if needed, by issuing commercial paper or borrowing under its revolving credit agreement.
In 2020, the Company recorded a gain of $1.5 million due to the option’s value decrease. • During 2021, the Company recorded an impairment loss of $74.1 million related to its investment in Discovery Family Channel. The Network projected a significant decline in affiliate revenue driven by changes in the cable distribution industry due to a decline in linear subscribers.
During 2021, the Company recorded an impairment loss of $74.1 million related to its investment in Discovery Family Channel. The Network projected a significant decline in affiliate revenue in 2021, driven by changes in the cable distribution industry due to a decline in linear subscribers.
The increase was primarily driven by higher deferred tax balances, higher investments in film and television productions and higher non-current receivable balances within the Entertainment segment. These increases were partially offset by a lower balance for the Company's investment in Discovery Family Channel, due to distributions received during 2022. Other assets increased 3% in 2021 compared to 2020.
The increase was primarily driven by higher deferred tax balances, higher investments in film and television productions and higher non-current receivable balances within the Entertainment segment. These increases were partially offset by a lower balance for the Company's investment in Discovery Family Channel, due to distributions received during 2022.
For more information on the Company's production financing facilities, including expected future repayments, see notes 9 and 11 to the consolidated financial statements included in Part II, Item 8. Financial Statements, of this Form 10-K.
For more information on the Company's production financing facilities, see notes 3, 9 and 11 to the consolidated financial statements included in Part II, Item 8. Financial Statements, of this Form 10-K.
Unless otherwise specifically indicated, all dollar or share amounts herein are expressed in millions of dollars or shares, except for per share amounts. EXECUTIVE SUMMARY Hasbro is a global Branded Entertainment leader whose mission is to entertain and connect generations of fans through the wonder of storytelling and exhilaration of play.
Unless otherwise specifically indicated, all dollar or share amounts herein are expressed in millions of dollars or shares, except for per share amounts. EXECUTIVE SUMMARY Hasbro is a toy and game company whose mission is to entertain and connect generations of fans through the wonder of storytelling and exhilaration of play.
In addition to these inventory management challenges, the bankruptcy or other lack of success of one of the Company’s significant retailers could negatively impact the Company’s future revenues. 69 Table of Contents 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.
In addition to these inventory management challenges, the bankruptcy or other lack of success of one of the Company’s significant retailers could negatively impact the Company’s future revenues. Unlike the Company's retail sales patterns, revenue patterns from the Company's entertainment businesses fluctuate based on the timing and popularity of content releases.
Financial Statements, of this Form 10-K for information on the Company's future royalty commitments as of December 25, 2022. Product Development Product development expense in 2022 totaled $307.9 million, or 5.3% of net revenues, compared to $315.7 million, or 4.9% of net revenues, in 2021.
Financial Statements, of this Form 10-K for information on the Company's future royalty commitments as of December 31, 2023. Product Development Product development expense in 2023 totaled $306.9 million, or 6.1% of net revenues, compared to $307.9 million, or 5.3% of net revenues, in 2022 and $315.7 million, or 4.9% of net revenues, in 2021.
The Company also has various third-party, inventory and tooling purchase commitments related primarily to the Company's Consumer Products segment which may total approximately $367.7 million in 2023. These payments exclude inventory and tooling purchase liabilities included in accounts payable or accrued liabilities on the consolidated balance sheets as of December 25, 2022.
The Company also has various third-party, inventory and tooling purchase commitments related primarily to the Company's Consumer Products segment which may total approximately $157.3 million in 2024. These payments exclude inventory and tooling purchase liabilities included in Accounts payable or Accrued liabilities on the Consolidated Balance Sheets as of December 31, 2023.
Dividends paid were $385.3 million in 2022, $374.5 million in 2021 and $372.7 million in 2020 reflecting the Company's quarterly dividend rate increase from $0.68 per share in 2020 and 2021, to $0.70 per share in 2022. Net repayments of short-term borrowings were $141.7 million, $5.6 million and $8.6 million in 2022, 2021 and 2020, respectively.
Dividends paid were $388.0 million in 2023, $385.3 million in 2022 and $374.5 million in 2021 reflecting the Company's quarterly dividend rate increase from $0.68 per share in 2021, to $0.70 per share in 2022 and 2023. Net (repayments) proceeds of short-term borrowings were $(41.6) million, $141.7 million and $(5.6) million in 2023, 2022 and 2021, respectively.
