UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.   20549
__________________
FORM 10-Q
__________________
(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 201928, 2020
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-6682
__________________
HASBRO, INC.
(Exact name of registrant as specified in its charter)

Rhode Island05-0155090
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1027 Newport Avenue

Pawtucket,Rhode Island0286002861
(Address of Principal Executive Offices)(Zip Code)
(401) (401) 431-8697
Registrant's telephone number, including area code

        
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.50 par value per shareHASThe NASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [x]  No  [ ]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [x]  No  [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging"emerging growth company”company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filer☐
Non-accelerated filer  ☐Smaller reporting company☐
Emerging growth company☐




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


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).         Yes ☐ No  [x]
The number of shares of Common Stock, par value $.50 per share, outstanding as of July 23, 201927, 2020 was 126,200,837.

137,022,714.




PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
HASBRO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Thousands of Dollars Except Share Data)
(Unaudited)
June 30,
2019		 July 1,
2018		 December 30,
2018		June 28,
2020		June 30,
2019		December 29,
2019
ASSETS     ASSETS
Current assets     Current assets
Cash and cash equivalents$1,151,042
 1,159,072
 1,182,371
Accounts receivable, less allowance for doubtful accounts of $17,000
$95,900 and $9,100
805,288
 739,268
 1,188,052
Cash and cash equivalents including restricted cash of $71,900, $0 and $0Cash and cash equivalents including restricted cash of $71,900, $0 and $0$1,038,016  1,151,042  4,580,369  
Accounts receivable, less allowance for doubtful accounts of $28,000
$17,000 and $17,200
Accounts receivable, less allowance for doubtful accounts of $28,000
$17,000 and $17,200
911,320  805,288  1,410,597  
Inventories564,769
 610,248
 443,383
Inventories564,168  564,769  446,105  
Prepaid expenses and other current assets308,996
 319,045
 268,698
Prepaid expenses and other current assets672,163  308,996  310,450  
Total current assets2,830,095
 2,827,633
 3,082,504
Total current assets3,185,667  2,830,095  6,747,521  
Property, plant and equipment, less accumulated depreciation of $490,000
$444,500 and $462,700
387,372
 265,904
 256,473
Property, plant and equipment, less accumulated depreciation of $528,200
$490,000 and $505,900
Property, plant and equipment, less accumulated depreciation of $528,200
$490,000 and $505,900
482,215  387,372  382,248  
Other assets     Other assets
Goodwill485,765
 572,488
 485,881
Goodwill3,666,045  485,765  494,584  
Other intangible assets, net of accumulated amortization of $759,900
$915,900 and $721,700
670,214
 741,076
 693,842
Other intangible assets, net of accumulated amortization of $855,000
$759,900 and $783,500
Other intangible assets, net of accumulated amortization of $855,000
$759,900 and $783,500
1,559,050  670,214  646,305  
Other665,164
 706,755
 744,288
Other1,329,073  665,164  584,970  
Total other assets1,821,143
 2,020,319
 1,924,011
Total other assets6,554,168  1,821,143  1,725,859  
Total assets$5,038,610
 5,113,856
 5,262,988
Total assets$10,222,050  5,038,610  8,855,628  
LIABILITIES AND SHAREHOLDERS' EQUITY     
LIABILITIES, NONCONTROLLING INTERESTS AND SHAREHOLDERS' EQUITYLIABILITIES, NONCONTROLLING INTERESTS AND SHAREHOLDERS' EQUITY
Current liabilities     Current liabilities
Short-term borrowings$12,787
 20,121
 9,740
Short-term borrowings$6,419  12,787  503  
Current portion of long-term debtCurrent portion of long-term debt378,558  —  —  
Accounts payable330,053
 339,861
 333,521
Accounts payable335,236  330,053  343,927  
Accrued liabilities729,856
 692,462
 931,063
Accrued liabilities1,261,352  729,856  912,652  
Total current liabilities1,072,696
 1,052,444
 1,274,324
Total current liabilities1,981,565  1,072,696  1,257,082  
Long-term debt1,695,833
 1,694,350
 1,695,092
Long-term debt4,802,509  1,695,833  4,046,457  
Other liabilities554,212
 600,312
 539,086
Other liabilities771,692  554,212  556,559  
Total liabilities3,322,741
 3,347,106
 3,508,502
Total liabilities7,555,766  3,322,741  5,860,098  
Redeemable noncontrolling interestsRedeemable noncontrolling interests24,133  —  —  
Shareholders' equity     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 209,694,630 at June 30, 2019, July 1, 2018, and December 30, 2018104,847
 104,847
 104,847
Preference stock of $2.50 par value. Authorized 5,000,000 shares; NaN issuedPreference stock of $2.50 par value. Authorized 5,000,000 shares; NaN issued—  —  —  
Common stock of $0.50 par value. Authorized 600,000,000 shares; issued 220,286,736 shares at June 28, 2020, 209,694,630 shares at June 30, 2019, and 220,286,736 shares at December 29, 2019Common stock of $0.50 par value. Authorized 600,000,000 shares; issued 220,286,736 shares at June 28, 2020, 209,694,630 shares at June 30, 2019, and 220,286,736 shares at December 29, 2019110,143  104,847  110,143  
Additional paid-in capital1,290,540
 1,263,657
 1,275,059
Additional paid-in capital2,297,267  1,290,540  2,275,726  
Retained earnings4,053,266
 4,070,661
 4,184,374
Retained earnings4,064,715  4,053,266  4,354,619  
Accumulated other comprehensive loss(173,175) (295,076) (294,514)Accumulated other comprehensive loss(308,128) (173,175) (184,220) 
Treasury stock, at cost; 83,488,022 shares at June 30, 2019; 82,370,078 shares at July 1, 2018; and 83,565,598 shares at December 30, 2018(3,559,609) (3,377,339) (3,515,280)
Treasury stock, at cost; 83,264,365 shares at June 28, 2020; 83,488,022 shares at June 30, 2019; and 83,424,129 shares at December 29, 2019Treasury stock, at cost; 83,264,365 shares at June 28, 2020; 83,488,022 shares at June 30, 2019; and 83,424,129 shares at December 29, 2019(3,559,990) (3,559,609) (3,560,738) 
Noncontrolling interestsNoncontrolling interests38,144  —  —  
Total shareholders' equity1,715,869
 1,766,750
 1,754,486
Total shareholders' equity2,642,151  1,715,869  2,995,530  
Total liabilities and shareholders' equity$5,038,610
 5,113,856
 5,262,988
Total liabilities, noncontrolling interests and shareholders' equityTotal liabilities, noncontrolling interests and shareholders' equity$10,222,050  5,038,610  8,855,628  
See accompanying condensed notes to consolidated financial statements.





HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Thousands of Dollars Except Per Share Data)
(Unaudited)
Quarter Ended Six Months EndedQuarter EndedSix Months Ended
June 30,
2019		 July 1,
2018		 June 30,
2019		 July 1,
2018		June 28,
2020		June 30,
2019		June 28,
2020		June 30,
2019
Net revenues$984,537
 904,458
 $1,717,047
 1,620,799
Net revenues$860,279  984,537  $1,965,849  1,717,047  
Costs and expenses:       Costs and expenses:
Cost of sales343,694
 338,306
 603,681
 593,493
Cost of sales253,245  343,694  515,939  603,681  
Program cost amortizationProgram cost amortization50,675  23,502  182,821  30,077  
Royalties71,061
 66,045
 130,949
 135,697
Royalties97,337  71,061  210,159  130,949  
Product development65,632
 59,859
 121,892
 117,243
Product development58,325  65,632  112,154  121,892  
Advertising92,799
 87,601
 169,403
 155,617
Advertising72,366  92,799  174,007  169,403  
Amortization of intangibles11,815
 4,554
 23,631
 11,032
Amortization of intangibles34,702  11,815  71,513  23,631  
Program production cost amortization23,502
 7,297
 30,077
 19,331
Selling, distribution and administration247,701
 253,208
 472,954
 581,217
Selling, distribution and administration281,192  247,701  560,320  472,954  
Acquisition and related costsAcquisition and related costs10,262  —  160,044  —  
Total costs and expenses856,204
 816,870
 1,552,587
 1,613,630
Total costs and expenses858,104  856,204  1,986,957  1,552,587  
Operating profit128,333
 87,588
 164,460
 7,169
Operating profit (loss)Operating profit (loss)2,175  128,333  (21,108) 164,460  
Non-operating (income) expense:       Non-operating (income) expense:
Interest expense22,018
 22,803
 44,332
 45,612
Interest expense49,577  22,018  104,302  44,332  
Interest income(5,996) (6,308) (13,678) (12,556)Interest income(1,031) (5,996) (5,698) (13,678) 
Other expense (income), net106,203
 2,969
 98,103
 (5,623)Other expense (income), net(2,643) 106,203  (4,102) 98,103  
Total non-operating expense, net122,225
 19,464
 128,757
 27,433
Total non-operating expense, net45,903  122,225  94,502  128,757  
Earnings (loss) before income taxes6,108
 68,124
 35,703
 (20,264)Earnings (loss) before income taxes(43,728) 6,108  (115,610) 35,703  
Income tax expense (benefit)(7,325) 7,825
 (4,457) 31,929
Income tax (benefit) expenseIncome tax (benefit) expense(10,830) (7,325) (14,902) (4,457) 
Net earnings (loss)$13,433
 60,299
 $40,160
 (52,193)Net earnings (loss)(32,898) 13,433  (100,708) 40,160  
Net earnings attributable to noncontrolling interestsNet earnings attributable to noncontrolling interests1,017  —  2,844  —  
Net earnings (loss) attributable to Hasbro, Inc.Net earnings (loss) attributable to Hasbro, Inc.$(33,915) 13,433  $(103,552) 40,160  
       
Net earnings (loss) per common share:       Net earnings (loss) per common share:
Basic$0.11
 0.48
 $0.32
 (0.42)Basic$(0.25) 0.11  $(0.75) 0.32  
Diluted$0.11
 0.48
 $0.32
 (0.42)Diluted$(0.25) 0.11  $(0.75) 0.32  
Cash dividends declared per common share$0.68
 0.63
 $1.36
 1.26
Cash dividends declared per common share$0.68  0.68  $1.36  1.36  
See accompanying condensed notes to consolidated financial statements.





HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Earnings (Loss)
(Thousands of Dollars)
(Unaudited)
Quarter Ended Six Months EndedQuarter EndedSix Months Ended
June 30,
2019		 July 1,
2018		 June 30,
2019		 July 1,
2018		June 28,
2020		June 30,
2019		June 28,
2020		June 30,
2019
Net earnings (loss)$13,433
 60,299
 40,160
 (52,193)Net earnings (loss)$(32,898) 13,433  $(100,708) 40,160  
Other comprehensive earnings (loss):       Other comprehensive earnings (loss):
Foreign currency translation adjustments3,334
 (50,627) 10,327
 (37,798)
Unrealized holding gains (losses) on available-for-sale securities, net of tax290
 87
 555
 (56)
Foreign currency translation adjustments, net of taxForeign currency translation adjustments, net of tax(7,197) 3,334  (138,964) 10,327  
Unrealized holding gains on available-for-sale securities, net of taxUnrealized holding gains on available-for-sale securities, net of tax2,534  290  2,124  555  
Net (losses) gains on cash flow hedging activities, net of tax(2,079) 43,712
 4,513
 18,442
Net (losses) gains on cash flow hedging activities, net of tax(3,691) (2,079) 21,324  4,513  
Changes in unrecognized pension amounts, net of tax19,589
 —
 19,589
 (26,058)Changes in unrecognized pension amounts, net of tax—  19,589  —  19,589  
Reclassifications to earnings (loss), net of tax:       Reclassifications to earnings (loss), net of tax:
Net (gains) losses on cash flow hedging activities(1,982) 1,635
 (4,796) 6,990
Net gains on cash flow hedging activitiesNet gains on cash flow hedging activities(5,278) (1,982) (8,942) (4,796) 
Amortization of unrecognized pension and postretirement amounts4,160
 2,512
 5,299
 4,332
Amortization of unrecognized pension and postretirement amounts276  4,160  550  5,299  
Settlement of U.S. defined benefit plan85,852
 —
 85,852
 —
Settlement of U.S. defined benefit plan—  85,852  —  85,852  
Total other comprehensive earnings (loss), net of tax109,164
 (2,681) 121,339
 (34,148)Total other comprehensive earnings (loss), net of tax(13,356) 109,164  (123,908) 121,339  
Comprehensive earnings (loss)$122,597
 57,618
 161,499
 (86,341)
Total comprehensive earnings attributable to noncontrolling interestsTotal comprehensive earnings attributable to noncontrolling interests1,017  —  2,844  —  
Total comprehensive earnings (loss) attributable to Hasbro, Inc.Total comprehensive earnings (loss) attributable to Hasbro, Inc.$(47,271) 122,597  $(227,460) 161,499  
See accompanying condensed notes to consolidated financial statements.





HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Thousands of Dollars)
(Unaudited)
 Six Months Ended
 June 30,
2019		 July 1,
2018
Cash flows from operating activities:   
Net earnings (loss)$40,160
 (52,193)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:   
Depreciation of plant and equipment62,408
 62,292
Amortization of intangibles23,631
 11,032
Program production cost amortization30,077
 19,331
Deferred income taxes(15,236) (17,839)
Stock-based compensation15,894
 23,545
Non-cash pension settlement110,777
 —
Other non-cash items(8,241) (8,442)
Change in operating assets and liabilities net of acquired balances:   
Decrease in accounts receivable431,557
 657,175
Increase in inventories(119,647) (194,838)
Increase in prepaid expenses and other current assets(33,073) (87,863)
Program production costs(59,417) (78,020)
Decrease in accounts payable and accrued liabilities(134,574) (142,172)
Change in net deemed repatriation tax(14,550) 54,622
Other6,510
 (5,829)
Net cash provided by operating activities336,276
 240,801
Cash flows from investing activities:   
Additions to property, plant and equipment(58,195) (71,755)
Acquisitions—
 (155,451)
Other(2,281) 3,384
Net cash utilized by investing activities(60,476) (223,822)
Cash flows from financing activities:   
Net proceeds from (repayments of) other short-term borrowings3,095
 (133,582)
Purchases of common stock(58,633) (103,493)
Stock-based compensation transactions25,779
 20,108
Dividends paid(164,908) (149,528)
Payments related to tax withholding for share-based compensation(11,889) (54,730)
Deferred acquisition payments(100,000) —
Net cash utilized by financing activities(306,556) (421,225)
Effect of exchange rate changes on cash(573) (17,916)
Decrease in cash and cash equivalents(31,329) (422,162)
Cash and cash equivalents at beginning of year1,182,371
 1,581,234
Cash and cash equivalents at end of period$1,151,042
 1,159,072
    
Supplemental information   
Cash paid during the period for:   
Interest$40,807
 41,200
Income taxes$40,014
 72,545



Six Months Ended
June 28,
2020		June 30,
2019
Cash flows from operating activities:
Net earnings (loss)$(100,708) 40,160  
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation of plant and equipment56,587  62,408  
Amortization of intangibles71,513  23,631  
Asset impairments40,878  —  
Program cost amortization182,821  30,077  
Deferred income taxes(11,086) (15,236) 
Stock-based compensation26,130  15,894  
Non-cash pension settlement—  110,777  
Other non-cash items7  (8,241) 
Change in operating assets and liabilities net of acquired balances:
Decrease in accounts receivable721,973  431,557  
Increase in inventories(125,356) (119,647) 
Increase in prepaid expenses and other current assets(40,190) (33,073) 
Program production costs, net(220,376) (59,417) 
Decrease in accounts payable and accrued liabilities(344,414) (134,574) 
Change in net deemed repatriation tax—  (14,550) 
Other560  6,510  
Net cash provided by operating activities258,339  336,276  
Cash flows from investing activities:
Additions to property, plant and equipment(64,009) (58,195) 
Acquisitions, net of cash acquired(4,403,929) —  
Other13,152  (2,281) 
Net cash utilized by investing activities(4,454,786) (60,476) 
Cash flows from financing activities:
Proceeds from borrowings with maturity greater than three months1,023,453  —  
Repayments of borrowings with maturity greater than three months(98,193) —  
Net (repayments of) proceeds from other short-term borrowings(4,480) 3,095  
Purchases of common stock—  (58,633) 
Stock-based compensation transactions1,830  25,779  
Dividends paid(186,243) (164,908) 
Payments related to tax withholding for share-based compensation(5,669) (11,889) 
Redemption of equity instruments(47,399) —  
Deferred acquisition payments—  (100,000) 
Other(4,835) —  
Net cash provided (utilized) by financing activities678,464  (306,556) 
Effect of exchange rate changes on cash(24,370) (573) 
Decrease in cash, cash equivalents and restricted cash(3,542,353) (31,329) 
Cash, cash equivalents and restricted cash at beginning of year4,580,369  1,182,371  
Cash, cash equivalents and restricted cash at end of period$1,038,016  1,151,042  
Supplemental information
Cash paid during the period for:
Interest$81,456  40,807  
Income taxes$30,449  40,014  
See accompanying condensed notes to consolidated financial statements.





HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity and Redeemable Noncontrolling Interests
(Thousands of Dollars)
(Unaudited)
Quarter Ended June 28, 2020
Three Months Ended June 30, 2019
Common
Stock		Additional
Paid-in Capital		Retained
Earnings		Accumulated Other
Comprehensive  Loss		Treasury
Stock		Noncontrolling InterestsTotal
Shareholders'
Equity		Redeemable Noncontrolling Interests
Balance, March 29, 2020Balance, March 29, 2020$110,143  2,282,379  4,191,810  (294,772) (3,560,336) 35,283  $2,764,507  $26,041  
Noncontrolling interests related to acquisition of Entertainment One Ltd.Noncontrolling interests related to acquisition of Entertainment One Ltd.—  —  —  —  —  (1,364) (1,364) 2,645  
Net loss attributable to Hasbro, Inc.Net loss attributable to Hasbro, Inc.—  —  (33,915) —  —  —  (33,915) —  
Net earnings (loss) attributable to noncontrolling interestsNet earnings (loss) attributable to noncontrolling interests—  —  —  —  —  1,104  1,104  (87) 
Other comprehensive lossOther comprehensive loss—  —  —  (13,356) —  —  (13,356) —  
Stock-based compensation transactionsStock-based compensation transactions—  (290) —  —  45  —  (245) —  
Stock-based compensation expenseStock-based compensation expense—  15,178  —  —  301  —  15,479  —  
Dividends declaredDividends declared—  —  (93,180) —  —  —  (93,180) —  
Distributions paid to noncontrolling owners and other foreign exchangeDistributions paid to noncontrolling owners and other foreign exchange—  —  —  —  —  3,121  3,121  (4,466) 
Balance, June 28, 2020Balance, June 28, 2020$110,143  2,297,267  4,064,715  (308,128) (3,559,990) 38,144  $2,642,151  $24,133  
Quarter Ended June 30, 2019
Common
Stock
 
Additional
Paid-in Capital
 
Retained
Earnings
 
Accumulated Other
Comprehensive  
Loss
 
Treasury
Stock
 
Total
Shareholders'
Equity
Common
Stock		Additional
Paid-in Capital		Retained
Earnings		Accumulated Other
Comprehensive  Loss		Treasury
Stock		Noncontrolling InterestsTotal
Shareholders'
Equity		Redeemable Noncontrolling Interests
Balance, March 31, 2019$104,847
 1,269,230
 4,125,686
 (282,339) (3,562,893) $1,654,531
Balance, March 31, 2019$104,847  1,269,230  4,125,686  (282,339) (3,562,893) —  $1,654,531  $—  
Net earnings—
 —
 13,433
 —
 —
 13,433
Net earnings—  —  13,433  —  —  —  13,433  —  
Other comprehensive earnings—
 —
 —
 109,164
 —
 109,164
Other comprehensive earnings—  —  —  109,164  —  —  109,164  —  
Stock-based compensation transactions—
 10,937
 —
 —
 12,499
 23,436
Stock-based compensation transactions—  10,937  —  —  12,499  —  23,436  —  
Purchases of common stock—
 —
 ���
 —
 (9,451) (9,451)Purchases of common stock—  —  —  —  (9,451) —  (9,451) —  
Stock-based compensation expense—
 10,373
 —
 —
 236
 10,609
Stock-based compensation expense—  10,373  —  —  236  —  10,609  —  
Dividends declared—
 —
 (85,853) —
 —
 (85,853)Dividends declared—  —  (85,853) —  —  —  (85,853) —  
Balance, June 30, 2019$104,847
 1,290,540
 4,053,266
 (173,175) (3,559,609) $1,715,869
Balance, June 30, 2019$104,847  1,290,540  4,053,266  (173,175) (3,559,609) —  $1,715,869  $—  
Three Months Ended July 1, 2018
Common
Stock
 
Additional
Paid-in Capital
 
Retained
Earnings
 
Accumulated Other
Comprehensive  
Loss
 
Treasury
Stock
 
Total
Shareholders'
Equity
Balance, April 1, 2018104,847
 1,053,368
 4,090,637
 (292,395) (3,385,098) 1,571,359
Net earnings—
 —
 60,299
 —
 —
 60,299
Issuance of shares for Saban purchase—
 198,853
 —
 —
 81,544
 280,397
Other comprehensive earnings—
 —
 —
 (2,681) —
 (2,681)
Stock-based compensation transactions—
 (1,602) —
 —
 101
 (1,501)
Purchases of common stock—
 —
 —
 —
 (74,102) (74,102)
Stock-based compensation expense—
 13,038
 —
 —
 216
 13,254
Dividends declared—
 —
 (80,275) —
 —
 (80,275)
Balance, July 1, 2018$104,847
 $1,263,657
 $4,070,661
 $(295,076) $(3,377,339) $1,766,750
See accompanying condensed notes to consolidated financial statements.











HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity and Redeemable Noncontrolling Interests
(Thousands of Dollars)
Six Months Ended June 30, 2019
 
Common
Stock
 
Additional
Paid-in Capital
 
Retained
Earnings
 
Accumulated Other
Comprehensive  
Loss
 
Treasury
Stock
 
Total
Shareholders'
Equity
Balance, December 30, 2018$104,847
 1,275,059
 4,184,374
 (294,514) (3,515,280) $1,754,486
Net earnings—
 —
 40,160
 —
 —
 40,160
Other comprehensive loss—
 —
 —
 121,339
 —
 121,339
Stock-based compensation transactions—
 (177) —
 —
 14,068
 13,891
Purchases of common stock—
 —
 —
 —
 (58,633) (58,633)
Stock-based compensation expense—
 15,658
 —
 —
 236
 15,894
Dividends declared—
 —
 (171,268) —
 —
 (171,268)
Balance, June 30, 2019$104,847
 1,290,540
 4,053,266
 (173,175) (3,559,609) $1,715,869
 
Six Months Ended July 1, 2018
 
Common
Stock
 
Additional
Paid-in Capital
 
Retained
Earnings
 
Accumulated Other
Comprehensive  
Loss
 
Treasury
Stock
 
Total
Shareholders'
Equity
Balance, December 31, 2017104,847
 1,050,605
 4,260,222
 (239,425) (3,346,292) 1,829,957
Net earnings (loss)—
 —
 (52,193) —
 —
 (52,193)
Impact of adoption of ASU 2018-02—
 —
 21,503
 (21,503) —
 —
Issuance of shares for Saban purchase—
 198,853
 —
 —
 81,544
 280,397
Other comprehensive earnings—
 —
 —
 (34,148) —
 (34,148)
Stock-based compensation transactions—
 (9,130) —
 —
 86
 (9,044)
Purchases of common stock—
 —
 —
 —
 (112,893) (112,893)
Stock-based compensation expense—
 23,329
 —
 —
 216
 23,545
Dividends declared—
 —
 (158,871) —
 —
 (158,871)
Balance, July 1, 2018$104,847
 $1,263,657
 $4,070,661
 $(295,076) $(3,377,339) $1,766,750
(Unaudited)
Six Months Ended June 28, 2020
Common
Stock		Additional
Paid-in Capital		Retained
Earnings		Accumulated Other
Comprehensive  Loss		Treasury
Stock		Noncontrolling InterestsTotal
Shareholders'
Equity		Redeemable Noncontrolling Interests
Balance, December 29, 2019$110,143  2,275,726  4,354,619  (184,220) (3,560,738) —  $2,995,530  $—  
Noncontrolling interests related to acquisition of Entertainment One Ltd.—  —  —  —  —  38,561  38,561  26,241  
Net loss attributable to Hasbro, Inc.—  —  (103,552) —  —  —  (103,552) 
Net earnings (loss) attributable to noncontrolling interests—  —  —  —  —  2,968  2,968  (124) 
Other comprehensive loss—  —  —  (123,908) —  —  (123,908) —  
Stock-based compensation transactions—  (4,288) —  —  447  —  (3,841) —  
Stock-based compensation expense—  25,829  —  —  301  —  26,130  —  
Dividends declared—  —  (186,352) —  —  —  (186,352) —  
Distributions paid to noncontrolling owners and other foreign exchange—  —  —  —  —  (3,385) (3,385) (1,984) 
Balance, June 28, 2020$110,143  2,297,267  4,064,715  (308,128) (3,559,990) 38,144  $2,642,151  $24,133  
 Six Months Ended June 30, 2019
Common
Stock		Additional
Paid-in Capital		Retained
Earnings		Accumulated Other
Comprehensive  Loss		Treasury
Stock		Noncontrolling InterestsTotal
Shareholders'
Equity		Redeemable Noncontrolling Interests
Balance, December 30, 2018$104,847  1,275,059  4,184,374  (294,514) (3,515,280) —  $1,754,486  $—  
Net earnings—  —  40,160  —  —  —  40,160  —  
Other comprehensive earnings—  —  —  121,339  —  —  121,339  —  
Stock-based compensation transactions—  (177) —  —  14,068  —  13,891  —  
Purchases of common stock—  —  —  —  (58,633) —  (58,633) —  
Stock-based compensation expense—  15,658  —  —  236  —  15,894  —  
Dividends declared—  —  (171,268) —  —  —  (171,268) —  
Balance, June 30, 2019$104,847  1,290,540  4,053,266  (173,175) (3,559,609) —  $1,715,869  $—  
See accompanying condensed notes to consolidated financial statements.






HASBRO, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
(Unaudited)
(1) Basis of Presentation
In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the consolidated financial position of Hasbro, Inc. and all majority-owned subsidiaries ("Hasbro" or the "Company") as of June 28, 2020 and June 30, 2019, and July 1, 2018, and the results of its operations and cash flows and shareholders' equity for the periods then ended in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and notes thereto. Actual results could differ from those estimates.
The quarters ended June 28, 2020 and June 30, 2019 and July 1, 2018 were each 13-week periods. The six -monthsix-month periods ended June 28, 2020 and June 30, 2019 and July 1, 2018 were each 26-week periods.
The results of operations for the quarter and six month periods ended June 30, 201928, 2020 are not necessarily indicative of results to be expected for the full year 2020, nor were those of the comparable 20182019 period representative of those actually experienced for the full year 2018. Certain reclassifications2019.
Following the Company's acquisition of Entertainment One Ltd. ("eOne" or "eOne Acquisition") (see Note 3), beginning with the first quarter of 2020, the eOne operating segment was added to the Company's reporting structure and is comprised of all legacy eOne operations. Over time, the Company plans to transition towards reflecting all of its entertainment operations within the eOne segment. The Company also expects to shift the consumer product and digital licensing business and toy and game sales related to the eOne preschool brands to legacy Hasbro segments; including related toy and game operations into the Company's geographic commercial segments in late 2021 and 2022. In addition to the eOne segment, the Company's brand architecture now reflects the addition of the TV, Film and Entertainment brand portfolio which consists of legacy eOne film and TV revenues. Operations related to eOne brands, including PEPPA PIG, PJ MASKS and RICKY ZOOM, are reported in the Emerging Brands portfolio.
eOne's results of operations and financial position are included in the Company's consolidated financial statements and accompanying condensed footnotes since the date of acquisition. For more information on the eOne Acquisition see Note 3.

Significant Accounting Policies

The Company's significant accounting policies are summarized in Note 1 to the consolidated financial statements included in our Form 10-K for the year ended December 29, 2019. An update and supplement to these accounting policies associated with our acquisition of eOne is below.



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 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 redeemable noncontrolling interests and noncontrolling interests acquired is listed below.
NameCountry of IncorporationOwnership InterestProportion HeldPrincipal Activity
Astley Baker Davies LimitedEngland and WalesNonredeemable70 %Ownership of intellectual property
Whizz Kid Entertainment LimitedEngland and WalesRedeemable70 %Production of television programs
MR Productions Holdings, LLCUnited StatesRedeemable75 %Film development
Renegade Entertainment, LLCUnited StatesRedeemable65 %Production of television programs
Round Room Live, LLCUnited StatesNonredeemable60 %Production of live events

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 madereceived. 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 prior yearits 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 outstanding. At June 28, 2020, $71,903 of the Company's cash was restricted by such facilities.

Investment in Productions and Acquired Content Rights
The cost of investments in programming ("IIP") and investments in content rights ("IIC") for eOne's television and film libraries are recorded in the consolidated balance sheets at amounts considered recoverable against future revenues. These amounts are amortized to conformprogram cost amortization using a model that reflects the consumption of the asset as it is released through different exploitation windows (e.g., broadcast licenses, theatrical release and home entertainment) and the expected revenue earned in each of those stages of release over a period not exceeding 10 years. Amounts capitalized are reviewed regularly and any portion of the unamortized amount that appears not to be recoverable from future net revenues will be written off to program cost amortization during the period in which the loss becomes evident. 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 period presentation.portion of MGs are recorded as Payables and Accrued Liabilities and the long-term portion are recorded as Other Liabilities.
These condensed consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”("SEC").  Certain information and disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.  The Company filed with the SEC audited consolidated financial statements for the fiscal year ended December 30, 201829, 2019 in its Annual Report on Form 10-K (“2018("2019 Form 10-K”10-K"), which includes all such information and disclosures and, accordingly, should be read in conjunction with the financial information included herein.


