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Hasbro

HasbroHASEarnings & Financial Report

Nasdaq · Consumer Discretionary · Leisure Products

Hasbro, Inc. is an American multinational toy manufacturing and entertainment holding company founded on December 6, 1923 by Henry, Hillel and Herman Hassenfeld and is incorporated and headquartered in Pawtucket, Rhode Island. Hasbro owns the trademarks and products of Kenner, Milton Bradley, Parker Brothers, and Wizards of the Coast, among others. As of August 2020, over 81.5% of its shares were held by large financial institutions.

What changed in Hasbro's 10-K — 2023 vs 2024

Top changes in Hasbro's 2024 10-K

371 paragraphs added · 666 removed · 242 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

70 edited+40 added−119 removed29 unchanged
Our customer order patterns may vary from year to year largely due to fluctuations in the degree of consumer acceptance of product lines, supply and product availability, marketing strategies and inventory policies of retailers, TV and film content releases, including the dates of theatrical releases of major motion pictures for which we offer products, and changes in overall economic conditions.
For our Consumer Products segment, our customer order patterns may vary from year to year largely due to fluctuations in the degree of consumer acceptance of product lines, supply and product availability, marketing strategies and inventory policies of retailers, TV and film content releases, including the dates of theatrical releases of major motion pictures for which we offer products, and changes in overall economic conditions.
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
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. 16 Table of Contents
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.
Product Development and Royalties Development Our success is dependent on continuous innovation in our play offerings and requires ongoing development of new brands and products alongside the redesign of existing products to drive consumer interest and market acceptance.
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.
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.
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.
Our 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 community where everyone can show up authentically as themselves and deliver their best work.
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.
The experience and dedication 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.
The CEO and Chief People Officer convene meetings with senior company leadership and the Board to review the full talent pipeline with a focus on our top company talent. We provide opportunities for our employees to grow their careers through annual goal setting and quarterly conversations.
The CEO and Chief People Officer convene meetings with senior company leadership and the Board to review the full talent pipeline with a focus on our top company talent. We provide opportunities for our employees to grow their careers through annual goal setting, development plans and quarterly conversations.
However, significant volatility in the prices of any of these materials may require renegotiation with our suppliers during the year. Competition We are a worldwide leader in the development, design, sale and marketing of toys and games and entertainment offerings, operating in a highly competitive business environment.
However, significant volatility in the prices of any of these materials may require renegotiation with our suppliers during the year. Competition We are a worldwide leader in the development, design, sale and marketing of games and toys, operating in a highly competitive business environment.
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").
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 ("COPPA").
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.
Rights to such designs and ideas, when acquired or licensed by us, are usually exclusive for 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.
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.
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. Part of 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.
In many instances, advance royalties and minimum guarantees are required by these license agreements. Our royalty expense in any given year may vary depending upon product mix and the timing of movie releases and other entertainment media.
In many instances, advance royalties and minimum 10 Table of Contents guarantees are required by these license agreements. Our royalty expense in any given year may vary depending upon product mix and the timing of movie releases and other entertainment media.
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.
To successfully execute our gaming strategy, we focus on brands that 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.
Human Capital Management Overview Our key human capital management objectives for our direct workforce are to attract, develop, motivate and retain a talented workforce to enable us to offer great toys, games and entertainment experiences to our fans and consumers.
Human Capital Management Overview Our key human capital management objectives for our direct workforce are to attract, develop, motivate and retain a talented workforce to enable us to offer great play experiences to our fans and consumers.
Most of our toys and games are manufactured from basic raw materials such as plastic, paper and cardboard, although certain products also use electronic components. All of these materials are readily available but may be subject to significant fluctuations in price.
We continually look to diversify our manufacturing footprint. Most of our toys and games are manufactured from basic raw materials such as plastic, paper and cardboard, although certain products also use electronic components. All of these materials are readily available but may be subject to significant fluctuations in price.
(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.
(6) 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. Availability of Information Our internet address is http://www.hasbro.com.
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.
Our products include a wide range of games, trading cards and collectibles, action figures, arts and crafts and creative play products, dolls, play sets, preschool toys, plush products, vehicles and toy-related specialty products, sports action products and accessories and many other consumer products which represent an array of internationally recognizable brands that capture the imagination of our consumers worldwide.
Our Hasbro Direct business is our "Fans Come First" approach, intended to create direct connections with our consumers and includes the following platforms: ◦ Magic: The Gathering Arena - the free-to-play online adaptation of the MAGIC: THE GATHERING card game where players can explore the fantasy worlds of Magic: The Gathering Arena , play a variety of game formats to collect cards and test skills against friends and other players around the world, or enter in-game tournaments. 10 Table of Contents ◦ SECRET LAIR - our internet-based storefront where MAGIC: THE GATHERING fans can purchase exclusive and limited versions of cards. ◦ D&D Beyond - the premier digital content platform for DUNGEONS & DRAGONS where fans can access online versions of official rule books, character sheets and catalogs, adventures, and other digital tools such as character builders and official D&D content available for purchase. ◦ Hasbro PULSE - Hasbro's ultimate fan ecommerce destination.
It includes the following platforms: ◦ Magic: The Gathering Arena - the free-to-play online adaptation of the MAGIC: THE GATHERING card game where players can explore the fantasy worlds of Magic: The Gathering Arena , play a variety of game formats to collect cards and test skills against friends and other players around the world, or enter in-game tournaments. ◦ SECRET LAIR - our internet-based storefront where MAGIC: THE GATHERING fans can purchase exclusive and limited versions of cards. ◦ D&D Beyond - the premier digital content platform for DUNGEONS & DRAGONS where fans can access online versions of official rule books, character sheets and catalogs, adventures, and other digital tools such as character builders and official D&D content available for purchase. ◦ Hasbro PULSE - Hasbro's ultimate fan ecommerce destination.
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.
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.
Important to our success is the continued growth and development of our digital gaming business, including development of AAA games, games as a service and licensed games.
Key to our success is the continued investment in, growth and development of, our digital gaming business, including development of AAA games, games as a service and licensed games.
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.
Other aspects of our strategy that help drive our consumer reach and storytelling experiences include 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.
Royalties and Participations We also produce an array of products under licenses based on our partners’ trademarks and copyrights for the names or likenesses of characters from movies, television shows and other entertainment media. We compete with other toy and game manufacturers for these licensed rights, and we refer to our products produced under these arrangements as Partner Brands.
Royalties and Participations We produce an array of products under licenses based on our partners’ trademarks and copyrights for the names or likenesses of characters from movies, television shows and other entertainment media. We compete with other toy and game manufacturers for these licensed rights.
Kilpin served as Executive Chairman and Chief Executive Officer of PlayMonster Group, LLC from 2020 to 2023. Prior thereto, Mr. Kilpin held senior leadership positions within the toy and entertainment industry at companies that include Activision Blizzard, Inc., Mattel, Inc. and The Walt Disney Company (4) Prior thereto, Ms.
Kilpin served as Executive Chairman and Chief Executive Officer of PlayMonster Group, LLC from 2020 to 2023. Prior thereto, Mr. Kilpin held senior leadership positions within the toy and entertainment industry at companies that include Activision Blizzard, Inc., Mattel, Inc. and The Walt Disney Company. (4) Prior to joining Hasbro in 2024, during a twelve-year tenure, Mr.
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.
With these platforms, we are expanding and enhancing our capabilities beyond traditional ecommerce to serve our consumers and activate brands.
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.
The following discusses our governance of human capital management and our key focus areas. 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.
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.
In 2024 and 2023, the second half of the year accounted for approxima tely 58% and 56% of full year revenues, respectively, with the third and fourth quarters accounting for approximately 31% and 27%, respectively, of full year net revenues in 2024 and 30% and 26%, respectively, of full year revenues in each of the third and fourth quarters of 2023.
Our iconic game brands include long-time favorites such as MONOPOLY, JENGA, CONNECT 4, THE GAME OF LIFE, SCRABBLE, CLUE and TRIVIAL PURSUIT, as well as many other well-known game brands. • Licensed Consumer Products .
Our other iconic game brands include long-time favorites such as MONOPOLY, JENGA, CONNECT 4, THE GAME OF LIFE, SCRABBLE, CLUE and TRIVIAL PURSUIT, as well as many other well-known game brands and newer games that are geared toward a mature consumer. • Digital Gaming .
Digital media encompasses digital gaming applications and the creation of digital environments for traditional products through the use of complementary digital applications, social media and websites which extend storylines and enhance play. ◦ Location-Based Entertainment . Location-based entertainment (“LBE”) allows consumers to experience and share our brands.
Digital media encompasses digital gaming applications and the creation of digital environments for traditional products through the use of complementary digital applications, social media and websites which extend storylines and enhance play.
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.
With our cross-platform capabilities, our entertainment business leverages film and television production and sales, digital content and children's programming to create compelling 9 Table of Contents entertainment and drive creativity and overall awareness across brands with merchandising and licensing tie-ins.
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%.
Customer Concentration During 2024, net revenues from our top five customers accounted for approximately 36% of our consolidated global net revenues, including our largest customers, Wal-Mart, Inc. and Amazon.com, Inc. who together represented 23% of consolidated global net revenues, with each accounting for 12% and 11%, respectively. Please see Part I, Item 1A.
The position(s) and office(s) listed below are the principal position(s) and office(s) held by such persons with the Company. The persons listed below generally also serve as officers and directors of certain of our various subsidiaries at our request.
The persons listed below generally also serve as officers and directors of certain of our various subsidiaries at our request.
Recent examples include the 2023 release of Baldur's Gate 3 , the DUNGEONS & DRAGONS-based role-playing video game from our partners at Larian Studios which won six awards, including Game of the Year at the 10th annual Game Awards. In 2022, we acquired D&D Beyond, the premier digital content platform for DUNGEONS & DRAGONS.
Recent examples include: ◦ the popular Monopoly Go! free-to-play mobile game, released by Scopely, Inc. during 2023 and based on the classic board game, MONOPOLY; ◦ the 2023 release of Baldur's Gate 3, the DUNGEONS & DRAGONS-based role-playing video game from our partners at Larian Studios which won several awards, including Game of the Year at the 10th annual Game Awards; and ◦ our 2022 acquisition of D&D Beyond, the premier digital content platform for DUNGEONS & DRAGONS.
Our HTO aligns and delivers on our Operational Excellence program, an ongoing enterprise-wide cost-savings initiative intended to improve our business through specialized organizational programs that include targeted cost-savings, supply chain transformation and certain other restructuring actions designed to drive growth and enhance shareholder value.
Operational Excellence Program In 2024, we continued to execute on our Operational Excellence program, an ongoing enterprise-wide cost-savings initiative that includes targeted cost-savings, supply chain transformation and certain other restructuring actions designed to drive growth and enhance shareholder value.
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.
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. The position(s) and office(s) listed below are the principal position(s) and office(s) held by such persons with the Company.
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.
Name Age Position and Office Held Period Serving in Current Position Chris Cocks (1) 51 Chief Executive Officer Since 2022 Gina Goetter (2) 48 Chief Financial Officer and Chief Operating Officer Since 2023 Tim Kilpin (3) 64 President, Toys, Board Games, Licensing and Entertainment Since 2023 John Hight (4) 64 President, Wizards of the Coast and Digital Gaming Since 2024 Holly Barbacovi (5) 48 Executive Vice President and Chief People Officer Since 2024 Tarrant Sibley (6) 56 Executive Vice President and Chief Legal Officer and Corporate Secretary Since 2019 15 Table of Contents (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 2016 to 2021.
For more than a decade, we have been consistently recognized for our corporate citizenship, including being named one of the 100 Best Corporate Citizens by 3BL Media, one of the World’s Most Ethical Companies by Ethisphere Institute and one of the 50 Most Community-Minded Companies in the U.S. by the Civic 50.
For more than a decade, Hasbro has been consistently recognized for its corporate citizenship, including being named one of the 100 Best Corporate Citizens by 3BL Media, a 2025 JUST Capital Industry Leader, one of the 50 Most Community-Minded Companies in the U.S. by the Civic 50, and a Brand that Matters by Fast Company.
We utilize independent third party laboratories that employ testing and other procedures intended to maintain compliance with the CPSIA, the FHSA, the FFA, other applicable domestic and international product standards, and our own standards.
Consumer product safety laws also exist in some states and cities within the United States and in many international markets including Canada, Australia, Asia and Europe. We utilize independent third-party laboratories that employ testing and other procedures intended to maintain compliance with the CPSIA, the FHSA, the FFA, other applicable domestic and international product standards, and our own standards.
The CPSC has the authority to seek to declare a product “a banned hazardous substance” under the CPSIA and to ban it from commerce. The CPSC can file an action to seize and condemn an “imminently hazardous consumer product” under the CPSIA and may also order equitable remedies such as recall, replacement, repair or refund for the product.
