Item 8. Financial Statements and Supplementary Data.

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Hasbro, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Hasbro, Inc. and subsidiaries (the Company) as of December 26, 2021 and December 27, 2020, the related consolidated statements of operations, comprehensive earnings, cash flows, and shareholders’ equity and redeemable noncontrolling interests for each of the years in the three-year period ended December 26, 2021, and the related notes and financial statement schedule II - valuation and qualifying accounts (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 26, 2021 and December 27, 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 26, 2021, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 26, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 23, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment of the carrying value of the investment in Discovery Family Channel

As discussed in Note 7 to the consolidated financial statements, the Company’s equity method investment in Discovery Family Channel, Inc. (DFC) at December 26, 2021 was $161.2 million. During the fourth quarter ended December 26, 2021, the Company recorded an impairment loss of $74.1 million related to its investment with Discovery. The Company tests it equity method investment in DFC annually or whenever an event or circumstance occurs that indicates that the carrying value may not be recoverable.

We identified the evaluation of the impairment of investment in DFC as a critical audit matter. The forecasted revenue, discount rate, and terminal growth rate used to estimate the fair value of the investment involved a high degree of auditor subjectivity given the volatility in consumer interest when choosing

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entertainment media. The fair value is also sensitive to changes to the forecasted revenue, discount rate, and terminal growth rate assumptions.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the impairment evaluation process. This included controls related to the review of forecasted revenue, discount rate, and terminal growth rate assumptions. We assessed the Company’s ability to accurately estimate forecasted revenue by comparing historical forecasts to actual revenue reported by DFC. We also compared revenue forecasts to executed contracts. We involved a valuation professional with specialized skills and knowledge who assisted in:

• evaluating the discount rate by comparing it against a discount rate that was independently developed using publicly available data for comparable entities

• evaluating the terminal growth rate by comparing it against publicly available industry reports and to DFC’s historical revenue growth

• developing an estimate of the fair value of the investment using (1) DFC’s forecasted cash flows and estimated terminal growth rate and (2) an independently developed discount rate, which was then compared to the Company’s fair value estimate.

/s/ KPMG LLP

We have not been able to determine the specific year that we began serving as the Company’s auditor, however, we are aware that we have served as the Company’s auditor since at least 1968.

Providence, Rhode Island

February 23, 2022

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HASBRO, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 26, 2021 and December 27, 2020

(Millions of Dollars Except Share Data)

			2021						2020
ASSETS
Current assets
Cash and cash equivalents including restricted cash of $35.8 in 2021 and $73.2 in 2020			$	1,019.2					1,449.7
Accounts receivable, less allowance for credit losses of $22.9 in 2021 and $28.1 in 2020			1,500.4						1,391.7
Inventories			552.1						395.6
Prepaid expenses and other current assets			656.4						609.6
Total current assets			3,728.1						3,846.6
Property, plant and equipment, net			421.1						489.0
Other assets
Goodwill			3,419.6						3,691.7
Other intangibles, net			1,172.0						1,530.8
Other			1,297.0						1,260.3
Total other assets			5,888.6						6,482.8
Total assets			$	10,037.8					10,818.4
LIABILITIES, NONCONTROLLING INTERESTS AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings			$	0.8					6.6
Current portion of long-term debt			200.1						432.6
Accounts payable			580.2						425.5
Accrued liabilities			1,674.8						1,538.6
Total current liabilities			2,455.9						2,403.3
Long-term debt			3,824.2						4,660.0
Other liabilities			670.7						794.0
Total liabilities			6,950.8						7,857.3
Redeemable noncontrolling interests			23.9						24.4
Shareholders’ equity
Preference stock of $2.50 par value. Authorized 5,000,000 shares; none issued			—						—
Common stock of $0.50 par value. Authorized 600,000,000 shares; issued 220,286,736 shares as of 2021 and 2020			110.1						110.1
Additional paid-in capital			2,428.0						2,329.1
Retained earnings			4,257.8						4,204.2
Accumulated other comprehensive loss			(235.3)						(195.0)
Treasury stock, at cost, 82,066,136 shares in 2021 and 82,979,403 shares in 2020			(3,534.7)						(3,551.7)
Noncontrolling interests			37.2						40.0
Total shareholders’ equity			3,063.1						2,936.7
Total liabilities, noncontrolling interests and shareholders’ equity			$	10,037.8					10,818.4

See accompanying notes to consolidated financial statements.

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HASBRO, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

Fiscal Years Ended in December

(Millions of Dollars Except Per Share Data)

			2021						2020						2019
Net revenues			$	6,420.4					5,465.4						4,720.2
Costs and expenses:
Cost of sales			1,927.5						1,718.9						1,807.8
Program cost amortization			628.6						387.1						85.6
Royalties			620.4						570.0						414.5
Product development			315.7						259.5						262.2
Advertising			506.6						412.7						413.7
Amortization of intangible assets			116.8						144.7						47.3
Selling, distribution and administration			1,432.7						1,252.1						1,037.0
Loss on disposal of business			108.8						—						—
Acquisition and related costs			—						218.6						—
Total costs and expenses			5,657.1						4,963.6						4,068.1
Operating profit			763.3						501.8						652.1
Non-operating expense (income):
Interest expense			179.7						201.1						101.9
Interest income			(5.4)						(7.4)						(30.1)
Other expense (income), net			7.1						(14.0)						(13.9)
Total non-operating expense, net			181.4						179.7						57.8
Earnings before income taxes			581.9						322.1						594.3
Income taxes			146.6						96.7						73.8
Net earnings			435.3						225.4						520.5
Net earnings attributable to noncontrolling interests			6.6						2.9						—
Net earnings attributable to Hasbro, Inc.			$	428.7					222.5						520.5
Per common share
Net earnings attributable to Hasbro, Inc.
Basic			$	3.11					1.62						4.07
Diluted			$	3.10					1.62						4.05
Cash dividends declared			$	2.72					2.72						2.72

See accompanying notes to consolidated financial statements.

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HASBRO, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Earnings

Fiscal Years Ended in December

(Millions of Dollars)

			2021						2020						2019
Net earnings			$	435.3					225.4						520.5
Other comprehensive earnings (loss):
Foreign currency translation adjustments, net of tax			(61.9)						10.1						9.6
Unrealized holding (losses) gains on available-for-sale securities, net of tax			(0.1)						0.6						0.5
Net gains on cash flow hedging activities, net of tax			13.5						2.4						11.7
Changes in unrecognized pension amounts, net of tax			3.4						(6.6)						14.9
Reclassifications to earnings, net of tax:
Net losses (gains) on cash flow hedging activities			2.6						(19.3)						(18.5)
Amortization of unrecognized pension and postretirement amounts			2.2						2.0						6.2
Settlement of U.S. defined benefit plan			—						—						85.9
Other comprehensive (loss) earnings, net of tax			(40.3)						(10.8)						110.3
Total comprehensive earnings, net of tax			395.0						214.6						630.8
Total comprehensive earnings attributable to noncontrolling Interests			6.6						2.9						—
Total comprehensive earnings attributable to Hasbro, Inc.			$	388.4					211.7						630.8

See accompanying notes to consolidated financial statements.

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HASBRO, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Fiscal Years Ended in December

(Millions of Dollars)

			2021						2020						2019
Cash flows from operating activities
Net earnings			$	435.3					225.4						520.5
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation of property, plant and equipment			163.3						120.2						133.5
Loss on disposal of business			108.8						—						—
Impairment of intangibles and production assets			—						71.5						—
Loss on Discovery investment			74.1						—						—
Fair value adjustment on Discovery Option			(20.1)						(1.5)						(1.2)
Non-cash pension settlement			—						—						111.0
Amortization of intangible assets			116.8						144.7						47.3
Program cost amortization			628.6						387.1						85.6
Deferred income taxes			36.0						30.3						(15.0)
Stock-based compensation			97.8						49.7						28.0
Other non-cash items			(1.5)						9.0						(53.0)
Changes in operating assets and liabilities, net of acquired and disposed balances:
(Increase) decrease in accounts receivable			(159.5)						210.8						(211.5)
(Increase) decrease in inventories			(173.9)						62.8						(4.6)
(Increase) decrease in prepaid expenses and other current assets			(30.6)						(7.5)						18.1
Program spend, net			(697.3)						(438.9)						(33.9)
Increase in accounts payable and accrued liabilities			313.2						49.3						62.3
Change in net deemed repatriation tax			(18.4)						(18.4)						(14.6)
Other			(54.7)						81.8						(19.4)
Net cash provided by operating activities			817.9						976.3						653.1
Cash flows from investing activities
Additions to property, plant and equipment			(132.7)						(125.8)						(133.6)
Investments and acquisitions, net of cash acquired			—						(4,412.9)						(8.8)
Proceeds from sale of business, net of cash			378.5						—						—
Net gains on derivative contracts			—						—						80.0
Other			(3.8)						38.5						1.5
Net cash provided (utilized) by investing activities			242.0						(4,500.2)						(60.9)
Cash flows from financing activities
Net proceeds from borrowings			144.0						1,112.6						2,355.0
Repayments of borrowings			(1,220.1)						(275.5)						—
Net repayments of other short-term borrowings			(5.6)						(8.6)						(8.8)
Purchases of common stock			—						—						(61.4)
Stock-based compensation transactions			30.6						16.6						31.8
Dividends paid			(374.5)						(372.7)						(336.6)
Payments related to tax withholding for share-based compensation			(13.7)						(6.0)						(13.1)
Redemption of equity instruments			—						(47.4)						—
Deferred acquisition payments			—						—						(100.0)
Proceeds from issuance of common stock			—						—						975.2
Debt extinguishment costs			(9.1)						—						—
Debt acquisition costs			—						—						(26.7)
Other			(11.4)						(13.1)						(4.8)
Net cash (utilized) provided by financing activities			(1,459.8)						405.9						2,810.6
Effect of exchange rate changes on cash			(30.6)						(12.7)						(4.8)
(Decrease) increase in cash, cash equivalents and restricted cash			(430.5)						(3,130.7)						3,398.0
Cash, cash equivalents and restricted cash at beginning of year			1,449.7						4,580.4						1,182.4
Cash, cash equivalents and restricted cash at end of year			$	1,019.2					1,449.7						4,580.4
Supplemental information
Interest paid			$	171.9					182.9						82.2
Income taxes paid			$	160.5					81.6						103.1

See accompanying notes to consolidated financial statements.

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HASBRO, INC. AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity and Redeemable Noncontrolling Interests

(Millions of Dollars)

			Common Stock						Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Loss						Treasury Stock						Non-controlling Interests						Total Shareholders’ Equity									Redeemable Non-controlling Interests
Balance, December 30, 2018			$	104.8					1,275.1						4,184.4						(294.5)						(3,515.2)						—						$	1,754.6								$	—
Net earnings									—						520.5						—						—						—						520.5									—
Equity issuance, net of fees			5.3						969.9						—						—						—						—						975.2									—
Other comprehensive earnings			—						—						—						110.3						—						—						110.3									—
Stock-based compensation transactions			—						3.0						—						—						15.7						—						18.7									—
Purchases of common stock			—						—						—						—						(61.4)						—						(61.4)									—
Stock-based compensation expense			—						27.8						—						—						0.2						—						28.0									—
Dividends declared			—						—						(350.2)						—						—						—						(350.2)									—
Balance, December 29, 2019			$	110.1					2,275.8						4,354.7						(184.2)						(3,560.7)						—						$	2,995.7								$	—
Noncontrolling interests related to acquisition of eOne			—						—						—						—						—						43.3						43.3									26.2
Net earnings attributable to Hasbro, Inc.			—						—						222.5						—						—						—						222.5									—
Net earnings attributable to noncontrolling interests			—						—						—						—						—						2.5						2.5									0.4
Buyout of noncontrolling interest			—						0.6						—						—						—						—						0.6									—
Other comprehensive loss			—						—						—						(10.8)						—						—						(10.8)									—
Stock-based compensation transactions			—						1.9						—						—						8.7						—						10.6									—
Stock-based compensation expense			—						49.4						—						—						0.3						—						49.7									—
Dividends declared			—						—						(373.0)						—						—						—						(373.0)									—
Distributions paid to noncontrolling owners and other foreign exchange			—						1.4						—						—						—						(5.8)						(4.4)									(2.2)
Balance, December 27, 2020			$	110.1					2,329.1						4,204.2						(195.0)						(3,551.7)						40.0						$	2,936.7								$	24.4
Net earnings attributable to Hasbro, Inc.			—						—						428.7						—						—						—						428.7									—
Net earnings attributable to noncontrolling interests			—						—						—						—						—						3.3						3.3									3.3
Change in put option value			—						(1.3)						—						—						—						—						(1.3)									—
Other comprehensive loss			—						—						—						(40.3)						—						—						(40.3)									—
Stock-based compensation transactions			—						1.2						—						—						15.6						—						16.8									—
Stock-based compensation expense			—						96.4						—						—						1.4						—						97.8									—
Dividends declared			—						—						(375.1)						—						—						—						(375.1)									—
Distributions paid to noncontrolling owners and other foreign exchange			—						2.6						—						—						—						(6.1)						(3.5)									(3.8)
Balance, December 26, 2021			$	110.1					2,428.0						4,257.8						(235.3)						(3,534.7)						37.2						$	3,063.1								$	23.9

See accompanying notes to consolidated financial statements.

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(1) Summary of Significant Accounting Policies

Preparation of Consolidated Financial Statements

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and notes thereto. Actual results could differ from those estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of Hasbro, Inc. and all majority-owned subsidiaries (“Hasbro” or the “Company”). Investments representing 20% to 50% ownership interests in other companies are accounted for using the equity method. For those majority-owned subsidiaries that are not 100% owned by Hasbro, the interests of the minority owners are accounted for as noncontrolling interests.

All intercompany balances and transactions have been eliminated.

Fiscal Year

Hasbro’s fiscal year ends on the last Sunday in December. The fiscal years ended December 26, 2021, December 27, 2020, and December 29, 2019 were all fifty-two week periods.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents include all cash balances and highly liquid investments purchased with an initial maturity to the Company of three months or less. Under the Company's production financing facilities, certain of the Company's cash is restricted while the financing is outstanding. At December 26, 2021, $35.8 million of the Company's cash was restricted by such facilities. See Production Financing below and notes 9 and 11 for further details.

Marketable Securities

Included in marketable securities is common stock in a public company arising from a business relationship. This type of investment is also included in prepaid expenses and other current assets in the accompanying consolidated balance sheets; however, due to its nature and business purpose, the Company records unrealized gains and losses in accumulated other comprehensive loss in the consolidated balance sheets until it is sold or the decline in value is deemed to be other than temporary, at which point the gains or losses will be recognized in the consolidated statements of operations.

Accounts Receivable and Allowance for Credit Losses

Credit is granted to customers predominantly on an unsecured basis. Credit limits and payment terms are established based on extensive evaluations made on an ongoing basis throughout the fiscal year with regard to the financial performance, cash generation, financing availability and liquidity status of each customer. The majority of customers are formally reviewed at least annually; more frequent reviews are performed based on the customer’s financial condition and the level of credit being extended. For customers on credit who are experiencing financial difficulties, management performs additional financial analyses before shipping orders. The Company uses a variety of financial transactions, based on availability and cost, to increase the collectability of certain of its accounts, including letters of credit, credit insurance, and requiring cash in advance of shipping.

The Company records an allowance for credit losses for accounts receivable based on management’s expected credit losses. Management's estimate of expected credit losses is based on its assessment of the business environment, customers’ financial condition, historical collection experience, accounts receivable aging and customer disputes.

Accounts receivable, net on the consolidated balance sheet represents amounts due from customers less the allowance for credit losses as well as allowances for discounts, rebates and returns.

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Inventories

Inventories are valued at the lower of cost (first-in, first-out) or net realizable value. Based upon a consideration of quantities on hand, actual and projected sales volume, anticipated product selling price and product lines planned to be discontinued, slow-moving and obsolete inventory is written down to its estimated net realizable value. At both December 26, 2021 and December 27, 2020, substantially all inventory is comprised of finished goods.

Equity Method Investment

For the Company’s equity method investments, only the Company’s investment in and amounts due to and from the equity method investment are included in the consolidated balance sheets and only the Company’s share of the equity method investment’s earnings (losses) is included in other expense (income), net in the consolidated statements of operations. Dividends, cash distributions, loans or other cash received from the equity method investment, additional cash investments, loan repayments or other cash paid to the investee are included in the consolidated statements of cash flows.

The Company reviews its equity method investments for impairment on a periodic basis. If it has been determined that the fair value of the equity investment is less than its related carrying value and that this decline is other-than-temporary, the carrying value of the investment is adjusted downward to reflect these declines in value. 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.