Program Cost Amortization Program cost amortization totaled $555.5 million, or 9.5% of net revenues in 2022, compared to $628.6 million, or 9.8% of net revenues in 2021 and $387.1 million, or 7.1% of net revenues, in 2020. The majority of the Company's program costs are capitalized as incurred and amortized using the individual-film-forecast method.
Program Cost Amortization Program cost amortization totaled $448.9 million, or 9.0% of net revenues in 2023, compared to $555.5 million, or 9.5% of net revenues in 2022 and $628.6 million, or 9.8% of net revenues, in 2021. The majority of the Company's program costs are capitalized as incurred and amortized using the individual-film-forecast method.
These amounts are described below: • Included in other liabilities in the consolidated balance sheets at December 25, 2022, the Company has a liability of $69.1 million of potential tax, interest and penalties for uncertain tax positions that have been taken or are expected to be taken in various income tax returns.
These amounts are described below: • Included in other liabilities in the Consolidated Balance Sheets at December 31, 2023, the Company has a liability of $47.4 million of potential tax, interest and penalties for uncertain tax positions that have been taken or are expected to be taken in various income tax returns.
The Company generated cash from employee stock option transactions of $74.2 million, $30.6 million, and $16.6 million in 2022, 2021 and 2020, respectively. The Company paid withholding taxes related to share-based compensation of $24.0 million, $13.7 million and $6.0 million in 2022, 2021 and 2020, respectively.
The Company generated cash from employee stock option transactions $74.2 million, and $30.6 million in 2022 and 2021, respectively. There were no employee stock options transactions in 2023. The Company paid withholding taxes related to share-based compensation of $16.8 million, $24.0 million and $13.7 million in 2023, 2022 and 2021, respectively.
Investing activities in 2022 reflect 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 $378.5 million of proceeds, net of cash sold, from the sale of eOne Music. Investing activities in 2020 reflect $4.4 billion of cash utilized to acquire eOne, net of cash acquired.
Investing activities in 2022 reflect 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 net proceeds of $378.5 million, from the sale of eOne Music.
The Company monitors 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.
The Company monitors the impact of inflation to its business operations on an ongoing basis and may need to implement actions such as price adjustments to mitigate the impact of changes to the rate of inflation in future periods. However, future volatility of general price inflation could affect consumer purchases of our products and spending on entertainment.
The Amended Revolving Credit Agreement extends through September 20, 2024. The Company was in compliance with all covenants as of December 25, 2022. The Company had no borrowings outstanding under its committed revolving credit facility as of December 25, 2022. However, letters of credit outstanding under this facility as of December 25, 2022 were approximately $4.0 million.
The Amended Revolving Credit Agreement extends through September 5, 2028. The Company was in compliance with all covenants as of December 31, 2023. The Company had no borrowings outstanding under its committed revolving credit facility as of December 31, 2023. However, letters of credit outstanding under this facility as of December 31, 2023 were approximately $4.0 million.
At December 25, 2022, the Company estimates that a hypothetical immediate 10% depreciation of the U.S. dollar against all foreign currencies included in these foreign exchange forward contracts could result in an approximate $21.8 million decrease in the fair value of these instruments.
At December 31, 2023, the Company estimates that a hypothetical immediate 10% depreciation of the U.S. dollar against all foreign currencies included in these foreign exchange forward contracts could result in an approximate $16.6 million decrease in the fair value of these instruments.
The net revenue increase in the Wizards of the Coast and Digital Gaming segment was attributable to higher net revenues from Wizards of the Coast tabletop gaming products, most notably, MAGIC: THE GATHERING, which has become the Company's first billion-dollar brand, driven by the number of strong performing card set releases in 2022.
The net revenue increase in the Wizards of the Coast and Digital Gaming segment was attributable to higher net revenues from Wizards of the Coast tabletop gaming products, most notably, MAGIC: THE GATHERING, which in 2022, became the Company's first billion-dollar brand, driven by the number of strong performing card sets released during the year.
INCOME TAXES Income tax expense totaled 22.4% of pre-tax earnings in 2022 compared with 25.2% in 2021 and 30.0% in 2020. Our effective tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions.
INCOME TAXES Income tax benefit totaled 12.9% of pre-tax loss in 2023 compared with income tax expense on pre-tax earnings of 22.4% in 2022 and 25.2% in 2021. Our effective tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions.