The CPSC can file an action to seize and condemn an “imminently hazardous consumer product” under the CPSIA and may also order equitable remedies such as recall, replacement, repair or refund for the product. The FHSA provides for the repurchase by the manufacturer of articles that are banned.
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.
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.
Many of our new toy and game products are introduced to major customers within one to two years leading up to their year of retail introduction. Our advertising expenditures are impacted by our product mix in any given year.
Our brands obtain marketing and advertising support through entertainment appearing on major networks globally, theatrical releases as well as on various other digital platforms. Many of our new products are introduced to major customers within one to two years leading up to their year of retail introduction. Our advertising expenditures are impacted by our product mix in any given year.
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 gaming business continues to transform game play with new and innovative games and play experiences.
Our entertainment offerings also require us to pay royalties and participations to those involved in the creation of the content, such as producers, writers, directors and actors.
Our entertainment offerings also require us to pay royalties and participations to those involved in the creation of the content, such as producers, writers, directors and actors. Marketing and Sales, Customer Concentration and Advertising Marketing and Sales Our global marketing function establishes brand direction and messaging and assists the selling entities in establishing local marketing programs.
Reinforcing storylines associated with our owned and controlled Hasbro and Family Brands through entertainment mediums, including television, film, digital content and other programming is our primary entertainment strategy.
These experiences bring our brands to life and further immerse our consumers in our storytelling in a capital efficient manner. • Entertainment . Reinforcing storylines associated with our owned and controlled brands through entertainment mediums, including television, film, digital content and other programming is our primary entertainment strategy.
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.
Item 1. Business. Overview Hasbro, Inc. (“Hasbro”) is a leading game, intellectual property ("IP"), and toy company whose mission is to create joy and community through the magic of play.
The Governance Committee analyzes these issues and makes recommendations to the full Board. In addition, the Audit Committee of our Board oversees Securities and Exchange Commission ("SEC") and public disclosures in specific areas like conflict minerals, climate and sustainability, and enterprise risk.
ESG topics, such as climate and sustainability, human rights and ethical sourcing, are regular agenda items at Governance Committee meetings. The Governance Committee analyzes these issues and makes recommendations to the full Board. In 12 Table of Contents addition, the Audit Committee of our Board oversees SEC and public disclosures in specific matters, such as conflict minerals, and enterprise risk.
We market and sell toys and games based on our owned and controlled brands globally at retail stores, through ecommerce platforms and through our fan-based direct-to-consumer platforms Hasbro PULSE and SECRET LAIR. Additionally, through license agreements with third parties, we develop and sell products based on popular third-party brands through these channels.
Our Brand Portfolio. Below is a summary of the brands and business models where we compete. • Toys and Games . We market and sell toys and games based on our owned and controlled brands globally at retail stores, through ecommerce platforms and through our fan-based direct-to-consumer platforms Hasbro PULSE and SECRET LAIR.
As a complement to our toy and game business, we promote our brands through the out-licensing of our intellectual properties to third parties for promotional and merchandising uses in a wide range of consumer products.
We are increasingly promoting our brands through the out-licensing of our intellectual properties to third parties for a wide range of digital games, consumer products and location-based experiences.
The costs of this group are allocated to the selling entities which comprise our principal operating segments. In addition to the global marketing function, our local selling entities employ sales and marketing functions responsible for local market activities and execution.
The global marketing group works with the global development function to deliver unified, brand-specific consumer experiences. In addition to the global marketing function, our local selling entities employ sales and marketing functions responsible for local market activities and execution.
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.
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.
In addition to contending with competition from other toy and game and entertainment and storytelling companies, we contend with the expanding variety of digital gaming and digital entertainment offerings available for children, while product life cycles of traditional toys and games have shortened.
We expect that as artificial intelligence becomes more prevalent, we will see increased competition from those using such technology to develop games, toys and content. We also contend with the expanding variety of digital gaming and digital entertainment offerings available for children, while product life cycles of traditional toys and games have shortened.
Through our Compensation Committee, the Board considers ESG performance and priorities when determining performance and compensation for our senior executives. The full Board receives regular updates regarding our ESG progress. In addition to Board-level governance, our CEO and the Executive Leadership Team ("ELT") regularly review our ESG performance, progress and opportunities.
The full Board receives regular updates regarding our ESG progress. In addition to Board-level governance, our CEO and the Executive Leadership Team ("ELT") regularly review our ESG performance, progress and opportunities. Our ELT and members of our global corporate sustainability team meet several times a year to ensure management oversight of the Company’s ESG strategy, impact and performance.
We regularly review salary ratios for men and women in similar roles to help maintain internal equity and market competitiveness across the globe. We review both industry and local market data at least annually to identify trends and market gaps to maintain the competitiveness of our compensation and employee benefit programs.
We review both industry and local market data at least annually to identify trends and market gaps to maintain the competitiveness of our compensation program. When designing our compensation and employee benefit programs, we consider the big picture of how these programs contribute to the overall employee experience.
We compete with several large toy and game companies in our product categories, as well as with many smaller United States and international toy and game designers, manufacturers and marketers. In certain instances, we also compete with large retailers, who offer such products under their own private labels, often at lower prices.
We view our primary competition as coming from game and toy companies, digital gaming companies and digital gaming developers. We compete with several large companies in our product categories, as well as with many smaller United States and international game and toy designers, manufacturers and marketers.
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.
We are continuing to refine our integrated supply chain from planning and designing to sourcing and delivering, with our multi-year plan to deliver improved capabilities and provide a productivity pipeline to fuel growth at Hasbro. 11 Table of Contents The majority of our toy and game products are manufactured in third-party facilities principally in the U.S. and the Far East, primarily China, Vietnam, India and Japan.
Focus Area: Diversity, Equity, and Inclusion We believe that the more inclusive we are as a company, the more effective our employees will be and the stronger our business will perform. Hasbro views DE&I as a strategic ESG priority that is linked to the success of our business and the growth of our brands.
Approximately 9% of our employees globally are covered by unions or collective bargaining agreements. Focus Area: Inclusion and Belonging We believe that the more inclusive we are as a company, the more effective our employees will be and the stronger our business will perform.
LBE includes licensing our brands to theme parks, water parks, hotels and resorts, family entertainment centers, retail, dining and entertainment, shows, exhibits and exhibitions such as Hasbro City, the newly-opened Hasbro-themed family entertainment center located in Paseo Interlomas, Mexico featuring thrilling theme park rides and experiences, live shows, food and beverage options and the region's first Hasbro-themed retail location.
Another recent example, in 2024, we saw a resurgence from MY LITTLE PONY through licensing across merchandising categories, music, and trading card products. ◦ Digital Games Licensing : 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! and Baldur's Gate 3 discussed above. ◦ Location-Based Entertainment : Location-based entertainment (“LBE”) includes licensing our brands to theme parks, water parks, hotels and resorts, family entertainment centers, retail, dining and entertainment, shows, exhibits and exhibitions such as Hasbro City, the recently-opened Hasbro-themed family entertainment center located in Paseo Interlomas, Mexico featuring thrilling theme park rides and experiences, live shows, food and beverage options and the region's first Hasbro-themed retail location.
Additionally, we promote our brands through the out-licensing of our intellectual properties to third parties for promotional and merchandising uses in a wide range of consumer products, where the out-licensing of brands is more effective and profitable than developing and marketing the products ourselves.
Hasbro is one of the world’s largest and most diverse licensors, and a growing part of our Playing to Win strategy is to extend the reach of our brands through the out-licensing of our intellectual properties to third parties for consumer products, digital games and entertainment. ◦ Consumer Products Licensing : We license our intellectual property for a variety of consumer products, including apparel, publishing, home goods and electronics, or in certain situations, toy products where the out-licensing of brands is more effective and profitable than developing and marketing the products ourselves.
Together we relaunched LITTLEST PET SHOP through a Roblox 9 Table of Contents experience in December 2023 and expect a refreshed LITTLEST PET SHOP product lineup in the first half of 2024 featuring new characters, collectables, and play-sets. We also out-license our brands for uses in theme park attractions and other forms of location-based entertainment.
A recent example of this includes the return of our LITTLEST PET SHOP brand through our partnership with Basic Fun!, a global marketer of toys and consumer products. Together we relaunched LITTLEST PET SHOP through a Roblox experience in December 2023, a refreshed LITTLEST PET SHOP product lineup in the first half of 2024 featuring new characters, collectables, and playsets.
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.
In certain instances, we also compete with large retailers, who offer such products under their own private labels, often at lower prices. 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.
Our entertainment business is also subject to seasonal variations based on the timing of film, television, streaming and digital content releases, which are often determined based on the timing of prime television seasons, certain geographic release dates and competition in the market.
Seasonality Our Wizards and entertainment businesses are subject to variations in sales based on the timing of release of card sets, games, and content releases. Release dates are determined by several factors, including the timing of holiday periods, geographical release dates and competition in the market.
Focus Area: Compensation, Health, Safety & Well-being of Employees Employee attraction, development, motivation and retention has long been a key Hasbro priority.
We work diligently to foster an inclusive culture that reflects the consumers and communities we serve globally. Focus Area: Compensation & Well-being of Employees Employee attraction, development, motivation and retention has long been a key Hasbro priority. We recognize and reward our employees with a total rewards package that includes competitive compensation and comprehensive benefits.
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).
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. 13 Table of Contents Employees As of year-end 2024, we employed approximately 4,985 people worldwide, with approximately 54% of our employees in North America (47% in the United States; 7% in Canada), 20% in Europe, 18% in Asia Pacific, and 8% in Latin America (includes Mexico).
Our toy and game products are developed by a global development function, the costs of which are allocated to the selling entities which comprise our principal operating segments. These costs include activities related to the development, design and engineering of new products and their packaging and on the improvement or modification of ongoing products.
Our products are developed by a global development function, which is responsible for the development, design and engineering of new products and their packaging and the innovation, improvement or modification of ongoing products. Much of this work is performed by our internal staff of designers, artists, model makers and engineers.
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.
Environmental, Social and Governance The following discusses our governance and focus areas of our Environmental, Social and Governance (ESG) efforts. 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").
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.
Through our franchise-first approach, we unlock value from both new and legacy IP, including MAGIC: THE GATHERING, DUNGEONS & DRAGONS, MONOPOLY, HASBRO GAMES, NERF, TRANSFORMERS, PLAY-DOH and PEPPA PIG, as well as premier partner brands.
We recognize and reward our employees with a total rewards package that includes competitive base pay, equity compensation (for certain levels), annual incentives, product discounts and other comprehensive benefits, including wellness programs that help people integrate work and life commitments. Competitive compensation is the cornerstone of our total rewards program.
Our compensation program includes base pay, equity compensation (for certain levels), annual incentives, and a robust recognition program. Competitive compensation is the cornerstone of our total rewards program. We regularly review salary ratios for men and women in similar roles to help maintain internal equity and market competitiveness across the globe.
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.
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. Another recent example is Transformers One , an animated film featuring the untold origin story of Optimus Prime and Megatron released in September 2024 in partnership with Paramount Pictures. • Hasbro Direct .
Our ESG Committee, comprised of our ELT and members of our global corporate sustainability team, meets several times a year to ensure rigorous management oversight of the Company’s ESG strategy, impact and performance. The ESG Committee sets the direction for our global ESG strategy and ensures the integration of ESG throughout the organization and supply chain.
This group sets the direction for our global ESG strategy and ensures the integration of ESG throughout the organization and supply chain. Focus Area: Climate and Sustainability • We recognize the impact our business can have on the environment and are working to reduce our footprint.
Key Brands include: • MARVEL, including SPIDER-MAN and THE AVENGERS (1) • LUCASFILMS' STAR WARS (1) • BEYBLADE • GHOST BUSTERS • INDIANA JONES (1) (1) Owned by The Walt Disney Company (“Disney”). • We hold certain toy and game licensed merchandise rights for major Disney entertainment properties Marvel and Star Wars, each for multi-year terms. • Our products were also supported by numerous streaming and broadcast television series of our partners.
Key partner brands include: • MARVEL, including SPIDER-MAN and THE AVENGERS (1) • LUCASFILMS' STAR WARS (1) • BEYBLADE • SECRET LAIR partners such as Final Fantasy, The Lord of the Rings, and Fallout ( 1) Owned by The Walt Disney Company (“Disney”).
For example, MAGIC: THE GATHERING had a record year in 2023 with a string of successful new sets. In 2023, we expanded our Magic audience through the integration of other well-known IP, such as with The Lord of the Rings: Tales of Middle-earth card set, Magic's best-selling set of all time, released in June 2023.
These games include: • MAGIC: THE GATHERING, one of the original collectible card games, is a strategic trading card game with compelling characters in multiple universes that continue to expand through new card sets, including with well-known third-party properties such as The Lord of the Rings: Tales of Middle-Earth card set released in 2023.