During the fourth quarter of 2021, the Company reviewed its investment in the Network for impairment and concluded that the fair value of the Company's interest in the joint venture was less than its carrying value, and as such, recorded an impairment loss of $74.1 million, which is included in other expense (income), net in the consolidated statements of operations for the year ended December 26, 2021. This impairment was caused by the impact of accelerating changes in the cable distribution industry.

The Company and Discovery are also party to an option agreement with respect to the Network. The Company has recorded a liability for this option agreement at fair value which is included in other liabilities in the consolidated balance sheets. Unrealized gains and losses on this option are recognized in other expense (income), net in the consolidated statements of operations as they occur. In 2021, as a result of the impairment loss recognized on the investment in the Network, the Company adjusted the option's fair value resulting in a $20.1 million gain.

See notes 7 and 14 for additional information.

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Noncontrolling Interests

The financial results and position of the noncontrolling interests acquired through the acquisition of eOne are included in their entirety in the Company’s consolidated statements of operations and consolidated balance sheets beginning with the first quarter of 2020. The value of the redeemable noncontrolling interests is presented in the consolidated balance sheets as temporary equity between liabilities and shareholders' equity. The value of the non-redeemable noncontrolling interests is presented in the consolidated balance sheets within total shareholders' equity. Earnings (losses) attributable to the redeemable noncontrolling interests and non-redeemable noncontrolling interests are presented as a separate line on the consolidated statements of operations which is necessary to identify those earnings (losses) specifically attributable to Hasbro. A breakout of the remaining redeemable noncontrolling interests and non-redeemable noncontrolling interests as of December 26, 2021 is listed below.

Name						Country of Incorporation						Ownership Interest						Proportion Held						Principal Activity
Astley Baker Davies Limited						England and Wales						Nonredeemable						70		%				Ownership of intellectual property
Renegade Entertainment, LLC						United States						Redeemable						65		%				Production of television programs
Round Room Live, LLC						United States						Nonredeemable						60		%				Production of live events

Property, Plant and Equipment, Net

Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed using accelerated and straight-line methods to depreciate the cost of property, plant and equipment over their estimated useful lives. The principal lives, in years, used in determining depreciation rates of various assets are: land improvements 15 to 19, buildings and improvements 15 to 25 and machinery and equipment (including computer hardware and software) 3 to 12. Depreciation expense is classified in the consolidated statements of operations based on the nature of the property and equipment being depreciated. Tools, dies and molds are depreciated over their useful lives, which is generally three years, using an accelerated method. The Company generally owns all tools, dies and molds related to its products.

Property, plant and equipment, net is reviewed for impairment whenever events or circumstances indicate the carrying value may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the asset or related asset group to future undiscounted cash flows expected to be generated by the asset or asset group. If such assets are considered to be impaired, the impairment to be recognized would be measured by the amount by which the carrying value of the assets exceeds their fair value wherein the fair value is the appraised value. Furthermore, assets to be disposed of are carried at the lower of the net book value or their estimated fair value less disposal costs.

Goodwill and Other Intangible Assets, Net

Goodwill results from acquisitions the Company has made over time. Substantially all of the Company's other intangible assets consist of the cost of acquired product rights. In establishing the value of such rights, the Company considers existing trademarks, copyrights, patents, license agreements and other product-related rights. These rights were valued on their acquisition dates based on the anticipated future cash flows from the underlying product lines. The Company has certain intangible assets related to the Tonka and Milton Bradley acquisitions that have indefinite lives.

Goodwill and intangible assets deemed to have indefinite lives are not amortized and are tested for impairment at least annually. The annual goodwill test begins with a qualitative assessment, where qualitative factors and their impact on critical inputs are assessed to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the Company determines that a reporting unit has an indication of impairment based on the qualitative assessment, it is required to perform a quantitative assessment.

During the first quarter of 2021, the Company realigned its financial reporting structure creating the following three principal reporting segments: Consumer Products, Wizards of the Coast and Digital Gaming and Entertainment. As a result of these changes, the Company reallocated its goodwill among the revised reporting units based on the change in relative fair values of the respective reporting units. (See note 6 for details on the allocation of goodwill across the Company's new reporting structure.)

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

In the third quarter 2021, the Company sold eOne Music for net proceeds of $397.0 million. The Company acquired eOne Music through its acquisition of eOne in 2020. Based on the value of the net assets held by eOne Music, which included certain goodwill and intangible assets allocated to the eOne reportable segment and attributable to eOne Music, the Company recorded a pre-tax non-cash goodwill impairment charge of $108.8 million within Loss on Disposal of Business on the Consolidated Statements of Operations for the year ended December 26, 2021. (See note 6 for details on the eOne Music goodwill impairment.)

Prior to its 2021 annual impairment test, the Company had not performed a quantitative assessment of goodwill since 2013. Given the length of time since the last quantitative analysis, as well as the changes that have occurred within its goodwill balances since that time, the Company elected to perform a quantitative assessment of goodwill for each reporting unit in the fourth quarter of 2021. Based on the quantitative assessment with respect to each of its reporting units, the Company determined that the fair values of its reporting units exceeded their carrying values. As a result of this assessment, the Company concluded that there was no impairment to any of its reporting units. Accordingly, other than the Music goodwill impairment loss noted above, there was no goodwill impairment recorded for the year ended December 26, 2021.

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. Our assessment included the consideration of COVID-19 and the impact to our business in 2020. We determined that it was not necessary to perform a quantitative assessment for the goodwill of the reporting units in any of the years.

The remaining intangible assets having definite lives are being amortized over periods ranging from two to twenty-five years, primarily using the straight-line method.

The Company reviews other intangible assets with definite lives for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the asset to future undiscounted cash flows expected to be generated by the asset or asset group. If such assets were considered to be impaired, the impairment to be recognized would be measured by the amount by which the carrying value of the assets exceeds their fair value wherein that fair value is determined based on discounted cash flows.

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. As a result, charges of $20.0 million and $30.7 million were recorded in the first and fourth quarters, respectively, within acquisition and related costs in the Company's Consolidated Statement of Operations.

There were no other triggering events in 2021 or 2020 which would indicate the Company's intangible assets were impaired.

Financial Instruments

Hasbro’s financial instruments include cash and cash equivalents, accounts receivable, short-term borrowings, accounts payable and certain accrued liabilities. At December 26, 2021, the carrying cost of these instruments approximated their fair value. The Company’s financial instruments at December 26, 2021 also include long-term borrowings (see note 11 for carrying cost and related fair values) as well as certain assets and liabilities measured at fair value (see notes 14 and 18).

Production Financing

Production financing relates to financing facilities for certain of the Company's television and film productions. Beginning in the first quarter of 2020 with the acquisition of eOne, the Company funded certain of its television and film productions using production financing facilities. Production financing facilities are secured by the assets and future revenues of the individual production subsidiaries, typically have maturities of less than two years while the

titles are in production, and are repaid once the production is delivered and all tax credits, broadcaster pre-sales and international sales have been received. In connection with the production of a television or film program, the Company records initial cash outflows within cash flows from operating activities due to its investment in the production and concurrently records cash inflows within cash flows from financing activities from the production financing it normally obtains. Under these facilities, certain of the Company's cash is restricted while the financing is

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Notes to Consolidated Financial Statements — (Continued)

outstanding. At December 26, 2021, $35.8 million of the Company's cash was restricted by such facilities. For further details, see note 11.

Revenue Recognition

Revenue is recognized when control of the promised goods, intellectual property or production is transferred to the customers or licensees, in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring those goods. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable.

The majority of the Company’s revenues are derived from sales of finished products to customers. Revenues from sales of finished products to customers accounted for 74%, 77% and 91% of the Company’s revenues for the years ended December 26, 2021, December 27, 2020 and December 29, 2019, respectively. When determining whether control of the finished products has transferred to the customer, the Company considers any future performance obligations. Generally, the Company has no post-shipment obligation on sales of finished products to customers and revenues from product sales are recognized upon passing of title to the customer, which is generally at the time of shipment. Any shipping and handling activities that are performed by the Company, whether before or after a customer has obtained control of the products, are considered activities to fulfill our obligation to transfer the products, and are recorded as incurred within selling, distribution, and administration expenses. The Company offers various discounts, rebates, allowances, returns, and markdowns to its customers (collectively, “allowances”), all of which are considered when determining the transaction price. Certain allowances are fixed and determinable at the time of sale and are recorded at the time of sale as a reduction to revenues. Other allowances can vary depending on future outcomes such as customer sales volume (“variable consideration”). The Company estimates the amount of variable consideration using the expected value method. In estimating the amount of variable consideration using the expected value method, the Company considers various factors including but not limited to: customer terms, historical experience, any expected deviations from historical experience, and existing or expected market conditions. The Company then records an estimate of variable consideration as a reduction to revenues at the time of sale. The Company adjusts its estimate of variable consideration at least quarterly or when facts and circumstances used in the estimation process may change. Historically, adjustments to estimated variable consideration have not been material.

The Company enters into contracts to license its intellectual property, which consists of its brands, in various channels including but not limited to: consumer products such as apparel or home goods, within formats such as on-line and digital games, within venues such as theme parks, or within formats such as television and film. The licensees pay the Company either a sales-based or usage-based royalty, or a combination of both, for use of the brands, in some cases subject to minimum guaranteed amounts or fixed fees. The license of the Company’s brands provide access to the intellectual property over the term of the license, generally without any other performance obligation of the Company other than keeping the intellectual property active, and is therefore considered a right-to-access license of symbolic intellectual property. The Company records sales-based or usage-based royalty revenues for right-to-access licenses at the occurrence of the licensees’ subsequent sale or usage. When the arrangement includes a minimum guarantee, the Company records the minimum guarantee on a ratable basis over the term of the license period and does not record the sales-based or usage-based royalty revenues until they exceed the minimum guarantee.

The Company also produces, sells and licenses television and film content for distribution to third parties in formats that include broadcast, digital streaming, transactional and theatrical. These are intellectual property licenses where the licensees pay either a fixed fee for the content license or a variable fee in the form of a sales based royalty. The content that the Company delivers to its licensees typically has stand-alone functionality, generally without any other performance obligation of the Company, and is therefore considered a right-to-use license of functional intellectual property. The Company records revenues for right-to-use licenses once the license period has commenced and the licensee has the ability to use the delivered content. In arrangements where the licensee pays the Company a fixed fee for multiple seasons or multiple series of programming, arrangement fees are recorded as revenues based upon their relative fair values. The Company also earns advertising revenues from certain content made available on free to consumer, streaming video on demand platforms where the Company earns a portion of the advertising revenues earned by the service provider. The performance obligation is met and revenue is recorded, when the user accesses the Company’s content through the streaming platform.

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Notes to Consolidated Financial Statements — (Continued)

The Company develops digital games featuring its brands within the games, such as Magic: The Gathering Arena. The Company does not charge a fee to the end users for the download of the games or the ability to play the games. The end users make in-application purchases of virtual currencies with such purchased virtual currencies to be used in the games. The Company records revenues from in-application purchases based on either the usage patterns of the players or the player’s estimated life, depending on the nature of the game item purchased in exchange for virtual currency. For items recognized over the player's estimated life, the Company currently recognizes digital game's revenues within six months of purchase. The Company controls all aspects of the digital goods delivered to the consumer. In the case of Magic the Gathering: Arena, the Company hosts the game on its own platform and therefore is the principal and records the gross revenues within Net Revenues in our Consolidated Statements of Operations.

The Company also develops certain digital games available for online and offline play, such as Dungeons & Dragons: Dark Alliance, which are delivered to customers through digital downloads or as physical discs compatible for play through various gaming platforms. Initially these game purchases may come with future software updates to be delivered as needed, or additional downloadable content, delivered when made available by the Company. For these games, the Company allocates the revenue to the identified performance obligations. For the software license performance obligation, the Company recognizes revenue when control of the gaming license has been transferred to the customer, typically at the time of purchase. If applicable, revenue related to future downloadable content or software updates is recognized ratably over the estimated service period.

Costs of Sales

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

Investment in Productions and Acquired Content Rights and Program Cost Amortization

The Company incurs costs in connection with the production of television programming and motion pictures. The majority of these costs are capitalized by the Company as they are incurred and amortized using the individual-film-forecast method, whereby these costs 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 such period related to the program. Ultimate revenue estimates are periodically reviewed and adjustments, if any, will result in changes to amortization rates and estimated accruals for residuals and participations. Ultimate revenue includes estimates over a period not to exceed ten years following the date of release of the production. Ultimate revenue used in amortization of acquired content rights is estimated over the life of the acquired rights but no longer than a period of ten years. 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. Certain of these agreements require the Company to pay minimum guaranteed advances ("MGs") for participations and residuals. MGs are recognized in the consolidated balance sheets when a liability arises, usually on delivery of the television or film program to the Company. The current portion of MGs are recorded as Payables and Accrued Liabilities and the long-term portion are recorded as Other Liabilities.

Royalties

The Company enters into license agreements with strategic partners, inventors, designers and others for the use of intellectual properties in its products. In addition, the Company enters into minimum guarantee royalty arrangements related to the purchase of film and television rights for content to be delivered in the future. These agreements may call for payment in advance or future payment of minimum guaranteed amounts. Amounts paid in advance are recorded as an asset and charged to expense when the related revenue is recognized in the consolidated statements of operations. If all or a portion of the minimum guaranteed amounts appear not to be recoverable through future use of the rights obtained under the license, the non-recoverable portion of the guaranty is charged to expense at that time.

Advertising

Production costs of commercials are expensed in the fiscal year during which the production is first aired. The costs of other advertising and promotion programs are expensed in the fiscal year incurred.

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Notes to Consolidated Financial Statements — (Continued)

Shipping and Handling

Hasbro expenses costs related to the shipment and handling of goods to customers as incurred. For 2021, 2020 and 2019, these costs were $264.1 million, $228.0 million and $218.7 million, respectively, and are included in selling, distribution and administration expenses.

Operating Leases

The Company leases certain property, vehicles and other equipment through operating leases. Operating lease right-of-use assets are recorded within Property, Plant and Equipment and the related liabilities recorded within Accrued Liabilities and Other Liabilities on the Company’s consolidated balance sheets. The Company has no material finance leases.

Operating lease assets represent the Company’s right to use the underlying asset for the lease term and lease liabilities represent an obligation to make lease payments according to the terms of the lease. Operating lease assets and liabilities are recognized at the inception of the lease agreement based on the estimated present value of lease payments over the lease term, using our incremental borrowing rate based on information available on the lease commencement date. The Company capitalizes non-lease components for equipment leases, but expenses non-lease components as incurred for real estate leases. Leases with an expected term of 12 months or less are not capitalized. Lease expense under such leases is recorded straight line over the life of the lease. For further details on the Company's operating leases, see note 17.

Income Taxes

Hasbro uses the asset and liability approach for financial accounting and reporting of income taxes. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred taxes are measured using rates expected to apply to taxable income in years in which those temporary differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. The assumptions utilized in determining future taxable income require significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses. Actual operating results in future years could differ from our current assumptions, judgments and estimates. However, we believe that it is more likely than not that most of the deferred tax assets recorded on our Consolidated Balance Sheets will ultimately be realized. We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. As of December 26, 2021, the valuation allowance of $171.2 million was primarily related to net operating losses acquired as part of the eOne acquisition. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company uses a two-step process for the measurement of uncertain tax positions that have been taken or are expected to be taken in a tax return. The first step is a determination of whether the tax position should be recognized in the consolidated financial statements. The second step determines the measurement of the tax position. The Company records potential interest and penalties on uncertain tax positions as a component of income tax expense.

Foreign Currency Translation

Foreign currency assets and liabilities are translated into U.S. dollars at period-end exchange rates, and revenues, costs and expenses are translated at weighted average exchange rates during each reporting period. Net earnings include gains or losses resulting from foreign currency transactions and, when required, translation gains and losses resulting from the use of the U.S. dollar as the functional currency in highly inflationary economies. Other gains and losses resulting from translation of financial statements are a component of other comprehensive earnings (loss).

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Notes to Consolidated Financial Statements — (Continued)

Pension Plans, Postretirement and Postemployment Benefits

Pension expense and related amounts in the consolidated balance sheets are based on actuarial computations of current and future benefits. Actual results that differ from the actuarial assumptions are accumulated and, if outside a certain corridor, amortized over future periods and, therefore affect recognized expense in future periods. The corridor used for this purpose is equal to 10% of the greater of plan liabilities or market asset values, and future periods vary by plan, but generally equal the actuarially determined average expected future working lifetime of active plan participants. The Company’s policy is to fund amounts which are required by applicable regulations and which are tax deductible. The estimated amounts of future payments to be made under other retirement programs are being accrued currently over the period of active employment and are also included in pension expense. Hasbro has a contributory postretirement health and life insurance plan covering substantially all employees who retired under any of its United States defined benefit pension plans prior to January 1, 2020, and meet certain age and length of service requirements. During the fourth quarter of 2019, with the approval of the Compensation Committee of the Company's Board of Directors, the Company announced the elimination of the contributory post-retirement health and life insurance coverage for employees whose retirement eligibility begins after December 31, 2019. See note 16 for further discussion.

