Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the audited consolidated financial statements of the Company included in Part II, Item 8*. Financial Statements,* of this Form 10-K.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements concerning the Company’s expectations and beliefs. See “Statement Regarding Forward-Looking Statements” and Part I, Item 1A. Risk Factors, of this Form 10-K for a discussion of other uncertainties, risks and assumptions associated with these statements.

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, Inc. (“Hasbro”) is a global play and entertainment company committed to Creating the World’s Best Play and Entertainment Experiences. From toys, games and consumer products to television, movies, digital gaming, and other entertainment experiences, we connect to global audiences by bringing to life great innovations, stories and brands across established and inventive platforms. Our iconic brands include NERF, MAGIC: THE GATHERING, MY LITTLE PONY, TRANSFORMERS, PLAY-DOH, MONOPOLY, BABY ALIVE, POWER RANGERS, PEPPA PIG and PJ MASKS, as well as premier partner brands. Through our recently acquired global entertainment studio, Entertainment One (“eOne”), we are building our brands globally through great storytelling and content on all screens. At Hasbro, we are committed to making the world a better place for all children, fans and families. We believe that doing well includes doing good in the world and for all our constituents. This is demonstrated in all we do, including through corporate social responsibility and philanthropy.

Our strategic plan is centered around Hasbro’s Brand Blueprint, a framework for bringing compelling and expansive brand experiences to consumers and audiences around the world. Our brands are story-led consumer franchises brought to life through a wide array of consumer products, compelling content across a multitude of platforms and media, including a variety of digital experiences, as well as music, publishing and location-based entertainment. Brands and content are at the center of the Hasbro Brand Blueprint. The development and execution of our brands and content are informed by our proprietary consumer insights, which help us understand the behavior of our consumers, from a consumption of content and play standpoint.

Hasbro generates revenue and earns cash by developing, marketing and selling products based on global brands in a broad variety of consumer goods categories. The Company also develops, acquires, produces, finances, distributes and sells entertainment content, some of which is based on the Company’s properties, in addition to the out-licensing of rights for third parties to use its properties in connection with products, including digital media and games and other consumer products. Hasbro also leverages its competencies to develop and market products based on well-known licensed brands including, but not limited to, BEYBLADE, DISNEY PRINCESS and DISNEY FROZEN, DISNEY’S DESCENDANTS, MARVEL, SESAME STREET, STAR WARS, and DREAMWORKS’ TROLLS. MARVEL, STAR WARS, DISNEY PRINCESS, DISNEY FROZEN and DISNEY’S DESCENDANTS are owned by The Walt Disney Company.

For the periods presented in this Form 10-K, the Company’s business is separated into four principal business segments: U.S. and Canada, International, Entertainment, Licensing and Digital and eOne. The U.S. and Canada segment markets and sells both toy and game products primarily in the United States and Canada. The International segment consists of the Company’s European, Asia Pacific and Latin and South American toy and game marketing and sales operations. The Company’s Entertainment, Licensing and Digital segment includes the Company’s legacy consumer products licensing, digital licensing and gaming, and movie and television entertainment operations. The eOne segment, which was added to the Company's reporting structure in the first quarter of 2020, engages in the development, acquisition, production, financing, distribution and sales of entertainment content and is comprised of all legacy eOne operations. In addition to these primary segments, the Company’s product sourcing operations are managed through its Global Operations segment.

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

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this amount to the prior period reported revenues. The Company believes that the presentation of the impact of changes in exchange rates, which are beyond the Company’s control, is helpful to an investor’s understanding of the performance of the underlying business. The Company has also included in this report, the 2020 impact of eOne acquisition and related costs, purchased intangible amortization, other severance costs and income tax expense associated with United Kingdom (“UK”) tax reform. In addition, the impact on 2019 net earnings and earnings per share, of the termination and settlement of its U.S. defined benefit pension plan and the impact of certain transaction costs, financing transaction fees and net hedge gains in association with the Company's agreement to acquire eOne.

Acquisition of Entertainment One

On December 30, 2019, the Company completed the acquisition of eOne for an aggregate purchase price of approximately $4.6 billion, comprised of $3.8 billion of cash consideration for shares outstanding and $0.8 billion related to the redemption of eOne's outstanding senior secured notes and the payoff of eOne's revolving credit facility. The Company financed the acquisition through a combination of the following debt and equity financings: (i) the issuance of senior unsecured notes in an aggregate principal amount of $2.4 billion; (ii) the issuance of 10,592,106 shares of common stock at a public offering price of $95.00 per share; and (iii) $1.0 billion in term loans. eOne's results of operations and financial position are included in the Company's consolidated financial statements and accompanying condensed footnotes since the date of acquisition. eOne is a global independent studio that specializes in the development, acquisition, production, financing, distribution and sales of entertainment content.

The addition of eOne accelerates the Company’s brand blueprint strategy by expanding our brand portfolio with eOne’s global preschool brands, adding proven TV and film expertise and executive leadership, as well as by enhancing brand building capabilities and our storytelling capabilities to strengthen Hasbro brands.

For more information on the eOne Acquisition see note 3 to the consolidated financial statements included in Part II, Item 8. Financial Statements, of this Form 10-K.

The Company’s 2020 results presented in this Form 10-K include eOne's results of operations and financial position beginning on December 30, 2019, the date of acquisition. The Company’s 2019 and prior years' results are presented as reported and do not include eOne results.

2020 highlights

• Net revenues of $5,465.4 million increased 16% from $4,720.2 million in 2019. The increase in net revenues includes an unfavorable foreign currency translation of $15.9 million attributable to the Company’s legacy Hasbro business.

◦U.S. and Canada segment net revenues increased 4%; International segment net revenues decreased 14%, including an unfavorable foreign currency translation impact of $15.9 million; Entertainment, Licensing and Digital segment net revenues decreased 14%; eOne segment net revenues in 2020 were $956.5 million.

◦Hasbro Gaming net revenues increased 15%; Emerging Brands net revenues increased 27% Partner Brands net revenues decreased 12%; Franchise Brands net revenues declined 5%; TV, Film and Entertainment portfolio net revenues were $804.8 million and represented 15% of total net revenues in 2020.

• Operating profit was $501.8 million, or 9.2% of net revenues in 2020 compared to operating profit of $652.1 million, or 13.8% of net revenues in 2019.

◦2020 operating profit was negatively impacted by acquisition and related expenses of $218.6 million ($188.6 million after-tax); $97.9 million ($80.7 million after-tax) of eOne acquired intangible asset amortization; and $8.5 million ($7.4 million after-tax) of restructuring charges associated with cost savings initiatives.

◦2019 operating profit was negatively impacted by $17.8 million ($16.4 million after-tax) of acquisition related costs associated with the eOne transaction.

• Net earnings attributable to Hasbro, Inc. declined in 2020 to $222.5 million, or $1.62 per diluted share, compared to $520.5 million, or $4.05 per diluted share in 2019.

◦In addition to the negative impacts to operating profit described above, 2020 net earnings were impacted by incremental income tax expense of $15.4 million, or $0.11 per diluted share, related to a change in the UK tax code.

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◦2019 net earnings included non-cash charges of $111.0 million ($86.0 million after-tax), or $0.67 per diluted share, related to the Company's settlement of its U.S. defined benefit pension plan liability, partially offset by a net benefit of $75.7 million ($81.8 million after tax), or $0.64 per diluted share, from eOne transaction related costs including foreign currency gains related to hedging a portion of the eOne British Pound purchase price.

2019 highlights

• Net revenues of $4,720.2 million increased 3% from $4,579.6 million in 2018. The increase in net revenues included an unfavorable foreign currency translation of $78.5 million.

◦U.S. and Canada segment net revenues increased 3%; International segment net revenues decreased 1% and included an unfavorable foreign currency translation impact of $76.5 million; Entertainment, Licensing and Digital segment net revenues increased 22%.

◦Partner Brands net revenues increased 24%; Emerging Brands net revenues increased 5%; Franchise Brands net revenues declined 1%; Hasbro Gaming net revenues declined 10%.

• Operating profit was $652.1 million, or 13.8% of net revenues in 2019 compared to operating profit of $331.1 million, or 7.2% of net revenues in 2018.

◦2019 operating profit was negatively impacted by $17.8 million ($16.4 million after-tax) of acquisition related costs associated with the eOne transaction.

◦2018 operating profit was negatively impacted by the Toys"R"Us bankruptcy, costs related to the Company’s 2018 restructuring program and impairment charges related to Backflip Studios and other intangible assets.

• Net earnings increased in 2019 to $520.5 million, or $4.05 per diluted share, compared to $220.4 million, or $1.74 per diluted share in 2018.

Share Repurchases and Dividends

The Company has a long history of returning cash to its shareholders through quarterly dividends and share repurchases. In 2020, Hasbro maintained its quarterly dividend rate of $0.68 per share. The Company has continued its quarterly dividend into 2021 with the first quarterly dividend paid in February and declaration of a second cash dividend of $0.68 per share scheduled for May 2021. In addition to the dividend, the Company periodically returns cash to shareholders through its share repurchase program. As part of this initiative, since 2005 the Company’s Board of Directors (the "Board") adopted numerous share repurchase authorizations with a cumulative authorized repurchase amount of $4,325.0 million. The most recent authorization was approved in May 2018 for $500 million. Since 2005, Hasbro has repurchased 108.6 million shares at a total cost of $3,961.2 million and an average price of $36.44 per share. At December 27, 2020, Hasbro had $366.6 million remaining available under these share repurchase authorizations. Share repurchases are subject to market conditions, the availability of funds and other uses of funds. As a result of the financing activities related to the eOne Acquisition, the Company has suspended its current share repurchase program while it prioritizes deleveraging.

Summary of Financial Performance

A summary of the Company’s results of operations for 2020, 2019 and 2018 is illustrated below.

			2020						2019						2018
Net revenues			$	5,465.4					$	4,720.2					$	4,579.6
Operating profit			501.8						652.1						331.1
Earnings before income taxes			322.1						594.2						270.4
Net earnings			225.4						520.5						220.4
Net earnings attributable to noncontrolling interests			2.9						—						—
Net earnings attributable to Hasbro, Inc.			222.5						520.5						220.4
Diluted earnings per share attributable to Hasbro, Inc.			1.62						4.05						1.74

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Results of Operations — Consolidated

The fiscal years ended December 27, 2020, December 29, 2019 and December 30, 2018 were each fifty-two week periods. The fiscal year ended December 27, 2020 results reflect the inclusion of the eOne business following the completion of the acquisition on December 30, 2019.

Net earnings attributable to Hasbro, Inc. decreased to $222.5 million for the fiscal year ended December 27, 2020 compared to $520.5 million for the fiscal year ended December 29, 2019, and were $220.4 million for the fiscal year ended December 30, 2018.

Diluted earnings per share attributable to Hasbro, Inc. were $1.62 in 2020, $4.05 in 2019 and $1.74 in 2018.

Net earnings and diluted earnings per share attributable to Hasbro, Inc. for each fiscal year in the three years ended December 27, 2020 include certain charges and benefits as described below.

2020

• In association with the Company's acquisition of eOne, the Company incurred related expenses of $269.3 million, comprised of the following:

◦A net charge of $188.6 million or $1.37 per diluted share of acquisition and related costs; and

◦Net expenses of $80.7 million or $0.59 per diluted share of incremental intangible amortization costs related to the intangible assets acquired in the eOne Acquisition.

• A net charge of $7.4 million or $0.05 per diluted share of severance charges associated with cost-savings initiatives within the Company's commercial and Music businesses.

• A net charge of $15.4 million or $0.11 per diluted share of income tax expense as a result of revaluation of Hasbro’s UK tax attributes in accordance with the Finance Act of 2020 enacted by the United Kingdom on July 22, 2020. Retroactive to April 1, 2020, the new law maintains the corporate income tax rate at 19% instead of the planned reduction to 17% that was previously enacted in the UK Finance Act of 2016.

2019

• A net charge of $86.0 million or $0.67 per diluted share associated with the settlement of the Company's U.S. defined benefit pension plan in the second quarter of 2019. During 2018 the Compensation Committee of the Company's Board of Directors approved a resolution to terminate the Company's U.S. defined benefit pension plan and commenced the termination process. During the second and fourth quarters of 2019, the Company settled remaining benefits directly with vested participants.