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Hasbro is guided by our purpose to create joy and community for all people around the world, one game, one toy, one story at a time.
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With over 100 years of expertise, we deliver play experiences to kids, families, and fans around the world, through physical and digital games, video games, toys, licensed consumer products, location-based entertainment, film, TV and more.
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Recent Developments Fiscal year 2023 was a year of transformation for our business. Following the October 2022 announcement of our revised strategic plan, we embarked upon an ambitious, multi-year transformation guided by our revamped strategy.
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Powered by our portfolio of iconic brands and a diversified network of partners and subsidiary studios, we bring fans together wherever they are, from tabletop to screen.
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Since that announcement, we have been able to create efficiencies in our supply chain, improve our inventory position, lower our costs, and reinvest back into the business. During fiscal 2023, we strengthened our leadership team with industry veterans and turnaround experts and have focused our strategic investments on our most valuable and profitable franchises across games, toys, licensing and entertainment.
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Recent Developments Fiscal year 2024 was a year of continued transformation for our business and we began to see tangible results from our initiatives. Specifically, we focused our efforts on strategic investments in our most valuable and profitable franchises across games, licensing, toys and entertainment.
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This focused strategy also led to the decision to sell certain non-core parts of our business, including the Entertainment One film and television business not relating to Hasbro and family-oriented brands, which we refer to as Hasbro Brands and Family Brands.
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We also made significant progress in our cost-savings initiatives, and further strengthened our leadership team with industry veterans and turnaround experts. 2024 Business Results We finished 2024 with momentum, led by another record year in our Wizards of the Coast and Digital Games segment, continued success in licensing, and operating profit improvement across the Company. • MAGIC: THE GATHERING had a solid year, nearly matching 2023’s record despite fewer set releases.
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In 2023, we experienced stronger than expected market headwinds within our Consumer Products business, resulting in our difficult decision to take additional headcount reductions and accelerate the process of certain organizational structure changes that is expected to result in the reallocation of people and resources, both in effort to strengthen our foundation and position Hasbro for growth.
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Modern Horizons 3, Bloomburrow, and Duskmourn led performance in tentpole sets with backlist and Secret Lair demand also exceeding expectations. • Digital licensing growth was led by Monopoly Go! from our partners at Scopely, Inc., closing the year with a successful TV campaign and the launch of Tycoon Club.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Inflation and other adverse economic conditions in the markets in which we and our employees, consumers, customers, suppliers and manufacturers operate could negatively impact our ability to produce and ship our products, and lower our revenues, margins and profitability.
Inflation and other adverse economic conditions in the markets in which we and our consumers, customers, employees, suppliers and manufacturers operate could negatively impact our ability to produce and ship our products, and lower our revenues, margins and profitability.
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.
Various economic conditions in the markets in which we, our consumers, customers, employees, suppliers and manufacturers operate, could have a significant negative impact on our revenues, profitability and business.
Weakened economic conditions, lowered employment levels or recessions in any of our major markets may also significantly reduce consumer purchases of our products and spending on entertainment. Economic conditions may also be negatively impacted by terrorist attacks, wars and other conflicts, natural disasters, increases in critical commodity prices or labor costs, or the prospect of such events.
Weakened economic conditions, lowered employment levels or recessions in any of our major markets may also significantly reduce consumer purchases of our products and spending on entertainment. Economic conditions may also be negatively impacted by terrorist attacks, wars and other conflicts, natural disasters, increases in critical commodity prices or labor costs, tariffs, or the prospect of such events.
Additionally, designing, developing and producing digital gaming and other technologically advanced or innovative products often relies on third parties and requires different competencies and follows different timelines than traditional toys and games. Delays in the design, development or production of our digital gaming products could have a significant impact on our success.
Designing, developing and producing digital gaming and other technologically advanced or innovative products often relies on third parties and requires different competencies and follows different timelines than traditional toys and games. Delays in the design, development or production of our digital gaming products could have a significant impact on our success.
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.
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 efficiency, profitability or otherwise harm the business.
There are no assurances that we will achieve these cost savings in the amounts we anticipate or within the anticipated timeframes or at all. In addition, any cost savings that we realize may be offset, in whole or in part, by reductions in net sales or through increases in other expenses.
There are no assurances that we will achieve cost savings in the amounts we anticipate or within the anticipated timeframes or at all. In addition, any cost savings that we realize may be offset, in whole or in part, by reductions in net sales or through increases in other expenses.
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.
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.
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 amount of our long-term 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.
In addition, increased concentration among our customers could negatively impact our ability to negotiate higher sales prices for our products and could result in lower gross margins than would otherwise be obtained if there were less consolidation among our customers.
In addition, increased concentration among our customers could negatively impact our ability to negotiate higher sales prices for our products and could result in lower margins than would otherwise be obtained if there were less consolidation among our customers.
The risk is also exacerbated by the increasing sophistication of many of the brands and products we are designing and developing in terms of combining digital and traditional technologies, and providing greater innovation and product differentiation.
The risk is exacerbated by the increasing sophistication of many of the brands and products we are designing and developing in terms of combining digital and traditional technologies, and providing greater innovation and product differentiation.
This seasonal patterns of our business requires significant use of working capital, mainly to manufacture or acquire inventory during the portion of the year prior to the holiday season, and requires accurate forecasting of demand for products during the holiday season in order to avoid losing potential sales of popular products or producing excess inventory of products that are less popular with consumers.
This seasonal pattern of our business requires significant use of working capital, mainly to manufacture or acquire inventory during the portion of the year prior to the holiday season and requires accurate forecasting of demand for products during the holiday season in order to avoid losing potential sales of popular products or producing excess inventory of products that are less popular with consumers.
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.
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 were doing so is necessary to conduct our business.
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.
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 business strategy.
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, license or investment we may make will be successful or beneficial, and acquisitions, dispositions, licenses and investments can consume significant amounts of management attention and other resources, which may negatively impact other aspects of our business.
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.
We may not realize the full benefit of our licenses from third parties 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.
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.
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 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.
In addition, our business is subject to the risk of third parties counterfeiting our products or infringing on our intellectual property rights, as well as the risk of unauthorized third parties copying and distributing our entertainment content or leaking portions of planned entertainment content.
In addition, our business is subject to the risk of third parties counterfeiting our products or infringing on our intellectual property rights, as well as the risk of unauthorized persons copying and distributing our digital or entertainment content or leaking portions of planned digital or entertainment content.
As a large multinational corporation, we are subject to a host of governmental regulations throughout the world, including antitrust, employment, customs and tax requirements, anti-boycott regulations, environmental regulations and the Foreign Corrupt Practices Act.
As a large multinational corporation, we are subject to a host of governmental regulations throughout the world, including antitrust, employment, pay transparency, customs and tax requirements, anti-boycott regulations, environmental regulations and the Foreign Corrupt Practices Act.
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.
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.
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.
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 18 Table of Contents acceptance or can be popular during a certain period of time but then be rapidly replaced.
This is a long-term project, with no assurance that we will achieve the anticipated efficiencies and benefits from such efforts. If the transformation of our supply chain operations is not successful, our business may be harmed. Further we may not achieve our anticipated cost savings, and we may face costly inefficiencies or other supply chain disruptions.
This is a long-term project, with no assurance that we will achieve the anticipated efficiencies and benefits from such efforts. If the transformation of our supply chain operations is not 20 Table of Contents successful, our business may be harmed. Further we may not achieve our anticipated cost savings, and we may face costly inefficiencies or other supply chain disruptions.
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.
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 such data.
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.
We cannot guarantee that we will recruit, hire or retain the key personnel we need to succeed. We have also 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 few years.
Our 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 ability to successfully implement and execute our 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 focused group of brands to global consumers in a wide array of markets; • our ability to successfully grow our digital gaming, licensing, and direct-to-consumers 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 successfully develop products that gain sufficient consumer interest; • 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.
The condition of the credit markets and prevailing interest rates have fluctuated significantly in the past and are likely to fluctuate in the future. Variations in these factors could make it difficult for us to sell debt securities or require us to offer higher interest rates in order to sell new debt securities.
The condition of the credit markets and prevailing interest rates have fluctuated significantly in the past and are likely to fluctuate in the future. Variations in these factors could make it difficult for us to sell debt securities or require us to offer higher interest rates in order to sell new debt 27 Table of Contents securities.
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 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.
As part of our transformation efforts, we are also upgrading some of our technology and systems, and, as described elsewhere, we are relying on the systems of third-party outsourcers for certain critical functions. We are critically dependent on the integrity, security and consistent operations of these systems and related back-up systems.
As part of our transformation efforts, we are upgrading some of our technology and systems, and we are relying on the systems of third-party outsourcers for certain critical functions. We are critically dependent on the integrity, security and consistent operations of these systems and related back-up systems.
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.
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’ 28 Table of Contents property or rights, securities claims, royalties claims, claims by former employees for employment related matters and claims relating to media content.
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.
Given that our toy and game manufacturing is conducted by third-party manufacturers, health conditions 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.
Advertising to children is subject to regulation by the Federal Trade Commission, the Federal Communications Commission and a host of other agencies globally, and the collection of information from children under the age of 13 is subject to the provisions of the Children’s Online Privacy Protection Act and other privacy laws around the world.
Advertising to children is subject to regulation by the Federal Trade Commission, the Federal Communications Commission and a host of other agencies globally, and the collection of information from children is subject to the provisions of the Children’s Online Privacy Protection Act and other privacy laws around the world.
Our future success will depend on the leadership of our key executives and their ability to navigate the organization through our transformation efforts.
Our future success will depend on the leadership of our key executives and their ability to navigate the organization through our transformation efforts and renewed strategy.
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.
Further, as described elsewhere, the imposition or threat 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.
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.
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 $1,250.0 million committed revolving credit facility.
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.
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 and could harm our results of operations.
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.
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: • The imposition of tariffs as described in these risk factors, trade sanctions, quotas, border adjustment taxes or other protectionist measures; • Political instability, civil unrest and economic instability; 21 Table of Contents • Currency conversion risks and currency fluctuations; • 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; • 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.
If we produce a line of products based on a movie or television series, the success of the movie or series has a critical impact on the level of consumer interest in the associated products we are offering.
If we produce a line of products based on a movie or television series, the success of the movie or series has a critical impact on the level of consumer interest in the associated products we offer.
Our intellectual property, including our trademarks and tradenames, copyrights, patents, and rights under our license agreements and other agreements that establish our intellectual property rights and maintain the confidentiality of our intellectual property, is of critical value.
Our intellectual property, including our trademarks and tradenames, copyrights, patents, and rights under our license agreements and other agreements that establish our intellectual property rights and maintain the 23 Table of Contents confidentiality of our intellectual property, is of critical value.