The cost of providing these benefits on behalf of employees who retired prior to 1993 has been substantially borne by the Company.

The cost of providing benefits on behalf of eligible employees who retire after 1992 is borne by the employee. The Company also has several plans covering certain groups of employees, which may provide benefits to such employees following their period of employment but prior to their retirement. The Company measures the costs of these obligations based on actuarial computations.

In February 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 ("U.S. Pension Plan"). The Company commenced the U.S. Pension Plan termination process and received regulatory approval during 2018 and settled all remaining benefits in 2019 directly with vested participants electing a lump sum payout, and purchased a group annuity contract from Massachusetts Mutual Life Insurance Company to administer all future payments to remaining U.S. Pension Plan participants. Upon settlement of the pension liability, the Company recognized a non-operating settlement charge of $111.0 million in 2019 related to pension losses, reclassified from accumulated other comprehensive loss to other (income) expense in the Company's consolidated statements of operations, adjusted for market conditions and settlement costs at benefit distribution.

Stock-Based Compensation

The Company has a stock-based employee compensation plan for employees and non-employee members of the Company’s Board of Directors. Under this plan the Company may grant stock options at or above the fair market value of the Company’s stock, as well as restricted stock, restricted stock units and contingent stock performance awards. All awards are measured at fair value at the date of the grant and amortized as expense on a straight-line basis over the requisite service period of the award. For awards contingent upon Company performance, the measurement of the expense for these awards is based on the Company’s current estimate of its performance over the performance period. See note 15 for further discussion.

Risk Management Contracts

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

At the inception of the contracts, Hasbro designates its derivatives as either cash flow or fair value hedges. The Company formally documents all relationships between hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking various hedge transactions. All hedges designated as cash flow hedges are linked to forecasted transactions and the Company assesses, both at the inception of the

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Notes to Consolidated Financial Statements — (Continued)

hedge and on an on-going basis, the effectiveness of the derivatives used in hedging transactions in offsetting changes in the cash flows of the forecasted transaction.

The Company records all derivatives, such as foreign currency exchange contracts, on the consolidated balance sheets at fair value. Changes in the derivative fair values that are designated as cash flow hedges are deferred and recorded as a component of Accumulated Other Comprehensive Loss (“AOCE”) until the hedged transactions occur and are then recognized in the consolidated statements of operations. The Company’s foreign currency contracts hedging anticipated cash flows are designated as cash flow hedges. When it is determined that a derivative is not highly effective as a hedge, the Company discontinues hedge accounting prospectively. Any gain or loss deferred through that date remains in AOCE until the forecasted transaction occurs, at which time it is reclassified to the consolidated statements of operations. To the extent the transaction is no longer deemed probable of occurring, hedge accounting treatment is discontinued and amounts deferred would be reclassified to the consolidated statements of operations. In the event hedge accounting requirements are not met, gains and losses on such instruments are included in the consolidated statements of operations. The Company uses derivatives to economically hedge intercompany loans denominated in foreign currencies. The Company does not use hedge accounting for these contracts as changes in the fair value of these contracts are substantially offset by changes in the fair value of the intercompany loans.

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 Entertainment One Ltd. ("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 on matured contracts to other (income) expense, net for the year ended December 29, 2019. These contracts matured on December 30, 2019 (the closing date of the transaction) and net gains or losses recognized on these contracts in 2020 were immaterial.

Prior to the issuance of certain long-term Notes due 2021 and 2044, the Company entered into a forward-starting interest rate swap contract to hedge the anticipated U.S. Treasury interest rates on the anticipated debt issuance. These instruments, which were designated and effective as hedges, were terminated on the date of the related debt issuance and the then fair value of these instruments was recorded to AOCE and amortized through the consolidated statements of operations using an effective interest rate method over the life of the related debt.

Net Earnings Per Common Share

Basic net earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding for the year as well as awards that have not been issued but all contingencies have been met. Diluted net earnings per share is similar except that the weighted average number of shares outstanding is increased by dilutive securities, and net earnings are adjusted, if necessary, for certain amounts related to dilutive securities. Dilutive securities include shares issuable upon exercise of stock options for which the market price exceeds the exercise price, less shares which could have been purchased by the Company with the related proceeds. Dilutive securities also include shares issuable under restricted stock unit award agreements. Options and restricted stock unit awards totaling 2.2 million, 2.8 million and 0.9 million for 2021, 2020, and 2019, respectively, were excluded from the calculation of diluted earnings per share because to include them would have been antidilutive.

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Notes to Consolidated Financial Statements — (Continued)

A reconciliation of net earnings and average number of shares for each of the three fiscal years ended December 26, 2021 is as follows:

			2021												2020												2019
(In millions, except per share data)			Basic						Diluted						Basic						Diluted						Basic						Diluted
Net earnings attributable to Hasbro, Inc.			$	428.7					428.7						222.5						222.5						520.5						520.5
Average shares outstanding			138.0						138.0						137.3						137.3						127.9						127.9
Effect of dilutive securities:
Options and other share-based awards			—						0.4						—						0.3						—						0.6
Equivalent shares			138.0						138.4						137.3						137.6						127.9						128.5
Net earnings per share attributable to Hasbro, Inc.			$	3.11					3.10						1.62						1.62						4.07						4.05

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Notes to Consolidated Financial Statements — (Continued)

(2) Revenue Recognition

Contract Assets and Liabilities

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

At December 26, 2021 and December 27, 2020, the Company had the following contract assets and liabilities in its consolidated balance sheets:

(In millions)			December 26, 2021						December 27, 2020
Assets
Contract assets - current			$	286.9					284.4
Contract assets - long term			104.2						77.0
Total			$	391.1					361.4
Liabilities
Contract liabilities - current			$	114.1					161.0
Contract liabilities - long term			7.1						18.2
Total			$	121.2					179.2

For the year ended December 26, 2021, the Company recognized $49.4 million of the contract assets and $123.2 million of contract liabilities that were included in the December 27, 2020 balances.

Unsatisfied Performance Obligations

Unsatisfied performance obligations relate primarily to in-production television content to be delivered in the future under existing agreements with partnering content providers such as broadcasters, distributors, television networks and subscription video on demand services. As of December 26, 2021, unrecognized revenue attributable to unsatisfied performance obligations expected to be recognized in the future was $304.1 million. Of this amount, we expect to recognize approximately $238.1 million in 2022, $53.9 million in 2023, and $12.1 million in 2024. These amounts include only fixed consideration.

Accounts Receivable and Allowance for Credit Losses

The Company’s balance for accounts receivable on the consolidated balance sheets as of December 26, 2021 and December 27, 2020 are primarily from contracts with customers. In the year ended December 29, 2019, the Company recorded a charge for credit losses for accounts receivable of approximately $49.0 million related to Toys“R”Us. The Company had no other material expense for credit losses in the years ended December 26, 2021, December 27, 2020, or December 29, 2019.

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Notes to Consolidated Financial Statements — (Continued)

Disaggregation of revenues

The Company disaggregates its revenues from contracts with customers by reportable segment: Consumer Products, Entertainment, and Wizards of the Coast and Digital Gaming. The Company further disaggregates revenues within its Consumer Products segment by major geographic region: North America, Europe, Latin America, and Asia Pacific; and within its Entertainment segment by category: Film & TV, Family Brands, and Music and Other. Finally, the Company disaggregates its revenues by brand portfolio into five brand categories: Franchise Brands, Partner Brands, Hasbro Gaming, Emerging Brands and TV/Film/Entertainment. We believe these collectively depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. See note 21 for additional information on disaggregation of revenues.

In addition to the required disclosures below, see further discussion of the Company's revenue recognition policy in note 1.

(3) Business Combination

On December 30, 2019, the Company completed its acquisition of eOne, a global independent studio that specializes in the development, acquisition, production, distribution and sales of entertainment content. The aggregate purchase price of $4.6 billion was 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 with proceeds from the following debt and equity financings: (1) the issuance of senior unsecured notes in an aggregate principal amount of $2.4 billion in November 2019, (2) the issuance of 10.6 million shares of common stock at a public offering price of $95.00 per share in November 2019 (resulting in net proceeds of $975.2 million) and (3) $1.0 billion in term loans provided by a term loan agreement, which were borrowed on the date of closing. See note 11 for further discussion of the issuance of the senior unsecured notes and term loan agreement.

eOne's results of operations and financial position have been included in the Company's consolidated financial statements and accompanying footnotes since the date of the acquisition, which was the beginning of the Company's fiscal year 2020.

The acquisition was accounted for as a business combination under FASB Accounting Standards Codification Topic 805, Business Combinations (“Topic 805”). Pursuant to Topic 805, the Company allocated the eOne purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, December 30, 2019. The excess of the purchase price over those fair values was recorded to goodwill.

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Notes to Consolidated Financial Statements — (Continued)

The following table summarizes the intangible assets acquired as part of the eOne acquisition:

Intangible assets acquired			Weighted Average Amortization Period			Fair value (In millions)
Established brands			10 years			$	615.0
Trade names			15 years			100.0
Artist relationships			14 years			100.0
Music catalogs			12 years			120.0
Other			8 years			121.0
Total intangible assets acquired			11 years			$	1,056.0

Intangible assets consisted of intellectual property associated with established brands, eOne artist relationships, eOne music catalogs and trademarks and trade names with estimated useful lives ranging from 7 to 15 years, determined based on when the related cash flows are expected to be realized. The fair value of the intangible assets acquired was determined based on the estimated future cash flows to be generated from the acquired assets, considering assumptions related to contract renewal rates and estimated brand franchise revenue growth. eOne acquired intangible asset amortization expense was $85.0 million and $97.9 million for the years ended December 26, 2021 and December 27, 2020, respectively.

Deferred tax liabilities within other liabilities were adjusted to record the deferred tax impact of purchase price accounting adjustments, primarily related to intangible assets.

Investments in productions and content, or IIP and IIC, were valued at $564.8 million on the acquisition date, and include the fair value of completed films and television programs which have been produced by eOne or for which eOne has acquired distribution rights, as well as the fair value of films and television programs in production, pre-production and development. For films and television programs, fair values were estimated based on forecasted cash flows, discounted to present value. For titles less than 3 years old and titles in development, the content assets will be amortized using the individual film forecast method, wherein the amortization will phase to the revenues incurred. For titles over 3 years old, the estimated useful life is 10 years, and will be amortized straight-line over that period.

Goodwill of $3.2 billion represents the excess of the purchase price over the fair value of the underlying tangible and identifiable intangible assets acquired and liabilities assumed. The acquisition goodwill represents the value placed on the combined company’s brand building capabilities, storytelling capabilities and franchise economics in TV, film and other mediums to strengthen Hasbro brands. In addition, the acquisition goodwill depicts added benefits of long-term profitable growth through in-sourcing toy and game production for the acquired preschool brands and cost-synergies, as well as future revenue growth opportunities. The goodwill recorded as part of this acquisition was included within the Entertainment and Consumer Products segments for the year ended December 27, 2020. The goodwill associated with the acquisition will not be amortized for financial reporting purposes and will not be deductible for federal tax purposes. See note 6 for information on the Company's goodwill reallocation during the first quarter of 2021 and the goodwill impairment charge recorded in the second quarter of 2021 as a result of the sale of the eOne music business, which was completed during the third quarter of 2021.

In 2020, the Company incurred charges of $218.6 million related to the eOne acquisition, which were recorded in acquisition and related costs within the Company’s Consolidated Statement of Operations. Included within the Entertainment segment results for the year ended December 27, 2020 were $133.2 million of acquisition and related charges. The remaining charges were included in Corporate and Other.

The acquisition and related costs for the year ended December 27, 2020 consisted of the following:

• Acquisition and integration costs of $145.2 million, including expense associated with the acceleration of eOne stock-based compensation and advisor fees settled at the 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; and

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• Restructuring and related costs of $73.4 million which includes severance and retention costs, as well as $40.9 million in impairment charges for certain definite-lived intangible and production assets. The impairment charges of $40.9 million were driven by the change in strategy for the combined company's entertainment assets.

Pursuant to Topic 805, unaudited supplemental pro forma results of operations for the year ended December 29, 2019, as if the acquisition of eOne had occurred on December 31, 2018, the first day of the Company’s 2019 fiscal year are presented below (in millions, except per share amounts):

						Year Ended
(In millions, except per share data)						December 29, 2019
Revenues						$	5,936.0
Net earnings						351.3
Net earnings attributable to Hasbro, Inc.						345.9
Net earnings per common share attributable to Hasbro, Inc.:
Diluted						$	2.51
Basic						$	2.51

These pro forma results do not represent financial results that would have been realized had the acquisition occurred on December 31, 2018.

The unaudited pro forma results include certain pro forma adjustments to net earnings that were directly attributable to the acquisition, as if the acquisition had occurred on December 31, 2018, including the following:

• elimination of transaction costs of $24.3 million for the year ended December 29, 2019, incurred by Hasbro and eOne related to the eOne Acquisition, included in Selling, Distribution and Administration;

• additional amortization expense of $38.8 million for the year ended December 29, 2019, that would have been recognized as a result of the allocation of purchase consideration to definite-lived intangible assets subject to amortization;

• estimated differences in interest expense of $75.4 million for the year ended December 29, 2019, as a result of incurring new debt and extinguishing historical eOne debt;

• total adjustments to Other (Income) Expense of $74.8 million for the year ended December 29, 2019, consisting of:

◦elimination of a gain of $94.6 million for the year ended December 29, 2019, related to the mark to market of foreign exchange forward and option contracts, which the Company entered into in order to hedge a portion of the British pound sterling purchase price for the eOne Acquisition; and

◦elimination of a charge of $19.8 million for the year ended December 29, 2019, related to premiums paid by eOne in connection with the 2019 early redemption and refinancing of its senior secured notes and the related write-off of unamortized deferred finance charges associated with the senior secured notes;

• the income tax effect of the pro forma adjustments resulted in income tax benefits of $12.3 million for the year ended December 29, 2019, calculated using a blended statutory income tax rate of 22.5% for the eOne adjustments, and a blended statutory tax rate of 21% for the Hasbro adjustments.

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Notes to Consolidated Financial Statements — (Continued)

(4) Other Comprehensive Earnings (Loss)

Components of other comprehensive earnings (loss) are presented within the consolidated statements of comprehensive earnings (loss). The following table presents the related tax effects on changes in other comprehensive earnings (loss) for each of the three fiscal years ended December 26, 2021.

(In millions)			2021						2020						2019
Other comprehensive earnings (loss), tax effect:
Tax (expense) on unrealized holding (losses) gains			$	—					$	(0.2)					(0.2)
Tax (expense) benefit on cash flow hedging activities			(1.0)						(3.4)						0.2
Tax benefit on foreign currency translation amounts			(7.2)						2.1						—
Tax (expense) benefit on changes in unrecognized pension amounts			(1.5)						2.6						(3.5)
Reclassifications to earnings, tax effect:
Tax (benefit) expense on cash flow hedging activities			(0.5)						4.3						2.3
Tax benefit on amortization of unrecognized pension and postretirement amounts reclassified to the consolidated statements of operations			(0.6)						(0.8)						(2.0)
Tax benefit on settlement of U.S. defined benefit plan			—						—						(24.9)
Total tax effect on other comprehensive earnings (loss)			$	(10.8)					4.6						(28.1)

Changes in the components of accumulated other comprehensive earnings (loss), net of tax for each of the three fiscal years ended December 26, 2021 are as follows:

(In millions)			Pension and Postretirement Amounts						Gains (Losses) on Derivative Instruments						Unrealized Holding Gains (Losses) on Available for-Sale Securities						Foreign Currency Translation Adjustments						Total Accumulated Other Comprehensive Earnings (Loss)
2021
Balance at December 27, 2020			$	(40.7)					(22.1)						0.3						(132.5)						(195.0)
Current period other comprehensive earnings (loss)			3.4						13.5						(0.1)						(61.9)						(45.1)
Reclassifications from AOCE to earnings			2.2						2.6						—						—						4.8
Balance at December 26, 2021			$	(35.1)					(6.0)						0.2						(194.4)						(235.3)
2020
Balance at December 29, 2019			$	(36.1)					(5.2)						(0.3)						(142.6)						(184.2)
Current period other comprehensive earnings (loss)			(6.6)						2.4						0.5						10.1						6.4
Reclassifications from AOCE to earnings			2.0						(19.3)						—						—						(17.2)
Balance at December 27, 2020			$	(40.7)					(22.1)						0.3						(132.5)						(195.0)
2019
Balance at December 30, 2018			$	(143.1)					1.5						(0.9)						(152.2)						(294.7)
Current period other comprehensive earnings (loss)			14.8						11.7						0.6						9.6						36.7
Reclassifications from AOCE to earnings			92.2						(18.4)						—						—						73.8
Balance at December 29, 2019			$	(36.1)					(5.2)						(0.3)						(142.6)						(184.2)

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Notes to Consolidated Financial Statements — (Continued)

Gains (Losses) on Derivative Instruments

At December 26, 2021, the Company had remaining net deferred gains on foreign currency forward contracts, net of tax, of $9.6 million in AOCE. These instruments hedge payments related to inventory purchased in the fourth quarter of 2021 or forecasted to be purchased in 2022, intercompany expenses expected to be paid or received during 2022, television and movie production costs paid in 2021 or expected to be paid in 2022 or 2023, and cash receipts for sales made at the end of the fourth quarter of 2021 or forecasted to be made in 2022. These amounts will be reclassified into the consolidated statements of operations upon the sale of the related inventory or recognition of the related sales expenses.