• A net benefit, of $81.8 million or $0.64 per diluted share related to transaction costs and hedge gains associated with the Company's agreement to acquire eOne in an all cash transaction. The $81.8 million after-tax gain consisted of the following: (i) hedge gains of $114.1 million related to the foreign exchange forward and option contracts to hedge a portion of the eOne purchase price and related costs; (ii) financing transaction fees of $20.6 million, primary related to the Company’s bridge facility which was terminated unused in the fourth quarter of 2019; (iii) eOne acquisition costs of $17.8 million during the fourth quarter of 2019; and (iv) tax benefits of $6.1 million for the full year 2019 related to the charges outlined in (ii) and (iii) above.

2018

• A net charge of $96.9 million or $0.76 per diluted share associated with a fourth quarter 2018 non-cash goodwill impairment charge related to the Company’s Backflip Studios goodwill and impairment of certain other definite-lived intangible assets.

• A net charge of $77.9 million or $0.61 per diluted share of severance costs associated with organizational restructuring.

• A net charge of $52.8 million or $0.42 per diluted share related to the Toys“R”Us bankruptcy and liquidation of its U.S. and other operations around the globe. The Company recognized incremental expense for credit losses on outstanding Toys“R”Us receivables, royalty expense, inventory obsolescence as well as other related costs.

• A net charge of $40.7 million or $0.32 per diluted share related to U.S. Tax Reform. In 2018 the Company made adjustments to provisional U.S. Tax Reform amounts recorded in the fourth quarter of 2017, based

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on additional guidance issued by the U.S. Treasury Department and the Internal Revenue Service during 2018.

Consolidated net revenues for the year ended December 27, 2020 grew 16% to $5,465.4 million from $4,720.2 million for the year ended December 29, 2019. Net revenues in 2020 include an unfavorable foreign currency translation of $15.9 million, which is the result of weakening currencies compared to the U.S. dollar, primarily in the Company's Latin American region.

Consolidated net revenues for the year ended December 29, 2019 grew 3% to $4,720.2 million from $4,579.6 million for the year ended December 30, 2018 and included an unfavorable foreign currency translation of $78.5 million, which was the result of weakening currencies primarily in our International segment in 2019 compared to 2018.

As a result of the Company's acquisition of eOne in 2020, the Company's brand architecture reflects the addition of the TV, Film and Entertainment brand portfolio which consists of legacy eOne film and TV revenues. Revenues related to eOne brands, including PEPPA PIG and PJ MASKS, are reported in the Emerging Brands portfolio.

The following chart presents net revenues expressed in millions of dollars, by brand portfolio for each year in the three years ended December 27, 2020.

			2020 Net Revenues			% Change			2019 Net Revenues			% Change			2018 Net Revenues			% Change
Franchise Brands			$	2,286.1		-5.2		%	$	2,411.8		-1.4		%	$	2,445.9		-9.1		%
Partner Brands			1,079.4			-11.6		%	1,221.0			23.7		%	987.3			-22.4		%
Hasbro Gaming			814.8			14.8		%	709.8			-9.9		%	787.7			-11.8		%
Emerging Brands			480.4			27.2		%	377.6			5.2		%	358.8			1.1		%
TV, Film and Entertainment			804.8			100.0		%	—			—		%	—			—		%

2020 versus 2019

Hasbro Gaming and Emerging Brands net revenues grew in 2020 compared to 2019, while net revenues from Franchise Brands and Partner Brands declined. TV, Film and Entertainment consists of the legacy eOne film and TV revenues.

Franchise Brands: The Franchise Brands portfolio decreased 5% in 2020 compared to 2019. Declines in net revenues from TRANSFORMERS and MY LITTLE PONY products were the primary drivers of the overall decline in Franchise Brands net revenues, while, to a lesser extent, NERF and PLAY-DOH products also contributed to segment net revenue declines. Much of the segment net revenue declines were due to reduced customer ordering, supply chain delays and other disruptions to the business as a result of the impact of the COVID-19 pandemic. Additionally, in 2019 TRANSFORMERS products benefited from the December 2018 theatrical release of TRANSFORMERS: BUMBLEBEE, driving lower revenues in 2020 compared to 2019. These declines were partially offset by net revenue increases from MAGIC: THE GATHERING products, due to favorable card set releases, and to a lesser extent, MONOPOLY products during 2020.

Partner Brands: The Partner Brands portfolio declined 12% in 2020 compared to 2019.

Within the Partner Brands portfolio, there are a number of brands which are reliant on related entertainment, including television and movie releases. As such, net revenues by partner brand, fluctuate from year-to-year depending on entertainment popularity, release dates and related product line offerings and success. Historically these entertainment-based brands experience higher revenues during years in which major motion pictures are released.

Due to the impact of the COVID-19 pandemic on the entertainment industry during 2020, including the postponement of certain theatrical releases, such as MARVEL's BLACK WIDOW, previously planned as a 2020 MARVEL release, as well as other production delays during the year, sales of certain of the Company's Partner Brands products declined during 2020 compared to 2019. Further, in 2019, Partner Brands products benefited from a successful entertainment slate that included MARVEL'S second quarter 2019 theatrical release, AVENGERS: END GAME and the third quarter 2019 theatrical release, SPIDER-MAN: FAR FROM HOME, as well as DISNEY’S FROZEN 2 and STAR WARS: THE RISE OF SKYWALKER, released during the fourth quarter of 2019.

Despite the entertainment industry's challenges as a result of the COVID-19 pandemic, there were several Partner Brand entertainment releases during 2020 including TROLLS WORLD TOUR, which was released in the premium

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video-on-demand format in April and the Disney+ streaming series, STAR WARS: THE MANDALORIAN, season two, released during the fourth quarter of 2020.

Overall, the decrease in Partner Brands net revenues during 2020 was largely driven by MARVEL products which are dependent on entertainment releases as described above, and to a lesser extent, DISNEY FROZEN products, also heavily reliant on supporting entertainment. In addition to these net revenue declines were lower net revenues from BEYBLADE products. These decreases were partially offset by net revenue increases from STAR WARS and TROLLS products, which were supported by the entertainment releases described above. To a lesser extent, the Partner Brands portfolio benefited from the introduction of select items from the Company's GHOSTBUSTERS product line in 2020, ahead of the release of the GHOSTBUSTERS: AFTERLIFE film, previously planned as a 2020 release but postponed and expected in theaters during 2021 due to the COVID-19 pandemic.

Hasbro Gaming: The Hasbro Gaming portfolio increased 15% in 2020 compared to 2019. Higher net revenues from DUNGEONS & DRAGONS products and higher net revenues from classic games including, JENGA, OPERATION and CLUE products were partially offset by lower net revenues from PIE FACE and certain other Hasbro Gaming products.

Net revenues for Hasbro’s total gaming category, including the Hasbro Gaming portfolio as reported above, and all other gaming revenue, most notably MAGIC: THE GATHERING and MONOPOLY, which are included in the Franchise Brands portfolio, totaled $1,763.8 million in 2020, an increase of 15%, versus $1,528.3 million in 2019.

Emerging Brands: The Emerging Brands portfolio grew 27% in 2020 compared to 2019. Contributing to the net revenue increases in 2020 were the inclusion of brands acquired through the eOne Acquisition such as PEPPA PIG and PJ MASKS and, to a lesser extent, net revenues from the Company's relaunch of the GI JOE product-line in 2020. These net revenue increases were partially offset by net revenue declines from LITTLEST PET SHOP and LOST KITTIES products.

TV, Film and Entertainment: Net revenues from the TV, Film and Entertainment portfolio were approximately 15% of total Company net revenues and included (i) theatrical and transactional net revenue contributions from the Amblin Partners film 1917, released in December 2019; (ii) broadcast and licensing contributions from key scripted deliveries including season two of THE ROOKIE and the fifth season of FEAR THE WALKING DEAD; (iii) the Company's strong lineup of unscripted television programming that includes season one of THE PACK and the NAKED AND AFRAID television series which aired it's eleventh series in 2020; and (iv) participations from the Company's television content library which includes well know titles such as GREY'S ANATOMY and CRIMINAL MINDS. In addition to these entertainment driven revenues, the Company's music business benefited from both strong streaming and publishing revenues.

2019 versus 2018

Partner Brands and Emerging Brands net revenues grew in 2019 compared to 2018, while net revenues from Franchise Brands and the Hasbro Gaming portfolio declined. The Company's 2019 and 2018 results are presented as reported and do not include eOne results.

Franchise Brands: The Franchise Brands portfolio declined 1% in 2019 compared to 2018. The primary drivers of the 2019 Franchise Brands net revenue declines were NERF and MY LITTLE PONY products and to a lesser extent, BABY ALIVE and TRANSFORMERS products. These decreases were offset by net revenue increases from MAGIC:THE GATHERING, products and to a lesser extent MONOPOLY and PLAY-DOH products.

Partner Brands: The Partner Brands portfolio increased 24% in 2019 compared to 2018.

In 2019, products related to three Partner Brands were supported by major theatrical releases – MARVEL products were supported by the 2019 theatrical releases, AVENGERS: END GAME and SPIDER-MAN: FAR FROM HOME, DISNEY’S FROZEN products were supported by the 2019 theatrical release, FROZEN 2 and STAR WARS products were supported by STAR WARS: THE RISE OF SKYWALKER.

During 2019, the increase in net revenues was driven by DISNEY FROZEN and MARVEL products, and to a lesser extent DISNEY’S DECENDANTS and STAR WARS products. These increases were partially offset by net revenue declines from DISNEY PRINCESS and DREAMWORKS’ TROLLS products during 2019.

Hasbro Gaming: The Hasbro Gaming portfolio declined 10% in 2019 compared to 2018. Lower net revenues from PIE FACE, SPEAK OUT and certain other Hasbro Gaming products were partially offset by net revenue increases from DUNGEONS & DRAGONS products.

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Net revenues for Hasbro’s total gaming category, including the Hasbro Gaming portfolio as reported above, and all other gaming revenue, most notably MAGIC: THE GATHERING and MONOPOLY, which are included in the Franchise Brands portfolio, totaled $1,528.3 million in 2019, an increase of 6%, versus $1,443.2 million in 2018.

Emerging Brands: The Emerging Brands portfolio grew 5% in 2019 compared to 2018. Net revenues were positively impacted by the introduction of the Company's POWER RANGERS products, as well as net revenue increases from PLAYSKOOL products, which were partially offset by net revenue declines from LITTLEST PET SHOP and LOST KITTIES products.

SEGMENT RESULTS

The Company’s net revenues and operating profits are primarily derived from its four principal segments: the U.S. and Canada segment, the International segment, the Entertainment, Licensing and Digital segment, and, as a result of the 2020 eOne Acquisition, the eOne operating segment.

Net Revenues

The chart below illustrates net revenues expressed in millions of dollars, derived from our principal operating segments in 2020, 2019 and 2018.

			2020 Net Revenues			% Change			2019 Net Revenues			% Change			2018 Net Revenues			% Change
U.S. and Canada *			$	2,556.1		4.4		%	$	2,449.3		3.1		%	$	2,375.7		-10.4		%
International			1,579.0			-14.0		%	1,836.4			-0.6		%	1,847.6			-17.3		%
Entertainment, Licensing and Digital *			373.9			-13.9		%	434.5			21.9		%	356.3			9.5		%
eOne			956.5			100.0		%	—			—		%	—			—		%

*As a result of the realignment of the Company’s financial reporting segments during the first quarter of 2019, net revenues of $57.7 million from 2018 were reclassified from the U.S. and Canada segment to the Entertainment, Licensing and Digital segment, to conform to current year presentation.

U.S. and Canada

2020 versus 2019

U.S. and Canada segment net revenues increased 4% in 2020 compared to 2019. Revenues in the U.S. and Canada segment were not materially impacted by foreign currency translation. Segment net revenues increased from growth in Franchise Brands and Hasbro Gaming, partially offset by lower net revenues from Partner Brands and to a lesser extent, the Emerging Brands portfolio.