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.
Recessions or even fear or anticipation of recessions, inflation, rising costs due to tariffs or potential tariffs, 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.
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.
To be successful, we must correctly anticipate the types of products, play patterns and entertainment which will capture consumers’ interests and imagination, and quickly develop and introduce innovative and value driven products and engaging entertainment which can compete successfully for consumers’ limited time, attention and spending.
If a digital game fails to gain consumer acceptance early in its life cycle, there are limited opportunities to gain such acceptance through secondary launches or distribution through alternative platforms.
If a digital game fails to 17 Table of Contents gain consumer acceptance early in its life cycle, there are limited opportunities to gain such acceptance through secondary launches or distribution through alternative platforms.
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.
If we are unable to navigate through global supply chain challenges, our business may be harmed. We have periodically faced global supply chain challenges with the production and delivery of some products being delayed due to logistics, including labor, trucking and container shortages, strikes, port congestion and other shipping disruptions.
The success of entertainment properties for which we have a license, such as licenses we have with The Walt Disney Company, and the ability of us to successfully market and sell related products, can significantly affect our revenues and profitability.
The success of entertainment and other properties for which we have a license, such as licenses we have with The Walt Disney Company for the MARVEL and STAR WARS properties, and our ability to successfully market and sell related products, can significantly affect our revenues and profitability.
Part of our strategy is to build lifelong relationships with our consumers through direct-to consumer relationships created through ecommerce, social media, digital games and services. If we are unable to effectively connect with consumer through these channels, or business may be harmed.
Part of our strategy is to increase our reach with our consumers through direct-to consumer relationships created through ecommerce, social media, digital games and services. If we are unable to effectively connect with consumers through these channels, our business may be harmed.
Our reliance on third-party manufacturers to produce our products, particularly in China, the U.S., Vietnam and India, presents risks to our business. All our products are manufactured by third-party manufacturers, the majority of which are in China, with a significant amount of our product sourcing also coming from manufacturers the U.S., Vietnam and a lesser amount from India.
Our reliance on third-party manufacturers to produce our products, particularly in China, the U.S., Vietnam and India, presents risks to our business. Most of our toy and game products are manufactured by third-party manufacturers, the majority of which are in China, with a significant amount of our product sourcing also coming from manufacturers in the U.S., Vietnam, India and Japan.
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.
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, political instability in certain port regions and tariffs.
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.
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.
We compete with many other potential employers in recruiting, hiring and retaining our management team and our many other skilled officers and employees around the world. In the digital gaming and entertainment industries, experienced personnel and top creative talent are in high demand and competition for their talent is intense.
We compete with many other potential employers in recruiting, hiring and retaining our management team and our many other skilled officers and employees around the world. Experienced personnel and top creative talent in the markets in which we operate are in high demand and competition for their talent is intense.
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.
Inflation 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.
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.
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.
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.
The occurrence of these types of events can result, and in the case of COVID-19 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; • 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. 25 Table of Contents Financial Risks Relating to our Business Our quarterly and annual operating results may fluctuate due to seasonality in our business.
In some cases, we expect that the integration of the companies that we may acquire into our operations will create production, marketing and other operating, revenue or cost synergies which will produce greater revenue growth and profitability and, where applicable, cost savings, operating efficiencies and other advantages.
In some cases, we expect that the integration of the companies that we may acquire will create production, marketing and other operating, revenue or cost synergies which will produce greater revenue growth and profitability and, where applicable, cost savings, operating efficiencies and other advantages. However, we cannot be certain that these synergies, efficiencies and cost savings will be realized.
In some cases, we may only obtain an exclusive license for certain aspects of an IP or for certain territories, which means that some of our competitors also have the right to use the same IP for other categories or in different territories.
In some cases, we may only obtain a license for certain aspects of an intellectual property or for certain territories, which means that some of our competitors may also use the same intellectual property for other categories or in different territories.
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.
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. 24 Table of Contents Global and Economic Risks Relating to our Business Changes in U.S., global or regional economic conditions could impact discretionary consumer spending and harm our business and financial performance.
As a result, our products and entertainment offerings can have short consumer life cycles with no guarantee of success. Consumer acceptance is even more critical for our toy business due to the recent decline in the overall toy industry.
As a result, our products and entertainment offerings can have short consumer life cycles with no guarantee of success. Consumer acceptance is even more critical for our toy business due to the recent decline in the overall toy industry and the impact of declining birthrates globally. Failure to correctly anticipate consumer interests, will harm our revenues and earnings.
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.
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. Our business may be harmed if we are unable to protect our critical intellectual property rights.
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.
Consumer interests change quickly and acceptance of toys and games and entertainment offerings are influenced by technological and 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.
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.
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.
In other cases, we may acquire or invest in companies that we believe have strong and creative management, in which case we may plan to operate them more autonomously rather than fully integrating them into our operations.
Even if achieved, these benefits may be delayed, reduced or short-lived in their realization. In other cases, we may acquire or invest in companies that we believe have strong and creative management, in which case we may plan to operate them more autonomously rather than fully integrating them into our 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.
If we are not successful in transforming our supply chain operations, our business may be harmed. 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.
Item 1A. Risk Factors. In evaluating our business, the material risks described below, as well as other information contained in this Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission should be considered carefully. Additional risks not presently known to us or that we currently deem immaterial may also adversely affect our business.
Item 1A. Risk Factors . In evaluating our business, the material risks described below, as well as other information contained in this Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission should be considered carefully.
A key component to the success of our strategy is to continue to innovate, develop and invest in digital gaming, particularly through our Wizards of the Coast and digital gaming business. We have invested substantially in this business and as a result it has seen significant growth over the past several years.
Our business will suffer if we are unable to develop, publish and commercialize digital games. A key component to the success of our strategy is to continue to develop, publish and commercialize digital games. We have invested substantially in our digital gaming business and as a result it has seen significant growth over the past several years.
The level of inventory carried by retailers may also reduce or delay retail sales resulting in lower revenues for us. If we or our customers determine that one of our products is more popular at retail than was originally anticipated, we may not have sufficient time to produce and ship enough additional products to fully meet consumer demand.
If we or our customers determine that one of our products is more popular at retail than was originally anticipated, we may not have sufficient time to produce and ship enough additional products to fully meet consumer demand.
This means we need to design innovative toys and games that create memorable, social and collectible experiences of play and entertainment. Our ability to successfully create innovative toys and games is affected by the interests of children, families, fans and audiences evolve quickly and can change dramatically from year to year and by geography.
Our ability to successfully create innovative toys and games is affected by the interests of children, families, fans and audiences which evolve quickly and can change dramatically from year to year and by geography.
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.
The possibility of moving our corporate headquarters may impact our ability to retain and attract key employees. Further, the continuing debate and practice 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.
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.
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 occurrence of any of these events or circumstances could individually or in the aggregate have a material adverse effect on our business, financial condition, cash flow or results of operations. This report contains forward-looking statements.
Additional risks not presently known to us or that we currently deem immaterial may also adversely affect our business. The occurrence of any of these events or circumstances could individually or in the aggregate have a material adverse effect on our business, financial condition, cash flow or results of operations. This report contains forward-looking statements.
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.
During 2024, Wal-Mart, Inc. and Amazon.com, Inc. accounted for approximately 12% and 11%, 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.
While we have taken actions to lessen the impact of these supply chain challenges, such as through the use of alternative ports and air freight, and accelerating inventory purchases in certain cases to ensure product availability for customers, such actions have resulted in higher costs and there can be no assurance that the actions taken will be effective.
We attempt to take actions to lessen the impact of these supply chain challenges, such as through the use of alternative ports and air freight, and adjusting inventory purchases in certain cases to ensure product availability for customers, though these actions have resulted and may in the future result in higher costs.
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 cannot be certain that the key talented individuals at these companies 19 Table of Contents would continue to work for us after the acquisition or that they would develop popular and profitable products, entertainment or services in the future.
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.
Technological as well as other trends in the entertainment industry, such as the continuing shift to streaming platforms, 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.
As a result, we face increased risk of not achieving sales sufficient to recover our costs and we may lose money on the development and sale of these products.
As a result, we face increased risk of not achieving sales sufficient to recover our costs and we may lose money on the development and sale of these products. There is no guaranty that a given game will be successful and it is possible we may cease development on a game after significant investment.
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.
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. If we fail to accurately assess and effectively respond to changes in technology and consumer behavior in the markets in which we operate, our business may be harmed.
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.
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.
See note 6 to our Consolidated Financial Statements, included in Part II, Item 8. Financial Statements, of this Form 10-K. Changes in foreign currency exchange rates can significantly impact our reported financial performance. Our global operations mean we transact business in many different jurisdictions with many different currencies.
Changes in foreign currency exchange rates can significantly impact our reported financial performance. Our global operations mean we transact business in many different jurisdictions with many different currencies.
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.
It is very difficult to predict consumer acceptance with certainty due to, among other things, the increasing utilization of technology at younger and younger ages, social media and digital media in entertainment offerings, the increasing breadth of products and entertainment available to consumers, and outside factors such as critical reviews and promotions.
Additionally, the suspension of the operations of a third-party manufacturer by government inspectors in China or another market in which we source products could result in delays to us in obtaining product and may harm sales.
Additionally, the suspension of the operations of a third-party manufacturer by government inspectors in China or another market in which we source products could result in delays to us in obtaining product and may harm sales. 22 Table of Contents We require our third-party manufacturers to comply with our Global Business Ethics Principles, which are designed to prevent products manufactured for us from being produced under inhumane or exploitive conditions.
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.
Our competitors’ products may achieve greater market acceptance than our products and potentially reduce demand for our products, lower our revenues and lower our profitability. 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.
While these techniques reduce a retailer’s investment in inventory, they increase pressure on suppliers like us to fill orders promptly and thereby shift a significant portion of inventory risk and carrying costs to the supplier.
Seasonality can increase pressure on suppliers like us to fill orders promptly and thereby shift a significant portion of inventory risk and carrying costs to the supplier. This can also result in our losing significant revenues and earnings if our supply chain is unable to supply product to our customers when they want it.
Similarly, declines in our profitability may impact the fair value of our reporting units, which could result in a write-down of our goodwill and consequently harm our net earnings. In 2023, we recorded non-cash goodwill and asset impairment charges of $1,307.2 million for the year ended December 31, 2023.
Similarly, declines in our profitability may impact the fair value of our reporting units, which could result in a write-down of our goodwill and consequently harm our net earnings. We have incurred, and may in the future incur, significant costs in connection with the development of video games.
Our indebtedness may limit our availability of cash, cause us to divert cash to fund debt service payments or make it more difficult to take certain other actions . We incurred significant indebtedness to finance our acquisition of eOne in 2019.
Depreciation in key currencies may have a significant negative impact on our revenues and earnings as they are reported in U.S. dollars. 26 Table of Contents Our indebtedness may limit our availability of cash, cause us to divert cash to fund debt service payments or make it more difficult to take certain other actions .