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.
During September 2023, the Company entered into a third 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 $1.25 billion, effective as of September 5, 2023.
The decrease in 2022 is the result of the discontinuation of amortization related to the eOne Music intangible assets following the sale of eOne Music during 2021. This decline was partially offset by additional expense associated with assets acquired through the D&D Beyond acquisition during 2022.
These decreases were partially offset by additional expense associated with assets acquired through the D&D Beyond Acquisition during the second quarter of 2022. The decrease in 2022 was the result of the discontinuation of amortization related to the eOne Music intangible assets following the sale of eOne Music during 2021.
Financial Statements , of this Form 10-K. 2022 % Net Revenues % Change 2021 % Net Revenues % Change 2020 % Net Revenues Consumer Products $ 217.3 6.1 % -46 % $ 401.4 10.1 % 30 % $ 308.1 8.4 % Wizards of the Coast & Digital Gaming 538.3 40.6 % -2 % 547.0 42.5 % 30 % 420.4 46.4 % Entertainment 22.7 2.4 % >100% (91.8) -8.0 % 35 % (141.1) -15.5 % Corporate and Other (370.6) n/a >100% (93.3) n/a -8 % (85.6) n/a Total 407.7 763.3 501.8 51 Table of Contents Effective for the first quarter of 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.
Financial Statements , of this Form 10-K. 2023 % Net Revenues % Change 2022 % Net Revenues % Change 2021 % Net Revenues Consumer Products $ (64.7) -2.2 % >100% $ 217.3 6.1 % -46 % $ 401.4 10.1 % Wizards of the Coast & Digital Gaming 525.7 36.1 % -2 % 538.3 40.6 % -2 % 547.0 42.5 % Entertainment (1,911.5) >100% >100% 22.7 2.4 % >100% (91.8) -8.0 % Corporate and Other (88.3) n/a 76 % (370.6) n/a >100% (93.3) n/a Total $ (1,538.8) 407.7 763.3 Effective for the first quarter of 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.
These expenses are included within Selling, Distribution and Administration within the Corporate and Other segment. 2021 • During 2021, in association with the sale of the eOne Music business, the Company incurred a loss of $118.3 million comprised of a goodwill impairment charge of $108.8 million included within Loss on Disposal of Business, and transaction costs of $9.5 million included within Selling, Distribution and Administration. • During 2021, the Company incurred incremental intangible amortization costs of $85.0 million related to the intangible assets acquired in the eOne acquisition. 54 Table of Contents • During 2021, the Company incurred $20.9 million of stock based compensation expense associated with the accelerated vesting of certain equity awards as a result of the passing of its former CEO included within Selling, Distribution and Administration. • During 2021, in association with the Company's acquisition of eOne, the Company incurred stock based compensation expense of $7.7 million for acquisition related equity grants, included within Selling, Distribution and Administration. 2020 • During 2020, in association with the Company's acquisition of eOne, the Company incurred related expenses of $218.6 million, comprised of $145.2 million of acquisition and integration costs and restructuring and related costs of $73.4 million, included within Acquisition and related costs. • During 2020, the Company incurred incremental intangible amortization costs of $97.9 million related to the intangible assets acquired in the eOne acquisition. • During 2020 the Company incurred $8.5 million of severance charges, associated with cost-savings initiatives recorded within Selling, Distribution and Administration.
These expenses are included within Selling, distribution and administration within the Corporate and Other segment. 2021 • During 2021, in association with the sale of the eOne Music business, the Company incurred a loss of $118.3 million comprised of a goodwill impairment charge of $108.8 million included within Loss on disposal of business, and transaction costs of $9.5 million included within Selling, distribution and administration. • During 2021, the Company incurred incremental intangible amortization costs of $85.0 million related to the intangible assets acquired in the eOne acquisition. • During 2021, the Company incurred $20.9 million of stock based compensation expense associated with the accelerated vesting of certain equity awards as a result of the passing of its former CEO included within Selling, distribution and administration. • During 2021, in association with the Company's acquisition of eOne, the Company incurred stock based compensation expense of $7.7 million for acquisition related equity grants, included within Selling, distribution and administration.
Cost of Sales Cost of sales primarily consists of purchased materials, labor, manufacturing overhead and other inventory-related costs such as obsolescence. Cost of sales decreased 1% to $1,911.8 million, or 32.6% of net revenues, for the year ended December 25, 2022 compared to $1,927.5 million, or 30.0% of net revenues, for the year ended December 26, 2021.