In the Franchise Brands portfolio, higher net revenues from MAGIC: THE GATHERING and to a lesser extent, MONOPOLY products were partially offset by lower net revenues from TRANSFORMERS, MY LITTLE PONY and PLAY-DOH products which were impacted, in part, by disruptions to the business from the COVID-19 pandemic. In the Partner brands portfolio, the decrease was driven by lower net revenues from MARVEL and DISNEY FROZEN products which did not have the benefit of 2020 entertainment releases, and to a lesser extent, from BEYBLADE products. These decreases were partially offset by net revenue increases from STAR WARS and TROLLS products as a result of entertainment support from the Disney+ streaming series, STAR WARS: THE MANDALORIAN, season two, released during the fourth quarter 2020 and TROLLS WORLD TOUR, which was released in the premium video-on-demand format in April. In the Hasbro Gaming portfolio, higher net revenues were delivered across many of the Company's games brands, most notably from DUNGEON & DRAGONS, JENGA and OPERATION products. In the Emerging Brands portfolio, net revenue declines from POWER RANGERS and FURREAL FRIENDS products were partially offset by net revenue contributions from the 2020 relaunch of the Company's GI JOE product line and higher net revenues from PLAYSKOOL products.

2019 versus 2018

U.S. and Canada segment net revenues increased 3% in 2019 compared to 2018. Revenues in the U.S. and Canada segment were not materially impacted by foreign currency translation. Segment net revenues increased from growth in Partner Brands and Emerging Brands, partially offset by lower net revenues from Franchise Brands and the Hasbro Gaming portfolio.

In the Franchise Brands portfolio, higher net revenues from MAGIC: THE GATHERING, PLAY-DOH and MONOPOLY products were more than offset by lower net revenues from NERF, MY LITTLE PONY, BABY ALIVE

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and TRANSFORMERS products. In the Partner Brands portfolio, higher net revenues from DISNEY FROZEN, STAR WARS and BEYBLADE products were partially offset by lower net revenues from DREAMWORKS' TROLLS and DISNEY PRINCESS products during 2019. In the Hasbro Gaming portfolio, lower net revenues from PIE FACE, SPEAK OUT and certain other Hasbro Gaming products were partially offset by net revenue increases from DUNGEONS & DRAGONS products. In the Emerging Brands portfolio, the positive impact from the introduction of the Company’s POWER RANGERS products, as well as net revenue increases from PLAYSKOOL products, were partially offset by net revenue declines from LITTLEST PET SHOP and LOST KITTIES products.

International

To calculate the year-over-year percentage change in net revenues absent the impact of foreign currency translation, net revenues were recalculated using those foreign currency translation rates in place for the prior year comparable period.

2020 versus 2019

International segment net revenues decreased 14% in 2020 compared to 2019 which includes an unfavorable foreign currency translation of $15.6 million consisting of an unfavorable $32.7 million impact from Latin America, partially offset by a favorable $14.3 million and $2.8 million impact from the Company's European and Asia Pacific markets, respectively. On a regional basis, net revenues from Europe grew slightly, while the Company's Latin America and Asia Pacific regions declined in part, due to disruptions to the business, and to consumer purchasing patterns, as a result of the COVID-19 pandemic, most notably in Latin America and, to a lesser extent, certain areas within the Company's Asia Pacific region. Net Revenues in emerging markets decreased 30% during 2020.

Lower net revenues from the Franchise Brands, Partner Brands and Emerging Brands portfolios were partially offset by higher net revenues from the Hasbro Gaming portfolio.

In the Franchise Brands portfolio, the primary drivers of the net revenue declines include lower sales of NERF, TRANSFORMERS, PLAY-DOH and to a lesser extent, MY LITTLE PONY products. These net revenue declines were partially offset by net revenue increases from MAGIC: THE GATHERING products. In the Partner Brands portfolio, the decrease was primarily driven by lower net revenues from MARVEL products which did not have the benefit of 2020 entertainment releases, as well as lower net revenues from the Company's BEYBLADE products. These decreases were partially offset by higher net revenues from STAR WARS and DREAMWORKS’ TROLLS products, which were supported by 2020 entertainment. In the Hasbro Gaming portfolio, the International segment realized higher net revenues from many of the Company's traditional games including CLUE, JENGA and OPERATION, in addition to higher net revenues from DUNGEONS & DRAGONS products. These increases were partially offset by net revenue decreases from PIE FACE products and certain other Hasbro games. In the Emerging Brands portfolio, the net revenue declines were driven primarily by LITTLEST PET SHOP, LOST KITTIES and PLAYSKOOL products.

2019 versus 2018

International segment net revenues decreased approximately 1% in 2019 compared to 2018 which includes an unfavorable foreign currency translation of $76.5 million (Europe — $44.9 million, Latin America — $19.5 million, Asia Pacific — $12.1 million). Unfavorable foreign currency translation reflects the strengthening of the U.S. dollar when compared to the Euro as well as compared to foreign currencies throughout the Latin America and Asia Pacific regions. Absent the impact of foreign currency translation, International segment net revenues increased 4% in 2019 compared to 2018. On a regional basis, net revenues from Europe remained flat, Latin America declined 4% while net revenues from the Company’s Asia Pacific region increased 3% in 2019 from 2018. Net Revenues in emerging markets decreased 5% during 2019.

Higher net revenues from Partner Brands were wholly offset by lower net revenues from the Franchise Brands, Hasbro Gaming and Emerging Brands portfolios.

In the Franchise Brands portfolio, net revenue declines from MY LITTLE PONY, TRANSFORMERS and NERF products were partially offset by net revenue increases from MONOPOLY and MAGIC: THE GATHERING products. In the Partner Brands portfolio, higher net revenues from DISNEY FROZEN and MARVEL products were partially offset by lower net revenues from BEYBLADE, DISNEY PRINCESS and STAR WARS products. In the Hasbro Gaming portfolio, lower net revenues from PIE FACE and SPEAK OUT products were partially offset by net revenue increases from CONNECT 4, OPERATION and DUNGEONS & DRAGONS products. In the Emerging Brands portfolio, lower net revenues from LITTLEST PET SHOP and LOST KITTIES products were partially offset by net revenue contributions from POWER RANGERS products, as well as net revenue increases from PLAYSKOOL products.

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Entertainment, Licensing and Digital

2020 versus 2019

Entertainment, Licensing and Digital segment net revenues declined 14% in 2020 compared to 2019. The net revenue declines during 2020 were primarily driven by lower film revenues due to the Company's share of revenue recognized in 2019 related to the TRANSFORMERS: BUMBLEBEE film combined with lower net revenues associated with the closure of the Backflip business in the fourth quarter of 2019, and to a lesser extent, lower consumer product licensing revenues during 2020 due to disruptions in the markets as a result of the COVID-19 pandemic. These declines were partially offset by an increase in digital gaming revenues in 2020 which benefited from the stay-at-home COVID-19 environment.

2019 versus 2018

Entertainment, Licensing and Digital segment net revenues increased 22% in 2019 compared to 2018. Net Revenue growth in 2019 was driven primarily by MAGIC: THE GATHERING ARENA and the Company's share of revenues related to TRANSFORMERS: BUMBLEBEE, the 2018 theatrical release produced jointly with Paramount Pictures. Increased licensing revenues from the TRANSFORMERS and MONOPOLY brands during 2019 also contributed to the net revenue increase. Partially offsetting these increases were lower net revenues related to streaming digital television content in 2019 compared to 2018.

eOne

2020 Results

eOne segment net revenues were $956.5 million during 2020. The following table presents eOne segment net revenues by channel for the year ended December 27, 2020.

			2020 Net Revenues
eOne Segment Net Revenues
Film and TV			$	684.9
Family Brands			152.4
Music and Other			119.2
Segment Total			$	956.5

The impact of the COVID-19 outbreak on the eOne segment was felt throughout 2020, but most significantly during the first half of the year. Specifically, scheduled productions were and continue to be delayed or postponed due to the shutdown of live-action production work and the closure or limited reopening of studios. In addition, theatrical releases have been delayed due to the closure or limited reopening of theaters, and in some cases, global film releases were moved from theaters to alternative media platforms such as on demand streaming services. Beginning in the third quarter, the entertainment industry saw a gradual return of live action TV and film production activities with deliveries accelerating through the remainder of 2020.

In 2020, drivers of the eOne segment net revenues included: (i) broadcast and licensing revenues associated with internationally recognized brands, PEPPA PIG and PJ MASKS and key scripted deliveries including season two of THE ROOKIE and the fifth season of FEAR THE WALKING DEAD (ii) theatrical and transactional net revenue contributions from the Amblin Partners film 1917, released in December 2019; (iii) the Company's strong lineup of unscripted television programming that includes season one of THE PACK and the NAKED AND AFRAID television series which aired it's eleventh season in 2020; and (iv) the Company's television content library which includes well known titles such as GREY'S ANATOMY and CRIMINAL MINDS. In addition to these entertainment driven revenues, the Company's music business benefited from both strong streaming and publishing revenues.

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Operating Profit (Loss)

The table below illustrates operating profit expressed in millions of dollars and operating profit margins, derived from our principal operating segments in 2020, 2019 and 2018. For a reconciliation of segment operating profit to total Company operating profit, see note 21 to our consolidated financial statements which are included in Part II, Item 8. Financial Statements, of this Form 10-K.

			2020			% Net Revenues			% Change			2019			% Net Revenues			% Change			2018			% Net Revenues
U.S. and Canada*			$	539.7		21.1		%	30		%	$	415.4		17.0		%	12		%	$	370.2		15.6		%
International			42.5			2.7		%	-60		%	107.3			5.8		%	>100%			39.5			2.1		%
Entertainment, Licensing and Digital*			93.0			24.9		%	-7		%	99.7			22.9		%	>100%			29.1			8.2		%
eOne			(79.2)			-8.3		%	100		%	—			—		%	—		%	—			—		%

*As a result of the realignment of the Company’s financial reporting segments during the first quarter of 2019, operating profit of $11.8 million from 2018 was reclassified from the U.S. and Canada segment to the Entertainment, Licensing and Digital segment, to conform to 2020 and 2019 presentation.

U.S. and Canada

2020 versus 2019

U.S. and Canada segment operating profit increased $124.3 million to $539.7 million in 2020 compared to $415.4 million in 2019. Operating profit margin increased to 21.1% of net revenues in 2020 from 17.0% of net revenues in 2019. The increase in operating profit and profit margin in 2020 was driven by higher segment net revenues, favorable brand mix, lower royalty expense associated with lower sales of the Company's Partner Brand products and lower marketing and advertising costs. These favorable effects were partially offset by higher freight costs as a result of greater domestic shipments and increased direct-to-customer shipments which carry higher fulfillment costs as well as higher product development expenses associated with the Company's Wizards of the Coast business.

2019 versus 2018

U.S. and Canada segment operating profit increased $45.2 million to $415.4 million in 2019 compared to $370.2 million in 2018. Absent the impact of the Toys"R"Us bankruptcy filing and subsequent liquidation included within 2018 operating profit, the operating profit for 2019 increased $60.2 million. Operating profit margin increased to 17.0% of net revenues in 2019 from 15.6% of net revenues in 2018. Operating profit in 2018 was negatively impacted by charges of $45.8 million related to the bankruptcy filing and subsequent liquidation of Toys"R"Us. Absent these charges, operating profit declined slightly as higher partner brand sales generated higher royalty expense, and lower advertising and administrative expense was largely offset by increased warehousing costs as a result of higher domestic shipments and higher intangible amortization expense as a result of a full year of amortization from the Power Rangers Acquisition in 2018.

International

2020 versus 2019

International segment operating profit decreased $64.8 million to $42.5 million in 2020 compared to $107.3 million in 2019. Operating profit margin decreased to 2.7% in 2020 from 5.8% in 2019. The decrease in operating profit and operating profit margin is due to lower net revenues, most notably from disruptions to the business, as a result of the COVID-19 pandemic, as discussed above. This decline in net revenues was partially offset by lower royalty expenses due to lower sales of the Company's Partner Brand products combined with reduced advertising, sales and marketing costs as well as lower distribution expenses.

2019 versus 2018

International segment operating profit increased $67.8 million to $107.3 million in 2019 compared to $39.5 million in 2018. Absent the impact of the Toys"R"Us bankruptcy filing and subsequent liquidation to 2018 operating profit, operating profit in 2019 increased $60.2 million. Operating profit margin increased to 5.8% in 2019 from 2.1% in 2018. The increase in operating profit and operating profit margin, as reported, is due to increased revenues, lower cost of sales due to improved inventory management, lower advertising costs and lower administrative costs. These decreases were partially offset by increased royalty expenses associated with higher sales of partner brand

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products and higher intangible amortization expense in 2019 as a result of a full year of amortization from the Power Rangers Acquisition in 2018.