Recently Adopted Accounting Standards
The Company's accounting policies are the same as those described in Note 1 to the Company's consolidated financial statements in its 2018 Form 10-K with the exception of the accounting policies related to leases and derivatives and hedging.
In FebruaryJune 2016, the Financial Accounting Standards Board (“FASB”("FASB") issued Accounting Standards Update 2016-02No. 2016-13 (ASU 2016-02), Leases2016-13) Financial Instruments - Credit Losses (Topic 842), which326): Measurement of Credit Losses on Financial Instruments. The amendments in this update provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The standard update replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires lessees to recognize a right-of-use asset and a lease liability for virtually all leases. The liability is based on the present value of lease payments and the asset is based on the liability. For income statement purposes, a dual model was retained requiring leases to be either classified as operating or finance. Operating leases result in straight-line expense while finance leases result in a front-loaded expense pattern. Certain other quantitative and qualitative disclosures are also required. ASU 2016-02 was required for public companies for fiscal years beginning after December 15, 2018. ASU 2016-02 as originally issued required modified retrospective adoption. In July 2018, the FASB issued ASU 2018-11, which provides an alternative transition method in addition to the existing method by allowing entities to apply ASU 2016-02 as of the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted ASU-2016-02 on December 31, 2018 using the retrospective basis as provided in ASU 2018-11. No cumulative effect was recorded to retained earnings. The Company also elected certain practical expedients as provided under the standard. These included (i) the election not to reassess whether contracts existing at the adoption date contain a lease under the new definitionconsideration of a lease under the standard; (ii) the election notbroader range of reasonable and supportable information to reassess the lease classification for existing leases as of the adoption date; (iii) the election not to reassess whether previously capitalized initial direct costs would qualify for capitalization under the standard; (iv) the election to use hindsight in determining the relevant lease terms for use in the capitalization of the lease liability; and (v) the election to use hindsight in reviewing the right-of-use assets for impairment. For all leases, the terms were evaluated, including extension and renewal options as well as the lease payments associated with the leases. As a result of the adoption of the standard, in the first quarter of 2019, the Company recorded right-of-use assets of $121,230 and lease liabilities of $139,520. The Company’s results of operations were not impacted by this standard. The adoption of this standard did not have an impact on the Company’s cash flows. For further details, see Note 10.



In August 2017, the FASB issued Accounting Standards Update No. 2017-12 (ASU 2017-12), Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendments expand and refine hedge accounting for both non-financial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the underlying hedged item in the financial statements. The impact of the standard includes elimination of the requirement to separately measure and recognize hedge ineffectiveness and requires the presentation of fair value adjustments to hedging instruments to be included in the same income statement line as the hedged item.inform credit loss estimates. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2018,2019, and early adoption iswas permitted. The Company adopted ASU 2017-12the standard in the first quarter of 20192020 and the adoption of thisthe standard did not have a material impact on the Company’s results orits consolidated financial statements.
Recently IssuedIn August 2018, the FASB issued Accounting PronouncementsStandards Update No. 2018-13 (ASU 2018-13), Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, specifically related to disclosures surrounding Level 3 asset balances, fair value measurement methods, related gains and losses and fair value hierarchy transfers. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2019, and early adoption was permitted. The Company adopted the standard in the first quarter of 2020 and the adoption of the standard did not have a material impact on its consolidated financial statements.
In March 2019, the FASB issued Accounting Standards Update No. 2019-02 (ASU 2019-02) Entertainment—Films—Other Assets—FilmEntertainment-Films-Other Assets-Film Costs (Subtopic 926-20) and Entertainment—Broadcasters—Intangibles—GoodwillEntertainment-Broadcasters-Intangibles-Goodwill and Other (Subtopic 920-350) -: Improvements to Accounting for Costs of Films and License Agreements for Program Materials. The amendments in this update align cost capitalization of episodic television series production costs with that of film production cost capitalization. In addition, this update addresses impairment testing procedures with regard to film groups, when a film or license agreement is expected to be monetized with other films and/or license agreements.  The intention of this update is to align accounting treatment with changes in production and distribution models within the entertainment industry and to provide increased transparency of information provided to users of financial statements about produced and licensed content.  For public companies, this standard is effective for annual reporting periods beginning after December 15, 2019, and early adoption was permitted. The Company adopted the standard in the first quarter of 2020 and the adoption of the standard did not have a material impact on its consolidated financial statements.
Recently Issued Accounting Pronouncements
In August 2018, the FASB issued Accounting Standards Update No. 2018-14 (ASU 2018-14) Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans. The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2020, and early adoption is permitted. The standard relates to financial statement disclosure only and will not have an impact on the Company's consolidated statement of financial position, statements of operations and comprehensive earnings (loss) or statement of cash flows.
In March 2020, the FASB issued Accounting Standards Update No. 2020-04 (ASU 2020-04) Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions, for a limited period of time, to ease the potential burden of recognizing the effects of reference rate reform on financial reporting. The amendments in this update apply to contracts, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued due to the global transition away from LIBOR and certain other interbank offered rates. An entity may elect to apply the amendments provided by this update beginning March 12, 2020 through December 31, 2022. The Company is currently evaluating this option as it relates to its contracts that reference LIBOR, as well as the impact of the standard andto the impact, if any, to itsCompany's consolidated financial statements.
(2) Revenue Recognition
Revenue Recognition
Revenue is recognized when control of the promised goods or content is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring those goods.goods or content.  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.



Contract Assets and Liabilities
Within our Entertainment, Licensing and Digital segment and our eOne segment the Company may receive royalty payments from licensees in advance of the licensees’ subsequent sales to their customers, or in advance of the Company’s performance obligation being satisfied.  In addition, the Company may receive payments from its digital gaming business in advance of the recognition of the revenues. The Company defers revenues on these advanced payments until its performance obligation is satisfied.  Thesatisfied and records the aggregate deferred revenues areas contract liabilities. The current portion of contract liabilities were recorded within Accrued Liabilities and the long-term portion were recorded as liabilities and were $51,182, $41,380, and $50,759 as of June 30, 2019, July 1, 2018, and December 30, 2018, respectively, and the changesOther Non-current Liabilities in deferred revenues are not material to the Company’s consolidated statements of operations for the six months ended June 30, 2019 and July 1, 2018, respectively.balance sheets. The Company records contract assets in the case of minimum guarantees that are being recognized ratably over the term of the respective license periods.  periods which varies based on sales over and above the contracts’ minimum guarantee. The current portion of contract assets were recorded in Prepaid Expenses and Other Current Assets, respectively, and the long-term portion were recorded as Other Long-Term Assets.

At June 28, 2020 and June 30, 2019, July 1, 2018 and December 30, 2018, thesethe Company had the following contract assets were $41,414, $22,105 and $18,166, respectively,liabilities in its consolidated balance sheets:
June 28, 2020June 30, 2019
Assets
     Contract assets - current$252,870  32,199  
     Contract assets - long term108,538  9,215  
           Total$361,408  41,414  
Liabilities
     Contract liabilities - current$141,650  53,804  
     Contract liabilities - long term24,374  8,411  
          Total$166,024  62,215  

In connection with the Company’s acquisition of eOne, the Company acquired $283,327 of contract assets, of which $32,199, $18,356 and $12,895, respectively,$226,432 were recorded in Prepaid Expenses and Other Current Assets and $9,215, $3,749 and $5,271, respectively,$56,895 were recorded in Other Long-term Assets, within the Company’s consolidated balances sheets. In addition, the Company acquired deferred revenues from eOne in the amount of $152,266, of which $144,094 were recorded in Accrued Liabilities and $8,172 were recorded in Other Non-current Liabilities within the Company's consolidated balance sheets. For the six months ended June 28, 2020, the Company recognized all revenues related to the acquired current contract liabilities.

Contract assets and liabilities attributable to eOne represent approximately 77% and 57% of total contract asset balances and total contract liability balances, respectively, as Other Long-Term Assets.of June 28, 2020.

Disaggregation of revenues
The Company disaggregates its revenues from contracts with customers by segment: U.S. and Canada, International, Entertainment, Licensing and Digital, and Global Operations.eOne.  The Company further disaggregates revenues within its International segment by major geographic region: Europe, Latin America, and Asia Pacific.  Finally, the Company disaggregates its revenues by brand portfolio into four5 brand categories: Franchise brands, Partner brands, Hasbro gaming, Emerging brands, and Emerging brands.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 11, Segment Reporting,13 for further information.

(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, financing, distribution and sales of entertainment content. eOne's principal brand, PEPPA PIG, which was launched in the United Kingdom in May 2004, entertains preschool children worldwide with much of its historical revenue generated through licensing and merchandising programs across multiple retail categories. eOne’s portfolio of preschool brands also includes PJ MASKS and RICKY ZOOM.

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



The all-cash transaction was valued at approximately £2,900,000 based on the consideration of £5.60 per common share of eOne. Converted at the rate of $1.31 USD/GBP on December 30, 2019, the cash consideration for shares outstanding was approximately $3,658,000. The Company also redeemed eOne's outstanding senior secured notes and paid off the debt outstanding under eOne's revolving credit facility, which together represented approximately $831,000 of eOne's indebtedness. The total cash consideration transferred by the Company was approximately $4,635,000.

The total consideration transferred, in thousands of dollars except per share data, was as follows:
Acquisition Consideration
eOne common shares outstanding as of December 30, 2019498,040 
Cash consideration per share$7.35 
   Total consideration for shares outstanding3,658,345 
Cash consideration for employee share based payment awards outstanding145,566 
Cash consideration for extinguishment of debt831,130 
   Total cash consideration4,635,041 
Less: Employee awards to be recorded as future stock compensation expense47,399 
   Total consideration transferred$4,587,642 

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 $2,375,000 in November 2019, (2) the issuance of 10,592 shares of common stock at a public offering price of $95.00 per share in November 2019 (resulting in net proceeds of $975,185) and (3) $1,000,000 in term loans provided by a term loan agreement, which were borrowed on the date of closing. See Note 7 for further discussion of the issuance of the senior unsecured notes and term loan agreement.

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. The Company's evaluations of the facts and circumstances available as of December 30, 2019, to assign fair values to assets acquired and liabilities assumed, including income tax related amounts, are ongoing. As we complete further analysis of assets including program rights, investment in films and television content, intangible assets, as well as deferred revenue, noncontrolling interest, tax and certain other liabilities, additional information on the assets acquired and liabilities assumed may become available. A change in information related to the net assets acquired may change the amount of the purchase price assigned to goodwill, and as a result, the preliminary fair values set forth below are subject to adjustment as additional information is obtained and valuations are completed. Provisional adjustments, if any, will be recognized during the reporting period in which the adjustments are determined. We expect to finalize the purchase price allocation as soon as practicable, but no later than one year from the acquisition date.
During the second quarter of 2020 the Company made adjustments to the preliminary allocation based on more detailed information obtained about the specific assets acquired and liabilities assumed. The adjustments made to the fair value of acquired investments in productions and content and intangible assets did not result in material changes to the amortization expense recorded in the previous quarter.