Cost of Sales Cost of sales primarily consists of purchased materials, labor, manufacturing overhead and other inventory-related costs such as obsolescence. Cost of sales decreased 11% to $1,706.0 million, or 34.1% of net revenues, for the year ended December 31, 2023 compared to $1,911.8 million, or 32.6% of net revenues, for the year ended December 25, 2022.
During 2022, 2021 and 2020 the Company primarily used cash from 62 Table of Contents 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").
During 2023, 2022 and 2021 the Company primarily used cash from operations and, to a lesser extent, borrowings under its commercial paper program in addition to borrowings under its available lines of credit, to fund its working capital. The Company has an agreement with a group of banks which provides for a commercial paper program (the "Program").
Financial Statements , of this Form 10-K, expressed in millions of dollars, for each of the years ended December 25, 2022, December 26, 2021 and December 27, 2020. 2022 2021 2020 Net cash provided by (used in): Operating Activities $ 372.9 $ 817.9 $ 976.3 Investing Activities (313.0) 242.0 (4,500.2) Financing Activities (553.3) (1,459.8) 405.9 In 2022, 2021 and 2020, Hasbro generated $372.9 million, $817.9 million and $976.3 million of cash from its operating activities, respectively.
Financial Statements , of this Form 10-K, expressed in millions of dollars, for each of the years ended December 31, 2023, December 25, 2022 and December 26, 2021. 2023 2022 2021 Net cash provided by (used in): Operating Activities $ 725.6 $ 372.9 $ 817.9 Investing Activities 117.6 (313.0) 242.0 Financing Activities (818.1) (553.3) (1,459.8) In 2023, 2022 and 2021, Hasbro generated $725.6 million, $372.9 million and $817.9 million of cash from its operating activities, respectively.
In addition, the Company has $3,711.2 million in principal amount of long-term debt outstanding at December 25, 2022. See note 20 to the consolidated financial statements included in Part II, Item 8. Financial Statements, of this Form 10-K for further information on the Company 's contractual obligations and commercial commitments.
In addition, the Company has $3,484.9 million in principal amount of total debt outstanding at December 31, 2023. See note 20 to the consolidated financial statements included in Part II, Item 8. Financial Statements, of this Form 10-K for further information on the Company 's contractual obligations and commercial commitments.
The decrease in cash provided by operating activities during 2022 was attributable to lower earnings and higher working capital requirements, including cash utilized for accounts payable and higher spend for television program and film production.
The decrease in net cash provided by operating activities during 2022 reflected higher working capital requirements, including cash utilized for accounts payable and higher spend for television program and film production.
Net Revenues The table below illustrates net revenues expressed in millions of dollars, derived from our principal operating segments in 2022, 2021 and 2020. 2022 Net Revenues % Change 2021 Net Revenues % Change 2020 Net Revenues Consumer Products $ 3,572.5 -10 % $ 3,981.6 9 % $ 3,649.6 Wizards of the Coast & Digital Gaming 1,325.1 3 % 1,286.6 42 % 906.7 Entertainment 959.1 -17 % 1,152.2 27 % 909.1 Consumer Products Segment The following table presents the Consumer Products segment net revenues by major geographic region for each fiscal year in the three years ended December 25, 2022. 2022 Net Revenues % Change 2021 Net Revenues % Change 2020 Net Revenues North America $ 2,064.8 -11 % $ 2,315.9 9 % $ 2,116.2 Europe 899.5 -16 % 1,067.7 8 % 989.2 Asia Pacific 293.4 -5 % 310.1 5 % 295.6 Latin America 314.8 9 % 287.9 16 % 248.6 Net Revenues $ 3,572.5 -10 % $ 3,981.6 9 % $ 3,649.6 2022 versus 2021 Consumer Products segment net revenues declined 10% in 2022 compared to 2021 and included the impact of an unfavorable $117.5 million foreign currency translation, most notably from the Company's European markets, and to a lesser extent, the Company's Asia Pacific and Latin American markets.