Entertainment, Licensing and Digital

2020 versus 2019

Entertainment and Licensing segment operating profit decreased $6.7 million to $93.0 million in 2020 compared to $99.7 million in 2019. Operating profit margin increased to 24.9% of net revenues in 2020 compared to 22.9% in 2019. The decrease in operating profit in the Entertainment, Licensing and Digital segment was driven by lower net revenues as well as asset impairment charges including $20.8 million in production assets, driven by a change in entertainment strategy as a result of the eOne Acquisition in 2020. These decreases were partially offset by lower program costs and amortization costs, reduced operating expenses associated with the closure of the Backflip business in the fourth quarter of 2019, lower royalty expense due to a favorable mix from growth in licensed digital gaming, as well as lower digital gaming advertising and development costs during 2020.

2019 versus 2018

Entertainment and Licensing segment operating profit increased $70.6 million to $99.7 million in 2019 compared to $29.1 million in 2018. Operating profit margin increased to 22.9% of net revenues in 2019 compared to 8.2% in 2018. Absent the impact of an $86.3 million goodwill impairment charge related to Backflip Studios on 2018 operating profit, operating profit in 2019 decreased 14%. This decrease was primarily due to higher program production expense and amortization costs, as well as increased development and administrative costs for MAGIC: THE GATHERING ARENA and other future digital gaming initiatives during 2019.

eOne

2020 Results

eOne segment operating losses were $79.2 million, or -8.3% of segment net revenues in 2020. This loss was driven by $112.4 million of acquisition and related costs including expense associated with the acceleration of eOne stock-based compensation and advisor fees settled at closing of the acquisition as well as integration costs and impairment charges in the fourth quarter of 2020 for certain definite-lived intangible and other assets. In addition, the operating loss included $97.9 million of incremental intangible amortization costs associated with the fair value of acquired intangible assets.

Segments and Corporate and Eliminations

In the Global Operations segment, the operating loss was $8.7 million in 2020 compared to operating losses of $7.2 million and $8.4 million in 2019 and 2018, respectively.

In Corporate and eliminations, the operating loss was $85.5 million in 2020 compared to operating profit of $36.9 million in 2019 and an operating loss of $99.3 million in 2018. The Corporate and Eliminations operating loss in 2020 was driven primarily by charges related to the eOne Acquisition; including acquisition and integration costs of $32.8 million and restructuring and related costs of $52.6 million, comprised of severance and retention costs, as well as impairment charges for certain definite-lived intangible assets driven by the change in strategy for the combined company’s entertainment assets. In addition to the charges associated with the eOne Acquisition, the Company incurred $8.5 million of severance charges associated with cost-savings initiatives within the Company’s commercial and Film and TV businesses. Corporate and Eliminations operating profit in 2019 includes $17.8 million of transaction costs associated with the eOne acquisition.

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OPERATING COSTS AND EXPENSES

The Company’s operating expenses, stated as percentages of net revenues, are illustrated below for the fiscal years ended December 27, 2020, December 29, 2019 and December 30, 2018:

			2020			2019			2018
Cost of sales			31.5		%	38.3		%	40.4		%
Program cost amortization			7.1			1.8			1.0
Royalties			10.4			8.8			7.7
Product development			4.7			5.6			5.4
Advertising			7.6			8.8			9.6
Amortization of intangibles			2.6			1.0			0.6
Selling, distribution and administration			22.9			22.0			28.1
Acquisition and related costs			4.0			—			—

Operating expenses for 2020, 2019 and 2018 include benefits and expenses related to the following events:

• During 2020, in association with the Company's acquisition of eOne, the Company incurred related expenses of $218.6 million, comprised of 145.2 million of acquisition and integration costs and restructuring and related costs of $73.4 million.

• During 2020, the Company incurred incremental intangible amortization costs of $97.9 million related to the intangible assets acquired in the eOne Acquisition.

• The Company incurred $8.5 million of severance charges, associated with cost-savings initiatives recorded within selling, distribution and administration ("SD&A") expenses in the Company's Corporate and Eliminations segment.

• During 2019, the Company incurred acquisition costs related to eOne of $17.8 million within administrative expenses in the Corporate and Eliminations segment.

• During 2018, the Company recognized charges of $60.4 million consisting of incremental expense for credit losses on outstanding Toys“R”Us receivables, royalty expense, inventory obsolescence as well as other costs related to the Toys“R”Us bankruptcy.

• During 2018, the Company incurred $89.3 million of severance charges, related to the 2018 restructuring program. These charges were recorded within SD&A expenses and included in Corporate and Eliminations.

• During 2018, the Company recorded $117.6 million in goodwill impairment and other intangible asset impairment charges, all within administrative expenses in the Entertainment, Licensing & Digital segment and the Corporate and Eliminations segment.

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 5% to $1,718.9 million, or 31.5% of net revenues, for the year ended December 27, 2020 compared to $1,807.8 million, or 38.3% of net revenues, for the year ended December 29, 2019. The cost of sales decrease as a percent of net revenues is primarily related to the acquisition of eOne, which experiences lower cost of sales as a percentage of net sales, and to a lesser extent, the decrease was due to the impact of $14.4 million of foreign exchange translation. The cost of sales decrease in dollars was driven by a favorable brand mix including an increase in net sales of MAGIC: THE GATHERING products, and improved inventory costing, partially offset by higher markdowns to address excess retail inventory within the International Segment.

In 2019, cost of sales decreased 2% to $1,807.8 million, or 38.3% of net revenues, for the year ended December 29, 2019 compared to $1,850.7 million, or 40.4% of net revenues, for the year ended December 30, 2018. The cost of sales decrease in dollars and as a percent of net revenues was the result of favorable product mix from higher Entertainment, Licensing and Digital revenues combined with higher Partner Brand products, such as DISNEY FROZEN, MARVEL and STAR WARS, and additional savings related to favorable obsolescence expense and sales allowances. These savings were partially offset by increased costs to bring products into the U.S. during 2019.

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Program Cost Amortization

Program cost amortization totaled $387.1 million, or 7.1% of net revenues in 2020, compared to $85.6 million, or 1.8% of net revenues, in 2019 and $43.9 million, or 1.0% of net revenues, in 2018. Program costs are capitalized as incurred and amortized using the individual-film-forecast method. Program cost amortization reflects both the phasing of revenues associated with films and television programming, as well as the type of content being produced and distributed. The increase in dollars and as a percentage of net revenues is related to the addition of eOne's business in 2020, which experiences higher program cost amortization as a percentage of net sales. Program cost amortization attributable to eOne was 6.2% of net revenues in 2020. This increase was partially offset by lower program cost amortization attributable to the TRANSFORMERS: BUMBLEBEE theatrical release, which the Company began to amortize during the third quarter of 2019.

Program production cost amortization increased in dollars and as a percent of net revenues in 2019 compared to 2018 reflecting amortization of production expenses attributable to certain film production assets, most notably TRANSFORMERS: BUMBLEBEE, partially offset by lower amortization of production expenses related to MY LITTLE PONY: THE MOVIE in 2019.

Royalty Expense

Royalty expense of $570.0 million, or 10.4% or net revenues, in 2020 compared to $414.5 million, or 8.8% of net revenues, in 2019 and $351.7 million, or 7.7% of net revenues, in 2018. 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. Product lines related to Hasbro-owned or controlled brands supported by entertainment generally do not incur the same level of royalty expense as licensed properties, particularly DISNEY FROZEN, STAR WARS and MARVEL, as well as DREAMWORKS and BEYBLADE products and certain other licensed properties which carry higher royalty rates than other licensed properties. Higher royalty expense in dollars and as a percentage of net revenues in 2020 compared to 2019, was driven by the addition of eOne royalty expenses in 2020 which represented 3.2% of net revenues, partially offset by lower sales of Partner Brand products.

Higher royalty expense in dollars and as a percentage of net revenues in 2019 compared to 2018, reflects higher revenues from Partner Brand products as well as the mix of entertainment-driven product sold. In particular, higher royalty expense in 2019 reflects the higher net sales of DISNEY FROZEN and MARVEL products, and to a lesser extent, higher net sales of DISNEY'S DESCENDANTS and STAR WARS products.

Product Development

Product development expense in 2020 totaled $259.5 million, or 4.7% of net revenues, compared to $262.2 million, or 5.6% of net revenues, in 2019. Product development expenditures reflect the Company’s investment in innovation and anticipated growth across our brand portfolio. The decrease as a percentage of net revenues was primarily related to the addition of eOne revenues, with no associated product development costs. The decrease in dollars during 2020 was driven by lower spending as a result of global cost savings initiatives combined with the impact of the closure of the Company's Backflip business during the fourth quarter of 2019. These decreases were partially offset by increased investments in the Company's Wizards of the Coast business.

Product development expense in 2019 totaled $262.2 million, or 5.6% of net revenues, compared to $246.2 million, or 5.4% of net revenues, in 2018. In dollars, the increase in product development expense was the result of increased investments in digital gaming, most notably, to MAGIC: THE GATHERING ARENA, which launched out of open beta in the third quarter of 2019, and other digital gaming initiatives. As a percentage of net revenues, product development was consistent with 2018.

Advertising Expense

Advertising expense in 2020 totaled $412.7 million, or 7.6% of net revenues compared to $413.7 million or 8.8% of net revenues in 2019 and $439.9 million or 9.6% in 2018. The level of the Company’s advertising expense is generally impacted by revenue mix, the amount and type of theatrical releases and television programming. The decrease in dollars was driven by lower advertising costs related to the Company’s digital gaming initiatives due to the timing of launch dates and reduced advertising levels across substantially all of the Company's regions, most notably in Latin America, reflecting the current environment due to the impact of COVID-19. These decreases were partially offset by increased advertising expenses as a result of the addition of eOne operations in 2020. Advertising expense attributable to eOne was 1.5% of net revenues in 2020.

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In 2019, the decrease in dollars and as a percentage of net revenues, was related to higher entertainment backed revenues which require lower advertising expense combined with greater efficiency in advertising programs.

Amortization of Intangible Assets

Amortization of intangible assets increased to $144.7 million, or 2.6% of net revenues, in 2020 compared to $47.3 million, or 1.0% of net revenues, in 2019 and $28.7 million, or 0.6% of net revenues in 2018. The increase in dollars and as a percentage of net revenues is primarily related to the acquisition of eOne, which contributed intangible asset amortization of $97.9 million, or 1.8% of net revenues in 2020.

In 2019, the increase in amortization of intangible assets in both dollars, and as a percent of net revenues reflects amortization related to the POWER RANGERS property rights acquired during the second quarter of 2018 as well as other licensed property rights, which began amortizing in 2019.

Selling, Distribution and Administration Expenses

Selling, distribution and administration ("SD&A") expenses increased to $1,252.1 million, or 22.9% of net revenues in 2020 from $1,037.1 million, or 22.0% of net revenues, in 2019. In 2020, the increase in SD&A expenses was driven primarily by the inclusion and consolidation of eOne's operations, accounting for 3.9% of net revenues. Also contributing to the increase was higher freight costs and higher expense for credit losses due to the impacts of the COVID-19 pandemic, as well as $8.5 million of restructuring charges. This increase was partially offset by lower marketing, sales and warehousing expenses across the regions during the year.

Selling, distribution and administration expenses were $1,037.1 million, or 22.0% of net revenues, in 2019 compared to $1,287.6 million, or 28.1% of net revenues, in 2018. SD&A expenses in 2019 included $17.8 million of transaction expenses related to the eOne acquisition while 2018 administrative expenses include the $117.6 million in goodwill impairment and other intangible asset charges, $89.3 million of severance charges, and $50.2 million of incremental expenses related to the Toys"R"Us bankruptcy. Absent these charges, the remaining decrease reflects lower spending due to the Company’s cost-reduction efforts and lower compensation expense, partially offset by increased expenses related to opening a new Midwestern U.S. warehouse and higher domestic shipping and warehousing costs to support higher sales.

Acquisition and Related Costs

During 2020, the Company incurred $218.6 million of acquisition and related costs in connection with the eOne Acquisition. These expenses were comprised of $145.2 million of acquisition and integration costs and $73.4 million of restructuring and related costs. Most notably, $47.4 million of expenses associated with the acceleration of eOne stock-based compensation and $38.2 million of advisor fees, substantially all of which were settled at the closing of the acquisition as well as certain other integration costs.