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Our cybersecurity program leverages various industry standards like the National Institute of Standards and Technology ("NIST") and Center for Internet Security Program framework, which organizes cybersecurity risks into five categories: identify, protect, detect, respond and recover.
Our cybersecurity program leverages various industry standards like the National Institute of Standards and Technology ("NIST") and Center for Internet Security ("CIS") Program framework, which organizes cybersecurity risks into five categories: identify, protect, detect, respond and recover.
Members of management together with our Board, the Cybersecurity and Data Privacy Committee of the Board(the "Cybersecurity Committee"), our internal Cybersecurity and Data Privacy Steering Committee (a cross-functional team which includes members of our Executive Leadership Team), and the Enterprise Risk Management team (a task force comprised of senior representatives of the company assessing risk in the organization), have developed cybersecurity and risk management processes to adapt to the changing cybersecurity landscape and respond to emerging threats in a timely and effective manner.
Members of management together with our Board, the Audit Committee of the Board (the "Audit Committee"), our internal Cybersecurity and Data Privacy Steering Committee (a cross-functional team which includes members of our Executive Leadership Team), and the members of an enterprise risk management team (a task force comprised of senior representatives of the company assessing risk in the organization), have developed cybersecurity and risk management processes to adapt to the changing cybersecurity landscape and respond to emerging threats in a timely and effective manner.
We have invested in IT security, including additional end-user training, using layered defenses, identifying and protecting critical assets, strengthening monitoring and alerting, and engaging experts. We regularly test defenses by performing simulations and drills at both a technical level (including through penetration tests) and by reviewing our operational policies and procedures with third-party experts.
We have invested in IT security, including additional end-user training, using layered defenses, identifying and protecting critical assets, strengthening monitoring and alerting, and engaging experts. We regularly test defenses by performing simulations and drills at both a technical level (including through penetration tests), tabletop exercises and by reviewing our operational policies and procedures with third-party experts.
The Cybersecurity Committee conducts an ongoing review of the Company’s cybersecurity program, which includes discussion of management’s actions to identify and detect threats, planned actions in the event of a response or recovery situation, as well as a review of recent enhancements to the Company’s security detection and response capabilities, and management’s progress on its cybersecurity strategic roadmap.
The Audit Committee conducts an ongoing review of the Company’s cybersecurity program, which includes discussion of management’s actions to identify and detect threats, planned actions in the event of a response or recovery situation, as well as a review of recent enhancements to the Company’s security detection, prevention and response capabilities, and management’s progress on its cybersecurity strategic roadmap.
We also have a set of Company-wide policies and procedures concerning cybersecurity and technology standards, which include a Technology Use policy, as well as other policies that directly or indirectly relate to cybersecurity, such as policies related to endpoint and network protection, encryption standards, malware/ransomware protection, remote access, multi-factor authentication, 38 Table of Contents confidential information and the use of the internet, social media, email and wireless devices.
We also have a set of Company-wide policies and procedures concerning cybersecurity and technology standards, which include a Technology Use policy, as well as other policies that directly or indirectly relate to cybersecurity, such as policies related to endpoint and network protection, encryption standards, malware/ransomware protection, remote access, multi-factor authentication, confidential information and the use of the internet, social media, email and wireless devices.
We regularly assess the threat landscape and take a holistic view of cybersecurity risks, with a layered cybersecurity strategy based on prevention, detection and mitigation. Our enterprise risk management team reviews cybersecurity risks, and key cybersecurity risks are incorporated into the enterprise risk management ("ERM") reports reviewed and discussed internally and with the Board.
We regularly assess the threat landscape and take a holistic view of cybersecurity risks, with a layered cybersecurity strategy based on prevention, detection, mitigation and continuous process improvements. Our enterprise risk management team reviews cybersecurity risks, and key cybersecurity risks are incorporated into the enterprise risk management ("ERM") reports reviewed and discussed internally and with the Board.
In addition to assessing our own cybersecurity preparedness, we also consider and evaluate cybersecurity risks associated with use of third-party vendors and service providers. The internal business owners of the hosted applications are required to document user access reviews at least annually and provide from the vendor a System and Organization Controls ("SOC") 1 or SOC 2 rep ort .
In addition to assessing our own cybersecurity preparedness, we also consider and evaluate cybersecurity risks associated with use of third-party vendors and service providers. The internal business owners of the hosted critical applications are required to document user access reviews at least annually and provide from the vendor a System and Organization Controls ("SOC") 1 or SOC 2 report.
Our Chief Information Officer is an Executive Sponsor of the Cyber Security Program, has over two decade of experience leading cyber security oversight, and others on our cyber security team have cybersecurity experience and certifications, such as the Certified Information Systems Security Professional, or other industry leading certifications.
Our Chief Digital and Information Officer is an Executive Sponsor of the Cyber Security Program, has over two decades of experience leading cyber security oversight, and others on our cyber security team have cybersecurity experience and certifications, such as the Certified Information Systems Security Professional, or other industry leading certifications.
The Cybersecurity team also subscribes various threat intelligence services to evaluate our security strategy or defense mechanism against such threats. The Board receives regular updates from the Cybersecurity Committee, including a summary of key performance indicators, test results and related remediation, and recent threats and how the Company is managing those threats.
The Cybersecurity team also subscribes to various threat intelligence services to evaluate our security strategy or defense mechanism against such threats. The Board receives regular updates from the Audit Committee, as well as from the Cybersecurity team, including a summary of key risk indicators, test results and related remediation, and recent threats and how the Company is managing those threats.
In addition, we have several avenues to gather risk intelligence, and potential threats identified by various services and capabilities to adjust our security strategy.
In addition, we have several avenues to gather risk intelligence, and potential threats identified by various services, internal and external assessments, and capabilities to adjust our security strategy.
The Cybersecurity Committee and the full Board actively participate in discussions with management and amongst themselves regarding cybersecurity risks. The Cybersecurity Committee meets regularly during the year and discusses cyber-related industry events, critical cyber incidents, alignment with our information security framework, threat assessment, security capabilities, response readiness and training efforts.
The Audit Committee and the full Board actively participate in discussions with management and amongst themselves regarding cybersecurity risks. The Audit Committee meets during the year and discusses cyber-related 29 Table of Contents industry events, critical cyber incidents, alignment with our information security framework, threat assessment, security capabilities, response readiness and training efforts.
During the past three years we have not suffered a material breach or a reportable incident, and cybersecurity risks (including breach of third parties with whom we work) have not materially affected us, including our business strategy, results of operations or financial condition. For more information about the cybersecurity risks we face, see Item 1A.
We face a number of cybersecurity risks in connection with our business. During the past three years we have not suffered a material breach or a reportable incident, and cybersecurity risks (including breach of third parties with whom we work) have not materially affected us, including our business strategy, results of operations or financial condition.
These policies go through an internal review process and are approved by appropriate members of management. The Company’s Chief Information Security Officer (“CISO”) is responsible for developing and implementing our information security program and reporting quarterly on cybersecurity matters to the Cybersecurity and Data Privacy Steering Committee, as well as to the Board and the Cybersecurity Committee.
These policies go through an internal review process and are approved by appropriate members of management. The Company’s Chief Information Security Officer (“CISO”) and the Cybersecurity and Data Privacy Steering Committee are responsible for developing, implementing and evaluating our information security program.
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A third-party cyber security firm also advises the Cybersecurity Committee on cybersecurity threats, trends in the industry, and best practices. This third party also evaluates and assesses our programs.
Added
The CISO regularly reports on cybersecurity matters to the Cybersecurity and Data Privacy Steering Committee, as well as to the Board and the Audit Committee.
Removed
To aid the Board with its cybersecurity and data privacy oversight responsibilities, the Board periodically hosts experts for presentations on these topics. We face a number of cybersecurity risks in connection with our business.
Added
For more information about the cybersecurity risks we face, see Item 1A. Risk Factors.