Net Revenues The table below illustrates net revenues expressed in millions of dollars, derived from our principal operating segments in 2023, 2022 and 2021. 2023 Net Revenues % Change 2022 Net Revenues % Change 2021 Net Revenues Consumer Products $ 2,886.4 -19 % $ 3,572.5 -10 % $ 3,981.6 Wizards of the Coast & Digital Gaming 1,457.6 10 % 1,325.1 3 % 1,286.6 Entertainment 659.3 -31 % 959.1 -17 % 1,152.2 Consumer Products Segment The following table presents the Consumer Products segment net revenues by major geographic region for each fiscal year in the three years ended December 25, 2022. 2023 Net Revenues % Change 2022 Net Revenues % Change 2021 Net Revenues North America $ 1,649.1 -20 % $ 2,064.8 -11 % $ 2,315.9 Europe 669.5 -26 % 899.5 -16 % 1,067.7 Asia Pacific 256.3 -13 % 293.4 -5 % 310.1 Latin America 311.5 -1 % 314.8 9 % 287.9 Net Revenues $ 2,886.4 -19 % $ 3,572.5 -10 % $ 3,981.6 2023 versus 2022 Consumer Products segment net revenues declined 19% in 2023 compared to 2022 and included the impact of a favorable $21.8 million foreign currency translation, most notably from the Company's Latin American markets and to a lesser extent, from markets across Europe.
The Company's significant accounting policies are summarized in note 1 to the consolidated financial statements included in Part II, Item 8. Financial Statements, of this Form 10-K.
We are currently assessing the impact of this ASU on our consolidated financial statements. The Company's significant accounting policies are summarized in note 1 to the consolidated financial statements included in Part II, Item 8. Financial Statements, of this Form 10-K.
Diluted earnings per share attributable to Hasbro, Inc. were $1.46 in 2022, $3.10 in 2021 and $1.62 in 2020.
Diluted (loss) earnings per share attributable to Hasbro, Inc. were $(10.73) in 2023, $1.46 in 2022 and $3.10 in 2021.
Income tax expense for 2022 includes a net discrete benefit primarily related to: (i) favorable return to provision adjustments; offset by (ii) a discrete expense recording a valuation allowance against net deferred tax assets due to Russia's on-going conflict with Ukraine.
This treatment applies starting in 2021. 58 Table of Contents Income tax expense for 2022 includes a net discrete benefit primarily related to: (i) favorable return to provision adjustments; offset by (ii) a discrete expense recording a valuation allowance against net deferred tax assets due to Russia's on-going conflict with Ukraine.
The Company intends to repatriate the accumulated foreign earnings as needed from time to time. The Company still has significant cash needs outside the United States and continues to consistently monitor and analyze its global working capital and cash requirements. As of 2022, we have recorded $3.6 million of foreign withholding and U.S. state income tax liability.
The Company still has significant cash needs outside the United States and continues to consistently monitor and analyze its global working capital and cash requirements. As of 2023, we have recorded $3.2 million of foreign withholding and U.S. state income tax liability.
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.
At December 31, 2023, the Company had fixed rate long-term debt of $3,484.9 million. 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.
This includes: the marketing and sale of toys and games, including our owned and partner brands, innovative gaming brands and role-playing and fantasy card collecting games, through retail stores, ecommerce platforms and Hasbro Direct, our direct-to-consumer platform; the distribution, license and sale of digital games developed internally, such as Magic: The Gathering Arena and other digital games based on our IP that is licensed to third parties.
This includes: innovative toy and gaming brands and role-playing and fantasy card collecting games, the marketing and sale of toys and games, including our owned and partner brands, through retail stores, ecommerce platforms and Hasbro Direct, our direct-to-consumer platform; the distribution, license and sale of digital games developed both internally and through licensing out our IP to third parties, such as Baldur's Gate 3, Monopoly Go! and Magic: The Gathering Arena and other digital games.
Net cash utilized for financing activities in 2022 included payments totaling $87.5 million related to the $1.0 billion in term loans described below, consisting of a $50.0 million principal and quarterly principal amortization payments of $37.5 million toward the Five-Year Tranche loan.
In addition, cash utilized for financing activities included drawdowns of $118.1 million and repayments of $206.7 million related to production financing loans. Net cash utilized for financing activities in 2022 included payments totaling $87.5 million toward the Five-Year Tranche loan consisting of a $50.0 million principal and quarterly principal amortization payments of $37.5 million.