The following table summarizes our preliminary allocation of the December 30, 2019 eOne purchase price (in thousands of dollars), as adjusted during the second quarter of 2020:
Initial Estimated Fair ValueMeasurement Period AdjustmentsUpdated Estimated Fair Value
Cash, cash equivalents and restricted cash$183,713  $—  $183,713  
Accounts receivable, net259,061  35,097  294,158  
Inventories7,029  —  7,029  
Other current assets286,270  (8,100) 278,170  
Property, plant and equipment (including right of use assets)90,339  26,503  116,842  
Intangible assets1,055,249  5,505  1,060,754  
Content assets - IIC and IIP751,524  (139,881) 611,643  
Other assets183,209  (76,591) 106,618  
Current portion of long-term debt(60,533) —  (60,533) 
Accounts payable, and accrued liabilities(772,097) 46,637  (725,460) 
Long-term debt(149,118) —  (149,118) 
Other liabilities(262,644) 19,661  (242,983) 
Noncontrolling interests(63,541) (1,261) (64,802) 
Estimated fair value of net assets acquired1,508,461  (92,430) 1,416,031  
Goodwill3,079,181  92,430  3,171,611  
Total purchase price$4,587,642  $—  $4,587,642  
(3)Intangible assets consist of intellectual property associated with established brands, eOne artist relationships, eOne music catalogs and trademarks and tradenames 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 acquiredwas 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.
Investments in productions and content, or IIP and IIC, includes 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.

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

Other fair value adjustments were made to accounts receivable, net and other assets to reflect the fair value of certain assets upon acquisition.

The former eOne senior notes were adjusted to fair value prior to extinguishment using quoted market values, and the fair value of the outstanding amounts under eOne's credit facility were estimated to approximate their carrying values.

Goodwill of $3,171,611 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, 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, as well as future revenue growth opportunities. The goodwill recorded as part of this acquisition is included in the newly created eOne segment. The goodwill associated with the fair value step-up of the acquisition will not be amortized for financial reporting purposes and will not be deductible for federal tax purposes.



Changes in the carrying amount of goodwill, by operating segment, for the quarter and six months ended June 28, 2020 is as follows:

Six Months Ended June 28, 2020
(in thousands of dollars)U.S and CanadaInternationalEntertainment, Licensing and DigitaleOneTotal
Balance at December 29, 2019$291,577  170,218  32,789  —  $494,584  
Acquired during the period—  —  —  3,079,181  3,079,181  
Measurement period adjustments—  —  —  92,430  92,430  
Foreign exchange translation—  514  (664) —  (150) 
Balance at June 28, 2020$291,577  170,732  32,125  3,171,611  $3,666,045  
The following table summarizes net revenues and loss before income taxes of eOne included in the Company's Consolidated Statement of Operations since the date of acquisition for the quarter and six months ended June 28, 2020 (in thousands of dollars).
Quarter EndedSix Months Ended
June 28, 2020June 28, 2020
eOne:
Net revenues$160,922  $503,415  
Loss before income taxes(11,028) (44,648) 


For the quarter and six months ended June 28, 2020 the Company incurred $10,262 and $160,044, respectively, of charges related to the eOne Acquisition, which are recorded in acquisition and related charges within the Company’s Consolidated Statement of Operations.
The acquisition and related costs for the quarter and six months ended June 28, 2020 consisted of the following:
•Acquisition and integration costs of $3,966 and $99,684 for the quarter and six months ended June 28, 2020, respectively, including, for the six months ended June 28, 2020, $47,339 of expense associated with the acceleration of eOne stock-based compensation and $38,168 of advisor fees settled at the closing of the acquisition, as well as integration costs; and
•Restructuring and related costs of $6,296 and $60,360 for the quarter and six months ended June 28, 2020, respectively, including severance and retention costs for the quarter and six months ended June 28, 2020 of $6,296 and $19,482, respectively, as well as $40,878 in impairment charges for certain definite-lived intangible and production assets for the six months ended June 28, 2020. The impairment charges of $40,878 were driven by the change in strategy for the combined company’s entertainment assets.
For the quarter ended June 28, 2020, all acquisition and related costs were included in Corporate and Eliminations. For the six months ended June 28, 2020, $77,729 and $20,831 of acquisition and related charges were included within the eOne and Entertainment, Licensing and Digital results, respectively. The remaining charges were included in Corporate and Eliminations.
Pursuant to Topic 805, unaudited supplemental pro forma results of operations for the quarter and six months ended June 30, 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 thousands, except per share amounts):
Quarter EndedSix Months Ended
June 30, 2019June 30, 2019
Revenues$1,215,628  $2,414,350  
Net earnings (loss)(42,219) 36,499  
Net earnings (loss) attributable to Hasbro, Inc.(42,621) 33,907  
Net earnings (loss) per common share:
     Diluted$(0.31) $0.25  
     Basic$(0.31) $0.25  

The Company acquired eOne on the first day of fiscal year 2020, as such our actual results reflect the acquisition occurring on the first day of the current period.

These pro forma results do not represent financial results that would have been realized had the acquisition occurred on December 31, 2018, nor are they intended to be a projection of future results.

The unaudited pro forma results include certain pro forma adjustments to net earnings (loss) that were directly attributable to the acquisition, as if the acquisition had occurred on December 31, 2018, including the following:
•additional amortization expense of $8,572 and $21,052 for the quarter and six months ended June 30, 2019, respectively, 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 $19,106 and $38,211 for the quarter and six months ended June 30, 2019, respectively, as a result of incurring new debt and extinguishing historical eOne debt; and
•the income tax effect of the pro forma adjustments in the amount of $1,344 and $8,024 for the quarter and six months ended June 30, 2019, respectively, calculated using a blended statutory income tax rate of 22.5% for the eOne amortization and elimination of historical interest adjustments, and a blended statutory tax rate of 21% for the interest on the new debt.


(4) Earnings (Loss) Per Share
Net earnings (loss) per share data for the quarters and six months ended June 28, 2020 and June 30, 2019 and July 1, 2018 were computed as follows:
 2019 2018
QuarterBasic Diluted Basic Diluted
Net earnings$13,433
 13,433
 60,299
 60,299
        
Average shares outstanding126,329
 126,329
 125,711
 125,711
Effect of dilutive securities:       
Options and other share-based awards—
 518
 —
 624
Equivalent Shares126,329
 126,847
 125,711
 126,335
        
Net earnings per common share$0.11
 0.11
 0.48
 0.48

20202019
QuarterBasicDilutedBasicDiluted
Net earnings (loss) attributable to Hasbro, Inc.$(33,915) (33,915) $13,433  13,433  
Average shares outstanding137,238  137,238  126,329  126,329  
Effect of dilutive securities:
Options and other share-based awards—  —  —  518  
Equivalent Shares137,238  137,238  126,329  126,847  
Net earnings (loss) attributable to Hasbro, Inc. per common share$(0.25) (0.25) $0.11  0.11  
2019 201820202019
Six MonthsBasic Diluted Basic DilutedSix MonthsBasicDilutedBasicDiluted
Net earnings (loss)$40,160
 40,160
 (52,193) (52,193)
Net earnings (loss) attributable to Hasbro, Inc.Net earnings (loss) attributable to Hasbro, Inc.$(103,552) (103,552) $40,160  40,160  
       
Average shares outstanding126,308
 126,308
 125,392
 125,392
Average shares outstanding137,193  137,193  126,308  126,308  
Effect of dilutive securities:       Effect of dilutive securities:
Options and other share-based awards—
 523
 —
 —
Options and other share-based awards—  —  —  523  
Equivalent Shares126,308
 126,831
 125,392
 125,392
Equivalent Shares137,193  137,193  126,308  126,831  
       
Net earnings (loss) per common share$0.32
 0.32
 (0.42) (0.42)
Net earnings (loss) attributable to Hasbro, Inc. per common shareNet earnings (loss) attributable to Hasbro, Inc. per common share$(0.75) (0.75) $0.32  0.32  

For the quartersquarter and six months ended June 30, 2019 and July 1, 2018,28, 2020, options and restricted stock units totaling 1,5704,030 and 1,214 shares,4,043, respectively, were excluded from the calculation of diluted earnings per share because to include them would have been anti-dilutive. For the quarter and six month periodsmonths ended June 30, 2019, and July 1, 2018, options and restricted stock units totaling 1,6311,570 and 3,127 shares,1,631, respectively, were excluded from the calculation of diluted earnings per share because to include them would have been antidilutive.anti-dilutive. Of the 2018fiscal 2020 amount, 1,921648 and 900 shares, respectively, would have been included in the calculation of diluted shares had the Company not had a net loss infor the quarter and six month periodmonths ended July 1, 2018.June 28, 2020. Assuming that these awards and options were included, under the treasury stock method, they would have resulted in an additional 823148 and 260 shares, respectively, being included in the diluted earnings per share calculation for the quarter and six month periodmonths ended July 1, 2018.

June 28, 2020.