In addition to foreign currency forward contracts, the Company entered into hedging contracts on future interest payments related to the 3.15% Notes, that were repaid in full in the aggregate principal amount of $300.0 million during the first quarter of 2021 (See note 11), and the 5.10% Notes due 2044. At the date of debt issuance, these contracts were terminated and the fair value on the date of settlement was deferred in AOCE and is being amortized to interest expense over the life of the related notes using the effective interest rate method. At December 26, 2021, deferred losses, net of tax, of $15.6 million related to these instruments remained in AOCE. For the year ended December 26, 2021, losses, net of tax of $1.0 million related to these hedging instruments were reclassified from AOCE to net earnings. For each of the years ended December 27, 2020 and December 29, 2019, losses, net of tax of $1.4 million, related to these hedging instruments were reclassified from AOCE to net earnings.

Of the net deferred gains included in AOCE at December 26, 2021, the Company expects net gains of approximately $8.0 million to be reclassified to the consolidated statements of operations within the next 12 months. However, the amount ultimately realized in earnings is dependent on the fair value of the hedging instruments on the settlement dates.

See notes 16 and 18 for additional discussion on reclassifications from AOCE to earnings.

(5) Property, Plant and Equipment

(In millions)			2021						2020
Land and improvements			$	3.2					3.4
Buildings and improvements			220.3						219.6
Machinery, equipment and software			604.7						559.2
			828.2						782.2
Less accumulated depreciation			630.0						553.0
			198.2						229.2
Tools, dies and molds, net of accumulated depreciation			63.6						68.0
			261.8						297.2
Right of use assets			256.4						255.1
Less accumulated depreciation			97.1						63.3
Total property, plant and equipment, net			$	421.1					489.0

Expenditures for maintenance and repairs which do not materially extend the life of the assets are charged to operations as incurred. In 2021, 2020 and 2019 the Company recorded $163.3 million, $120.2 million and $133.5 million, respectively, of depreciation expense.

See note 17 for additional discussion on right of use assets.

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Notes to Consolidated Financial Statements — (Continued)

(6) Goodwill and Intangible Assets

Goodwill

During the first quarter of 2021, the Company realigned its financial reporting structure creating the following three principal reporting segments: Consumer Products, Wizards of the Coast and Digital Gaming and Entertainment. In our realignment, some, but not all, of our reporting units were changed. As a result of these changes, the Company reallocated its goodwill among the revised reporting units based on the changes in relative fair values of the respective reporting units. Changes in the carrying amount of goodwill, by operating segment, for the years ended December 26, 2021 and December 27, 2020 are as follows:

(In millions)			Consumer Products						Wizards of the Coast and Digital Gaming						Entertainment									Total
2021
Balance at December 27, 2020			$	1,385.7					53.1						2,252.9									3,691.7
Goodwill allocation			199.4						254.2						(453.6)									—
Goodwill associated with disposal of business			—						—						(162.2)									(162.2)
Impairment during the period			—						—						(108.8)									(108.8)
Foreign exchange translation			(0.2)						—						(0.9)									(1.1)
Balance at December 26, 2021			$	1,584.9					307.3						1,527.4									3,419.6
2020
Balance at December 29, 2019			$	430.1					52.7						11.8									494.6
Acquired during the period			0.4						—						3,195.4									3,195.8
Allocation of eOne acquired Goodwill			954.0						—						(954.0)									—
Foreign exchange translation			1.2						0.4						(0.3)									1.3
Balance at December 27, 2020			$	1,385.7					53.1						2,252.9									3,691.7

The $3.2 billion of goodwill acquired during 2020 is attributable to the eOne acquisition and represents the value placed on the combined company’s brand building capabilities, our storytelling capabilities and franchise economics in TV, film and other mediums to strengthen Hasbro brands. In addition, the acquisition goodwill depicts added benefits of long-term profitable growth through in-sourcing toy and game production for the acquired preschool brands and cost-synergies, which are expected to impact all of the Company’s reporting segments. For this reason, a portion of the goodwill associated with the eOne acquisition was allocated to certain legacy reportable segments based on a calculated synergy value comprised of toy and game insourcing, labor cost-savings and certain other expected benefits. See note 3 for more information about the acquisition of eOne.

A portion of the Company’s goodwill and other intangible assets reside in the Corporate segment of the business. For purposes of the goodwill impairment testing, these assets are allocated to the reporting units within the Company’s operating segments.

The Company performs an annual impairment assessment on goodwill. This annual impairment assessment is performed in the fourth quarter of the Company’s fiscal year. In addition, if an event occurs or circumstances change that indicate that the carrying value may not be recoverable, the Company will perform an interim impairment test at that time. Although COVID-19 has had and will continue to have an impact to our business and the economies in which we operate, the impact of COVID-19 did not constitute a triggering event for purposes of goodwill testing in 2020 or 2021.

In conjunction with the goodwill reallocation described above, during the first quarter of 2021, the Company performed an impairment test of goodwill balances held by the reporting units impacted by the segment realignment. The reporting units were tested as of December 28, 2020 and included our Europe, Asia Pacific, Global Consumer Products Licensing, Wizards of the Coast and Family Brands reporting units. Based on the results of the goodwill assessment, we determined that the fair values of each of these reporting units exceeded their carrying values, and as such, we concluded that there was no indication of goodwill impairment for these reporting units as of December 28, 2020.

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Notes to Consolidated Financial Statements — (Continued)

During the second quarter of 2021, the Company entered into a definitive agreement to sell the Entertainment One Music business ("eOne Music") for an aggregate sales price of $385.0 million, subject to certain closing adjustments related to working capital and net debt. Based on the value of the net assets held by eOne Music, which included goodwill and intangible assets allocated to eOne Music as part of the eOne acquisition, the Company recorded a pre-tax non-cash goodwill impairment charge of $108.8 million, during 2021, within Loss on Disposal of Business in the Consolidated Statements of Operations, and within the Entertainment segment. On June 29, 2021, during the Company's fiscal third quarter, the eOne Music sale was completed and associated goodwill and intangible assets were removed from the consolidated financial statements. There were no underlying business conditions that provided an indication of the existence of impairment.

During the fourth quarter of 2021 the Company performed a quantitative goodwill assessment with respect to each of its reporting units and determined that the fair values of the Company’s reporting units exceeded their carrying values. As a result of this assessment, the Company concluded that, other than the Music goodwill impairment loss noted above, there was no other impairment to any of its reporting units. Accordingly, no goodwill impairment was recorded as a result of the quantitative test for the year ended December 26, 2021.

During the fourth quarter of 2020 the Company performed a qualitative goodwill assessment with respect to its reporting units, including eOne, and determined that it was not necessary to perform a quantitative assessment for the goodwill of the Company's reporting units.

During the fourth quarter of 2019, 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 games releases. The modifications resulted in changes to the long-term projections for the Backflip business. The goodwill impairment analysis involved comparing the Backflip carrying value to its estimated fair value, which was calculated based on the Income Approach. Discounted cash flows serve as the primary basis for the Income Approach. The Company utilized forecasted cash flows for the Backflip reporting unit that included assumptions including but not limited to: expected revenues to be realized based on planned future mobile game releases, expected EBITDA margins derived in part based on expected future royalty costs, advertising and marketing costs, development costs, overhead costs, and expected future tax rates. The cash flows beyond the forecast period were estimated using a terminal value growth rate of 3%. 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. Based on this assessment, the Company recorded an impairment charge of $86.3 million in the fourth quarter of 2019, in the Company’s Wizards of the Coast & Digital Gaming segment, which was the full amount of remaining goodwill associated with the Backflip reporting unit.

Based on its qualitative assessment of goodwill for all reporting units with the exception of Backflip in 2019, the Company concluded there was no other impairment of goodwill during 2019.

Other Intangible Assets, Net

The following table represents a summary of the Company’s other intangible assets, net at December 26, 2021 and December 27, 2020:

(In millions)			2021						2020
Acquired product rights			$	2,101.7					2,374.7
Licensed rights of entertainment properties			45.0						45.0
Accumulated amortization			(1,050.4)						(964.6)
Amortizable intangible assets			1,096.3						1,455.1
Product rights with indefinite lives			75.7						75.7
Total other intangibles assets, net			$	1,172.0					1,530.8

Certain intangible assets relating to rights obtained in the Company’s acquisition of Milton Bradley in 1984 and Tonka in 1991 are not amortized. These rights were determined to have indefinite lives and are included as product rights with indefinite lives in the table above. The Company tests these assets for impairment on an annual basis in the fourth quarter of each year or when an event occurs or circumstances change that indicate that the

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Notes to Consolidated Financial Statements — (Continued)

carrying value may not be recoverable. The Company completed its annual impairment tests of indefinite-lived intangible assets in the fourth quarter of 2021, 2020, and 2019 concluding that there was no impairment of these assets. The Company’s other intangible assets are amortized over their remaining useful lives, and accumulated amortization of these other intangibles is reflected in other intangible assets, net in the accompanying consolidated balance sheets.

Intangible assets 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. As a result, charges of $20.0 million and $30.7 million were recorded in the first and fourth quarters, respectively, within acquisition and related costs in the Company's Consolidated Statement of Operations.

There were no other triggering events in 2021 or 2020 which would indicate the Company's intangible assets were impaired.

In the fourth quarter of 2019, 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 assets were impaired. The Company calculated the fair value of the intangible assets based on a discounted cash flow, which resulted in a charge of $31.3 million recorded within administrative expense and in the Company’s Corporate and Eliminations segment.

Other than the intangible assets discussed above, no other indications of impairment existed. The Company will continue to incur amortization expense related to the use of acquired and licensed rights to produce various products. A portion of the amortization of these product rights will fluctuate depending on brand activation, related revenues during an annual period and future expectations, as well as rights reaching the end of their useful lives. The Company currently estimates amortization expense related to the above intangible assets for the next five years to be approximately:

			(In millions)
2022			$	107.9
2023			99.6
2024			97.9
2025			97.9
2026			97.9

(7) Equity Method Investment

The Company owns an interest in a joint venture, Discovery Family Channel (the “Network”), with 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 $300.0 million and certain future tax payments based on the value of certain tax benefits expected to be received by the Company. On September 23, 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.

As of December 26, 2021 and December 27, 2020, the Company’s investment in the Network totaled $161.2 million and $216.6 million, respectively. During the fourth quarter of 2021, the Company reviewed its investment with Discovery for impairment and concluded that the fair value of the Company's interest in the joint venture was less than its carrying value, and as such, recorded an impairment loss of $74.1 million, which is included in other (income) expense, net in the consolidated statements of operations for the year ended December 26, 2021. The Company utilized the discounted cash flow method under the income approach to estimate the fair value of the

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Notes to Consolidated Financial Statements — (Continued)

Network, which requires assumptions and estimates that include: future annual cash flows, income tax rates, discount rates, estimated growth rates, and other market factors. Recent accelerating changes in the cable distribution industry, including technological changes and expanding options for digital content offerings, has resulted in the fragmentation of viewership, declines in subscribers to the traditional cable bundle, and pricing pressure. These factors led to the lower valuation of the Network as compared to its carrying value.

The Company’s share in the earnings of the Network for the years ended December 26, 2021, December 27, 2020 and December 29, 2019 totaled $20.8 million, $21.8 million and $23.6 million, respectively, and is included as a component of other expense (income), net in the consolidated statements of operations. The Company also enters into certain other transactions with the Network. During 2021, 2020 and 2019, these transactions were not material.

In connection with the amendment, the Company and Discovery entered into an option agreement to acquire 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. At December 26, 2021 and December 27, 2020, the fair market value of this option was $1.7 million and $20.6 million, respectively, and was included as a component of other liabilities. The change in the option's value was driven by the impairment loss recorded on the Company's investment in the Network. During 2021, 2020 and 2019, the Company recorded gains of $20.1 million, $1.5 million and $1.3 million in other (income) expense, net relating to the change in fair value of this option.

The Company also has a related liability due to Discovery under the existing tax sharing agreement. The balance of the associated liability, including imputed interest, was $18.3 million and $19.9 million at December 26, 2021 and December 27, 2020, respectively, and is included as a component of other liabilities in the accompanying consolidated balance sheets. The Company recognized a loss of $2.1 million in the fourth quarter of 2021 related to an increase of this liability. This was caused by a change in the Company's 2020 tax rate that resulted in future payments owed to the Network. During 2021, 2020 and 2019, the Company made payments under the tax sharing agreement to Discovery of $5.3 million, $4.7 million and $4.8 million, respectively. See note 20 for more information on estimated future payments in relation to the Company's Discovery tax sharing agreement.

The Company has a license agreement with the Network that requires the payment of royalties by the Company to the Network based on a percentage of revenue derived from products related to television shows broadcast by the joint venture. The license includes a minimum royalty guarantee of $125.0 million, which was paid in five annual installments of $25.0 million per year, commencing in 2009, which can be earned out over approximately a 12-year period. As of December 26, 2021 the Company did not have a prepaid royalty balance related to this agreement as the licensing agreement ended in 2021. As of December 27, 2020 the Company's prepaid royalties related to this agreement were $15.1 million, all of which were included in prepaid expenses and other current assets. Beginning in 2021, the Company and the Network agreed that Hasbro would no longer provide the Network with new content. Previous to this amendment, the parties were subject to an agreement under which the Company would provide the Network with an exclusive first look in the U.S. to license certain types of programming developed by the Company based on its intellectual property. In the event the Network licenses the programming from the Company to air, it is required to pay the Company a license fee.

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

Investments in productions and investments in acquired content rights are predominantly monetized on a title-by-title basis and are recorded within other assets in the Company's consolidated balance sheets, to the extent they are considered recoverable against future revenues. These amounts are being amortized to program cost amortization using a model that reflects the consumption of the asset as it is released through various channels including broadcast licenses, theatrical release and home entertainment. Amounts capitalized are reviewed periodically on an individual film basis and any portion of the unamortized amount that appears not to be recoverable from future net revenues is expensed as part of program cost amortization during the period the loss becomes evident.

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Notes to Consolidated Financial Statements — (Continued)

Programming costs are included in other assets and consist of the following at December 26, 2021 and December 27, 2020:

(In millions)			2021						2020
Investment in Films and Television Programs:
Individual Monetization
Released, net of amortization			$	481.7					$	428.0
Completed and not released			18.5						17.3
In production			151.6						185.5
Pre-production			84.0						67.6
			735.8						698.4
Film/TV Group Monetization (1)
Released, net of amortization			32.2						—
In production			13.0						—
			45.2						—
Investment in Other programming:
Released, net of amortization			5.3						13.7
Completed and not released			0.4						2.1
In production			12.6						5.4
Pre-production			1.7						7.6
			20.0						28.8
Total Program Investments			$	801.0					$	727.2

(1) Due to a monetization strategy change, during 2021 the Company began monetizing certain content assets as a film/TV group.

The Company recorded $628.6 million of program cost amortization related to released programming during 2021, consisting of the following:

(In millions)						Investment in Production						Investment in Content						Other						Total
Program cost amortization						$	541.8					$	78.3					$	8.5					$	628.6

Based on management’s total revenue estimates at December 26, 2021, the Company's expected future amortization expenses for capitalized programming costs over the next five years are as follows:

(In millions)						2022						2023						2024						2025						2026
Completed and not released						$	19.6					0.4						0.4						0.3						0.3
Released						102.2						71.0						65.0						72.5						60.1
In production						46.6						49.2						8.7						7.9						7.1
Pre-production						6.0						8.0						10.0						—						—
Total						$	174.4					128.6						84.1						80.7						67.5

In the normal course of its business, the Company also enters into contracts related to obtaining right of first refusal ("first look deals") to purchase, distribute, or license certain entertainment projects or content. See note 20 for more information on the Company's expected future payments for first look deals.