NON-OPERATING (INCOME) EXPENSE

Interest Expense

Interest expense totaled $201.1 million in 2020 compared to $101.9 million in 2019 and $90.8 million in 2018. In connection with the financing of the eOne Acquisition, the Company issued an aggregate of $2.4 billion of senior unsecured debt securities in November 2019, and in the first quarter of 2020, borrowed $1.0 billion in term loans provided by a term loan agreement. The increase in interest expense in 2020 compared to 2019 reflects interest related to these notes and other borrowings associated with the eOne Acquisition, partially offset by lower average short-term borrowings during 2020.

Interest Income

Interest income was $7.4 million in 2020 compared to $30.1 million in 2019 and $22.4 million in 2018. In 2019, the Company had higher cash balances driven by the long-term debt and equity financings completed in November 2019, resulting in proceeds of approximately $3.3 billion which were used in the December 30, 2019 acquisition of eOne. In 2020, the decrease in interest income was primarily the result of lower cash balances and lower average interest rates compared to 2019. The increase in interest income is 2019 was the result of the higher cash balances described above, partially offset by lower average interest rates compared to 2018.

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Other (Income) Expense, Net

Other (income) expense, net was $(14.0) million, $(13.9) million and $(7.8) million in 2020, 2019 and 2018, respectively. The following table outlines major contributors to other (income) expense, net, expressed in millions of dollars.

			2020						2019						2018
Foreign currency losses (gains)			$	2.1					$	(124.3)					10.8
Earnings from Discovery Family Channel			(21.8)						(23.6)						(21.1)
Pension expense			1.2						119.5						5.8
Gain on PP&E			(4.9)						(0.4)						(0.4)
eOne deferred financing costs			1.0						19.6						—
Loss (gain) on investments			7.3						(6.1)						(3.0)
Other			1.1						1.4						0.1
			$	(14.0)					(13.9)						(7.8)

• Foreign currency losses reflect the strengthening of the U.S. dollar against certain currencies, primarily across the Company's Latin American markets. Foreign currency gains in 2019 reflect realized and unrealized gains of approximately $114.1 million on the foreign exchange forward and option contracts entered to hedge a portion of the British pound sterling purchase price in relation to the eOne acquisition.

• Earnings from the Discovery joint venture are comprised of the Company’s share in the results of the Network.

• During 2019, the Company incurred $111.0 million of settlement charges related to the termination of its U.S. defined benefit pension plan which is reflected as a non-cash charge to pension expense.

• The gain on PP&E in 2020 reflects a $6.1 million gain related to the sale of the Dragonvale software and brand.

• During 2019, the Company incurred costs associated with the financing of the eOne transaction. With the termination of the bridge facility, the Company wrote off the associated financing costs in the fourth quarter of 2019.

• During 2020, the loss on investments was driven by a partial write off of an investment in Quibi, a mobile streaming service, which was obtained as part of the eOne acquisition. The 2019 and 2018 gain on investments primarily reflects proceeds from the sale of certain long-term investments sold during the year.

• In relation to their joint venture, Discovery owns an option to purchase Hasbro’s share of the Discovery Family Channel. The option’s fair value is periodically re-measured and represents a $1.5 million gain in 2020, a $1.3 million gain in 2019 and a $0.5 million gain in 2018 (included in other in the table above) due to the option’s value decrease.

INCOME TAXES

Income tax expense totaled 30.0% of pre-tax earnings in 2020 compared with 12.4% in 2019 and 18.5% in 2018. Our effective tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions. It is also affected by discrete items that may occur in any given year but are not consistent from year to year. Income tax expense for 2020 includes a discrete net tax benefit of $14.5 million primarily related to eOne acquisition and related costs, revaluation of tax attributes as a result of United Kingdom’s enactment of the Finance Act of 2020, increase of uncertain tax positions based on changes in management judgment and tax planning, including planning directly related to the eOne integration. Income tax expense for 2019 includes a net discrete tax benefit of $33.5 million primarily relating to the settlement of the U.S. defined benefit pension plan liability and the acquisition of eOne, specifically the nontaxable integrated hedging gains and nondeductible transaction costs. Income tax expense for 2018 includes a discrete net tax expense of $40.7 million relating to the Tax Cuts and Jobs Act (the “Tax Act”) and net tax benefits of approximately $50.0 million primarily due to reassessment of prior period tax positions and excess tax benefits relating to share-based compensation.

Subsequent to the Tax Act, the Company has greater flexibility to manage cash globally. The Company intends to repatriate the accumulated foreign earnings as needed from time to time. The Company still has significant cash

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needs outside the United States and continues to consistently monitor and analyze its global working capital and cash requirements. In 2020, the Company recorded approximately $1.2 million of foreign withholding and U.S. state taxes that will be incurred due to future cash distributions. The Company will continue to record additional tax effects, if any, in the period that the on-going distribution analysis is completed and is able to make reasonable estimates.

NEW ACCOUNTING PRONOUNCEMENTS

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2016-13 (ASU 2016-13) Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this update provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The standard update replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2019, and early adoption was permitted. The Company adopted the standard in the first quarter of 2020 and the adoption of the standard did not have a material impact on its consolidated financial statements.

In August 2018, the FASB issued Accounting Standards Update No. 2018-13 (ASU 2018-13), Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, specifically related to disclosures surrounding Level 3 asset balances, fair value measurement methods, related gains and losses and fair value hierarchy transfers. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2019, and early adoption was permitted. The Company adopted the standard in the first quarter of 2020 and the adoption of the standard did not have a material impact on its consolidated financial statements.

In March 2019, the FASB issued Accounting Standards Update No. 2019-02 (ASU 2019-02) Entertainment-Films-Other Assets-Film Costs (Subtopic 926-20) and Entertainment-Broadcasters-Intangibles-Goodwill and Other (Subtopic 920-350): Improvements to Accounting for Costs of Films and License Agreements for Program Materials. The amendments in this update align cost capitalization of episodic television series production costs with that of film production cost capitalization. In addition, this update addresses impairment testing procedures with regard to film groups, when a film or license agreement is expected to be monetized with other films and/or license agreements. The intention of this update is to align accounting treatment with changes in production and distribution models within the entertainment industry and to provide increased transparency of information provided to users of financial statements about produced and licensed content. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2019, and early adoption was permitted. The Company adopted the standard in the first quarter of 2020 and the adoption of the standard did not have a material impact on its consolidated financial statements.

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued Accounting Standards Update No. 2018-14 (ASU 2018-14) Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20)- Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans. The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2020, and early adoption is permitted. The standard relates to financial statement disclosure only and will not have an impact on the Company's statement of financial position, statement of operations or statement of cash flows.

In December 2019, the FASB issued Accounting Standards Update No. 2019-12 (ASU 2019-12), Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update remove certain exceptions for performing intraperiod tax allocations, recognizing deferred taxes for investments, and calculating income taxes in interim periods. The guidance also simplifies the accounting for franchise taxes, transactions that result in a step-up in the tax basis of goodwill, and the effect of enacted changes in tax laws or rates in interim periods. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and early adoption is permitted. While the Company is continuing to assess the potential impacts of ASU 2019-12, it does not expect ASU 2019-12 to have a material effect on its consolidated financial statements.

In March 2020, the FASB issued Accounting Standards Update No. 2020-04 (ASU 2020-04) Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments

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in this update provide optional expedients and exceptions for applying generally accepted accounting principles ("GAAP") to contracts, hedging relationships, and other transactions, for a limited period of time, to ease the potential burden of recognizing the effects of reference rate reform on financial reporting. The amendments in this update apply to contracts, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued due to the global transition away from LIBOR and certain other interbank offered rates. An entity may elect to apply the amendments provided by this update beginning March 12, 2020 through December 31, 2022. The Company does not expect the change from LIBOR to an alternate rate to have a material impact on its consolidated financial statements however, unlike other standard updates, the provisions of this update are only available until December 31, 2022, as such, the Company continues to evaluate the standard's potential impact to its consolidated financial statements.

OTHER INFORMATION

Brexit Referendum

On June 23, 2016, the United Kingdom voted in a referendum to leave the European Union (“EU”), referred to as Brexit. The UK government triggered the formal two-year period to negotiate the terms of the UK’s exit on March 29, 2017. These events resulted in an immediate weakening of British pound sterling against the US dollar, and increased volatility in the foreign currency markets which continued through 2019. These fluctuations initially affected Hasbro’s financial results, although the impact was partially mitigated by the Company’s hedging strategy. On January 31, 2020, the UK formally withdrew from the EU and entered a transitional period which ended on December 31, 2020. In December 2020 the UK and the EU agreed on a trade and cooperation agreement, under which the EU and the UK will now form two separate markets governed by two distinct regulatory and legal regimes. The trade and cooperation agreement covers the general objectives and framework of the relationship between the UK and the EU, including as it relates to trade, transport and visas. The Company continues to monitor the impact to foreign currency markets, taking appropriate actions to support the Company’s long-term strategy and to mitigate risks in its operational and financial activities. However, the Company cannot predict the direction of Brexit-related developments nor the impact of those developments on our European operations and the economies of the markets in which they operate.

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically generated a significant amount of cash from operations. In 2020, the Company funded its operations and liquidity needs through available cash and from cash flows from operations, and when needed, used borrowings under its available lines of credit. In addition, the Company’s eOne operating segment used production financing to fund certain of its television and film productions which are arranged on an individual production basis by special purpose production subsidiaries.

During 2021, the Company expects to continue to fund its working capital needs primarily through available cash and cash flows from operations and from production financing facilities and, if needed, by issuing commercial paper or borrowing under its revolving credit agreement. In the event that the Company is not able to issue commercial paper, the Company intends to utilize its available lines of credit. The Company believes that the funds available to it, including cash expected to be generated from operations, funds available through its commercial paper program or its available lines of credit and production financing, are adequate to meet its working capital needs for 2021, including the repayment of the current portion of our long-term debt of $432.6 million, as shown on the consolidated balance sheets which represents the $300.0 million of 3.15% Notes that mature during the second quarter of 2021, as well as the current portion of required quarterly principal amortization payments for our term loan facilities and other production financing facilities, each as described below. The Company may also issue debt or equity securities from time to time, to provide additional sources of liquidity when pursuing opportunities to enhance our long-term competitive position, while maintaining a strong balance sheet. However, unexpected events or circumstances such as material operating losses or increased capital or other expenditures, or the inability to otherwise access the commercial paper market, may reduce or eliminate the availability of external financial resources. In addition, significant disruptions to credit markets may also reduce or eliminate the availability of external financial resources. Although the Company believes the risk of nonperformance by the counterparties to its financial facilities is not significant, in times of severe economic downturn in the credit markets, it is possible that one or more sources of external financing may be unable or unwilling to provide funding to the Company.

As of December 27, 2020, the Company’s cash and cash equivalents totaled $1,449.7 million, of which $73.2 million is restricted under the Company’s production financing facilities. Prior to 2017, deferred income taxes had not been provided on the majority of undistributed earnings of international subsidiaries as such earnings were indefinitely reinvested by the Company. Accordingly, such international cash balances were not available to fund cash requirements in the United States unless the Company was to change its reinvestment policy. The Company has

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maintained sufficient sources of cash in the United States to fund cash requirements without the need to repatriate any funds. The Tax Act provided significant changes to the U.S. tax system including the elimination of the ability to defer U.S. income tax on unrepatriated earnings by imposing a one-time mandatory deemed repatriation tax on undistributed foreign earnings. As of December 27, 2020, the Company had a total liability of $174.5 million related to this tax, $18.4 million is reflected in current liabilities while the remaining long-term payable related to the Tax Act of $156.1 million is presented within other liabilities, non-current on the consolidated balance sheets included in Part II, Item 8. Financial Statements, of this Form 10-K. As permitted by the Tax Act, the Company will pay the transition tax in annual interest-free installments through 2025. As a result, in the future, the related earnings in foreign jurisdictions will be made available with greater investment flexibility. The majority of the Company’s cash and cash equivalents held outside of the United States as of December 27, 2020 are denominated in the U.S. dollar.

The table below outlines key financial information pertaining to our consolidated balance sheets including the year-over-year changes, expressed in millions of dollars.