Item 2. Properties

Properties — owned and leased real estate

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Item 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.
Item 2. Properties. Hasbro owns its corporate headquarters in Pawtucket, Rhode Island consisting of approximately 343,000 square feet, which is used by all major functions of the business. 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 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 primary office locations in the Consumer Products segment outside of the United States are in Australia, Brazil, France, Germany, Mexico, Spain, the People’s Republic of China, and the United Kingdom. In addition, the Company owns an office in Switzerland and leases an office in the Netherlands, both of which are primarily used for corporate functions.
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.
The Company has third party warehousing agreements of approximately three million 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 of office space in Burbank, California used by the Consumer Products and Entertainment segments.
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.
Hasbro also leases an aggregate of 78,000 square feet of office space in Hong Kong and 48,000 square feet of office space in Shenzhen, People’s Republic of China. The Company leases or owns property in 33 countries.
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 allegations in this complaint are substantially the same as those in the Lee action described above. Defendants have not yet responded to this action. The Company is currently party to other certain legal proceedings, none of which we believe to be material to our business or financial condition. Item 4. Mine Safety Disclosures.
Removed
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.
Added
The Company believes that its facilities are generally suitable and adequate for its needs at this time. The Company is, however, currently evaluating options to relocate its corporate headquarters given the age and condition of the current building in Pawtucket, Rhode Island. Item 3 . Legal Proceedings.
Removed
The above properties consist, in general, of brick, concrete and steel buildings which the Company believes are in good condition and well maintained.
Added
On November 13, 2024, West Palm Beach Firefighters’ Pension Fund filed a putative class action lawsuit in the U.S. District Court for the Southern District of New York alleging violations of Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 and certain rules promulgated thereunder. West Palm Beach Firefighters’ Pension Fund v.
Removed
The Company believes that its facilities are adequate for its needs at this time, although as part of its ongoing business it does periodically assess if alternate facilities to one or more of the facilities mentioned above would provide business advantages or if certain facilities could be consolidated.
Added
Hasbro, Inc., Richard Stoddart, Christian Cocks, Deborah Thomas, Gina Goetter and Eric Nyman, Case No.1:24-cv-8633 (S.D.N.Y.). The plaintiff asserts claims on behalf of persons and entities that purchased the Company’s securities between February 7, 2022 and October 25, 2023 (the “Class Period”), and seeks compensatory damages, interest, fees, and costs.
Removed
The Company believes that, should it not be able to renew any of the leases related to its leased facilities, it could secure similar substitute properties without a material adverse impact on its operations. Item 3 . Legal Proceedings.
Added
The complaint alleges that members of the putative class suffered losses as a result of false or misleading statements and withholding of information regarding the Company’s inventory, including quality and appropriateness thereof, during the Class Period. The court is in the process of appointing a lead plaintiff. The Company intends to vigorously defend against these claims.
Added
Due to the early stages of this matter, the Company is unable to estimate a reasonably possible range of loss, if any, that may result from this matter.
Added
On February 5, 2025, Dale Lee, derivatively on behalf of Hasbro, Inc., filed a putative shareholder derivative action against current and former members of the Board of Directors of the Company in the U.S. District Court for the Southern District of New York. Lee v. Cocks, et al., Case No. 1:25-cv-01018 (S.D.N.Y.).
Added
The allegations in this complaint are nearly identical to those of the West Palm Beach Firefighters' Pension Fund action.
Added
Plaintiff alleges, nominally on behalf of the Company, that the named defendants breached the Hasbro Code of Conduct and Audit Committee Charter as well as their individual fiduciary duties by making false or misleading statements, approving the making of false or misleading statements, and/or withholding information regarding the Company's inventory during the same time period as the Class Period.
Added
The action alleges violations of Section 14(a) of the Exchange Act 30 Table of Contents and Rule 14a-9 with respect to the 2022 Proxy Statement, Section 10(b), 15 U.S.C. sec. 78(j) and Rule 10b-5. Defendants have not yet responded to the action.
Added
On February 21, 2025, Patrick Ayers, derivatively on behalf of Hasbro, Inc., filed a putative shareholder derivative action against certain of the Company’s executive officers and current and former members of the Board of Directors of the Company in the U.S. District Court for the Southern District of New York, et al., Case No. 1:25-cv-1504 (S.D.N.Y.).

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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There 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.
There were no repurchases of the Company’s Common Stock during 2024. 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 13, 2024, there were approximately 7,305 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 14, 2025, there were approximately 7,063 shareholders of record of the Company’s 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 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.
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 29, 2024, Hasbro had $241.6 million remaining available under these shares repurchase authorizations.
Removed
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.