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Notes to Consolidated Financial Statements — (Continued)

(9) Financing Arrangements

At December 26, 2021, Hasbro had available an unsecured revolving credit agreement (see Amended Revolving Credit Agreement below) in the amount of $1.5 billion and unsecured uncommitted lines of credit from various banks approximating $139.8 million. Substantially all of the short term borrowings outstanding at the end of 2021 and 2020 represent borrowings made under, or supported by, these lines of credit. Borrowings under the lines of credit as of December 26, 2021 and December 27, 2020 were made in the form of production demand loans at various interest rates. The weighted average interest rates of the outstanding borrowings under the uncommitted lines of credit as of December 26, 2021 and December 27, 2020 were 3.9% and 3.8%, respectively. The Company had no borrowings outstanding under its committed line of credit at December 26, 2021 and December 27, 2020. During 2021 and 2020, Hasbro’s working capital needs were fulfilled by cash available and cash generated from operations.

During the second half of 2019, in preparation for the Company's acquisition of eOne, the Company completed 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 10.6 million shares of common stock at a public offering price of $95.00 per share and (iii) $1.0 billion in term loans provided by a Term Loan Agreement (the “Term Loan Agreement”) entered into with Bank of America, N.A., as administrative agent, and certain financial institutions, as lenders, pursuant to which such lenders committed to provide, contingent on completion of the eOne acquisition and certain other customary conditions to funding, facilities consisting of a three-year senior unsecured term loan facility in an aggregate principal amount of $400.0 million and a five-year senior unsecured term loan facility in an aggregate principal amount of $600.0 million. On December 30, 2019, the Company completed the acquisition of eOne and on that date, borrowed the full amount of $1.0 billion under the Term Loan Facilities. As of December 26, 2021, the Company has repaid the full aggregate principal amount of $400.0 million on the three-year term loan facility and $180.0 million of the aggregate principal amount on the five-year term loan facility. See note 11 for further discussion on the Term Loan Agreement and note 3 for further discussion on the eOne acquisition.

The Company has a second amended and restated revolving credit agreement with Bank of America, as administrative agent, swing line lender and a letter of credit issuer and lender and certain other financial institutions, as lenders thereto (the "Amended Revolving Credit Agreement"), which provides the Company with commitments having a maximum aggregate principal amount of $1.5 billion. The Amended Revolving Credit Agreement also provides for a potential additional incremental commitment increase of up to $500.0 million subject to agreement of the lenders. The Amended Revolving Credit Agreement contains certain financial covenants setting forth leverage and coverage requirements, and certain other limitations typical of an investment grade facility, including with respect to liens, mergers and incurrence of indebtedness. The Amended Revolving Credit Agreement extends through September 20, 2024. The Company was in compliance with all covenants as of and for the year ended December 26, 2021. The Company had no borrowings outstanding under its committed revolving credit facility as of December 26, 2021.

The Company pays a commitment fee (0.100% as of December 26, 2021) based on the unused portion of the revolving credit facility and interest equal to a Base Rate or Eurocurrency Rate plus a spread on borrowings under the facility. The Base Rate is determined based on either the Federal Funds Rate plus a spread, or Prime Rate plus a spread. The commitment fee and the amount of the spread to the Base Rate or Eurocurrency Rate both vary based on the Company’s long-term debt ratings and the Company’s leverage. At December 26, 2021, the interest rate under the revolving credit facility was equal to Eurocurrency Rate plus 1.125%.

The Company also has an agreement with a group of banks providing a commercial paper program (the “Program”). Under the Program, at the Company’s request 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. Borrowings under the Program are supported by the aforementioned unsecured committed line of credit and the Company may issue notes from time to time up to an aggregate principal amount outstanding at any given time of $1.0 billion. The maturities of the notes may vary but may not exceed 397 days. Subject to market conditions, the notes will be sold under customary terms in the commercial paper market and will be issued at a discount to par, or alternatively, will be sold at par and will bear varying interest rates based on a fixed or floating rate basis. The interest rates will vary based on market conditions and the ratings assigned to the notes by the credit rating agencies at the time of issuance. At December 26, 2021 and December 27, 2020, the Company did not have any notes outstanding under the Program.

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Notes to Consolidated Financial Statements — (Continued)

During November 2021, the Company secured a senior revolving film and television production credit facility (the “RPCF”) with MUFG Union Bank, N.A., as administrative agent and lender and certain other financial institutions, as lenders thereto (the “Revolving Production Financing Agreement”) which provides the Company with commitments having a maximum aggregate principal amount of $250.0 million. The Revolving Production Financing Agreement also provides the Company the option to request a commitment increase up to an aggregate additional amount of $150.0 million subject to agreement of the lenders. The Revolving Production Financing Agreement extends through November 22, 2024. The Company will use the RPCF to fund certain of the Company’s original film and TV production costs. Borrowings under the RPCF will be non-recourse to the Company's assets.

(10) Accrued Liabilities

Components of accrued liabilities for the fiscal years ended on December 26, 2021 and December 27, 2020 are as follows:

(In millions)			2021						2020
Participations and residuals			$	299.1					$	327.3
Royalties			253.0						229.2
Deferred revenue			114.1						161.0
Payroll and management incentives			183.6						132.4
Freight			107.5						32.3
Dividends			94.0						93.4
Other Taxes			95.0						81.9
Accrued expenses IIC & IIP			74.9						29.7
Advertising			60.4						58.6
Severance			32.0						49.7
Accrued income taxes			30.9						29.7
Other			330.3						313.4
Total accrued liabilities			$	1,674.8					1,538.6

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Notes to Consolidated Financial Statements — (Continued)

(11) Long-Term Debt

Components of long-term debt for the fiscal years ended on December 26, 2021 and December 27, 2020 are as follows:

(In millions)			2021												2020
			Carrying Cost						Fair Value						Carrying Cost						Fair Value
3.90% Notes Due 2029			$	900.0					991.7						$	900.0					1,011.1
3.55% Notes Due 2026			675.0						725.6						675.0						752.7
3.00% Notes Due 2024			500.0						521.2						500.0						540.6
6.35% Notes Due 2040			500.0						692.8						500.0						636.5
3.50% Notes Due 2027			500.0						539.2						500.0						544.5
2.60% Notes Due 2022 (1)			—						—						300.0						311.5
5.10% Notes Due 2044			300.0						374.5						300.0						338.1
3.15% Notes Due 2021 (2)			—						—						300.0						302.3
6.60% Debentures Due 2028			109.9						136.7						109.9						137.4
Variable % Notes Due December 30, 2022 (3)			—						—						300.0						300.0
Variable % Notes Due December 30, 2024 (4)			397.5						397.5						577.5						577.5
Production Financing Facilities			170.1						170.1						165.5						165.5
Total long-term debt			$	4,052.5					4,549.3						$	5,127.9					5,617.7
Less: Deferred debt expenses			28.2						—						35.3						—
Less: Current portion			200.1						—						432.6						—
Long-term debt			$	3,824.2					4,549.3						$	4,660.0					5,617.7

(1) During the third quarter of 2021, the Company repaid in full its 2.60% Notes, in the aggregate principal amount of $300.0 million due in November 2022.

(2) During the first quarter of 2021, the Company repaid in full its 3.15% Notes, in the aggregate principal amount of $300.0 million due in May 2021.

(3) During the second quarter of 2021, the Company repaid $250.0 million of the Variable % Notes Due December 30, 2022 and during the third quarter of 2021, the Company repaid the remaining balance of $50.0 million of the Variable % Notes Due December 30, 2022.

(4) During the third quarter of 2021, the Company repaid $50.0 million, and during the fourth quarter of 2021, the Company repaid $100.0 million of the Variable % Notes Due December 30, 2024.

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

The Notes bear interest at the stated rates but may be subject to upward adjustment if the credit rating of the Company is reduced by Moody's or Standard & Poors. The adjustment can be from 0.25% to 2.00% based on the extent of the ratings decrease. The Company may redeem the Notes at its option at the greater of the principal amount of the Notes or the present value of the remaining scheduled payments discounted using the effective interest rate on applicable U.S. Treasury bills at the time of repurchase, plus (1) 25 basis points (in the case of the 2024 Notes); (2) 30 basis points (in the case of the 2026 Notes); and (3) 35 basis points (in the case of the 2029

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Notes to Consolidated Financial Statements — (Continued)

Notes). In addition, on and after October 19, 2024 for the 2024 Notes, September 19, 2026 for the 2026 Notes and August 19, 2029 for the 2029 Notes, such series of Notes will be redeemable, in whole at any time or in part from time to time, at the Company's option at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus any accrued and unpaid interest.

In September 2019, the Company entered into a $1.0 billion Term Loan Agreement (the "Term Loan Agreement”) with Bank of America N.A. (“Bank of America”), as administrative agent, and certain financial institutions as lenders, pursuant to which such lenders committed to provide, contingent upon the completion of the eOne acquisition and certain other customary conditions to funding, (1) a three-year senior unsecured term loan facility in an aggregate principal amount of $400.0 million (the “Three-Year Tranche”) and (2) a five-year senior unsecured term loan facility in an aggregate principal amount of $600.0 million (the “Five-Year Tranche” and together with the Three-Year Tranche, the “Term Loan Facilities”). The full amount of the Term Loan Facilities were drawn down on December 30, 2019, the closing date of the eOne acquisition. During 2020, the Company made $122.5 million in payments towards the $1.0 billion term loan notes consisting of $100.0 million on the principal of the Three-Year Tranche loans in addition to the required quarterly principal amortization payments totaling $22.5 million on the Five-Year Tranche loans. During 2021, the Company paid $480.0 million toward the $1.0 billion term loan notes consisting of the remaining $300.0 million of the principal balance of the Three-Year Tranche loans as well as $150.0 million principal balance and principal amortization payments totaling $30.0 million on the Five-Year Tranche loans.

Loans under the Five-Year Tranche bear interest at the Company’s option, at either the Eurocurrency Rate or the Base Rate, plus a per annum applicable rate that fluctuates between 100.0 basis points and 187.5 basis points, in the case of loans priced at the Eurocurrency Rate, and between 0.0 basis points and 87.5 basis points, in the case of loans priced at the Base Rate, in each case, based upon the non-credit enhanced, senior unsecured long-term debt ratings of the Company by Fitch Ratings Inc., Moody’s Investor Service, Inc. and S&P Global Rankings, subject to certain provisions taking into account potential differences in ratings issued by the relevant rating agencies or a lack of ratings issued by such rating agencies. Loans under the Five-Year Tranche require principal amortization payments that are payable in equal quarterly installments of 5.0% per annum of the original principal amount thereof for each of the first two years after funding, increasing to 10.0% per annum of the original principal amount thereof for each subsequent year. The Term Loan Agreement contains affirmative and negative covenants typical of this type of facility, including: (i) restrictions on the Company’s and its domestic subsidiaries’ ability to allow liens on their assets, (ii) restrictions on the incurrence of indebtedness, (iii) restrictions on the Company’s and certain of its subsidiaries’ ability to engage in certain mergers, (iv) the requirement that the Company maintain a Consolidated Interest Coverage Ratio of no less than 3.00:1.00 as of the end of any fiscal quarter and (v) the requirement that the Company maintain a Consolidated Total Leverage Ratio of no more than, depending on the gross proceeds of equity securities issued after the effective date of the acquisition of eOne, 5.65:1.00 or 5.40:1.00 for each of the first, second and third fiscal quarters ended after the funding of the Term Loan Facilities, with periodic step downs to 3.50:1.00 for the fiscal quarter ending December 31, 2023 and thereafter. As of December 26, 2021, the Company was in compliance with the financial covenants contained in the Term Loan Agreement.

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

Current portion of long-term debt at December 26, 2021 of $200.1 million, as shown on the consolidated balance sheet, represents the current portion of required quarterly principal amortization payments for the 5-Year Tranche of the Term Loan Facilities and other production financing facilities. All of the Company’s other long-term borrowings have contractual maturities that occur subsequent to 2023 with the exception of certain of the Company’s production financing facilities and annual principal payments related to the Term Loan Facilities.

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Notes to Consolidated Financial Statements — (Continued)

The Company's long-term borrowings have the following future contractual maturities:

Future long-term borrowings contractual payments			(In millions)
2022*			$	52.5
2023**			60.0
2024			785.0
2025			—
2026			675.0
2027 and thereafter			2,309.9
			3,882.4
Production financing facilities			170.1
			$	4,052.5

*Represents the Company's current portion of required quarterly principal amortization payments for term loan facilities.

** Represents the Company's required quarterly principal amortization payments for term loan facilities in 2023.

The fair values of the Company’s long-term debt are considered Level 3 fair values (see note 13 for further discussion of the fair value hierarchy) and are measured using the discounted future cash flows method. In addition to the debt terms, the valuation methodology includes an assumption of a discount rate that approximates the current yield on a similar debt security. This assumption is considered an unobservable input in that it reflects the Company’s own assumptions about the inputs that market participants would use in pricing the asset or liability. The Company believes that this is the best information available for use in the fair value measurement.

Production Financing

In addition to the Company's financial instruments, the Company uses production financing to fund certain of its television and film productions which are typically arranged on an individual production basis by special purpose production subsidiaries.

Production financing facilities are secured by the assets and future revenue of the individual production subsidiaries and are non-recourse to the Company's assets.

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

(In millions)			2021						2020
Production financing held by production subsidiaries			$	170.1					$	165.5
Other loans (1)			—						5.4
Total			$	170.1					$	170.9
Production financing included in the consolidated balance sheet as:
Non-current			$	—					$	62.9
Current			170.1						102.6
Total			$	170.1					$	165.5

(1)Other loans of $5.4 million, consist of production related demand loans, and are recorded within Short-term Borrowings in the Company's consolidated balance sheets.

Interest is charged at bank prime rate plus a margin based on the risk of the respective production. The weighted average interest rate on all production financing as of December 26, 2021 was 3.9%.

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Notes to Consolidated Financial Statements — (Continued)

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

(In millions)			Canadian Facilities						U.S. Facilities						Total
As of December 26, 2021			$	35.8					134.3						170.1

The following table represents the movements in production financing and other related loans during 2021:

(In millions)			Production Financing						Other Loans						Total
December 27, 2020			$	165.5					$	5.4					$	170.9
Drawdowns			$	144.0					$	15.3					$	159.3
Repayments			$	(140.1)					$	(20.9)					$	(161.0)
Foreign exchange differences			$	0.7					$	0.2					$	0.9
Balance at December 26, 2021			$	170.1					$	—					$	170.1

The Company expects to repay all of its outstanding production financing loans in 2022.

(12) Income Taxes

The components of earnings before income taxes, determined by tax jurisdiction, are as follows:

(In millions)			2021						2020						2019
United States			$	236.8					191.5						250.5
International			345.1						130.6						343.8
Total earnings before income taxes			$	581.9					322.1						594.3

Income taxes attributable to earnings before income taxes are:

(In millions)			2021						2020						2019
Current
United States			$	59.5					22.3						41.4
State and local			15.4						6.2						5.6
International			42.9						37.9						41.8
			117.8						66.4						88.8
Deferred
United States			7.1						27.2						(20.1)
State and local			(0.3)						(10.8)						(1.5)
International			22.0						13.9						6.6
			28.8						30.3						(15.0)
Total income taxes			$	146.6					96.7						73.8

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

A reconciliation of the statutory United States federal income tax rate to Hasbro’s effective income tax rate is as follows:

			2021						2020						2019
Statutory income tax rate			21.0		%				21.0		%				21.0		%
State and local income taxes, net			1.5						2.2						0.5
Tax on international earnings			(1.1)						(3.5)						(2.7)
Domestic tax on foreign earnings			(1.7)						(2.7)						(1.9)
Change in unrecognized tax benefits			(3.4)						4.1						0.6
Change in valuation allowance			(1.6)						4.5						—
Share-based compensation			(0.6)						(0.4)						(0.8)
Research and development tax credits			(1.1)						(1.6)						(0.7)
Deferred tax rate change			6.5						3.6						—
Gains on integrated hedging instruments			—						—						(4.0)
Officers' compensation			1.9						1.4						—
Loss on disposition of business			3.9						—						—
Other, net			(0.1)						1.4						0.4
			25.2		%				30.0		%				12.4		%

Certain reclassifications have been made to prior year presentation to conform to current year presentation.