			2020						%						2019						%						2018
Cash and cash equivalents, net of short-term borrowings (including restricted cash of $73.2,$0.0 and $0.0)			$	1,449.7					-68		%				$	4,580.4					>100%						$	1,172.6
Accounts receivable, net			1,391.7						-1		%				1,410.6						19		%				1,188.1
Inventories			395.6						-11		%				446.1						1		%				443.4
Prepaid expenses and other current assets			609.6						96		%				310.5						16		%				268.7
Other assets			1,260.2						>100%						585.0						-21		%				744.3
Accounts payable and accrued liabilities			1,964.1						56		%				1,256.6						-1		%				1,264.6
Other liabilities			793.9						43		%				556.6						3		%				539.1

Accounts receivable, net decreased 1% in 2020 compared to 2019. Foreign currency translation did not have a significant impact on account receivable balances in 2020. Absent eOne, accounts receivable balances decreased 15% due to improved collections and fewer sales to customers that carry longer payment terms. Days sales outstanding decreased to 74 days at December 27, 2020 from 90 days at December 29, 2019. The days sales outstanding primarily reflects improved collections throughout 2020 as well as the mix of sales. Accounts receivable, net increased 19% in 2019 compared to 2018. Days sales outstanding increased to 90 days at December 29, 2019 from 78 days at December 30, 2018. The days sales outstanding increase was the result of higher sales in jurisdictions with longer payment terms as well as the timing of shipments during the fourth quarter of 2019.

Inventories decreased 11% in 2020 compared to 2019 reflecting lower levels, primarily in the US, and across all regions, due to improved inventory management and lower sales. Inventories increased 1% in 2019 compared to 2018. Foreign currency translation did not have a significant impact on 2020 inventory balances.

Prepaid expenses and other current assets increased 96% in 2020 compared to 2019. The increase was due to higher accrued royalty and licensing income, primarily attributable to accrued revenue balances of $236.9 million associated with eOne's properties and content, higher prepaid royalty amounts due to payments made in the first quarter of 2020 for the extension of the Company’s Marvel and Lucas agreements, higher accrued tax credits related to film and television production costs, the majority of which are attributable to eOne productions, and higher prepaid tax balances as a result of lower earnings relative to estimated tax payments. These increases were partially offset by lower unrealized gains on foreign exchange contracts and lower short-term investment balances as a result of the Company's global cash management strategy. Prepaid expenses and other current assets increased 16% in 2019 compared to 2018. The increase was due to higher unrealized gains on foreign exchange contracts, including $34.1 million of unrealized gains from hedges in relation to the eOne acquisition purchase price and other related transaction costs. In addition, the increase in prepaid expenses and other current assets was due to higher accrued and prepaid royalty and licensing balances in 2019. As a result of the settlement of the Company's U.S. defined benefit pension plan liability, the Company had remaining excess assets of approximately $20.2 million of which $8.6 million was recorded as a current asset to be used to fund Company contributions to the Company's 401(k) plan in the U.S. These increases were partially offset by lower prepaid tax balances.

Other assets increased 115% in 2020 compared to 2019. The increase was primarily due to eOne's investments in acquired content and production for film, television and music content of $627.9 million. Also contributing to the increase in 2020 are higher long-term accrued income balances primarily driven by eOne and higher deferred tax balances resulting from the eOne acquisition. These increases were partially offset by lower capitalized television production costs in the legacy Hasbro business and lower non-current royalty advances which have been reclassified from non-current to current. Other assets decreased 21% in 2019 compared to 2018. Lower balances in

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2019 included: lower deferred tax asset balances as a result of a reclassification of certain deferred tax assets to reduce the Company's transition tax liability, lower long-term receivable balances related to third-party production studio rebates, lower capitalized movie production costs as a result of higher amortization of certain production assets during 2019, as well as decreases in non-current royalty advance balances. These decreases were partially offset by the pension surplus remaining following the settlement of the Company's U.S. defined benefit pension plan liability during 2019, of which approximately $11.6 million was recorded in other assets and higher long-term contract assets balances in 2019.

Accounts payable and accrued liabilities increased 56% in 2020 compared to 2019. The increase was primarily attributable to accrued participation and deferred revenue balances attributable to eOne. In addition, increases included higher account payable balances, higher accrued royalty balances, and higher accrued salaries and incentive compensation balances. Accounts payable and accrued liabilities were essentially flat in 2019 compared to 2018. Increases included higher accrued royalty balances as a result of higher sales of partner brand products, higher accrued incentive compensation balances, the Company’s current lease liability balance of $30.7 million included in accrued liabilities as the result of the adoption of ASU 2016-02, higher accrued dividends resulting from the higher level of shares outstanding and the higher dividend rate, and higher accrued interest as a result of higher debt levels in 2019 from the issuance of notes in November 2019. These increases were primarily offset by the payment of remaining amounts due to Saban Properties for the POWER RANGERS brand acquisition and lower severance accruals from payments made in relation to restructuring actions taken in 2018.

Other liabilities increased to 43% in 2020 compared to 2019. The increase was primarily driven by deferred tax liabilities recorded as a result of the eOne Acquisition, higher long-term lease liability balances resulting from the eOne Acquisition and higher reserves for uncertain tax positions. In addition, the balance in 2020 includes the inclusion of long-term deferred revenue balances related to eOne. These increases were offset by a lower transition tax liability balance reflecting the reclassification of the 2021 installment payment. Other liabilities increased 3% in 2019 compared to 2018. The increase was primarily due to the adoption of Accounting Standards Update 2016-02, Leases (Topic 842) ("ASU 2016-02") in 2019 which requires the recognition of long-term lease liability balances, which were $113.4 million at December 29, 2019, partially offset by a decrease in the transition tax liability reflecting the reclassification of certain deferred tax assets to reduce the transition tax liability as well as the reclassification of the 2020 installment payment, and the elimination of deferred rent balances which were netted with their corresponding right of use assets as a result of the adoption of ASU 2016-02 in 2019.

Cash Flow

The following table summarizes the changes in the consolidated statement of cash flows included in Part II, Item 8. Financial Statements, of this Form 10-K, expressed in millions of dollars, for each of the years ended on December 27, 2020, December 29, 2019 and December 30, 2018.

			2020						2019						2018
Net cash provided by (used in)
Operating Activities			$	976.3					$	653.1					$	646.0
Investing Activities			(4,500.2)						(61.0)						(286.5)
Financing Activities			405.9						2,810.6						(737.1)

In 2020, 2019 and 2018, Hasbro generated $976.3 million, $653.1 million and $646.0 million of cash from its operating activities, respectively. Operating cash flows in 2020, 2019 and 2018 included $438.9 million, $33.9 million and $132.0 million, respectively, of cash used for television program and film production. The $323.2 million increase in net cash provided by operating activities was primarily attributable to higher collections of accounts receivable balances in 2020 and higher earnings excluding non-cash charges. These increases were partially offset by higher film and television production spend as a result of the inclusion of eOne operations during 2020. The increase in operating cash flows in 2019 compared to 2018 primarily reflects higher earnings offset by higher levels of accounts receivable at December 2019.

Cash flows utilized by investing activities were $4,500.2 million, $61.0 million and $286.5 million in 2020, 2019 and 2018, respectively. 2020 cash utilized by investing activities reflects $4.4 billion of cash utilized to acquire eOne, net of cash acquired. Additions to property, plant and equipment decreased in 2020 to $125.8 million from $133.6 million and $140.4 million in 2019 and 2018, respectively. Of these additions, 51% in 2020, 54% in 2019 and 58% in 2018 were for purchases of tools, dies and molds related to the Company’s products. During the fiscal years ended December 27, 2020, December 29, 2019 and December 30, 2018, the depreciation of plant and equipment was $120.2 million, $133.5 million and $139.3 million, respectively. Fluctuations in depreciation of plant and

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equipment correlate with the percentage of additions to property, plant and equipment relating to tools, dies and molds which have shorter useful lives and accelerated depreciation. The cash used for the purchase of eOne consisted of the net proceeds from the issuance of an aggregate principal amount of $2.4 billion in senior secured notes in November 2019, net proceeds $975.2 million from of the issuance of approximately 10.6 million shares of common stock in November 2019 and $1.0 billion in term loans drawn in the first quarter of 2020. Excluding capital expenditures, 2019 cash utilized for investing activities reflects a cash payment net of cash acquired of $8.8 million related to the acquisition of Tuque Games in October of 2019 as well as offsetting realized gains of $80.0 million from hedges in relation to the Company's exposure to fluctuations in the British pound sterling associated with the eOne acquisition purchase price and other transaction related costs. The Company's 2019 investing activities also included $6.4 million received from the installment note relating to the sale of the Company’s manufacturing operations in 2015.

Net cash provided (utilized) by financing activities was $405.9 million, $2,810.6 million, and $(737.1) million in 2020, 2019 and 2018, respectively. Cash provided by financing activities in 2020 included the drawdown of the Company's $1.0 billion in term loans, as well as drawdowns of $115.6 million related to eOne production financing loans. Partially offsetting these cash inflows were production financing loan repayments of $159.8 million, payments of $47.4 million associated with the redemption of eOne stock awards that were accelerated as a result of the acquisition and payments totaling $122.5 million towards the $1.0 billion term loans described above.

In 2019, net cash provided by financing activities included the following financing activities associated with the Company's acquisition of eOne: net proceeds of $2,355.0 million from the November 2019 issuance of senior unsecured long-term debt securities, net proceeds of $975.2 million from the issuance of 10,592,106 shares of common stock and debt acquisition costs of $26.7 million paid in relation to eOne acquisition financing arrangements. In addition, net cash from 2019 financing activities included the Company's remaining payment of $100.0 million related to the 2018 POWER RANGERS brand acquisition.

Financing activities in 2019 and 2018, also reflect $61.4 million and $250.1 million, respectively, of cash paid, including transaction costs, to repurchase the Company’s Common Stock. There were no repurchases of the Company’s common stock in 2020 as the Company suspended its share repurchase program while it prioritizes deleveraging. During 2019 and 2018, the Company repurchased 0.7 million and 2.7 million shares, respectively, at an average price of $87.41and $94.15, respectively. A portion of the 2018 share repurchases were executed to offset the issuance of 3.1 million shares to Saban Properties included as part of the POWER RANGERS asset acquisition. At December 27, 2020, $366.6 million remained for share repurchases under the May 2018 Board authorization.

Dividends paid were $372.7 million in 2020, $336.6 million in 2019 and $309.3 million in 2018. The Company has a long history of returning cash to its shareholders through quarterly dividends and has maintained its quarterly dividend rate of $0.68 per share throughout 2020. The increase in dividends from 2019 to 2020 reflects higher shares outstanding as a result of the November 2019 stock issuance. Net repayments of short-term borrowings were $8.6 million and $8.8 million in 2020 and 2019, respectively. Net proceeds from short term borrowings were $142.4 million in 2018. The Company generated cash from employee stock option transactions of $16.6 million, $31.8 million, and $30.0 million in 2020, 2019 and 2018, respectively. The Company paid withholding taxes related to share-based compensation of $6.0 million, $13.1 million and $58.3 million in 2020, 2019 and 2018, respectively.

Sources and Uses of Cash

The Company commits to inventory production, advertising and marketing expenditures prior to the peak fourth quarter retail selling season. Accounts receivable increase during the third and fourth quarter as customers increase their purchases to meet expected consumer demand in their holiday selling season. Due to the concentrated timeframe of this selling period, payments for these accounts receivable are generally not due until the fourth quarter or early in the first quarter of the subsequent year. This timing difference between expenditures and cash collections on accounts receivable sometimes makes it necessary for the Company to borrow amounts during the latter part of the year. During 2020, 2019 and 2018 the Company primarily used cash from operations and, to a lesser extent, borrowings under available lines of credit to fund its working capital.

The Company has an agreement with a group of banks which provides for a commercial paper program (the "Program"). Under the Program, at the request of the Company and subject to market conditions, the banks may either purchase from the Company, or arrange for the sale by the Company, of unsecured commercial paper notes. The Company may issue notes from time to time up to an aggregate principal amount outstanding at any given time of $1,000.0 million. The maturities of the notes may vary but may not exceed 397 days. The notes are sold under customary terms in the commercial paper market and are issued at a discount to par, or alternatively, sold at par and bear varying interest rates based on a fixed or floating rate basis. The interest rates vary based on market

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conditions and the ratings assigned to the notes by the credit rating agencies at the time of issuance. Subject to market conditions, the Company intends to utilize the Program as its primary short-term borrowing facility and does not intend to sell unsecured commercial paper notes in excess of the available amount under the revolving credit agreement discussed below. If, for any reason, the Company is unable to access the commercial paper market, the Company intends to use the revolving credit agreement to meet the Company's short-term liquidity needs. At December 27, 2020, the Company had no outstanding borrowings related to the Program.