Item 7. Management's Discussion & Analysis

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

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This has resulted in the recording of a deferred tax asset of $135.6 million related to tax intangibles that will be amortized over time and result in a future cash tax benefit. This treatment applies starting in 2021.
This resulted in the recording of a deferred tax asset of $135.6 million related to tax intangibles that will be amortized over time and result in a future cash tax benefit. This treatment applies starting in 2021.
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.
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; and entertainment content.
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.
The business of the Company is 42 Table of Contents 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.
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.
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 2024.
The Company may also issue debt or equity securities from time to time, to provide additional sources of liquidity when pursuing opportunities to enhance our long-term competitive position, while maintaining a strong balance sheet.
The Company may issue debt or equity securities from time to time, to provide additional sources of liquidity when pursuing opportunities to enhance its long-term competitive position, while maintaining a strong balance sheet.
The Company may perform a qualitative assessment and bypass the quantitative impairment testing process, if it is not more likely than not that the carrying value of a reporting unit exceeds its fair value. If it is more likely than not the carrying value exceeds its fair value, a quantitative goodwill impairment test is performed.
The Company may perform a qualitative assessment and bypass the quantitative impairment testing process, if it is not more likely than not that the carrying value of a reporting unit exceeds its fair value.
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 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 spending.
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.
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 2024 approximately 58% 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.
Fiscal year 2023 includes discrete items related to (i) impairment of goodwill in our Family Brands business segment of $960.0 million with no tax benefit and (ii) impairment of goodwill in the Film and TV reporting unit of $231.2 million with no tax benefit. Exclusive of the goodwill impairments, the Company recorded a net discrete tax benefit of $278.7 million.
Fiscal year 2023 includes discrete items related to an impairment of goodwill in our Family Brands reporting unit of $960.0 million with no tax benefit and an impairment of goodwill in the Film and TV reporting unit of $231.2 million with no tax benefit. Exclusive of the goodwill impairments, the Company recorded a net discrete tax benefit of $278.7 million.
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.
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.
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.
The Company still has significant cash needs outside the United States and continues to consistently monitor and analyze its global working capital and cash requirements. As of 2024, we have recorded $4.6 million of foreign withholding and U.S. state income tax liability.
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.
Revenues from the Company’s top five retail customers, accounted for approximately 36% of its consolidated net revenues in 2024. The Company monitors the creditworthiness of its customers and adjusts credit policies and limits as it deems appropriate.
Hasbro generates revenue and earns cash by developing, marketing, licensing and selling products, play and entertainment experiences, based on our global brands as well as other IP in a broad variety of categories.
We generate revenue and earn cash by developing, marketing, licensing and selling products, play and entertainment experiences, based on our global brands as well as other IP in a broad variety of categories.
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.
At December 29, 2024, 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 $15.1 million decrease in the fair value of these instruments.
At December 31, 2023, these contracts had net unrealized losses of $3.2 million, of which $0.7 million are recorded in Prepaid expenses and other current assets, $3.9 million are recorded in Accrued liabilities. Included in Accumulated other comprehensive loss at December 31, 2023 are deferred losses of $2.5 million, net of tax, related to these derivatives.
At December 29, 2024, these contracts had net unrealized gains of $0.5 million, of which $1.7 million are recorded in Prepaid expenses and other current assets, $1.2 million are recorded in Accrued liabilities. Included in Accumulated other comprehensive loss at December 29, 2024 are deferred losses of $4.4 million, net of tax, related to these derivatives.
Recently, the Organization for Economic Co-operation and Development (OECD) has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as Pillar 2). Certain aspects of Pillar 2 are effective January 1, 2024, and other aspects are effective January 1, 2025.
The Organization for Economic Co-operation and Development ("OECD") has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as "Pillar 2").
The Company or the administering bank may terminate the agreement upon at least 30 days’ written notice. The amount of obligations confirmed under the program that remain unpaid by the Company were $43.3 million, and $76.1 million as of December 31, 2023 and December 25, 2022, respectively. These obligations are presented within Accounts payable in our condensed Consolidated Balance Sheets.
The Company or the administering bank may terminate the agreement upon at least 30 days’ written notice. The amount of obligations confirmed under the supplier finance program that remain unpaid were $66.2 million, and $43.3 million as of December 29, 2024 and December 31, 2023, respectively. These obligations are presented within Accounts payable in the Company's Consolidated Balance Sheets.
Intangible assets, other than those with indefinite lives, are reviewed for indications of impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable.
Intangible assets, other than those with indefinite lives, are reviewed for indications of impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. During 2024, there were no triggering events which would indicate the Company's intangible assets were impaired.
This benefit is primarily related to two items. First, the Company recognized tax benefits of $124.0 million associated with the impairment of trade names in our Film and TV reporting unit, as well as loss on assets held for sale.
This benefit is primarily related to two items: (i) the Company recognized tax benefits of $124.0 million associated with the impairment of trade names in our Film and TV reporting unit, as well as loss on assets held for sale, and (ii) during 2023, the Company concluded its discussions with the tax authorities in Switzerland as to the application of the grandfathering rules related to 2020 Swiss Tax Reform.
The Company also utilizes the percentage of completion methodology, primarily related to unscripted content. Program cost amortization reflects both the phasing of revenues associated with films and television programming, as well as the type of content being produced and distributed.
Program cost amortization reflects both the phasing of revenues associated with films and television programming, as well as the type of content being produced and distributed.
These net revenue decreases were partially offset by net revenue increases from DUNGEONS & DRAGONS digital gaming products, most notably Baldur's Gate 3 , the DUNGEONS & DRAGONS-based role-playing video game released during the third quarter 2023, as well as the theatrical release of Dungeons & Dragons: Honor Among Thieves released in March 2023 and higher net revenues from D&D Beyond, acquired during the second quarter of 2022.
Net revenues in 2023 were supported by DUNGEONS & DRAGONS digital game and products, most notably Baldur's Gate 3 , the DUNGEONS & DRAGONS-based role-playing video game released during the third quarter 2023, as well as theatrical release of Dungeon & Dragons: Honor Among Thieves released in March 2023.
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.
Royalties: Royalty expense totaled $284.2 million, or 6.9% of net revenues, in 2024 compared to $428.3 million, or 8.6% of net revenues, in 2023. Fluctuations in royalty expense generally relate to the volume of entertainment-driven products sold in a given period, especially if the Company is selling product tied to one or more major motion picture releases in the period.
Selling, Distribution and Administration Expenses Selling, distribution and administration expenses decreased to $1,480.4 million, or 29.6% of net revenues in 2023, from $1,666.1 million, or 28.4% of net revenues, in 2022. In 2021, Selling, distribution and administration expenses were $1,432.7 million, or 22.3% of net revenues in 2021.
Selling, Distribution and Administration Expenses: Selling, distribution and administration expenses decreased to $1,213.2 million, or 29.3% of net revenues in 2024, from $1,480.4 million, or 29.6% of net revenues, in 2023.
NON-OPERATING EXPENSE (INCOME) Interest Expense Interest expense totaled $186.3 million in 2023 compared to $171.0 million in 2022 and $179.7 million in 2021.
NON-OPERATING EXPENSE (INCOME) Interest Expense: Interest expense totaled $171.2 million in 2024 compared to $186.3 million in 2023.
Wizards of the Coast and Digital Gaming Segment 2023 versus 2022 Wizards of the Coast and Digital Gaming segment operating profit decreased $12.6 million to $525.7 million in 2023, compared to $538.3 million in 2022. Operating profit margin decreased to 36.1% in 2023 from 40.6% in 2022.
Wizards of the Coast and Digital Gaming segment operating profit increased $106.3 million to $632.0 million in 2024, compared to $525.7 million in 2023. Operating profit margin increased to 41.8% in 2024 from 36.1% in 2023.
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.
OPERATING COSTS AND EXPENSES 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 30.9% to $1,179.5 million, or 28.5% of net revenues, for 2024 compared to $1,706.0 million, or 34.1% of net revenues, for 2023.
The 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.
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.
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.
Program Cost Amortization: Program cost amortization totaled $49.3 million, or 1.2% of net revenues in 2024, compared to $448.9 million, or 9.0% of net revenues in 2023. The majority of the Company's program costs are capitalized as incurred and amortized using the individual-film-forecast method. The Company also utilizes the percentage of completion methodology, primarily related to unscripted content.
Additionally, the Company generates revenue though the development, production and sales of entertainment content and from out-licensing certain non-core brands which are more profitable through a licensing arrangement for products that include various toys and games, consumer products, such as apparel and publishing, as well as for use in theme park attractions and other forms of location-based entertainment and within formats such as film and TV programming.
Additionally, the Company generates revenue through licensing our brands to third parties for toys and games, consumer products, such as apparel and 32 Table of Contents publishing, as well as for use in theme park attractions and other forms of location-based entertainment and within formats such as film and TV programming.
The Amended Revolving Credit Agreement also provides for a potential additional incremental commitment increase of up to $500.0 million subject to agreement of the lenders. The Amended Revolving Credit Agreement contains certain financial covenants setting forth leverage and coverage requirements, and certain other limitations typical of an investment grade facility, including with respect to liens, mergers and incurrence of indebtedness.
The Amended Revolving Credit Agreement contains certain financial covenants setting forth leverage and coverage requirements, and certain other limitations typical of an investment grade facility, including with respect to liens, mergers and incurrence of indebtedness. The Company was in compliance with all covenants as of December 29, 2024.
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.
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.
These decreases were partially offset by net revenue contributions from the introduction of the Company's products for INDIANA JONES, supported by the June 2023 theatrical release of Indiana Jones and the Dial of Destiny .
Additionally, revenue in 2023 was higher due to the Company's products for INDIANA JONES supported by the June 2023 theatrical release of Indiana Jones and the Dial of Destiny .
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.
The Company has primarily funded its operations and liquidity needs through cash on hand and from cash flows from operations, and when needed, used commercial paper and borrowings under its available lines of credit. As of December 29, 2024, the Company had $695.0 million of Cash and cash equivalents and $3,401.8 million of Long-term debt.
The Company is continuing to manage inventory levels through closeout sales where needed and by monitoring consumer purchase patterns to ensure adequate supply of new product while clearing excess supply to mitigate the risk of inventory obsolescence.
The Company is continuing to manage inventory levels and by monitoring consumer purchase patterns to ensure adequate supply of new product while clearing excess supply to mitigate the risk of inventory obsolescence. 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.
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.
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.
These net revenue decreases were partially offset by higher sales of TRANSFORMERS products supported by the theatrical release of Transformers: Rise of Beasts in June 2023 and from the Company's refreshed lineup of FURBY products following the reintroduction of the brand during the second quarter of 2023 and higher sales of GI JOE products.
These revenue decreases were partially offset by revenue contributions from FURBY products following the Company's reintroduction of the brand and refreshed product line during the second quarter of 2023, BEYBLADE products following the Company's refreshed product line in 2024, and licensing revenue for MY LITTLE PONY trading cards.
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.
See Note 20, Commitments and Contingencies, in our consolidated financial statements for further detail of our obligations and the expected timing of expected future payments. • Uncertain Tax Positions – As of December 29, 2024, the Company has a liability of $45.6 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.
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.
Amortization of Intangible Assets: Amortization of intangible assets decreased to $68.3 million, or 1.7% of net revenues, in 2024 compared to $83.0 million, or 1.7% of net revenues, in 2023. The decrease in 2024 reflects lower definite lived intangible assets due to the sale of the eOne Film and TV business and impairments taken in 2023.
Net cash flows provided by investing activities was $117.6 million in 2023 compared to net cash flows utilized for investing activities of $313.0 million in 2022 and net cash flows provided by investing activities of $242.0 million in 2021. Investing activities in 2023 primarily reflect net proceeds of $329.6 million from the sale of the eOne Film and TV Business.
Investing Activities: Net cash flows utilized for investing activities was $203.7 million in 2024 compared to net cash flows provided by investing activities of $117.6 million in 2023.
In 2023, Partner Brands net revenue declines were primarily driven by lower sales of the Company's products for DISNEY FROZEN and DISNEY PRINCESS due to the expiration of the related license agreements in December 2022, lower net revenues from the Company's products for MARVEL and STAR WARS compared to 2022, which benefited from a robust slate of entertainment releases in 2022 as described below, without comparable releases in 46 Table of Contents 2023, and to a lesser extent, lower net revenues from BEYBLADE products.
The Partner Brands portfolio net revenues decreased 15% in 2024 as compared to 2023. During 2024, Partner Brands net revenue decreases were driven by lower net revenues from the Company's products for STAR WARS and MARVEL which benefited from a broader slate of entertainment releases in prior years without a more recent release entertainment release to support revenue in 2024.
The net revenue increase in the Wizards of the Coast and Digital Gaming segment was primarily attributable to higher net revenues from DUNGEONS & DRAGONS digital gaming products, most notably Baldur's Gate 3 , the DUNGEONS & DRAGONS-based role-playing video game released during the third quarter 2023 and to a lesser extent, higher digital licensing net revenues, attributable to the increased success of Monopoly Go! , as well as the launch of the Peppa Pig: World Adventures video game released in the first quarter of 2023.
Digital and Licensed Gaming increased 22% due to strong demand for MONOPOLY GO!, partially offset by the decrease in net revenue recognized from the digital licensing of Baldur's Gate 3 , the DUNGEONS & DRAGONS-based role-playing video game that was released during the third quarter 2023.
The critical accounting policies which management believes are the most critical to aid in fully understanding and evaluating the Company’s reported financial results include film and television production costs, recoverability of goodwill, intangible assets, income taxes and business combinations. Additionally, the Company identified the valuation of the Company’s equity method investment in Discovery Family Channel as a significant accounting estimate.
The critical accounting policies which management believes are the most critical to aid in fully understanding and evaluating the Company’s reported financial results include the recoverability of goodwill and intangible assets and income taxes. 38 Table of Contents Recoverability of Goodwill and Intangible Assets Goodwill and other intangible assets include the cost of the acquired business in excess of the fair value of the tangible net assets recorded in connection with each acquisition.
Entertainment segment operating losses in 2023 were driven primarily by a non-cash goodwill impairment charge of $960.0 million, reflecting a reduced long-term forecast due to lower profitability of PJ MASKS as described below, and a change in outlook for our owned and operated production efforts that shifted the Entertainment strategy to an 51 Table of Contents asset lite and partner led model, a loss on disposal of business of $539.0 million related to the sale of the eOne Film and TV business not directly supporting the Company's Entertainment Strategy, a non-cash goodwill impairment charge of $231.2 million related to the goodwill impairment of the Company's Film & TV reporting unit, due to the expected economic impact of industry factors, as well as asset impairment charges of $65.0 million related to the Company's definite-lived intangible eOne Trademark.
The increase in Entertainment segment operating results in 2024 was driven by non-cash impairment charges in 2023 comprised of a goodwill impairment charge of $1,191.2 million primarily associated Company's eOne Film and TV business; a loss on disposal of business of $539.0 million related to the sale of the eOne Film and TV business; and intangible asset impairment charges of $65.0 million and $51.0 million related to definite-lived intangible assets for the eOne Trademark and PJ MASKS, respectively.