These impacts to segment operating results were partially offset by a loss on disposal of assets of $22.1 million and asset impairment charges of $4.1 million related to the Company's Blueprint 2.0 strategy to exit non-core businesses, the impact of the sale of the eOne Music business during 2021 described above and higher program amortization costs in proportion to entertainment revenues related to the mix of programming delivered in 2022. 2021 versus 2020 Entertainment segment operating losses were $91.8 million, or 8.0% of segment net revenues in 2021, compared to operating losses of $141.1 million, or 15.5% of segment net revenues in 2020.
These impacts to segment operating results were partially offset by a loss on disposal of assets of $22.1 million and asset impairment charges of $4.1 million related to the exit of certain non-core businesses, the impact of the sale of the eOne Music business during 2021 described above and higher program amortization costs in proportion to entertainment revenues related to the mix of programming delivered in 2022.
Amortization of Intangible Assets Amortization of intangible assets decreased to $105.3 million, or 1.8% of net revenues, in 2022 compared to $116.8 million, or 1.8% of net revenues, in 2021 and $144.7 million, or 2.6% of net revenues in 2020.
Amortization of Intangible Assets Amortization of intangible assets decreased to $83.0 million, or 1.7% of net revenues, in 2023 compared to $105.3 million, or 1.8% of net revenues, in 2022 and $116.8 million, or 1.8% of net revenues in 2021.
Loss on Disposal of Business In 2022, the loss on disposal of business of $22.1 million, or 0.4% of net revenues represents non-cash impairment charges associated with the exit of certain non-core businesses within the Entertainment segment.
In 2022, the loss on disposal of business of $22.1 million, or 0.4% 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 $108.8 million, or 1.7% of net revenues, represents a non-cash impairment charge associated with the disposition of eOne Music during 2021.
Royalty Expense Royalty expense of $493.0 million, or 8.4% of net revenues, in 2022 compared to $620.4 million, or 9.7% of net revenues, in 2021 and $570.0 million, or 10.4% of net revenues, in 2020.
Royalty Expense Royalty expense of $428.3 million, or 8.6% of net revenues, in 2023 compared to $493.0 million, or 8.4% of net revenues, in 2022 and $620.4 million, or 9.7% of net revenues, in 2021.
The decline in net revenues includes an unfavorable foreign currency translation of $166.3 million. ◦ Net revenues in the Consumer Products segment decreased 10% to $3,572.5 million; Wizards of the Coast and Digital Gaming segment increased 3% to $1,325.1 million; and Entertainment segment net revenues decreased 17% to $959.1 million. ◦ TV/Film/Entertainment portfolio net revenues decreased 17%; Hasbro Gaming net revenues decreased 13%; Emerging Brands net revenues decreased 12%; Partner Brands net revenues decreased 9%; and Franchise Brands net revenues decreased 4%. ◦ Hasbro’s total gaming portfolio, including the Hasbro Gaming portfolio as reported above, and all other gaming revenue, most notably MAGIC: THE GATHERING and MONOPOLY, totaled $2.0 billion, a decrease of 5%. • Operating profit was $407.7 million, or 7.0% of net revenues in 2022 compared to operating profit of $763.3 million, or 11.9% of net revenues in 2021. ◦ Operating Profit in the Wizards of the Coast and Digital Gaming segment decreased 2% to $538.3 million; Consumer Products segment decreased 46% to $217.3 million; Entertainment segment increased >100% to $22.7 million; and Corporate and Other operating losses increased >100% to $370.6 million. • Net earnings attributable to Hasbro, Inc. declined in 2022 to $203.5 million, or $1.46 per diluted share, compared to $428.7 million, or $3.10 per diluted share in 2021. 2021 highlights • Net revenues of $6,420.4 million increased 17% from $5,465.4 million in 2020.