The Company has a second amended and restated revolving credit agreement with Bank of America, N.A., as administrative agent, swing line lender and a letter of credit issuer and lender and certain other financial institutions, as lenders thereto (the "Amended Revolving Credit Agreement"), which provides the Company with commitments having a maximum aggregate principal amount of $1,500.0 million. The Amended Revolving Credit Agreement also provides for a potential additional incremental commitment increase of up to $500.0 million subject to agreement of the lenders. The Amended Revolving Credit Agreement contains certain financial covenants setting forth leverage and coverage requirements, and certain other limitations typical of an investment grade facility, including with respect to liens, mergers and incurrence of indebtedness. The Amended Revolving Credit Agreement extends through September 20, 2024. The Company was in compliance with all covenants as of December 27, 2020. The Company had no borrowings outstanding under its committed revolving credit facility as of December 27, 2020. However, letters of credit outstanding under this facility as of December 27, 2020 were approximately $3.0 million. Amounts available and unused under the committed line, at December 27, 2020 were approximately $1,497.0 million, inclusive of borrowings under the Company’s commercial paper program. The Company also has other uncommitted lines from various banks, of which approximately $19.9 million was utilized at December 27, 2020. Of the amount utilized under, or supported by, the uncommitted lines, approximately $6.6 million and $13.3 million represent outstanding short-term borrowings and letters of credit, respectively.

In September of 2019, the Company entered into a $1.0 billion Term Loan Agreement (the "Term Loan Agreement") with Bank of America N.A. ("Bank of America"), as administrative agent, and certain financial institutions as lenders, pursuant to which such lenders committed to provide, contingent upon the completion of the eOne Acquisition and certain other customary conditions to funding, (1) a three-year senior unsecured term loan facility in an aggregate principal amount of $400.0 million (the “Three-Year Tranche”) and (2) a five-year senior unsecured term loan facility in an aggregate principal amount of $600.0 million (the “Five-Year Tranche” and together with the Three-Year Tranche, the “Term Loan Facilities”). On December 30, 2019, the Company completed the acquisition of eOne and on that date, borrowed the full amount of $1.0 billion under the Term Loan Facilities. The Company is subject to certain financial covenants contained in this agreement and as of December 27, 2020, the Company was in compliance with these covenants. The terms of the Term Loan Facilities are described in Note 11 to the consolidated financial statements included in Part II, Item 8. Financial Statements, of this Form 10-K.

During November 2019, in conjunction with the Company's acquisition of eOne, the Company issued an aggregate of $2.4 billion of senior unsecured debt securities (collectively, the "Notes") consisting of the following tranches: $300 million of notes due 2022 (the "2022 Notes") that bear interest at a fixed rate of 2.60%; $500 million of notes due 2024 (the "2024 Notes") that bear interest at a fixed rate of 3.00%; $675 million of notes due 2026 (the "2026 Notes") that bear interest at a fixed rate of 3.55%; and $900 million of notes due 2029 (the "2029 Notes") that bear interest at a fixed rate of 3.90%. The terms of the Notes are described in Note 11 to the consolidated financial statements in Part II, Item 8. Financial Statements, of this Form 10-K.

The Company has principal amounts of long-term debt at December 27, 2020 of $5.1 billion due at varying times from 2021 through 2044. Of the total principal amount of long-term debt, $432.6 million is current at December 27, 2020 of which $300.0 million is related to the 3.15% 2021 Notes and $30.0 million is related to principal amortization of the 5-year term loans due December 2024. Additionally, the Company has outstanding production financing facilities at December 27, 2020 of $165.5 million of which $62.9 million is included in long-term debt and $102.6 million is reported as the current portion of long-term debt within the Company's consolidated financial statements. See note 11 to the Company’s consolidated financial statements in Part II, Item 8. Financial Statements, of this Form 10-K for additional information.

In November of 2019, the Company completed an underwritten public offering of 10,592,106 shares of common stock, par value $0.50 per share, at a public offering price of $95.00 per share. Net proceeds from this public offering were approximately $975.2 million, after deducting underwriting discounts and commissions and offering expenses of approximately $31.1 million. The net proceeds were used to finance, in part, the acquisition of eOne and to pay related costs and expenses. See Note 9 for more information on the Company's eOne acquisition financing.

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Critical Accounting Policies and Significant Estimates

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

Film and Television Production Costs

The Company incurs certain costs in connection with the production of television programs and films which are capitalized as they are incurred and amortized using the individual-film-forecast method. These costs, which include direct production costs, development costs, acquisition and inventory costs as well as residuals and participations, are amortized in the proportion that the current year’s revenues bear to management’s estimate of total ultimate revenues as of the beginning of each fiscal year related to the film or television program. These capitalized costs are reported at the lower of cost, less accumulated amortization, or fair value, and reviewed for impairment when an event or change in circumstances occurs that indicates that impairment may exist. The fair value is determined using a discounted cash flow model which is primarily based on management’s future revenue and cost estimates.

The most significant estimates are those used in the determination of ultimate revenue in the individual-film-forecast method. Ultimate revenue estimates impact the timing of program production cost amortization in the consolidated statements of operations. Ultimate revenue includes revenue from all sources that are estimated to be earned related to a film or television program and include theatrical exhibition; first run program distribution fees; toy, game and other consumer product licensing fees; and other revenue sources, such as secondary market home entertainment formats and subscription video on demand ("SVOD") services. Our ultimate revenue estimates for each film or television program are developed based on our estimates of expected future results. We review and revise these estimates at each reporting date to reflect the most current available information. When estimates for a film or television program are revised, the difference between the program production cost amortization determined using the revised estimate and any amounts previously expensed during that fiscal year, are included as an adjustment to program production cost amortization in the consolidated statements of operations in the period in which the estimates are revised. Prior period amounts are not adjusted for subsequent changes in estimates. Factors that can impact our revenue estimates include the historical performance of similar films and television programs, expected distribution platforms, factors unique to our television and film content and the success of our program-related toy, game and other merchandise.

Recoverability of Goodwill and Intangible Assets

The Company tests goodwill for impairment at least annually. If an event occurs or circumstances change that indicate that the carrying value of a reporting unit exceeds its fair value, the Company will perform an interim goodwill impairment test at that time. The Company may perform a qualitative assessment and bypass the quantitative impairment testing process, if it is not more likely than not that impairment exists.

If it is more likely than not that impairment exists, a quantitative goodwill impairment test is performed. When performing a quantitative impairment test, goodwill is tested for impairment by comparing the carrying value to the estimated fair value of the reporting unit which is calculated using an income approach. Other intangible assets with indefinite lives are tested for impairment by comparing their carrying value to their estimated fair value.

In 2020, following the acquisition of eOne during the first quarter, the Company allocated its $4.6 billion purchase price to tangible and identifiable intangible assets acquired and liabilities assumed, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values amounted to $3.2 billion and was recorded to goodwill and allocated to the Company's reportable segments as follows: eOne: $2.241 million; U.S. and Canada: $521.2 million; International: $329.6 million; and Entertainment, Licensing and Digital: $103.2 million. See note 6 to the Company's consolidated financial statements in Part II, Item 8. Financial Statements, of this Form 10-K for details on the allocation of acquired goodwill.

During the fourth quarters of 2020 and 2019, the Company performed a qualitative goodwill assessment with respect to each of its reporting units, including an assessment of eOne in 2020. Our assessment included the consideration of COVID-19 and the impact to the business in 2020. We determined that it was not necessary to perform a quantitative assessment for the goodwill of the reporting units in either year.

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During the fourth quarter of 2018, the Company took a number of actions to react to a rapidly changing mobile gaming industry that resulted in a modification to the Company’s long-term plan for its Backflip business. These modifications included organizational actions and related personnel changes, the extension of launch dates for games currently in or planned for development and the addition of partners for the development of future game releases. The modifications resulted in changes to the long-term projections for the Backflip business which led the Company to conclude the goodwill associated with the Backflip reporting unit was impaired. The goodwill impairment analysis involved comparing the Backflip carrying value to its estimated fair value, which was calculated based on the Income Approach. To calculate the fair value of the future cash flows under the Income Approach, a discount rate of 19% was utilized, representing the reporting unit’s estimated weighted-average cost of capital. Based on the results of the impairment test, the Company determined that the carrying value of the Backflip reporting unit exceeded its estimated fair value. The Company recorded an impairment charge of $86.3 million within administrative expense and in the Company’s Entertainment, Licensing and Digital segment, during the fourth quarter of 2018, which was the full amount of remaining goodwill associated with the Backflip reporting unit. Subsequently, during 2019 the Company made the decision to close the Backflip business.

The estimation of future cash flows utilized in the evaluation of the Company’s goodwill requires significant judgments and estimates with respect to future revenues related to the respective asset and the future cash outlays related to those revenues. Actual revenues and related cash flows or changes in anticipated revenues and related cash flows could result in a change in this assessment and result in an impairment charge. The estimation of discounted cash flows also requires the selection of an appropriate discount rate. The use of different assumptions would increase or decrease estimated discounted cash flows and could increase or decrease the related impairment charge.

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 2020, the Company determined that certain of its definite-lived intangible entertainment and production assets related to properties, from both the legacy Hasbro business as well as properties acquired through the eOne Acquisition, were impaired. It was determined that the carrying values of these intangible assets exceeded their related future cash flows, thus indicating impairment. As a result, charges of $20.1 and $30.7 million were recorded in the first and fourth quarters of 2020, respectively, within acquisition and related costs in the Company's consolidated statement of operations, included in Part II, Item 8. Financial Statements, of this Form 10-K.

There were no other triggering events in 2020 or 2019 which would indicate the Company's intangible assets were impaired.

As part of its assessment of intangible assets in the fourth quarter of 2018, the Company completed impairment testing relating to certain property rights, both owned or related to license agreements. Specifically, the Company reviewed intangible assets recorded in connection with licensed property rights and owned technology. Due to a decline in revenue and revised projections for future revenue, it was determined that the intangible asset carrying values exceeded expected future cash flows, indicating that the intangible asset was impaired, and resulted in a charge of $31.3 million recorded within administrative expense.

Income Taxes

The Company’s annual income tax rate is based on its income, statutory tax rates, changes in prior tax positions and tax planning opportunities available in the various jurisdictions in which it operates. Significant judgment and estimates are required to determine the Company’s annual tax rate and evaluate its tax positions. Despite the Company’s belief that its tax return positions are fully supportable, these positions are subject to challenge and estimated liabilities are established in the event that these positions are challenged, and the Company is not successful in defending these challenges. 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 addition, on December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code that established new tax laws in 2018, including, but not limited to, reducing the U.S. statutory tax rate from 35% to 21% and creating new taxes on certain foreign-sourced earnings and certain related-party payments.

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

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December 2019. The Company is still assessing the transitional provision options it may elect; however, the legislation is not expected to have a material effect on the Company’s consolidated financial statements.

In certain cases, tax law requires items to be included in the Company’s income tax returns at a different time than when these items are recognized in the consolidated financial statements or at a different amount than that which is recognized in the consolidated financial statements. Some of these differences are permanent, such as expenses that are not deductible on the Company’s tax returns, while other differences are temporary and will reverse over time, such as depreciation expense. These differences that will reverse over time are recorded as deferred tax assets and liabilities on the consolidated balance sheets. Deferred tax assets represent deductions that have been reflected in the consolidated financial statements but have not yet been reflected in the Company’s income tax returns. Valuation allowances are established against deferred tax assets to the extent that it is determined that the Company will have insufficient future taxable income, including capital gains, to fully realize the future deductions or capital losses. Deferred tax liabilities represent expenses recognized on the Company’s income tax return that have not yet been recognized in the Company’s consolidated financial statements or income recognized in the consolidated financial statements that has not yet been recognized in the Company’s income tax return.

Business Combinations

The Company accounts for business combination under FASB Accounting Standards Codification Topic 805, Business Combinations (“Topic 805”). Identifiable assets acquired, liabilities assumed and any noncontrolling interests in the acquiree are recognized and measured as of the acquisition date at fair value. Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred and any noncontrolling interests in the acquiree exceed the recognized basis of the identifiable assets acquired, net of assumed liabilities. Determining the fair value of assets acquired, liabilities assumed and noncontrolling interests requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items.