(4)(5) 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 the quarterquarters and six month periodsmonths ended June 28, 2020 and June 30, 2019 and July 1, 2018.2019.
Quarter EndedSix Months Ended
June 28,
2020		June 30,
2019		June 28,
2020		June 30,
2019
Other comprehensive earnings (loss), tax effect:
Tax expense on unrealized holding gains (losses)$(734) (85) $(616) (162) 
Tax benefit (expense) on cash flow hedging activities1,443  49  (5,759) 46  
Tax benefit on foreign currency translation adjustments8,406  —  8,406  —  
Tax expense on changes in unrecognized pension amounts—  (5,687) —  (5,687) 
Reclassifications to earnings, tax effect:
Tax expense on cash flow hedging activities1,184  188  1,451  534  
Amortization of unrecognized pension and postretirement amounts(79) (1,208) (159) (1,539) 
Tax benefit on settlement of U.S defined benefit plan—  (24,925) —  (24,925) 
Total tax effect on other comprehensive earnings (loss)$10,220  (31,668) $3,323  (31,733) 
 Quarter Ended Six Months Ended
 June 30,
2019		 July 1,
2018		 June 30,
2019		 July 1,
2018
        
Other comprehensive earnings (loss), tax effect:       
Tax (expense) benefit on unrealized holding gains (losses)$(85) (25) (162) 16
Tax benefit (expense) on cash flow hedging activities49
 (5,669) 46
 311
Tax (expense) benefit on changes in unrecognized pension amounts(5,687) —
 (5,687) 7,565
Reclassifications to earnings, tax effect:       
Tax expense (benefit) on cash flow hedging activities188
 (114) 534
 (908)
Tax benefit on unrecognized pension and postretirement amounts reclassified to the consolidated statements of operations(1,208) (729) (1,539) (1,257)
Tax benefit on settlement of U.S defined benefit plan(24,925) —
 (24,925) —
Total tax effect on other comprehensive earnings (loss)$(31,668) (6,537) (31,733) 5,727


Changes in the components of accumulated other comprehensive earnings (loss) for the six months ended June 28, 2020 and June 30, 2019 and July 1, 2018 are as follows:

 
Pension and
Postretirement
Amounts
 
Gains
(Losses) on
Derivative
Instruments
 
Unrealized
Holding
Gains
(Losses) on
Available-
for-Sale
Securities
 
Foreign
Currency
Translation
Adjustments
 
Total
Accumulated
Other
Comprehensive
Loss
2019         
Balance at December 30, 2018$(143,134) 1,549
 (744) (152,185) (294,514)
Current period other comprehensive earnings (loss)110,740
 (283) 555
 10,327
 121,339
Balance at June 30, 2019$(32,394) 1,266
 (189) (141,858) (173,175)
          
2018         
Balance at December 31, 2017$(110,971) (32,827) 1,034
 (96,661) (239,425)
Adoption of ASU 2018-02(18,065) (3,660) 222
 —
 (21,503)
Current period other comprehensive earnings (loss)(21,726) 25,432
 (56) (37,798) (34,148)
Balance at July 1, 2018$(150,762) (11,055) 1,200
 (134,459) (295,076)

Pension and
Postretirement
Amounts		Gains
(Losses) on
Derivative
Instruments		Unrealized
Holding
Gains
(Losses) on
Available-
for-Sale
Securities		Foreign
Currency
Translation
Adjustments		Total
Accumulated
Other
Comprehensive
Loss
2020
Balance at December 29, 2019$(36,129) (5,232) (230) (142,629) (184,220) 
Current period other comprehensive earnings (loss)550  12,382  2,124  (138,964) (123,908) 
Balance at June 28, 2020$(35,579) 7,150  1,894  (281,593) (308,128) 
2019
Balance at December 30, 2018$(143,134) 1,549  (744) (152,185) (294,514) 
Current period other comprehensive earnings (loss)110,740  (283) 555  10,327  121,339  
Balance at June 30, 2019$(32,394) 1,266  (189) (141,858) (173,175) 
Gains (Losses) on Derivative Instruments
At June 30, 2019,28, 2020, the Company had remaining net deferred gains on foreign currency forward contracts, net of tax, of $19,881$24,371 in accumulated other comprehensive loss ("AOCE"). These instruments hedge payments related to inventory purchased in the second quarter of 20192020 or forecasted to be purchased during the remainder of 20192020 through 2022, intercompany expenses expected to be paid or received during 2019,2020, television and movie production costs paid in 2019,2020, and cash receipts for sales made at the end of the second quarter of 20192020 or forecasted to be made in the remainder of 20192020 and, to a lesser extent, 20202021 through 2021.2022. These amounts will be reclassified into the consolidated statements of operations upon the sale of the related inventory or recognition of the related sales or expenses.




In addition to foreign currency forward contracts, the Company entered into hedging contracts on future interest payments related to the long-term notes due in 2021 and 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 June 30, 2019,28, 2020, deferred losses, net of tax of $18,615$17,219 related to these instruments remained in AOCE. For the quarters ended June 28, 2020 and June 30, 2019, and July 1, 2018, previously deferred losses of $449, were reclassified from AOCE to net earnings. For the six monthsix-month periods ended June 28, 2020 and June 30, 2019, and July 1, 2018, previously deferred losses of $899 were reclassified from AOCE to net earnings.
Of the amount included in AOCE at June 30, 2019,28, 2020, the Company expects net gains of approximately $14,296$17,263 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.
(6) Accrued Liabilities
Components of accrued liabilities for the periods ended June 28, 2020, June 30, 2019 and December 29, 2019 were as follows:
(5)
June 28,
2020		June 30,
2019		December 29,
2019
Royalties$135,555  $113,436  $196,558  
Advertising53,217  67,258  59,440  
Payroll and management services48,880  32,946  85,635  
Dividends93,175  85,820  93,067  
Severance47,204  56,362  35,039  
Participations and Residuals335,630  10,324  10,432  
Other Taxes51,670  42,154  66,715  
Lease liability -Current42,371  29,298  30,673  
Accrued income taxes36,727  18,364  14,276  
Deferred revenue141,650  53,804  48,465  
Other275,273  220,090  272,352  
Total accrued liabilities$1,261,352  $729,856  $912,652  


(7) Financial Instruments
The Company's financial instruments include cash and cash equivalents, accounts receivable, short-term borrowings, accounts payable and certain accrued liabilities. At June 28, 2020, June 30, 2019 July 1, 2018 and December 30, 2018,29, 2019, the carrying cost of these instruments approximated their fair value. The Company's financial instruments at June 28, 2020, June 30, 2019 July 1, 2018 and December 30, 201829, 2019 also include certain assets and liabilities measured at fair value (see Notes 710 and 9)11) as well as long-term borrowings. The carrying costs, which are equal to the outstanding principal amounts, and fair values of the Company's long-term borrowings as of June 28, 2020, June 30, 2019 July 1, 2018 and December 30, 201829, 2019 are as follows:
June 28, 2020June 30, 2019December 29, 2019
Carrying
Cost		Fair
Value		Carrying
Cost		Fair
Value		Carrying
Cost		Fair
Value
3.90% Notes Due 2029$900,000  938,070  $—  —  $900,000  893,430  
3.55% Notes Due 2026675,000  712,193  —  —  675,000  680,670  
3.00% Notes Due 2024500,000  523,450  —  —  500,000  502,150  
6.35% Notes Due 2040500,000  579,650  500,000  591,850  500,000  581,600  
3.50% Notes Due 2027500,000  515,950  500,000  507,200  500,000  500,550  
2.60% Notes Due 2022300,000  309,690  —  —  300,000  300,960  
5.10% Notes Due 2044300,000  304,020  300,000  310,860  300,000  301,980  
3.15% Notes Due 2021300,000  318,630  300,000  303,900  300,000  303,900  
6.60% Debentures Due 2028109,895  124,544  109,895  132,984  109,895  130,610  
Variable % Notes Due December 30, 2022400,000  400,000  —  —  —  —  
Variable % Notes Due December 30, 2024592,500  592,500  —  —  —  —  
Production Financing Facilities141,965  141,965  —  —  —  —  
Total long-term debt5,219,360  5,460,662  1,709,895  1,846,794  4,084,895  4,195,850  
Less: Deferred debt expenses38,293  —  14,062  —  38,438  —  
Less: Current portion378,558  —  —  —  —  —  
Long-term debt$4,802,509  5,460,662  $1,695,833  1,846,794  $4,046,457  4,195,850  
 June 30, 2019 July 1, 2018 December 30, 2018
 
Carrying
Cost
 
Fair
Value
 
Carrying
Cost
 
Fair
Value
 
Carrying
Cost
 
Fair
Value
6.35% Notes Due 2040$500,000
 591,850
 500,000
 557,250
 500,000
 535,000
3.50% Notes Due 2027500,000
 507,200
 500,000
 464,600
 500,000
 457,350
5.10% Notes Due 2044300,000
 310,860
 300,000
 287,730
 300,000
 272,640
3.15% Notes Due 2021300,000
 303,900
 300,000
 297,960
 300,000
 297,600
6.60% Debentures Due 2028109,895
 132,984
 109,895
 127,094
 109,895
 123,346
Total long-term debt$1,709,895
 1,846,794
 1,709,895
 1,734,634
 1,709,895
 1,685,936
Less: Deferred debt expenses14,062
 —
 15,545
 —
 14,803
 —
Long-term debt$1,695,833
 1,846,794
 1,694,350
 1,734,634
 1,695,092
 1,685,936
In November 2019, in conjunction with the Company's acquisition of eOne, the Company issued an aggregate of $2,375,000 of senior unsecured debt securities (the "Notes") consisting of the following tranches: $300,000 of notes due 2022 (the "2022 Notes") that bear interest at a fixed rate of 2.60%, $500,000 of notes due 2024 (the "2024 Notes") that bear interest at a fixed rate of 3.00%, $675,000 of notes due 2026 (the "2026 Notes") that bear interest at a fixed rate of 3.55% and $900,000 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 $20,043 of underwriting discount and fees, totaled $2,354,957. These costs are being amortized over the life of the Notes, which range from three to ten years. 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) 15 basis points (in the case of the 2022 Notes); (2) 25 basis points (in the case of the 2024 Notes); (3) 30 basis points (in the case of the 2026 Notes); and (4) 35 basis points (in the case of the 2029 Notes).  In addition, on and after October 19, 2024 for the 2024 Notes, September 19, 2026 for the 2026 Notes and August 19, 2029 for the 2029 Notes, such series of Notes will be redeemable, in whole at any time or in part from time to time, at the Company's option at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus any accrued and unpaid interest.
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 $400,000 (the “Three-Year Tranche”) and (2) a five-year senior unsecured term loan facility in an aggregate principal amount of $600,000 (the “Five-Year Tranche” and together with the Three-Year Tranche, the “Term Loan Facilities”). Loans under the Term Loan Facilities will bear interest at the Company’s option, at either the Eurocurrency Rate or the Base Rate, in each case plus a per annum applicable rate that fluctuates (1) in the case of the Three-Year Tranche, between 87.5 basis points and 175.0 basis


points, in the case of loans priced at the Eurocurrency Rate, and between 0.0 basis points and 75.0 basis points, in the case of loans priced at the Base Rate, and (2) in the case of the Five-Year Tranche, 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 to the relevant rating agencies or a lack of ratings issued by such rating agencies. Loans under the Five-Year Tranche will require principal amortization payments that will be 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. The notes were drawn down on December 30, 2019, the closing date of the eOne Acquisition. During the second quarter of 2020, the Company made the required quarterly principal amortization payment of $7,500 on the 5 Tranche loans. As of June 28, 2020, the Company was in compliance with the financial covenants contained in the Term Loan Agreement.