The decline in net revenues includes an unfavorable foreign currency translation of $166.3 million. ◦ Net revenues in the Consumer Products segment decreased 10% to $3,572.5 million; Wizards of the Coast and Digital Gaming segment increased 3% to $1,325.1 million; and Entertainment segment net revenues decreased 17% to $959.1 million. ◦ TV/Film/Entertainment portfolio net revenues decreased 17%; Hasbro Gaming net revenues decreased 13%; Emerging Brands net revenues decreased 12%; Partner Brands net revenues decreased 9%; and Franchise Brands net revenues decreased 4%. ◦ Hasbro’s total gaming portfolio, including the Hasbro Gaming portfolio as reported above, and all other gaming revenue, most notably MAGIC: THE GATHERING and MONOPOLY, totaled $2.0 billion, a decrease of 5%. • Operating profit was $407.7 million, or 7.0% of net revenues in 2022 compared to operating profit of $763.3 million, or 11.9% of net revenues in 2021. ◦ Operating Profit in the Wizards of the Coast and Digital Gaming segment decreased 2% to $538.3 million; Consumer Products segment operating profit decreased 46% to $217.3 million; Entertainment segment operating losses increased greater than 100% to $22.7 million; and Corporate and Other operating losses increased greater than 100% to $370.6 million. • Net earnings attributable to Hasbro, Inc. declined in 2022 to $203.5 million, or $1.46 per diluted share, compared to $428.7 million, or $3.10 per diluted share in 2021. 43 Table of Contents Summary of Financial Performance A summary of the Company’s results of operations for 2023, 2022 and 2021 is illustrated below. 2023 2022 2021 Net revenues $ 5,003.3 $ 5,856.7 $ 6,420.4 Operating (loss) profit (1,538.8) 407.7 763.3 (Loss) earnings before income taxes (1,709.1) 261.5 581.9 Net (loss) earnings (1,487.8) 203.0 435.3 Net earnings (loss) attributable to noncontrolling interests 1.5 (0.5) 6.6 Net (loss) earnings attributable to Hasbro, Inc.
The Company does not know the ultimate resolution of these uncertain tax positions and as such, does not know the ultimate amount or timing of payments related to this liability. • At December 25, 2022, the Company had letters of credit and related instruments of approximately $11.9 million.
The Company does not know the ultimate resolution of these uncertain tax positions and as such, does not know the ultimate amount or timing of payments related to this liability. 67 Table of Contents • At December 31, 2023, the Company had letters of credit and related instruments of approximately $13.3 million.
In addition, entertainment business operating results fluctuate due to expenses recorded in relation to film and television productions and content such as program amortization costs and advertising expenses, which are incurred and recognized, beginning prior to initial releases and then continue throughout the related distribution windows.
In addition, entertainment business operating results fluctuate due to expenses recorded in relation to productions and content such as program amortization costs and advertising expenses, which are incurred and recognized, beginning prior to initial releases and then continue throughout the related distribution windows. Inflation The impact of inflation on the Company's business operations was significant during 2022 and 2023.
As noted above, to align with the revenue generated from the assets acquired in the eOne acquisition, Consumer Products segment operating profit in 2022 includes $37.7 million of incremental intangible asset amortization costs. In 2021, comparable costs were reported in the Entertainment segment results.
Operating profit margin decreased to 6.1% of net revenues in 2022 from 10.1% of net revenues in 2021. In 2022, to align with the revenue generated from the assets acquired in the eOne acquisition, Consumer Products segment operating profit included $37.7 million of incremental intangible asset amortization costs. In 2021, comparable costs were reported in the Entertainment segment results.
Product development expenditures reflect the Company’s investment in innovation and anticipated growth across our brand portfolio. The decrease in dollars compared to 2021 was driven by lower spending in line with the Company's global cost savings initiatives partially offset by higher spending in the Wizards of the Coast and Digital Gaming segment in support of the Company’s core initiatives.
The decrease in 2022 Product development expense in dollars compared to 2021 was driven by lower spending in line with the Company's global cost savings initiatives partially offset by higher spending in the Wizards of the Coast and Digital Gaming segment in support of the Company’s core initiatives.
Higher net revenues from MAGIC: THE GATHERING products, due to record sales from set releases that include: Kamigawa: Neon Dynasty , Commander Legends: Battle for Baldur's Gate , Double Masters, Dominaria United, Streets of New Capenna and The Brothers War, reflected momentum in the brand, elevating MAGIC: THE GATHERING to the Company's first billion-dollar brand.
Higher net revenues from MAGIC: THE GATHERING products, due to record sales from set releases that included: Kamigawa: Neon Dynasty , Commander Legends: Battle for Baldur's Gate , Double Masters, and others, reflecting momentum in the brand, and elevating MAGIC: THE GATHERING to the Company's first billion-dollar brand.
Financial Statements , of this Form 10-K for further information on our reportable segments. 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 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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. The information required by this item is included in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation, of this Form 10-K and is incorporated herein by reference. 70 Table of Contents
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. The information required by this item is included in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation, of this Form 10-K and is incorporated herein by reference. 69 Table of Contents

Other HAS 10-K year-over-year comparisons