The Company's evaluation of the facts and circumstances available as of December 30, 2019, to assign fair values to eOne assets acquired and liabilities assumed, including income tax related amounts continued throughout 2020. As further analysis of assets including program rights, investment in films and television content, intangible assets, as well as deferred revenue, noncontrolling interests, tax and certain other liabilities was completed during the year, additional information on the assets acquired and liabilities assumed became available. Changes in the information related to the net assets acquired changed the amount of the purchase price assigned to goodwill, and as a result, the preliminary fair values disclosed were adjusted as additional information was obtained and valuations were finalized. Provisional adjustments, if any, were recognized during the reporting periods in which the adjustments were determined. For more information on the eOne Acquisition see note 3, to the consolidated financial statements included in Part II, Item 8. Financial Statements, of this Form 10-K.

Valuation of Equity Method Investment in Discovery Family Channel

The Company owns an interest in a joint venture, Discovery Family Channel (“the Network”), with Discovery Communications, Inc. (“Discovery”). The Company has determined that it does not meet the control requirements to consolidate the Network and accounts for the investment using the equity method of accounting. The Network was established to create a cable television network in the United States dedicated to high-quality children’s and family entertainment. In October 2009, the Company purchased an initial 50% share in the Network for a payment of $300 million and certain future tax payments based on the value of certain tax benefits expected to be received by the Company. In September 2014, the Company and Discovery amended their relationship with respect to the Network and Discovery increased its equity interest in the Network to 60% while the Company retained a 40% equity interest in the Network. In connection with the amendment, the Company and Discovery entered into an option agreement related to the Company’s remaining 40% ownership in the Network, exercisable during the one-year period following December 31, 2021. The exercise price of the option agreement is based upon 80% of the then fair market value of the Network, subject to a fair market value floor.

The Company tests its equity method investment in the Network for impairment annually. If an event occurs or circumstances change that indicate that the carrying value may not be recoverable, the Company will perform an interim test at that time. The Company’s valuation of its equity method investment in the Network includes assumptions surrounding forecasted revenue and expenses, a discount rate and a terminal growth rate, which are used to estimate the fair value of the investment and involve a high degree of subjectivity given the volatility in consumer interest when choosing entertainment media.

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Contractual Obligations and Commercial Commitments

In the normal course of its business, the Company enters into contracts related to obtaining rights to produce products under license, which may require the payment of minimum guarantees. In addition, the Company enters into contractual commitments to obtain film and television content distribution rights and minimum guarantee commitments related to the purchase of film and television rights for content to be delivered in the future. The Company has also entered into operating leases for certain facilities and equipment. In addition, the Company has $4,962.4 million in principal amount of long-term debt outstanding at December 27, 2020. Future payments required under these and other obligations, expressed in millions of dollars as of December 27, 2020, are as follows:

			Payments due by Fiscal Year
Certain Contractual Obligations			2021						2022						2023						2024						2025						Thereafter						Total
Long-term debt			$	330.0					353.0						360.0						560.0						375.0						2,984.9						4,962.9
Interest payments on fixed-rate long-term debt			158.4						153.7						145.9						145.9						130.9						953.9						1,688.7
Operating lease commitments			50.5						46.2						38.2						26.6						21.5						48.2						231.2
Future minimum guaranteed contractual royalty payments			380.5						121.4						52.7						32.7						32.7						32.8						652.8
Transition Taxa			18.4						18.4						34.4						45.9						57.3						—						174.4
Tax sharing agreementb			4.9						5.1						5.4						6.0						2.8						0.4						24.6
Purchase commitmentsc			394.3						95.0						85.0						—						—						—						574.3
Production financing repayments			48.2						71.5						7.8						23.8						—						—						151.3
First look dealsd			20.9						8.5						—						—						—						—						29.4
			$	1,406.1					$	872.8					$	729.4					$	840.9					$	620.2					$	4,020.2					$	8,489.6

a As discussed above, the Tax Act requires the Company to pay a one-time mandatory deemed repatriation tax on undistributed foreign earnings of $308.0 million. The Company utilized $78.5 million of existing tax credits to reduce the $308.0 million U.S. federal income tax liability, which resulted in $229.5 million to be paid in interest-free installments through 2025, of which $55.1 million was paid through 2020. See note 12 to the consolidated financial statements included in Part II, Item 8. Financial Statements, of this Form 10-K for further discussion.

b In connection with the Company’s agreement to form a joint venture with Discovery, the Company is obligated to make future payments to Discovery under a tax sharing agreement. These payments are contingent upon the Company having sufficient taxable income to realize the expected tax deductions of certain amounts related to the joint venture. Accordingly, estimates of these amounts are included in the table above.

c Purchase commitments represent agreements (including open purchase orders) to purchase inventory and tooling in the ordinary course of business as well as purchase commitments under a manufacturing agreement. The reported amounts exclude inventory and tooling purchase liabilities included in accounts payable or accrued liabilities on the consolidated balance sheets as of December 27, 2020.

d First look deals represent agreements which give the Company right of first refusal to purchase, distribute, or license certain entertainment projects or content.

Not included in the table above, are certain unsatisfied performance obligations primarily related to in-production television content to be delivered in the future, under existing agreements. As of December 27, 2020, unrecognized revenue attributable to these obligations was $314.2 million. Of this amount, the Company expects to recognize approximately $280.2 million in 2021, $17.9 million in 2022, and $16.1 million in 2023. These amounts include only fixed consideration.

Other Expected Future Payments

From time to time, the Company may be party to arrangements, contractual or otherwise, whereby the Company may not be able to estimate the ultimate timing or amount of the related payments. As such, these amounts have been excluded from the table above and described below:

• Included in other liabilities in the consolidated balance sheets at December 27, 2020, the Company has a liability of $60.6 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. The Company does not know the ultimate

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resolution of these uncertain tax positions and as such, does not know the ultimate amount or timing of payments related to this liability.

• At December 27, 2020, the Company had letters of credit and related instruments of approximately $16.2 million.

The Company believes that cash from operations and funds available through its commercial paper program or lines of credit will allow the Company to meet these and other obligations described above.

Financial Risk Management

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

To manage this exposure, the Company has hedged a portion of its forecasted foreign currency transactions using foreign exchange forward contracts. At December 27, 2020, 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 $40.7 million decrease in the fair value of these instruments. A decrease in the fair value of these instruments would be substantially offset by decreases in the value of the forecasted foreign currency transactions.

The Company is also exposed to foreign currency risk with respect to its net cash and cash equivalents or short-term borrowing positions in currencies other than the U.S. dollar. The Company believes, however, that the on-going risk on the net exposure should not be material to its financial condition. In addition, the Company’s revenues and costs have been and will likely continue to be affected by changes in foreign currency rates. A significant change in foreign exchange rates can materially impact the Company’s revenues and earnings due to translation of foreign-denominated revenues and expenses. The Company does not hedge against translation impacts of foreign exchange. From time to time, affiliates of the Company may make or receive intercompany loans in currencies other than their functional currency. The Company manages this exposure at the time the loan is made by using foreign exchange contracts.

The Company reflects all derivatives at their fair value as an asset or liability on the consolidated balance sheets. The Company does not speculate in foreign currency exchange contracts. At December 27, 2020, these contracts had net unrealized losses of $7.9 million, of which $3.7 million are recorded in prepaid expenses and other current assets, $1.1 million are recorded in other assets, $12.5 million are recorded in accrued liabilities and $0.2 million are recorded in other non-current liabilities. Included in accumulated other comprehensive earnings at December 27, 2020 are deferred losses of $5.6 million, net of tax, related to these derivatives.

In addition, during the third quarter of 2019 the Company hedged a portion of its exposure to fluctuations in the British pound sterling in relation to the eOne Acquisition purchase price and other transaction related costs using a series of both foreign exchange forward and option contracts. These contracts did not qualify for hedge accounting and as such, were marked to market through the Company's Consolidated Statement of Operations. For tax purposes these contracts qualified as nontaxable integrated tax hedges. The Company recorded realized gains of $80.0 million to other (income) expense, net on the matured portion of these contracts for the year ended December 29, 2019. The remaining contracts matured on December 30, 2019, the closing date of the transaction. The net gains or losses recognized in 2020 were immaterial to the Company's consolidated financial statements.

At December 27, 2020, the Company had fixed rate long-term debt of $4,084.9 million. Of this long-term debt, $600.0 million represents the aggregate issuance of long-term debt in May 2014 which consists of $300.0 million of 3.15% Notes due 2021 and $300.0 million of 5.10% Notes due 2044. Prior to the May 2014 debt issuance, the Company entered into forward-starting interest rate swap agreements with a total notional value of $500.0 million to hedge the anticipated underlying U.S. Treasury interest rate. These interest rate swaps were matched with this debt issuance and were designated and effective as hedges of the change in future interest payments. At the date of issuance, the Company terminated these swap agreements and their fair value at the date of issuance was recorded in accumulated other comprehensive loss and is being amortized through the consolidated statements of operations using an effective interest rate method over the life of the related debt. Included in accumulated other comprehensive loss at December 27, 2020 are deferred losses, net of tax, of $16.5 million related to these derivatives.

On June 23, 2016, the United Kingdom voted in a referendum to leave the European Union (“EU”), commonly referred to as Brexit. The UK government triggered the formal two-year period to negotiate the terms of the UK’s exit

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on March 29, 2017. These events resulted in an immediate weakening of British pound sterling against the US dollar, and increased volatility in the foreign currency markets which continued through 2019. These fluctuations initially affected Hasbro’s financial results, although the impact was partially mitigated by the Company’s hedging strategy. On January 31, 2020, the UK formally withdrew from the EU and entered a transitional period which ended on December 31, 2020. In December 2020 the UK and the EU agreed on a trade and cooperation agreement, under which the EU and the UK will now form two separate markets governed by two distinct regulatory and legal regimes. The trade and cooperation agreement covers the general objectives and framework of the relationship between the UK and the EU, including as it relates to trade, transport and visas. The Company continues to closely monitor the negotiations and the impact to foreign currency markets, taking appropriate actions to support the Company’s long-term strategy and to mitigate risks in its operational and financial activities. However, the Company cannot predict the direction of Brexit-related developments nor the impact of those developments on our European operations and the economies of the markets in which they operate.

The Economy and Inflation

The principal market for the Company’s toys and games and licensed consumer products, is the retail sector. Revenues from the Company’s top five retail customers, accounted for approximately 35% of its consolidated net revenues in 2020 and 38% of its consolidated net revenues in 2019 and 2018. The Company monitors the creditworthiness of its customers and adjusts credit policies and limits as it deems appropriate.

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 2020, approximately 64% 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 concentration of sales in the second half of the year increases the risk of (a) underproduction of popular items, (b) overproduction of less popular items, and (c) failure to achieve tight and compressed shipping schedules. The business of the Company is characterized by customer order patterns which vary from year to year largely because of differences in the degree of consumer acceptance of a product line, product availability, marketing strategies, inventory levels, policies of retailers and differences in overall economic conditions. Larger retailers generally maintain lower inventories throughout the year and purchase a greater percentage of product within or close to the fourth quarter holiday consumer buying season, which includes Christmas.

Quick response inventory management practices being used by retailers as well as growth in ecommerce result in orders increasingly placed for immediate delivery and fewer orders placed well in advance of shipment. Retailers are timing their orders so that they are filled by suppliers closer to the time of purchase by consumers. 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 addition, 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 television, film, streaming and digital content releases. Release dates are determined by factors including the timing of holiday periods, geographical release dates and competition in the market. In addition, entertainment business operating results fluctuate due to expenses recorded in relation to film and television productions and content such as program amortization costs and advertising expenses, which are incurred and recognized, beginning prior to initial releases and then continue throughout the related distribution windows.

The effect of inflation on the Company’s operations during 2020 was not significant and the Company will continue its practice of monitoring costs and adjusting prices, accordingly.

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Coronavirus Outbreak

The global outbreak of COVID-19 currently being experienced in markets in which we, our employees, consumers, customers, suppliers and manufacturers operate, had a significant negative impact on our revenues, profitability and overall business operations during 2020. While we have responded by developing and executing plans to help mitigate the negative impact of COVID-19 to our business, the efforts will not completely prevent our business from being adversely affected. At this time, we are planning for a return to the office later in 2021 and are designing safety protocols intended to protect the health and well-being of our employees upon their return. The coronavirus outbreak continues to be fluid and uncertain, making it difficult to forecast the final impact it could have on our future operations. Please see Part I, Item 1A. Risk Factors, of this Form 10-K for further information.

Other Information

The Company is not aware of any material amounts of potential exposure relating to environmental matters and does not believe its environmental compliance costs or liabilities to be material to its operating results or financial position.