Amounts available and unused under the committed line, at December 31, 2023 were approximately $1.2 billion, inclusive of borrowings under the Company’s commercial paper program. The Company also has other uncommitted lines from various banks, of which approximately $9.3 million was utilized in the form of letters of credit, at December 31, 2023.
The Company had no borrowings outstanding under its committed revolving credit facility as of December 29, 2024. However, letters of credit outstanding under this facility were approximately $3.7 million. Amounts available and unused under the committed line, as of December 29, 2024 were approximately $1.25 billion, inclusive of borrowings under the Company’s commercial paper program.
The increase in interest expense during 2023 primarily reflects higher interest rates in 2023 related to interest payments for the Company's variable-rate Five-Year term loan, which was retired late in the fourth quarter of 2023, using proceeds from the sale of the eOne Film and TV business.
The decrease in Interest expense during 2024 primarily reflects lower average outstanding borrowings in 2024 as compared to 2023 due to the assumption of the production financing borrowings by Lionsgate as part of the eOne Film and TV business and due to the retirement of the Company's variable-rate Five-Year term loan using proceeds from the sale of the eOne Film and TV business, both occurring during the fourth quarter of 2023, the full payment 35 Table of Contents of the 2024 Notes and repurchases of the 2026 Notes during the fourth quarter of 2024.
Operating cash flows in 2023, 2022 and 2021 included $408.0 million, $767.7 million and $697.3 million, respectively, of cash used for television program and film production. The increase in net cash provided by operating activities during 2023 after adjusting for non-cash items, was attributable to lower working capital requirements, most notably, lower investments in entertainment content and production during 2023.
The increase in net cash provided by operating activities during 2024 after adjusting for non-cash items, was primarily attributable to improved net earnings in 2024 compared to 2023, and working capital benefits, primarily due to lower investments in entertainment content compared to 2023 as a result of the sale of the eOne Film and TV business, and reduced inventory due to management inventory initiatives.
The Company believes that cash from operations, and, if necessary, its committed line of credit and other borrowing facilities, will allow the Company to meet its obligations over the next twelve months. Critical Accounting Policies and Significant Estimates The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.
Refer to Note 1, Summary of Significant Accounting Policies, in our consolidated financial statements for further information on these non-recurring adjustments. Critical Accounting Policies and Significant Estimates The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.
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 Company's third amended and restated revolving credit agreement with Bank of America, N.A. maturing September 5, 2028 (the "Amended Revolving Credit Agreement"), provides the Company with a maximum aggregate principal amount of $1.25 billion and also provides for a potential additional incremental commitment increase of up to $500.0 million subject to agreement of the lenders.
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.
Unless otherwise specifically indicated, all dollar or share amounts herein are expressed in millions of dollars or shares, except for per share amounts. The fiscal year ended December 29, 2024 was a fifty-two week period and fiscal year December 31, 2023 was a fifty-three week period.
The net revenue decrease was driven by lower sales of Partner Brands products including the Company's products for DISNEY PRINCESS and DISNEY FROZEN, following the expiration of associated license agreements in December 2022, lower sales of the Company's products for MARVEL and to a lesser extent, lower sales of the Company's products for STAR WARS compared to 2022, which benefited from a variety of entertainment releases without a comparable slate in 2023.
The net revenue decrease from lower net revenues from the Company's products for STAR WARS and MARVEL benefited from a slate of entertainment releases in prior years without a more recent release entertainment release to support revenue in 2024.
Advertising Expense Advertising expense in 2023 totaled $358.4 million, or 7.2% of net revenues, compared to $387.3 million or 6.6% of net revenues in 2022 and $506.6 million or 7.9% in 2021. The level of the Company’s advertising expense is generally impacted by revenue mix, the amount and type of theatrical releases and television programming delivered.
The level of the Company’s advertising expense is generally impacted by revenue mix, the amount and type of theatrical releases and television programming delivered. The Advertising expense decrease during 2024 was primarily driven by the sale of the eOne Film and TV business, along with declines in the advertising expense in the Consumer Products segment due to lower net revenues.
Higher interest income in 2022 compared to 2021 is primarily the result of higher average interest rates in 2022 compared to 2021. 57 Table of Contents Other Expense (Income), Net Other expense (income), net was $7.0 million, $(13.0) million and $7.1 million in 2023, 2022 and 2021, respectively.
Other Expense, Net: Other expense, net was $69.1 million in 2024 compared to Other expense, net of $7.0 million in 2023.
The following table presents net revenues expressed in millions of dollars, by brand portfolio for each year in the three years ended December 31, 2023. 2023 Net Revenues % Change 2022 Net Revenues % Change 2021 Net Revenues Franchise Brands $ 3,256.5 -3 % $ 3,350.8 -5 % $ 3,541.9 Partner Brands 687.8 -35 % 1,052.0 -9 % 1,161.0 Portfolio Brands 521.3 -17 % 625.2 -13 % 719.8 Non-Hasbro Branded Film & TV 537.7 -35 % 828.7 -17 % 997.7 Total $ 5,003.3 $ 5,856.7 $ 6,420.4 2023 versus 2022 Net revenues declined in all brand portfolios in 2023 compared to 2022.
See the Segment Results discussion below for further details. 33 Table of Contents The following table presents net revenues expressed in millions of dollars, by brand portfolio for 2024 and 2023: Net Revenues 2024 2023 % Change Franchise Brands $ 3,120.9 $ 3,256.5 (4) % Partner Brands 583.4 687.8 (15) % Portfolio Brands 431.2 521.8 (17) % Non-Hasbro Branded Film & TV (1) — 537.2 (100) % Total $ 4,135.5 $ 5,003.3 (17) % (1) Net revenues from the Company's Non-Hasbro-branded Film and TV portfolio were associated with the Company's non-core eOne Film and TV business sold to Lionsgate during the fourth quarter of 2023.
Entertainment Segment 2023 versus 2022 The Entertainment segment operating loss was $1.9 billion, compared to operating profit of $22.7 million, or 2.4% of segment net revenues in 2022.
The Entertainment segment operating loss increased to an operating loss of $1.6 million, compared to an operating loss of $1,911.5 million in 2023.
See note 3 to the 56 Table of Contents consolidated financial statements, included in Part II, Item 8. Financial Statements , of this Form 10-K for additional information on the sale of the eOne Film and TV business.
The Loss on disposal of business for both periods represents the loss recognized associated with the sale of the Company's eOne Film and TV business within the Entertainment segment during 2023. See Note 3, Sale of Entertainment One Film and TV Business, in our consolidated financial statements for additional information on the sale of the eOne Film and TV business.
These decreases were partially offset by net revenues from FURBY products following the Company's successful reintroduction of the brand and refreshed product line during the second quarter of 2023, as well as higher net revenues from GI JOE products. Non-Hasbro Branded Film & TV: Net revenues from the TV/Film/Entertainment portfolio declined 35% in 2023 compared to 2022.
The Portfolio Brands net revenues decreased 17% in 2024 as compared to 2023 primarily driven by lower net revenues from POWER RANGERS, PJ MASKS and BABY ALIVE products which were partially offset by revenue contributions from FURBY products following the Company's reintroduction of the brand and refreshed product line during the second quarter of 2023, the release of the next generation of BEYBLADE in 2024, and licensing revenue for MY LITTLE PONY trading cards.
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.
Loss on Disposal of Business: Loss on disposal of business decreased to $37.4 million, or 0.9% of net revenues, in 2024 compared to $539.0 million, or 10.8% of net revenues, in 2023.
In 2021, comparable intangible amortization costs were recorded within the Entertainment segment. Consumer Products Segment 2023 versus 2022 Consumer Products segment operating results decreased $282.0 million to an operating loss of $64.7 million in 2023, compared to operating profit of $217.3 million in 2022.
Consumer Products segment operating results increased $180.0 million to an operating income of $115.3 million in 2024, compared to an operating loss of $64.7 million in 2023. Operating profit margin increase to 4.5% of net revenues in 2024 from an operating loss margin of 2.2% of net revenues in 2023.
In addition, $231.2 million of goodwill impairment charges recorded during the second quarter of 2023, related to the goodwill impairment of the Company's Film & TV reporting unit, due to the expected economic impact of industry factors. These charges were recorded within the Entertainment segment. See note 6 to the consolidated financial statements, included in Part II, Item 8.
During 2023, the Company recorded $1,191.2 million of non-cash goodwill impairment charges associated with goodwill assigned to the Company's Film and TV reporting unit. See further detail in Note 7, Goodwill and Intangible Assets, in our consolidated financial statements related to the goodwill impairment charges.
The net revenue decrease primarily reflects lower net revenues from NERF products, lower net revenues from Hasbro Gaming products, lower net revenues from PLAY-DOH products compared to 2022, which benefited from the release of Play-doh Squished programming and to a lesser extent, lower net revenues from PEPPA PIG products.
The net revenue decrease primarily reflects lower net revenues from NERF, STAR WARS and MARVEL products, POWER RANGERS, Hasbro Gaming, and TRANSFORMERS.
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 decrease in Royalty expense in dollars and as a percent of net revenues during 2024 directly reflects the impact of the sale of the eOne Film and TV business. Product Development: Product development expense in 2024 totaled $294.1 million, or 7.1% of net revenues, compared to $306.9 million, or 6.1% of net revenues, in 2023.
The decrease in accounts receivable reflects the removal of receivable balances included as part of the sale of the eOne Film and TV business during the fourth quarter of 2023, combined with lower revenues during 2023 compared to 2022.
The decrease in dollars and as a percent of net revenues during 2024 was driven by the impact of the sale of the eOne Film and TV business during the fourth quarter of 2023 as prior year Program costs were primarily associated with the eOne Film and TV business.
The activity related to this programs is reflected within the operating activities section of the Condensed Consolidated Statements of Cash Flows. Share Repurchases and Dividends The Company has a long history of returning cash to its shareholders through quarterly dividends and share repurchases.
The activity related to this program is reflected within the operating activities section of the Consolidated Statements of Cash Flows From time to time, the Company or its affiliates may seek to retire or purchase outstanding debt through cash purchases, in open-market purchases, privately negotiated transactions or otherwise.
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.
Indebtedness and Credit Facilities As of December 29, 2024, the Company had $3,401.8 million of Long-term debt due at varying times from 2026 through 2044. In May 2024, the Company issued an aggregate of $500.0 million of senior unsecured debt securities that bears a fixed interest of 6.05% due 2034 (the "2034 Notes").
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.
At December 29, 2024, the Company had fixed rate long-term debt of $3,401.8 million. The Company does not have any interest rate swaps on its existing long-term debt. Industry Trends, the Economy and Inflation The principal market for the Company’s toys and games and licensed consumer products is the retail sector.
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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.
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The following includes a comparison of our consolidated results of operations for fiscal years 2024 and 2023.
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Hasbro is guided by our purpose to create joy and community for all people around the world, one game, one toy, one story at a time.
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For a comparison of our consolidated results of operations for fiscal years 2023 and 2022, see Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 28, 2024.
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For the past decade, we have been consistently recognized for our corporate citizenship, including being named one of the 100 Best Corporate Citizens by 3BL Media and one of the World’s Most Ethical Companies by Ethisphere Institute.
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EXECUTIVE SUMMARY Hasbro is a leading game, IP, and toy company whose mission is to create joy and community through the magic of play. With over 100 years of expertise, we deliver play experiences for fans of all ages around the world, through physical and digital games, video games, toys, licensed consumer products, location-based entertainment, film, TV and more.
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Our strategic plan, which we sometimes refer to as our Blueprint or Blueprint 2.0, supports our mission by bringing compelling and expansive brand experiences to consumers and audiences around the world.
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Summary of Financial Performance Results of Operations — Consolidated The following table presents the consolidated results of operations for 2024 and 2023: 2024 2023 Amount % of Net Revenues Amount % of Net Revenues Net revenues $ 4,135.5 100.0 % $ 5,003.3 100.0 % Costs and expenses Cost of sales 1,179.5 28.5 % 1,706.0 34.1 % Program cost amortization 49.3 1.2 % 448.9 9.0 % Royalties 284.2 6.9 % 428.3 8.6 % Product development 294.1 7.1 % 306.9 6.1 % Advertising 319.5 7.7 % 358.4 7.2 % Amortization of intangible assets 68.3 1.7 % 83.0 1.7 % Impairment of goodwill — — % 1,191.2 23.8 % Loss on disposal of business 37.4 0.9 % 539.0 10.8 % Selling, distribution and administration 1,213.2 29.3 % 1,480.4 29.6 % Total costs and expenses 3,445.5 83.3 % 6,542.1 130.8 % Operating profit (loss) 690.0 16.7 % (1,538.8) (30.8) % Non-operating expense Interest expense 171.2 4.1 % 186.3 3.7 % Interest income (47.3) (1.1) % (23.0) (0.5) % Other expense, net 69.1 1.7 % 7.0 0.1 % Total non-operating expense, net 193.0 4.7 % 170.3 3.4 % Earnings (loss) before income taxes 497.0 12.0 % (1,709.1) (34.2) % Income tax expense (benefit) 102.6 2.5 % (221.3) (4.4) % Net earnings (loss) 394.4 9.5 % (1,487.8) (29.7) % Net earnings (loss) attributable to noncontrolling interests 8.8 0.2 % 1.5 — % Net earnings (loss) attributable to Hasbro, Inc. $ 385.6 9.3 % $ (1,489.3) (29.8) % Net earnings (loss) per common share: Basic $ 2.77 $ (10.73) Diluted $ 2.75 $ (10.73) Net Revenues Consolidated net revenues for the year ended December 29, 2024 decreased 17.3% to $4,135.5 million from $5,003.3 million for the year ended December 31, 2023, primarily driven by a $579.0 million, or 88%, decline in the Entertainment segment as a result of the sale of the eOne Film and TV business during the fourth quarter of 2023 and a $342.5 million, or 12%, decline in the Consumer Products segment, partially offset by a $53.7 million, or 4%, increase in the Wizards of the Coast and Digital Gaming segment.
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Using this approach, our brands are transformed as story-led and play-led consumer franchises brought to life through games, play and experiences and offered across a multitude of platforms and media.
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Franchise Brands: Our Franchise Brands include our flagship owned or controlled brands, which we believe can deliver significant revenues, profits and growth over the long term, such as MAGIC: THE GATHERING, Hasbro Gaming, PLAY-DOH, TRANSFORMERS, DUNGEONS & DRAGONS, PEPPA PIG and NERF. The Franchise Brands portfolio net revenues decreased 4% in 2024 as compared to 2023.
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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. 41 Table of Contents Key elements of our strategy include: • building innovative toys and games that create memorable, social and collectible experiences of play and entertainment in our key focus categories: games (board games, trading cards, role playing); preschool; action brands; creativity; outdoor; and dolls; • pursuing a franchise-first approach to deliver the magic of our brands through licensing, digital games and entertainment; • focusing on fewer, bigger, more profitable brands and driving market share in our key focus categories; • investing in our Hasbro direct-to-consumer business and building direct relationships with fans through ecommerce, social, digital games and services; • continuing to cultivate our digital gaming business, through AAA games, games as a service and licensing relationships that activate our brands; • 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; • executing on our operational savings initiatives, including supply chain transformation, to improve operating results and reinvest in our business; and • investing in and empowering our people at all levels of our organization and continue to foster a diverse and inclusive culture that drives accountability and focuses on profitability.
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The net revenue decrease primarily reflects lower net revenues from NERF, DUNGEONS & DRAGONS, and TRANSFORMERS products.
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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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Additionally, net revenues in 2023 were supported by TRANSFORMERS products from the June 2023 theatrical release of TRANSFORMERS: Rise of the Beasts as compared to the late September 2024 theatrical release of Transformers One . The lower net revenues in 2024 from NERF and TRANSFORMERS products were partially offset by higher net revenues from MONOPOLY GO!.
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The Company believes that the presentation of the impact of changes in exchange rates, which are beyond the Company’s control, is helpful to an investor’s understanding of the performance of the underlying business. Results discussed herein include income from operations before income taxes attributable to the eOne Film and TV business sold to Lionsgate on December 27, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Item 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
Item 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. 43 Table of Contents

Other HAS 10-K year-over-year comparisons