Current portion long-term debt at June 28, 2020 of $378,558, as shown on the consolidated balance sheet represents the $300,000 of 3.15% Notes that mature during the second quarter of 2021, as well as the current portion of required quarterly principal amortization payments for 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 2021 with the exception of certain of the Company’s production financing facilities.
The fair values of the Company's long-term debt are considered Level 3 fair values (see Note 710 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
(6)In addition to the Company's financial instruments, the Company uses production financing to fund certain of its television and film productions which are 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.
Quarter Ended
June 28, 2020
Production financing held by production subsidiaries$141,965 
Other loans6,419 
          Total$148,384 
Production financing shown in the consolidated balance sheet as:
Non-current$93,407 
Current53,541 
          Total$146,948 
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 June 28, 2020 was 3.6%.



The Company has Canadian dollar and U.S. dollar production credit facilities with various banks. The carrying amounts are denominated in the following currencies:
Canadian DollarsU.S. DollarsTotal
As of June 28, 2020$60,829  87,555  148,384  
The following table represents the movements in production financing and other related loans acquired as a result of the eOne Acquisition during the first six months of 2020:
Production FinancingOther LoansTotal
December 30, 2019$209,651  9,102  218,753  
Drawdowns26,275  12,904  39,179  
Repayments(90,693) (15,169) (105,862) 
Foreign exchange differences(3,268) (418) (3,686) 
Balance at June 28, 2020$141,965  6,419  148,384  
(8)eOne Investments in Productions and Investments in Acquired Content Rights
In connection with the Company's acquisition of eOne, the Company acquired eOne's library of television and film and music content rights, which amounted to $614,871 as of June 28, 2020 and was recorded in other assets within the Company's consolidated balance sheets.
Investments in productions and investments in acquired content rights are predominantly monetized on a title-by-title basis and are recorded in the 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 to be reviewed periodically on an individual film basis and any portion of the unamortized amount that appears not to be recoverable from future net revenues will be expensed as part of program cost amortization during the period the loss becomes evident.

Costs associated with the Company's investments in eOne productions and investments in acquired content rights consisted of the following at June 28, 2020:
June 28, 2020
Film and TV Programming
Released, less amortization$346,800 
Completed and not released128,140 
In production41,363 
Pre-production70,411 
586,714 
Other Programming
Released, less amortization12,684 
Completed and not released2,942 
In production7,044 
Pre-production5,487 
28,157 
Total program costs$614,871 


The Company recorded $167,248 of program cost amortization related to the above programming in the six months ended June 28, 2020, consisting of the following:
Investment in ProductionInvestment in ContentTotal
Program cost amortization$118,184  49,064  167,248  
(9) Income Taxes

The Company and its subsidiaries file income tax returns in the United States and various state and international jurisdictions. In the normal course of business, the Company is regularly audited by U.S. federal, state and local, and international tax authorities in various tax jurisdictions.
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”).  The Tax Act made broad and complex changes to the U.S. tax code including, but not limited to, reducing the U.S. federal corporateOur effective tax rate and requiring a one-time tax on certain unrepatriated earnings of foreign subsidiaries.



On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”("ETR") established a one-year measurement period to complete the accountingfrom continuing operations was 12.9% for the ASC 740 income tax effects ofsix months ended June 28, 2020 and (12.5)% for the Tax Act.  An entity recognizessix months ended June 30, 2019.

The following items caused the impact of those amounts for whichyear to date ETR to be significantly different from the accounting is complete.  December 22, 2018 markedprior year ETR:

•during the end of the measurement period for purposes of SAB 118. As such, the Company has completed its analysis based on legislative updates relating to the Tax Act.
As a result,six months ended June 28, 2020, the Company recorded a discrete net tax expensebenefit of $47,800$24,002, of which $24,079 is a result of the eOne acquisition and related costs incurred. Additionally, our estimated annual ETR increased to 20.5% from 18.3% as a result of the eOne acquisition during the first six months of 2020, and a change in the first quartermix of 2018 which reversed certain discrete benefits recorded in 2017 as well as increased our provisional deemed repatriation tax liability. No adjustments were made to provisional amounts during the second quarter of 2018.forecasted income by jurisdiction.

For•during the six months ended June 30, 2019, the Company recorded a discrete net tax benefit of $24,925 as a result of the charge incurred from$31,263 primarily associated with the settlement of itsthe U.S. Pension Plan duringdefined benefit pension plan liability, excess tax benefits on share-based payments and expiration of statutes of limitation of uncertain tax positions.

In May 2019, a public referendum held in Switzerland approved Swiss Federal Act on Tax Reform and AHV Financing ("TRAF") proposals previously approved by Swiss Parliament. The Swiss tax reform measures were effective on January 1, 2020. Changes in tax reform include the second quarterabolishment of preferential tax regimes for holding companies, domicile companies and mixed companies at the cantonal level. The enacted changes in Swiss federal tax were not material to the Company's consolidated financial statements. Swiss cantonal tax was enacted in December 2019. The Company is still assessing the transitional provision options it may elect; however, the legislation is not expected to have a material effect on the Company’s consolidated financial statements. We will continue to review TRAF as the Swiss authorities provide additional interpretive guidance on the new law and related transitional methodology.

The Company is no longer subject to U.S. federal income tax examinations for years before 2013.2013 and 2016 forward. 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 2012.2013. The Company is currently under income tax examination in several U.S. state and local and non-U.S. jurisdictions.
(7)(10) Fair Value of Financial Instruments
The Company measures certain financial instruments at fair value. The fair value hierarchy consists of three levels: Level 1 fair values are based on quoted market prices in active markets for identical assets or liabilities that the entity has the ability to access; Level 2 fair values are those based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities; and Level 3 fair values are based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
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 has elected the fair value option for certain available-for-sale investments. At June 28, 2020, June 30, 2019 July 1, 2018 and December 30, 2018,29, 2019, these investments totaled $12,837, $24,358 $24,219 and $23,913,$25,518, respectively, and are included in prepaid expenses and other current assets in the consolidated balance sheets. In the second quarter of 2020, the Company liquidated $11,470 of these investments, which are included in Other Investing Activities in the consolidated statement of cash flows. The Company recorded net gainslosses of $177$(780) and $727$(1,211) on these investments in other (income) expense, net for the quarter and six months ended June 30, 2019,28, 2020, respectively, related to the change in fair value of such instruments. For the quarter and six month periods ended July 1, 2018,June 30, 2019, the Company recorded net (losses) gains of $(342)$177 and $106,$727, respectively, in other (income) expense net, related to the change in fair value of such instruments.





At June 28, 2020, June 30, 2019 July 1, 2018 and December 30, 2018,29, 2019, the Company had the following assets and liabilities measured at fair value in its consolidated balance sheets (excluding assets for which the fair value is measured using net asset value per share):
 Fair Value Measurements Using:
 
Fair
Value
 
Quoted
Prices in
Active
Markets
for
Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
June 30, 2019       
Assets:       
Available-for-sale securities$1,349
 1,349
 —
 —
Derivatives24,622
 —
 24,622
 —
Total assets$25,971
 1,349
 24,622
 —
        
Liabilities:       
Derivatives$1,894
 —
 1,894
 —
Option agreement22,471
 —
 —
 22,471
Total liabilities$24,365
 —
 1,894
 22,471
        
July 1, 2018       
Assets:       
Available-for-sale securities$3,054
 3,054
 —
 —
Derivatives22,551
 —
 22,551
 —
Total assets$25,605
 3,054
 22,551
 —
        
Liabilities:       
Derivatives$5,191
 —
 5,191
 —
Option agreement23,546
 —
 —
 23,546
Total liabilities$28,737
 —
 5,191
 23,546
        
December 30, 2018       
Assets:       
Available-for-sale securities$914
 914
 —
 —
Derivatives26,076
 —
 26,076
 —
Total assets$26,990
 914
 26,076
 —
        
Liabilities:       
Derivatives$1,610
 —
 1,610
 —
Option agreement23,440
 —
 —
 23,440
Total Liabilities$25,050
 —
 1,610
 23,440

Fair Value Measurements Using:
Fair
Value		Quoted
Prices in
Active
Markets
for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
June 28, 2020
Assets:
Available-for-sale securities$2,741  2,741  —  —  
Derivatives28,941  —  28,941  —  
Total assets$31,682  2,741  28,941  —  
Liabilities:
Derivatives$2,893  —  2,893  —  
Option agreement20,690  —  —  20,690  
Total liabilities$23,583  —  2,893  20,690  
June 30, 2019
Assets:
Available-for-sale securities$1,349  1,349  —  —  
Derivatives24,622  —  24,622  —  
Total assets$25,971  1,349  24,622  —  
Liabilities:
Derivatives$1,894  —  1,894  —  
Option agreement22,471  —  —  22,471  
Total liabilities$24,365  —  1,894  22,471  
December 29, 2019
Assets:
Available-for-sale securities$1,296  1,296  —  —  
Derivatives48,973  —  48,973  —  
Total assets$50,269  1,296  48,973  —  
Liabilities:
Derivatives$5,733  —  5,733  —  
Option agreement22,145  —  —  22,145  
Total Liabilities$27,878  —  5,733  22,145  
Available-for-sale securities include equity securities of one1 company quoted on an active public market.