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Notes to Consolidated Financial Statements — (Continued)

The components of deferred income tax expense (benefit) arise from various temporary differences and relate to items included in the consolidated statements of operations as well as items recognized in other comprehensive earnings. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 26, 2021 and December 27, 2020 are:

(In millions)			2021						2020
Deferred tax assets:
Accounts receivable			$	30.8					32.7
Inventories			14.1						14.0
Loss and credit carryforwards			175.7						221.6
Operating leases			17.8						23.1
Operating expenses			23.5						32.9
Pension			16.3						16.6
Other compensation			37.3						33.7
Postretirement benefits			8.5						7.9
Interest rate hedge			4.7						5.0
Tax sharing agreement			1.5						2.2
Deferred revenue			4.0						8.3
Other			13.5						12.0
Gross deferred tax assets			347.7						410.0
Deferred tax liabilities:
Depreciation and amortization of long-lived assets			144.5						181.2
Equity method investment			6.7						21.3
Operating leases			15.1						20.1
Foreign exchange			13.7						7.3
Prepaid expenses			3.5						3.6
Other			8.8						19.5
Gross deferred tax liabilities			192.3						253.0
Valuation allowance			(171.2)						(174.2)
Net deferred income taxes			$	(15.8)					(17.2)

Certain reclassifications have been made to prior year presentation to conform to current year presentation.

The most significant amount of the loss and credit carryforwards relate to tax attributes of the acquired eOne entities that historically operated at losses in certain jurisdictions. At December 26, 2021, the Company has loss and credit carryforwards of $175.7 million, which is a decrease of $45.9 million from $221.6 million at December 27, 2020. Loss and credit carryforwards as of December 26, 2021 relate primarily to the U.S. and Canada. The Canadian loss carryforwards expire at various dates from 2031 to 2041. Some U.S. federal and state loss and credit carryforwards expire at various dates throughout 2022 while others have an indefinite carryforward period.

The recoverability of these future tax deductions and credits is evaluated by assessing the adequacy of future expected taxable income from all sources, including taxable income in prior carryback years, reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. To the extent the Company does not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is generally established. To the extent that a valuation allowance was established and it is subsequently determined that it is more likely than not that the deferred tax assets will be recovered, the change in the valuation allowance is recognized in the consolidated statements of income.

The Company has a valuation allowance for certain net deferred tax assets at December 26, 2021 of $171.2 million, which is a decrease of $3.0 million from $174.2 million at December 27, 2020. The valuation allowance pertains to certain U.S. state and international loss and credit carryforwards, some of which have no expiration and

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Notes to Consolidated Financial Statements — (Continued)

others that expire beginning in 2022, and other net deferred tax assets. The decrease in the valuation allowance is primarily due to the realization of certain net operating losses resulting from tax planning during the year.

At December 26, 2021 and December 27, 2020, the Company’s net deferred income taxes are recorded in the consolidated balance sheets as follows:

(In millions)			2021						2020
Other assets			132.1						137.6
Other liabilities			(147.9)						(154.8)
Net deferred income taxes			$	(15.8)					(17.2)

We previously considered the earnings in our non-U.S. subsidiaries to be indefinitely reinvested and, accordingly, recorded no deferred income taxes. However, the Tax Cuts and Jobs Act (the "Tax Act") enacted on December 22, 2017 gave the Company more flexibility to manage cash globally. The Company still has significant cash needs outside the United States and continues to consistently monitor and analyze its global working capital and cash requirements. However, we intend to repatriate substantially all of our accumulated foreign earnings when appropriate. As of 2021, we have recorded $3.4 million of a foreign withholding and U.S. state income tax liability. The Company has not finalized the timing of any actual cash distributions or the specific amounts and therefore we could still be subject to some additional foreign withholding taxes and U.S. state taxes. We will record these additional tax effects, if any, in the period that we complete our analysis and are able to make a reasonable estimate.

A reconciliation of unrecognized tax benefits, excluding potential interest and penalties, for the fiscal years ended December 26, 2021, December 27, 2020, and December 29, 2019 is as follows:

(In millions)			2021						2020						2019
Balance at beginning of year			$	67.8					36.7						46.1
Gross increases in prior period tax positions			0.6						12.7						2.0
Gross increase from acquisition			—						13.7						—
Gross decreases in prior period tax positions			(12.0)						—						—
Gross increases in current period tax positions			4.6						11.7						4.2
Decreases related to settlements with tax authorities			(2.7)						—						(12.0)
Decreases from the expiration of statute of limitations			(7.7)						(7.0)						(3.6)
Balance at end of year			$	50.6					67.8						36.7

Unrecognized tax benefits as of December 26, 2021, December 27, 2020 and December 29, 2019, were $50.6 million, $67.8 million, and $36.7 million, respectively, and are recorded within other liabilities, prepaid expenses and other current assets, and other assets in the Company's consolidated balance sheets. If recognized, these tax benefits would have affected our income tax provision for fiscal years 2021, 2020, and 2019, by approximately $46.0 million, $57.0 million, and $36.0 million, respectively.

During 2021, 2020, and 2019, the Company recognized $2.6 million, $3.7 million, and $1.8 million, respectively, of potential interest and penalties, which are included as a component of income taxes in the accompanying consolidated statements of operations. At December 26, 2021, December 27, 2020, and December 29, 2019, the Company had accrued potential interest and penalties of $7.3 million, $11.6 million, and $5.5 million, respectively.

The Company and its subsidiaries file income tax returns in the United States and various state and international jurisdictions. In the normal course of business, the Company is regularly audited by U.S. federal, state and local and international tax authorities in various tax jurisdictions. The Company is no longer subject to U.S. federal income tax examinations for years before 2012. With few exceptions, the Company is no longer subject to U.S. state or local and non-U.S. income tax examinations by tax authorities in its major jurisdictions for years before 2014. The Company is currently under income tax examination by the Internal Revenue Service and in several U.S. state and local and non-U.S. jurisdictions.

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Notes to Consolidated Financial Statements — (Continued)

The Company believes it is reasonably possible that a decrease of approximately $0.0 million - $5.0 million in gross unrecognized tax benefits may be necessary within the coming year as a result of expected tax return settlements and lapse of statute of limitations.

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

(13) Capital Stock

The Company has a long history of increasing shareholder value through its share repurchase program. Purchases of the Company’s common stock may be made from time to time, subject to market conditions, and may be made in the open market or through privately negotiated transactions. The Company has no obligation to repurchase shares under the authorization and the time, actual number, and the value of the shares which are repurchased will depend on a number of factors, including the price of the Company’s common stock. As part of this initiative, since 2005, the Company's Board of Directors (the "Board") adopted numerous share repurchase authorizations with a cumulative authorized repurchase amount of $4.3 billion. The most recent authorization for the repurchase of up to $500.0 million in common stock was approved in May 2018. As a result of the financing activities related to the eOne acquisition, the Company suspended its share repurchase program to prioritize deleveraging, and did not repurchase any shares during 2021 and 2020. At December 26, 2021, $366.6 million remained under the current authorization.

(14) Fair Value of Financial Instruments

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

Accounting standards permit entities to measure many financial instruments and certain other items at fair value and establish presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar assets and liabilities. The Company elected the fair value option for certain available-for-sale investments using net asset value per share and during 2020, the Company liquidated these investments as part of its global cash management strategy. The Company recorded net (losses) gains of $(0.3) million and $1.9 million on these investments in other (income) expense, net for the years ended December 27, 2020 and December 29, 2019, respectively, relating to the change in fair value of such investments.

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Notes to Consolidated Financial Statements — (Continued)

At December 26, 2021 and December 27, 2020, the Company had the following assets and liabilities measured at fair value in its consolidated balance sheets (excluding assets for which the fair value is measured using net asset value per share):

									Fair Value Measurements Using
(In millions)			Fair Value						Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
December 26, 2021
Assets:
Available-for-sale securities			$	1.9					1.9						—						—
Derivatives			10.9						—						10.9						—
Total assets			$	12.8					1.9						10.9						—
Liabilities:
Derivatives			$	2.6					—						2.6						—
Option agreement			1.7						—						—						1.7
Total liabilities			$	4.3					—						2.6						1.7
December 27, 2020
Assets:
Available-for-sale securities			$	2.1					2.1						—						—
Derivatives			4.8						—						4.8						—
Total assets			$	6.9					2.1						4.8						—
Liabilities:
Derivatives			$	12.7					—						12.7						—
Option agreement			20.6						—						—						20.6
Total liabilities			$	33.3					—						12.7						20.6

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

The Company’s derivatives consist of foreign currency forward and option contracts. The Company uses current forward rates of the respective foreign currencies to measure the fair value of these contracts. The Company's option agreement relates to an equity method investment in Discovery Family Channel. The option agreement is included in other liabilities at December 26, 2021 and December 27, 2020, and is valued using an option pricing model based on the fair value of the related investment. Inputs used in the option pricing model include volatility and fair value of the underlying company which are considered unobservable inputs as they reflect the Company’s own assumptions about the inputs that market participants would use in pricing the asset or liability. The Company believes that this is the best information available for use in the fair value measurement. Due to the 2021 revaluation of the Discovery Family Channel and resulting impairment charges, the Company reduced the option's fair value by $20.1 million during the fourth quarter of 2021. See note 7 for more information on the Company's investment in the Discovery Family Channel.

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

(In millions)			2021						2020
Balance at beginning of year			$	(20.6)					$	(22.1)
Gain from change in fair value			18.9						1.5
Balance at end of year			$	(1.7)					$	(20.6)

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(15) Stock Options, Other Stock Awards and Warrants

The Company has reserved 11.3 million shares of its common stock for issuance upon exercise of options and other awards granted or to be granted under stock incentive plans for employees and for non-employee members of the Board of Directors (collectively, the “plans”). These awards generally vest and are expensed in equal annual amounts over three to five years. The plans provide that options be granted at exercise prices not less than the market value of the underlying common stock on the date the option is granted and options and share awards are adjusted for such changes as stock splits and stock dividends. Options are exercisable for periods of no more than seven years after date of grant. Upon exercise in the case of stock options, grant in the case of restricted stock or vesting in the case of performance based contingent stock and restricted stock unit grants, shares are issued out of available treasury shares. The Company’s current plan permits the granting of awards in the form of stock, stock appreciation rights, stock awards and cash awards in addition to stock options.

Total compensation expense related to stock options, restricted stock units, including those awards made to non-employee members of its Board of Directors, and stock performance awards for the years ended December 26, 2021, December 27, 2020 and December 29, 2019 was $97.8 million, $49.7 million and $28.0 million, respectively, and was recorded as follows:

(In millions)			2021						2020						2019
Product development			$	3.7					3.3						3.3
Selling, distribution and administration (a)(b)			94.1						46.4						24.7
			97.8						49.7						28.0
Income tax benefit			10.2						5.3						3.6
			$	87.6					44.4						24.4

(a)The 2021 increase in compensation expense reflects $20.9 million of additional expense associated with the contractual accelerated vesting of certain equity awards as a result of the passing of the Company's former CEO.

(b)The 2020 increase in compensation expense was due to additional stock options, restricted stock units, and stock performance awards granted to eligible participants as a result of the eOne acquisition.

The following table represents total stock compensation expense, net of performance adjustments, by award type related to stock performance awards, restricted stock units, stock options and awards made to non-employee members of the Company’s Board of Directors, for the years ended December 26, 2021, December 27, 2020 and December 29, 2019:

(In millions)			2021						2020						2019
Stock performance awards			$	26.9					8.4						(1.6)
Restricted stock units			50.9						28.5						18.7
Stock options			18.4						11.0						9.1
Non-employee awards			1.6						1.8						1.8
			97.8						49.7						28.0
Income tax benefit			10.2						5.3						3.6
			$	87.6					44.4						24.4

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Stock Performance Awards

In 2021, 2020 and 2019, as part of its annual equity grant to executive officers and certain other employees, the Company issued contingent stock performance awards (the “Stock Performance Awards”). These awards provide the recipients with the ability to earn shares of the Company’s common stock based on the Company’s achievement of stated cumulative operating performance targets over the three fiscal years ended December 2023, December 2022, and December 2021 for the 2021, 2020 and 2019 awards, respectively. Each Stock Performance Award has a target number of shares of common stock associated with such award which may be earned by the recipient if the Company achieves the stated diluted earnings per share and revenue targets. For certain employees participating in the 2019 and 2020 awards, the Stock Performance Awards also include an additional target for the Company's return on invested capital, in addition to the diluted earnings per share and revenue targets. Beginning with the 2021 awards, all employee awards will be measured on achieving diluted earnings per share, revenue and return on invested capital targets. The ultimate amount of the award may vary from 0% to 200% of the target number of shares, depending on the cumulative results achieved.

Information with respect to Stock Performance Awards for 2021, 2020 and 2019 is as follows:

(In millions, except per share data)			2021						2020						2019
Outstanding at beginning of year			0.6						0.5						0.6
Granted			0.2						0.4						0.3
Forfeited			—						(0.1)						(0.1)
Canceled			(0.1)						(0.2)						(0.1)
Vested			—						—						(0.2)
Outstanding at end of year			0.7						0.6						0.5
Weighted average grant-date fair value:
Granted			$	96.06					56.49						86.90
Forfeited			$	—					80.31						92.90
Canceled			$	77.33					88.25						99.58
Vested			$	—					99.58						74.72
Outstanding at end of year			$	75.74					69.25						87.59

Shares granted in 2021 included additional shares related to the 2019 award, reflecting adjustments to the ultimate amount of shares to be issued based on the Company's cumulative results achieved during the performance period. These shares were excluded from the calculation of the weighted average grant-date fair value of Stock Performance awards granted in 2021. Shares canceled in 2020 and 2019 represent Stock Performance Awards granted during 2018 and 2017, respectively, that were canceled based on the failure to meet the targets set forth by the agreement.

Stock Performance Awards are valued at the market value of the underlying common stock at the dates of grant and are expensed over the performance period. On a periodic basis, the Company reviews the actual and forecasted performance of the Company against the stated targets for each award. The total expense is adjusted upward or downward based on the expected number of shares to be issued as defined in the respective stock performance award agreement. If minimum targets as detailed under the award are not met, no additional compensation expense will be recognized and any previously recognized compensation expense will be reversed. During 2021, 2020 and 2019, the Company recognized expense, net of performance adjustments, of $26.9 million, $8.4 million and $(1.6) million, respectively, relating to Stock Performance Awards. The expense recognized in 2021 included $7.6 million of additional stock expense associated with the contractual acceleration of outstanding performance share awards upon the passing of the Company's former CEO. At December 26, 2021, the amount of total unrecognized compensation cost related to these awards is approximately $14.3 million and the weighted average period over which this will be expensed is 20 months.

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Restricted Stock Units

The Company, as part of its annual equity grant to executive officers and certain other employees, issues restricted stock or grants restricted stock units. These shares or units are nontransferable and subject to forfeiture for periods prescribed by the Company. These awards are valued at the market value of the underlying common stock at the date of grant and are subsequently amortized over the periods during which the restrictions lapse, generally three years. During 2021, 2020 and 2019, the Company recognized compensation expense, net of forfeitures, on these awards of $50.9 million, $28.5 million and $18.7 million, respectively. The expense recognized in 2021 included $6.0 million of additional stock expense associated with the contractual acceleration of outstanding restricted stock awards upon the passing of the Company's former CEO. At December 26, 2021, the amount of total unrecognized compensation cost related to restricted stock units is $71.6 million and the weighted average period over which this will be expensed is 20 months.

Information with respect to the remaining Restricted Stock Awards and Restricted Stock Units for 2021, 2020 and 2019 is as follows:

(In millions, except per share data)			2021						2020						2019
Outstanding at beginning of year			1.0						0.5						0.4
Granted			0.7						0.8						0.3
Forfeited			(0.1)						(0.1)						—
Vested			(0.5)						(0.2)						(0.2)
Outstanding at end of year			1.1						1.0						0.5
Weighted average grant-date fair value:
Granted			$	91.06					91.80						87.98
Forfeited			$	85.88					94.01						92.56
Vested			$	91.42					94.21						90.23
Outstanding at end of year			$	91.78					91.56						92.54

Stock Options

Information with respect to stock options for each of the three fiscal years ended December 26, 2021 is as follows:

(In millions, except per share data)			2021						2020						2019
Outstanding at beginning of year			2.8						2.4						2.3
Granted			0.6						0.8						0.7
Exercised			(0.5)						(0.3)						(0.5)
Expired or forfeited			—						(0.1)						(0.1)
Outstanding at end of year			2.9						2.8						2.4
Exercisable at end of year			2.1						1.5						1.3
Weighted average exercise price:
Granted			$	90.31					96.79						86.66
Exercised			$	65.12					55.82						58.18
Expired or forfeited			$	95.59					94.32						95.71
Outstanding at end of year			$	92.15					88.16						81.58
Exercisable at end of year			$	92.05					82.80						73.03

With respect to the 2.9 million outstanding options and 2.1 million options exercisable at December 26, 2021, the weighted average remaining contractual life of these options was 4.29 years and 3.83 years, respectively. The aggregate intrinsic value of the options outstanding and exercisable at December 26, 2021 was $17.4 million and $12.9 million, respectively. Substantially all unvested outstanding options are expected to vest.

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

The Company uses the Black-Scholes valuation model in determining the fair value of stock options. The expected life of the options used in this calculation is the period of time the options are expected to be outstanding and has been determined based on historical exercise experience. The weighted average fair value of options granted in fiscal 2021, 2020 and 2019 was $21.30, $18.58 and $15.70, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the fiscal years 2021, 2020 and 2019:

			2021						2020						2019
Risk-free interest rate			0.50		%				1.38		%				2.47		%
Expected dividend yield			3.01		%				2.81		%				3.14		%
Expected volatility			38		%				30		%				27		%
Expected option life			4 years						4 years						4 years

The intrinsic values, which represent the difference between the fair market value on the date of exercise and the exercise price of the option, for the options exercised in fiscal 2021, 2020 and 2019 were $16.0 million, $9.7 million and $24.5 million, respectively.

At December 26, 2021, the amount of total unrecognized compensation cost related to stock options was $9.4 million and the weighted average period over which this will be expensed is 21 months.

Non-Employee Awards

In 2021, 2020 and 2019, the Company granted 17,000, 30,000 and 20,000 shares of common stock, respectively, to its non-employee members of its Board of Directors. Of these shares, the receipt of 10,000 shares from the 2021 grant, 20,000 shares from the 2020 grant and 10,000 shares from the 2019 grant has been deferred to the date upon which the respective director ceases to be a member of the Company’s Board of Directors. These awards were valued at the market value of the underlying common stock at the date of grant and vested upon grant. In connection with these grants, compensation cost of $1.6 million was recorded in selling, distribution and administration expense in the year ended December 26, 2021, and $1.8 million in the years ended December 27, 2020 and December 29, 2019.

(16) Pension, Postretirement and Postemployment Benefits

Pension and Postretirement Benefits

The Company recognizes an asset or liability for each of its defined benefit pension plans equal to the difference between the projected benefit obligation of the plan and the fair value of the plan’s assets. Actuarial gains and losses and prior service costs that have not yet been included in income are recognized in the consolidated balance sheets in AOCE. Reclassifications to earnings from AOCE related to pension and postretirement plans are recorded to other (income) expense.

Expenses related to the Company’s defined benefit pension and defined contribution plans for 2021, 2020 and 2019 were approximately $49.3 million, $44.7 million and $48.4 million, respectively. Of these amounts, $42.7 million, $38.4 million and $35.1 million, respectively, related to defined contribution plans in the United States and certain international subsidiaries. The remainder of the expense relates to defined benefit pension plans discussed below.

United States Plans

Prior to 2008, substantially all United States employees were covered under at least one of several non-contributory defined benefit pension plans maintained by the Company. Benefits under the two major plans which principally covered non-union employees, were based primarily on salary and years of service. Benefits under the remaining plans are based primarily on fixed amounts for specified years of service. In 2007, for the two major plans covering its non-union employees, the Company froze benefits being accrued effective at the end of December 2007. Following the August 2015 sale of its manufacturing facility in East Longmeadow, MA, the Company elected to freeze benefits related to its major plan covering union employees. Effective January 1, 2016, the plan covering union employees merged with and into the Hasbro Inc. Pension Plan, and ceased to exist as a separate plan on that date.

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

In February 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 (“U.S. Pension Plan”). During the first quarter of 2018 the Company commenced the U.S. Pension Plan termination process and received regulatory approval during the fourth quarter of 2018. During the second quarter of 2019, the Company settled all remaining benefits directly with vested participants electing a lump sum payout, and purchased a group annuity contract from Massachusetts Mutual Life Insurance Company to administer all future payments to remaining U.S. Pension Plan participants. The U.S. Pension Plan's net funded asset position was sufficient to cover the lump sum payments and the purchase of the group annuity contract and settle all other remaining benefit obligations with no additional cost to the Company. After the settlement of the benefit obligations and payment of expenses, the Company had excess assets in the U.S. Pension Plan of approximately $20.2 million. The Company elected to utilize the remaining surplus after payment of administrative expenses for the Company's future matching contributions under the Company's 401(k) plan. The Company made a transfer of $19.5 million to the Company’s 401(k) plan which occurred in February 2020, with the remainder transferred in November 2021. Upon settlement of the pension liability, which occurred in May 2019, the Company recognized a non-operating settlement charge of $110.8 million, with an additional settlement charge of $0.2 million in December 2019, related to pension losses, reclassified from accumulated other comprehensive loss to other (income) expense in the Company's consolidated statements of operations, adjusted for market conditions and settlement costs at benefit distribution.

During 2020, the Company merged its employee retirement agreements, which had beginning benefit liabilities of $14.8 million, with its remaining US pension plans.

At December 26, 2021, the measurement date, the Company's remaining plans were unfunded with an aggregate accumulated and projected benefit obligation of $41.6 million.

The Company also provides certain postretirement health care and life insurance benefits to eligible employees who retired prior to January 1, 2020 and have either attained age 65 with 5 years of service or age 55 with 10 years of service. The cost of providing these benefits on behalf of employees who retired prior to 1993 has been substantially borne by the Company. The cost of providing benefits to all eligible employees who retire after 1992 is borne by the employee. The plan is not funded. During the fourth quarter of 2019, with the approval of the Compensation Committee of the Company's Board of Directors, the Company announced the elimination of the contributory postretirement health and life insurance coverage for employees whose retirement eligibility begins after December 31, 2019.

As of December 26, 2021, the Company had unrecognized losses related to its remaining U.S. pension and post retirement plans of $17.1 million.

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Reconciliations of the beginning and ending balances for the projected benefit obligation, the fair value of plan assets and the funded status are included below for the years ended December 26, 2021 and December 27, 2020.

			Pension												Postretirement
(In millions)			2021						2020						2021						2020
Change in Projected Benefit Obligation
Projected benefit obligation — beginning			$	46.0					30.9						29.9						27.4
Interest cost			1.1						1.5						0.8						0.9
Transfer in			—						14.8						—						—
Actuarial (gain) loss			(1.1)						3.4						0.4						3.4
Benefits paid			(3.1)						(4.6)						(1.8)						(1.8)
Plan amendments			—						—						(1.2)						—
Settlements paid			(1.3)						—						—						—
Projected benefit obligation — ending			$	41.6					46.0						28.1						29.9
Accumulated benefit obligation — ending			$	41.6					46.0						28.1						29.9
Change in Plan Assets
Fair value of plan assets — beginning			$	—					$	—					—						—
Fair value of plan assets — ending			$	—					—						—						—
Reconciliation of Funded Status
Projected benefit obligation			$	(41.6)					(46.0)						(28.1)						(29.9)
Fair value of plan assets			—						—						—						—
Funded status			(41.6)						(46.0)						(28.1)						(29.9)
Unrecognized prior service cost (credit)			—						—						(1.2)						—
Unrecognized net loss			13.2						15.8						3.9						3.6
Net amount			$	(28.4)					(30.2)						(25.4)						(26.3)
Accrued liabilities			$	(3.2)					(3.2)						(1.6)						(1.7)
Other liabilities			(38.4)						(42.8)						(26.5)						(28.2)
Accumulated other comprehensive (earnings) loss			13.2						15.8						2.7						3.6
Net amount			$	(28.4)					(30.2)						(25.4)						(26.3)

Assumptions used to determine the year-end pension and postretirement benefit obligations are as follows:

			2021						2020
Pension
Weighted average discount rate			2.91		%				2.51		%
Mortality table			Pri-2020/Scale MP - 2021						Pri-2012/Scale MP - 2020
Postretirement
Discount rate			3.03		%				2.72		%
Health care cost trend rate assumed for next year			6.00		%				6.25		%
Rate to which the cost trend rate is assumed to decline (ultimate trend rate)			5.00		%				5.00		%
Year that the rate reaches the ultimate trend			2025						2024

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

The following presents detail of the components of the net periodic benefit cost for the three years ended December 26, 2021.

(In millions)			2021						2020						2019
Components of Net Periodic Cost
Pension
Service cost			$	—					—						1.2
Interest cost			1.1						1.5						6.6
Expected return on assets			—						—						(6.2)
Amortization of actuarial loss			1.0						0.7						7.6
Curtailment/Settlement losses			0.5						—						111.0
Net periodic benefit cost			$	2.6					2.2						120.2
Postretirement
Service cost			$	—					—						0.9
Interest cost			0.8						0.9						1.3
Net periodic benefit cost			$	0.8					0.9						2.2

Assumptions used to determine net periodic benefit cost of the pension plan and postretirement plan for each fiscal year follow:

			2021						2020						2019
Pension
Weighted average discount rate			2.51		%				3.33		%				3.72		%
Long-term rate of return on plan assets			N/A						N/A						4.20		%
Postretirement
Discount rate			2.72		%				3.46		%				4.33		%
Health care cost trend rate assumed for next year			6.25		%				6.25		%				6.25		%
Rate to which the cost trend rate is assumed to decline (ultimate trend rate)			5.00		%				5.00		%				5.00		%
Year that the rate reaches the ultimate trend rate			2025						2024						2024

Expected benefit payments under the defined benefit pension plans (which reflects the 2019 Plan termination) and the postretirement benefit plan for the next five years subsequent to 2021 and in the aggregate for the following five years are as follows:

(In millions)			Pension						Postretirement
2022			$	3.2					$	1.7
2023			3.3						1.6
2024			3.2						1.6
2025			3.3						1.6
2026			3.1						1.5
2027-2031			14.0						7.2

International Plans

Pension coverage for employees of Hasbro’s international subsidiaries is provided, to the extent deemed appropriate, through separate defined benefit and defined contribution plans. At December 26, 2021 and December 27, 2020, the defined benefit plans had total projected benefit obligations of $121.6 million and $128.2 million, respectively, and fair values of plan assets of $94.8 million and $95.2 million, respectively. Substantially all of the plan assets are invested in equity and fixed income securities. The pension expense related to these plans was $4.0 million, $3.5 million and $2.1 million in 2021, 2020 and 2019, respectively. In fiscal 2022, the Company expects

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

$1.2 million of unrecognized net losses and an immaterial amount of amortization of prior service costs and unrecognized transition obligation to be included as a component of net periodic benefit cost.

Expected benefit payments under the international defined benefit pension plans for the five years subsequent to 2021 and in the aggregate for the five years thereafter are as follows: 2022: $2.3 million; 2023: $2.5 million; 2024: $2.6 million; 2025: $2.7 million; 2026: $3.0 million; and 2027 through 2031: $16.7 million.

Postemployment Benefits

Hasbro has several plans covering certain groups of employees, which may provide benefits to such employees following their period of active employment but prior to their retirement. These plans include certain severance plans which provide benefits to employees involuntarily terminated and certain plans which continue the Company’s health and life insurance contributions for employees who have left Hasbro’s employ under terms of its long-term disability plan.

(17) Leases

The Company occupies offices and uses certain equipment under various operating lease arrangements. The Company has no finance leases. The leases have remaining terms of 1 to 17 years, some of which include options to extend lease terms or options to terminate current lease terms at certain times, subject to notice requirements set out in the lease agreement. Payments under certain of the lease agreements may be subject to adjustment based on a consumer price index or other inflationary indices. The lease liability for such lease agreements as of the adoption date, was based on fixed payments as of the adoption date. Any adjustments to these payments based on the related indices will be recorded to expense as incurred. Leases with an expected term of 12 months or less are not capitalized. Lease expense under such leases is recorded straight line over the life of the lease. The Company capitalizes non-lease components for equipment leases, but expenses non-lease components as incurred for real estate leases.

The rent expense under such arrangements and similar arrangements that do not qualify as leases under ASU 2016-02, net of sublease income amounted to $88.2 million, $90.6 million and $68.9 million, respectively, for each of the three years ended December 26, 2021 and was not material to the Company’s financial statements nor were expenses related to short term leases (expected term less than twelve months) or variable lease payments during those same periods.

All leases expire prior to 2038. Real estate taxes, insurance and maintenance expenses are generally obligations of the Company. It is expected that, in the normal course of business, leases that expire will be renewed or replaced by leases on other properties; thus, it is anticipated that future minimum lease commitments will not be less than the amounts shown for 2021.

Information related to the Company's leases for the years ended December 26, 2021 and December 27, 2020 is as follows:

			Year Ended						Year Ended
(In millions)			December 26, 2021						December 27, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	53.4					$	50.9
Right-of-use assets obtained in exchange for lease obligations:
Operating leases*			$	28.4					$	109.1
Weighted Average Remaining Lease Term:
Operating leases			5.6 years						6.1 years
Weighted Average Discount Rate:
Operating leases			3.0		%				3.1		%

*In 2020 as part of the acquisition of eOne, the Company recognized $88.8 million of Right-of-use assets, net in the form of operating leases.

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

The following is a reconciliation of future undiscounted cash flows to the operating liabilities, and the related right of use assets, included in our Consolidated Balance Sheets as of December 26, 2021:

			Year Ended
(In millions)			December 26, 2021
2022			$	50.3
2023			42.3
2024			30.2
2025			24.3
2026			18.7
2027 and thereafter			33.4
Total future lease payments			199.2
Less imputed interest			22.9
Present value of future operating lease payments			176.3
Less current portion of operating lease liabilities (1)			43.9
Non-current operating lease liability (2)			132.4
Operating lease right-of-use assets, net (3)			$	159.3
(1) Included in Accrued liabilities on the consolidated balance sheets
(2) Included in Other liabilities on the consolidated balance sheets
(3) Included in Property, plant and equipment on the consolidated balance sheets

(18) Derivative Financial Instruments

Hasbro uses foreign currency forward contracts to mitigate the impact of currency rate fluctuations on firmly committed and projected future foreign currency transactions. These over-the-counter contracts, which hedge future currency requirements related to purchases of inventory, product sales, television and film production cost and production financing loans (see note 11) as well as other cross-border transactions not denominated in the functional currency of the business unit, are primarily denominated in United States and Hong Kong dollars, and Euros. All contracts are entered into with a number of counterparties, all of which are major financial institutions. The Company believes that a default by a single counterparty would not have a material adverse effect on the financial condition of the Company. Hasbro does not enter into derivative financial instruments for speculative purposes.

Cash Flow Hedges

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

At December 26, 2021 and December 27, 2020, the notional amounts and fair values of the Company’s foreign currency forward contracts designated as cash flow hedging instruments were as follows:

			2021												2020
(In millions)			Notional Amount						Fair Value						Notional Amount						Fair Value
Hedged transaction
Inventory purchases			199.1						10.4						316.8						(10.0)
Sales			104.5						(1.9)						111.6						1.3
Production financing and other			217.0						2.3						89.9						0.4
Total			$	520.6					10.8						518.3						(8.3)

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

The Company has a master agreement with each of its counterparties that allows for the netting of outstanding forward contracts. The fair values of the Company’s foreign currency forward contracts designated as cash flow hedges are recorded in the consolidated balance sheets at December 26, 2021 and December 27, 2020 as follows:

(In millions)			2021						2020
Prepaid expenses and other current assets
Unrealized gains			$	13.8					2.3
Unrealized losses			(3.1)						(1.6)
Net unrealized gains			$	10.7					0.7
Other assets
Unrealized gains			$	0.2					1.1
Unrealized losses			—						—
Net unrealized gains			$	0.2					1.1
Accrued liabilities
Unrealized gains			$	—					3.0
Unrealized losses			(0.1)						(12.9)
Net unrealized losses			$	(0.1)					(9.9)
Other liabilities
Unrealized gains			$	—					—
Unrealized losses			—						(0.2)
Net unrealized losses			$	—					(0.2)

Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings (loss) to net earnings for the years ended December 26, 2021, December 27, 2020 and December 29, 2019 as follows:

(In millions)			2021						2020						2019
Consolidated Statements of Operations Classification
Cost of sales			$	(4.7)					21.2						16.7
Net revenues			1.0						2.9						5.6
Other			2.0						1.2						0.2
Net realized (losses) gains			$	(1.7)					25.3						22.5

Undesignated Hedges

The Company also enters into foreign currency forward contracts to minimize the impact of changes in the fair value of intercompany loans due to foreign currency changes. The Company does not use hedge accounting for these contracts as changes in the fair values of these contracts are substantially offset by changes in the fair value of the intercompany loans. Additionally, to manage transactional exposure to fair value movements on certain monetary assets and liabilities denominated in foreign currencies, the Company has implemented a balance sheet hedging program. The Company does not use hedge accounting for these contracts as changes in the fair values of these contracts are offset by changes in the fair value of the balance sheet items. As of December 26, 2021 and December 27, 2020, the total notional amounts of the Company’s undesignated derivative instruments were $632.0 million and $590.6 million, respectively.

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

At December 26, 2021 and December 27, 2020, the fair value of the Company’s undesignated derivative financial instruments are recorded in the consolidated balance sheets as follows:

(In millions)			2021						2020
Prepaid expenses and other current assets
Unrealized gains			$	—					3.5
Unrealized losses			—						(0.5)
Net unrealized gains			$	—					3.0
Accrued liabilities
Unrealized gains			$	3.5					—
Unrealized losses			(6.0)						(2.6)
Net unrealized losses			$	(2.5)					(2.6)
Total unrealized (losses) gains, net			$	(2.5)					0.4

The Company recorded net gains (losses) gains of $4.6 million, $(27.7) million and $13.4 million on these instruments to other (income) expense, net for 2021, 2020 and 2019, respectively, relating to the change in fair value of such derivatives, substantially offsetting gains and losses from the change in fair value of intercompany loans to which the instruments relate.

eOne Purchase Hedges

During the third quarter of 2019, the Company hedged a portion of its exposure to fluctuations in the British pound sterling and other transactions in relation to the eOne acquisition 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 on matured contracts to other (income) expense, net for the year ended December 29, 2019. These contracts matured on December 30, 2019 (the closing date of the transaction) and the related net gains or losses recognized in the Company's 2020 results were immaterial to the Company's consolidated financial statements.

For additional information related to the Company’s derivative financial instruments see notes 4 and 14.

(19) Restructuring Actions

During 2018, the Company announced a comprehensive restructuring plan which consisted of re-designing its go-to market strategy and re-shaping its organization to become a more responsive, innovative and digitally-driven play and entertainment company. As part of this process the Company took certain restructuring actions which continued through 2019. The actions primarily included headcount reduction aimed at right-sizing the Company’s cost-structure and giving it the ability to add required new talent in the future. In 2020, the Company continued to streamline its commercial organization, and recorded severance of $6.9 million associated with these cost-savings initiatives. These charges were included within selling, distribution and administrative costs on the Consolidated Statement of Operations for the year ended December 27, 2020.

During 2020, in connection with the eOne acquisition, the Company recorded $32.5 million of severance and other employee charges related to the integration of eOne. These charges were recorded within acquisition and related costs on the Consolidated Statements of Operations for the year ended December 27, 2020, and reported within Corporate and Eliminations.

The Company also recorded severance charges of $1.5 million in 2020 associated with cost-savings initiatives within the eOne Music business.

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

The detail of activity related to the programs as of December 26, 2021 is as follows:

(In millions)			2018 Restructuring & 2020 Commercial Program						eOne Integration Program						Other						Total
Remaining amounts to be paid as of December 29, 2019			$	31.1					$	—					$	—					$	31.1
2020 restructuring charges			6.9						32.5						1.5						40.9
Payments made in 2020			(20.7)						(15.6)						(0.7)						(37.0)
Remaining amounts to be paid as of December 27, 2020			17.3						16.9						0.8						$	35.0
Payments made in 2021			(7.5)						(11.8)						(0.8)						(20.1)
Remaining amounts to be paid as of December 26, 2021			$	9.8					$	5.1					$	—					$	14.9

(20) Commitments and Contingencies

Hasbro had unused open letters of credit and related instruments of approximately $13.6 million and $16.2 million at December 26, 2021 and December 27, 2020, respectively.

The Company enters into license agreements with strategic partners, inventors, designers and others for the use of intellectual properties in its products. Certain of these agreements contain provisions for the payment of guaranteed or minimum royalty amounts. 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. Under terms of existing agreements as of December 26, 2021, Hasbro may, provided the other party meets their contractual commitment, be required to pay amounts as follows: 2022: $223.7 million; 2023: $128.3 million; 2024: $65.7 million; 2025: $65.7 million; 2026: $65.7 million; and thereafter: $3.2 million. At December 26, 2021, the Company had $79.7 million of prepaid royalties, all of which are included in prepaid expenses and other current assets

Interest payment obligations on the Company's fixed-rate long-term debt are as follows: 2022: $145.9 million; 2023: $145.9 million; 2024: $145.9 million; 2025: $130.9 million; 2026: $130.9 million; and thereafter: $823.1 million. See note 11 for information on repayment terms for the Company's variable rate term loans.

The Company enters into contracts with certain partners which among other things, provide the Company right of first refusal to purchase, distribute, or license certain entertainment projects or content. At December 26, 2021, the Company estimates that it may be obligated to pay $30.8 million and $5.4 million, in 2022 and 2023, respectively, related to such agreements.

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. The Company estimates these payments may total approximately $19.8 million and may range from approximately $0.4 million to $6.0 million per year during the period 2022 to 2026, with no remaining payments due thereafter. 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.

At December 26, 2021, the Company estimates payments related to inventory and tooling purchase commitments may total approximately $621.7 million, including contractual commitments under the manufacturing agreement with Cartamundi as follows: 2022: $95.0 million and 2023: $85.0 million.

Hasbro is party to certain legal proceedings, as well as certain asserted and unasserted claims. Amounts accrued, as well as the total amount of reasonably possible losses with respect to such matters, individually and in the aggregate, are not deemed to be material to the consolidated financial statements.

See note 17 for additional information on the Company's future lease payment commitments. See note 11 for additional information on the Company's long-term debt and production financing repayments.

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(21) Segment Reporting

Segment and Geographic Information

Hasbro is a global play and entertainment company with a broad portfolio of brands and entertainment content spanning toys, games, licensed products ranging from traditional to digital, as well as film and television entertainment. In the first quarter of 2020, the Company completed its acquisition of the global independent studio, eOne and throughout 2020, the Company successfully integrated the acquired eOne business and started to achieve synergies as a combined company. During the first quarter of 2021, the Company realigned its reportable segment structure to: (1) align with changes to its business structure subsequent to the integration of eOne; and (2) reflect changes to its reporting structure and provide transparency into how operating performance is measured. The Company's three principal reportable segments are (i) Consumer Products, (ii) Wizards of the Coast and Digital Gaming, and (iii) Entertainment.

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

Segment performance is measured at the operating profit level. Included in Corporate and eliminations are certain corporate expenses, including the elimination of intersegment transactions and certain assets benefiting more than one segment. Intersegment sales and transfers are reflected in management reports at amounts approximating cost. Certain shared costs, including global development and marketing expenses and corporate administration, are allocated to segments based upon expenses and foreign exchange rates fixed at the beginning of the year, with adjustments to actual expenses and foreign exchange rates included in Corporate and eliminations. The accounting policies of the segments are the same as those referenced in note 1.

Results shown for fiscal years 2021, 2020 and 2019 are not necessarily those which would be achieved if each segment was an unaffiliated business enterprise.

Reclassifications of certain prior year segment results and account balances have been made to conform to the current-year presentation. None of the segment changes impact the Company's previously reported consolidated net revenue, operating profits, net earnings or net earnings per share.

On June 29, 2021, the Company completed the sale of eOne Music. The financial results of eOne Music were recorded within the Company's Entertainment segment through the date of the closing of the sale. The assets and liabilities of eOne Music were de-consolidated as of the closing date and there are no remaining carrying amounts in the Company's Consolidated Balance Sheets as of December 26, 2021. The sale of eOne Music in 2021 did not impact the Company's previously reported 2020 or 2019 net revenues, operating profit, earnings, assets or liabilities.

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Information by segment and a reconciliation to reported amounts are as follows:

(In millions)			Revenues from External Customers						Affiliate Revenue						Operating Profit (Loss)						Depreciation and Amortization						Capital Additions						Total Assets
2021
Consumer Products			$	3,981.6					465.4						401.4						112.4						73.1						4,925.5
Wizards of the Coast and Digital Gaming			1,286.6						121.6						547.0						48.5						35.1						1,585.1
Entertainment			1,152.2						61.5						(91.8)						96.6						6.2						6,052.8
Corporate and Other(a)			—						(648.5)						(93.3)						22.6						18.3						(2,525.6)
Consolidated Total			$	6,420.4					—						763.3						280.1						132.7						10,037.8
2020
Consumer Products			$	3,649.6					379.0						308.1						78.3						69.3						5,552.5
Wizards of the Coast and Digital Gaming			906.7						77.3						420.4						9.0						35.9						585.7
Entertainment			909.1						5.9						(141.1)						138.0						6.6						6,003.0
Corporate and Other(a)			—						(462.2)						(85.6)						39.7						14.0						(1,322.8)
Consolidated Total			$	5,465.4					—						501.8						265.0						125.8						10,818.4
2019
Consumer Products			$	3,881.2					386.0						306.9						92.7						78.2						5,388.9
Wizards of the Coast and Digital Gaming			761.2						55.0						294.7						9.2						31.1						613.1
Entertainment			77.8						11.5						13.6						2.8						0.6						338.5
Corporate and Other(a)			—						(452.5)						36.9						76.1						23.7						2,515.1
Consolidated Total			$	4,720.2					—						652.1						180.8						133.6						8,855.6

(a)Certain long-term assets, including property, plant and equipment, goodwill and other intangibles, which benefit multiple operating segments, are included in both Entertainment and Corporate and Other. Allocations of certain expenses, related assets within the individual operating segments, are done at the beginning of the year based on budgeted amounts. Any differences between actual and budgeted amounts are reflected in Corporate and Other. Furthermore, Corporate and Other includes elimination of inter-company income statement transactions. Corporate and Other also includes the elimination of inter-company balance sheet amounts.

The following table represents consolidated Consumer Products segment net revenues by major geographic region for the three fiscal years ended December 26, 2021.

(In millions)			2021						2020						2019
North America			$	2,315.9					2,116.2						2,098.1
Europe			1,067.7						989.2						982.2
Asia Pacific			310.1						295.6						359.4
Latin America			287.9						248.6						441.5
Net revenues			$	3,981.6					3,649.6						3,881.2

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

The following table represents consolidated Entertainment segment net revenues by category for the three fiscal years ended December 26, 2021.

(In millions)			2021						2020						2019
Film and TV			$	932.5					$	700.5					$	45.1
Family Brands			132.9						86.5						31.8
Music and Other			86.8						122.1						0.9
Net revenues			$	1,152.2					909.1						77.8

The following table presents consolidated net revenues by brand portfolio for the three fiscal years ended December 26, 2021.

(In millions)			2021						2020						2019
Franchise Brands			$	2,792.7					2,286.1						2,411.8
Partner Brands			1,161.0						1,079.4						1,221.0
Hasbro Gaming			851.4						814.8						709.8
Emerging Brands			617.6						480.4						377.6
TV/Film/Entertainment			997.7						804.7						—
Net revenues			$	6,420.4					5,465.4						4,720.2

Hasbro’s total gaming category, including all gaming net revenues, most notably MAGIC: THE GATHERING and MONOPOLY, totaled $2,098.9 million, $1,763.8 million and $1,528.3 million for the years ended December 26, 2021, December 27, 2020 and December 29, 2019, respectively.

Information as to Hasbro’s operations in different geographical areas is presented below on the basis the Company uses to manage its business. Net revenues are categorized based on location of the customer, while long-lived assets (property, plant and equipment, goodwill and other intangibles) are categorized based on their location.

(In millions)			2021						2020						2019
Net revenues
United States			$	3,898.9					3,202.4						2,653.3
International			2,521.5						2,263.0						2,066.9
			6,420.4						5,465.4						4,720.2
Long-lived assets
United States			1,359.6						1,491.3						1,299.3
International			3,653.0						4,220.2						223.8
			$	5,012.6					5,711.5						1,523.1

Principal international markets include Europe, Canada, Mexico and Latin America, Australia, China and Hong Kong. Long-lived assets include property, plant and equipment, goodwill and other intangibles.

Other Information

Hasbro markets its tangible products primarily to customers in the retail sector. Although the Company closely monitors the creditworthiness of its customers, adjusting credit policies and limits as deemed appropriate, a substantial portion of its customers’ ability to discharge amounts owed is generally dependent upon the overall retail economic environment.

In 2021 and 2020 the Company’s largest customers were Wal-Mart Stores, Inc., Amazon.com and Target Corporation. Sales to these customers amounted to 13%, 11% and 8%, respectively of consolidated net revenues in 2021 and 15%, 10% and 8%, respectively of consolidated net revenues during 2020. In 2019 the Company’s largest customers were Wal-Mart Stores, Inc. and Target Corporation. Sales to these customers amounted to 18% and 9%, respectively, of consolidated net revenues during 2019. Net revenues from the Company’s major customers are reported within the Consumer Products segment, Wizards of the Coast & Digital Gaming segment and the Entertainment segment.

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Hasbro purchases certain components used in its manufacturing process and certain finished products from manufacturers in the Far East. The Company’s reliance on external sources of manufacturing can be shifted, over a period of time, to alternative sources of supply for products it sells, should such changes be necessary. However, if the Company were prevented from obtaining products from a substantial number of its current Far East suppliers due to political, labor or other factors beyond its control, the Company’s operations would be disrupted, potentially for a significant period of time, while alternative sources of product were secured. The imposition of trade sanctions, tariffs, border adjustment taxes or other measures by the United States or the European Union against a class of products imported by Hasbro from, or the loss of “normal trade relations” status with, China, or other countries where we manufacture products, or other factors which increase the cost of manufacturing in China, or other countries where we manufacture products, such as higher labor costs or an appreciation in the Chinese Yuan, could significantly disrupt our operations and/or significantly increase the cost of the products which are manufactured and imported into other markets.

The Company has agreements which allow it to develop and market products based on properties owned by third parties including its license with Marvel Entertainment, LLC and Marvel Characters B.V. (together “Marvel”) and its license with Lucas Licensing Ltd. and Lucasfilm Ltd. (together “Lucas”). These licenses have multi-year terms and provide the Company with the right to market and sell designated classes of products based on Marvel’s portfolio of brands, including SPIDER-MAN and THE AVENGERS, and Lucas’s STAR WARS brand. The Company also has a license to market products with The Walt Disney Company for DISNEY PRINCESS and DISNEY FROZEN lines through the end of 2022. Hasbro’s net revenues from these licenses can be significant in any given year based on the level of thirdparty entertainment. In addition to DISNEY PRINCESS and DISNEY FROZEN, both Marvel and Lucas are owned by The Walt Disney Company.

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HASBRO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(22) eOne Music Sale

On April 25, 2021, the Company entered into a definitive agreement to sell eOne Music for an aggregate sales price of $385.0 million, subject to certain closing adjustments related to working capital and net debt.

On June 29, 2021, the Company completed the sale of eOne Music for net proceeds of $397.0 million, including the sales price of $385.0 million and $12.0 million of closing adjustments related to working capital and net debt calculations. The final proceeds were subject to further adjustment upon completion of closing working capital, which resulted in a net outflow of $0.9 million. The Company acquired eOne Music through its acquisition of eOne in December 2019. Based on the value of the net assets held by eOne Music, which included goodwill and intangible assets allocated to eOne Music as part of the eOne acquisition, the Company recorded a pre-tax non-cash goodwill impairment charge of $108.8 million within Loss on Disposal of Business on the Consolidated Statements of Operations for the year ended December 26, 2021. The Company also recorded pre-tax cash transaction expenses of $9.5 million within Selling, Distribution and Administration expenses on the Consolidated Statements of Operations during the second quarter of 2021. The impairment charge was recorded within the Entertainment segment and the transaction costs were recorded within the Corporate and Other segment.

The operations of eOne Music did not meet the criteria to be presented as discontinued operations in accordance with Accounting Standards Update No. 2014-08 (ASU 2014-08) Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity and eOne Music did not represent an individually significant component of the Company’s business. Income from operations before income taxes, attributable to eOne Music, was recorded to the Company's Consolidated Statements of Operations, within the Entertainment segment through the sale transaction closing date. Assets of $473.5 million and liabilities of $77.3 million, attributable to eOne Music, were de-consolidated as of the closing date and, as of December 26, 2021, there are no remaining carrying amounts in the Company's Consolidated Balance Sheets.

The following table presents the carrying amounts of the major classes of eOne Music assets and liabilities sold on June 29, 2021 and reflects final working capital adjustments.

(In millions)			December 26, 2021
Cash and Cash Equivalents			$	18.2
Goodwill and Other Intangible Assets			410.3
Prepaid Expenses			31.0
Other Assets			14.0
Total Assets			473.5
Accrued Liabilities			24.4
Deferred Taxes			36.9
Other Liabilities			16.0
Total Liabilities			$	77.3

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