The Company's derivatives consist of foreign currency forward and option contracts and zero-cost collar options. The Company used current forward rates of the respective foreign currencies to measure the fair value of these contracts. The Company’s option agreement relates to an equity method investment in Discovery Family Channel (“Discovery”("Discovery"). The option agreement is included in other liabilities at June 28, 2020, June 30, 2019 July 1, 2018 and December 30, 2018,29, 2019, and is valued using an option pricing model based on the fair value of the related investment.  Inputs used in the option pricing model include the volatility and fair value of the underlying company which are considered unobservable inputs as they reflect the Company's own assumptions about the inputs that market participants would use in pricing the asset or liability. The Company believes that this is the best information



available for use in the fair value measurement. There were no changes in these valuation techniques during the six month period ended June 30, 2019.28, 2020.
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):
 2019 2018
Balance at beginning of year$(23,440) (23,980)
Gain from change in fair value969
 434
Balance at end of second quarter$(22,471) (23,546)

20202019
Balance at beginning of year$(22,145) (23,440) 
Gain from change in fair value1,455  969  
Balance at end of second quarter$(20,690) (22,471) 
In addition to the above, the Company has three investments for which the fair value is measured using net asset value per share. At June 28, 2020, June 30, 2019 July 1, 2018 and December 30, 2018,29, 2019, these investments had fair values of $12,837, $24,358 $24,219 and $23,913,$25,518, respectively. Two of the investments have net asset values that are predominantly based on underlying investments which are traded on an active market and are redeemable within 45 days. The third investment invests in hedge funds which are generally redeemable on a quarterly basis with 30 days – 90 days’ notice.
(8) (11)Pension and Postretirement Benefits
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 $19,000. 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. Upon settlement of the pension liability, which occurred in May, 2019, the Company recognized a non-operating settlement charge of $110,777 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.
As of June 30, 2019, the Company had unrecognized losses related to its remaining pension and postretirement plans of $32,394.
The components of the net periodic cost of the Company's terminated defined benefit pension plan, remaining defined benefit pension plan and other postretirement plans for the quarters and six months ended June 30, 2019 and July 1, 2018 are as follows:
 Quarter Ended
 Pension Postretirement
 June 30,
2019		 July 1,
2018		 June 30,
2019		 July 1,
2018
Service cost$808
 667
 178
 189
Interest cost4,913
 3,980
 316
 293
Expected return on assets(5,128) (5,174) —
 —
Settlement110,777
 —
 —
 —
Net amortization and deferrals5,610
 2,965
 5
 43
Net periodic benefit cost$116,980
 2,438
 499
 525




 Six Months Ended
 Pension Postretirement
 June 30,
2019		 July 1,
2018		 June 30,
2019		 July 1,
2018
Service cost1,845
 1,352
 356
 377
Interest cost7,118
 7,996
 632
 585
Expected return on assets(7,166) (10,379) —
 —
Settlement110,777
 —
 —
 —
Net amortization and deferrals7,308
 5,942
 10
 85
Net periodic benefit cost119,882
 4,911
 998
 1,047

During the six months ended June 30, 2019, the Company made cash contributions of $520 to its remaining defined benefit pension plans. During fiscal 2019, the Company expects to make cash contributions to its remaining defined benefit pension plans of approximately $1,600 in the aggregate.
(9) Derivative Financial Instruments
Hasbro uses foreign currency forward contracts and zero-cost collar options to mitigate the impact of currency rate fluctuations on firmly committed and projected future foreign currency transactions. These over-the-counter contracts, which hedge future currency requirements related to purchases of inventory, product sales, television and film production cost and production financing loans (see Note 7) as well as other cross-border transactions not denominated in the functional currency of the business unit, are primarily denominated in United States and Hong Kong dollars, and Euros. All contracts are entered into with a number of counterparties, all of which are major financial institutions. The Company believes that a default by a single counterparty would not have a material adverse effect on the financial condition of the Company. Hasbro does not enter into derivative financial instruments for speculative purposes.
Cash Flow Hedges
The Company uses foreign currency forward contracts and zero-cost collar options to reduce the impact of currency rate fluctuations on firmly committed and projected future foreign currency transactions. All of the Company's designated foreign currency forward contracts and zero-cost collar options 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 in 20192020 through 2022.

At June 28, 2020, June 30, 2019 July 1, 2018 and December 30, 2018,29, 2019, the notional amounts and fair values of the Company's foreign currency forward contracts designated as cash flow hedging instruments were as follows:
June 30, 2019 July 1, 2018 December 30, 2018June 28, 2020June 30, 2019December 29, 2019
Hedged transaction
Notional
Amount
 
Fair
Value
 
Notional
Amount
 
Fair
Value
 
Notional
Amount
 
Fair
Value
Hedged transactionNotional
Amount		Fair
Value		Notional
Amount		Fair
Value		Notional
Amount		Fair
Value
Inventory purchases$480,244
 16,062
 647,255
 10,248
 468,305
 15,089
Inventory purchases$255,549  20,093  $480,244  16,062  $398,800  8,727  
Sales235,874
 8,452
 342,123
 11,291
 298,194
 11,232
Sales77,267  4,859  235,874  8,452  124,920  4,037  
Royalties and Other12,228
 15
 151,689
 (4,575) 26,341
 (304)
Production financing and otherProduction financing and other110,648  3,989  12,228  15  19,499  140  
Total$728,346
 24,529
 1,141,067
 16,964
 792,840
 26,017
Total$443,464  28,941  $728,346  24,529  $543,219  12,904  






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 June 28, 2020, June 30, 2019 July 1, 2018 and December 30, 201829, 2019 as follows:
June 30,
2019		 July 1,
2018		 December 30,
2018		June 28,
2020		June 30,
2019		December 29,
2019
Prepaid expenses and other current assets     Prepaid expenses and other current assets
Unrealized gains$18,554
 17,388
 21,718
Unrealized gains$23,684  18,554  12,133  
Unrealized losses(1,911) (5,307) (972)Unrealized losses(1,033) (1,911) (3,955) 
Net unrealized gains$16,643
 12,081
 20,746
Net unrealized gains$22,651  16,643  8,178  
     
Other assets     Other assets
Unrealized gains$8,250
 12,774
 6,173
Unrealized gains$6,310  8,250  6,652  
Unrealized losses(271) (2,700) (843)Unrealized losses(20) (271) —  
Net unrealized gains$7,979
 10,074
 5,330
Net unrealized gains$6,290  7,979  6,652  
     
Accrued liabilities     Accrued liabilities
Unrealized gains$—
 911
 77
Unrealized gains$—  —  293  
Unrealized losses(78) (3,118) (136)Unrealized losses—  (78) (2,219) 
Net unrealized losses$(78) (2,207) (59)Net unrealized losses$—  (78) (1,926) 
     
Other liabilities     Other liabilities
Unrealized gains$—
 807
 —
Unrealized gains$—  —  —  
Unrealized losses(15) (3,791) —
Unrealized losses—  (15) —  
Net unrealized losses$(15) (2,984) —
Net unrealized losses$—  (15) —  


Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings (loss) to net earnings for the quarters and six months ended June 28, 2020 and June 30, 2019 and July 1, 2018 as follows:
 Quarter Ended Six Months Ended
 June 30,
2019		 July 1,
2018		 June 30,
2019		 July 1,
2018
Statements of Operations Classification       
Cost of sales$1,986
 (950) 4,600
 (4,841)
Net revenues599
 430
 1,477
 762
Other34
 1,339
 152
 (84)
Net realized gains (losses)$2,619
 819
 6,229
 (4,163)

Quarter EndedSix Months Ended
June 28,
2020		June 30,
2019		June 28,
2020		June 30,
2019
Statements of Operations Classification
Cost of sales$5,607  1,986  $9,564  4,600  
Net revenues833  599  1,176  1,477  
Other471  34  552  152  
Net realized gains$6,911  2,619  $11,292  6,229  
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, with the acquisition of eOne during the first quarter of 2020, the Company continued eOne's balance sheet hedging program designed to manage transactional exposure to fair value movements on certain of eOne's foreign currency denominated monetary assets and liabilities. 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 item. As of June 28, 2020, June 30, 2019 July 1, 2018 and December 30, 201829, 2019 the total notional amounts of the Company's undesignated derivative instruments were $436,567, $247,295 $140,151 and $452,773,$307,351, respectively.




At June 28, 2020, June 30, 2019 July 1, 2018 and December 30, 2018,29, 2019, the fair values of the Company's undesignated derivative financial instruments were recorded in the consolidated balance sheets as follows:
 June 30,
2019		 July 1,
2018		 December 30,
2018
Prepaid expenses and other current assets     
Unrealized gains$—
 1,120
 —
Unrealized losses—
 (724) —
Net unrealized gains$—
 396
 —
      
Accrued liabilities     
Unrealized gains$164
 —
 1,269
Unrealized losses(1,965) —
 (2,820)
Net unrealized losses$(1,801) —
 (1,551)
      
Total unrealized (losses) gains, net$(1,801) 396
 (1,551)

June 28,
2020		June 30,
2019		December 29,
2019
Prepaid expenses and other current assets
Unrealized gains$—  2,391  —  
Unrealized losses—  (337) —  
Net unrealized gains$—  2,054  —  
Accrued liabilities
Unrealized gains$4,496  164  13  
Unrealized losses(7,389) (1,965) (3,820) 
Net unrealized losses$(2,893) (1,801) (3,807) 
Total unrealized (losses) gains, net$(2,893) 253  (3,807) 
The Company recorded net losses of $(15,726) and $(13,227) on these instruments to other (income) expense, net for the quarter and six months ended June 28, 2020, respectively, and net gains of $1,776 and $6,584 on these instruments to other (income) expense, net for the quarter and six month periodsmonths ended June 30, 2019, respectively, and net gains of $10,451 and $3,751 on these instruments to other (income) expense, net for the quarter and six month periods ended July 1, 2018, respectively, relating to the change in fair value of such derivatives, substantially offsetting gains and losses from the change in fair value of intercompany loans to which the contracts relate.
eOne Purchase Price Hedge

During the third quarter of 2019 the Company hedged a portion of its exposure to fluctuations in the British pound sterling in relation to the eOne Acquisition 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. These contracts matured on December 30, 2019 (the closing date of the transaction) and net gains or losses recognized on these contracts in the Company's 2020 results were immaterial.
For additional information related to the Company's derivative financial instruments see Notes 45 and 7.10.
(10)(12) Leases
The Company occupies offices and uses certain equipment under various operating lease arrangements. The Company has no finance leases. These leases have remaining lease terms of 1 year to 1918 years, some of which include either, 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. PaymentsLease expense under such leases are expensed as incurred.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.
For the quarter and six months ended June 28, 2020, the Company's operating lease and other rental expenses were $22,386 and $45,283, respectively. For the quarter and six months ended June 30, 2019, operating lease expense wasand other rental expenses were $9,133 and $18,075,$18,075, respectively. Expense related to short-term leases (expected terms less than 12 months) and variable lease payments werewas not material in the quarter or six months ended June 28, 2020 or June 30, 2019.




Information related to the Company’s leases for the quarter and six months ended June 28, 2020 and June 30, 2019 isare as follows:
 Quarter Ended Six Months Ended
 June 30,
2019		 June 30,
2019
Cash paid for amounts included in the measurement of lease liabilities:   
Operating cash flows from operating leases$9,240
 $18,814
Right-of-use assets obtained in exchange for lease obligations:   
Operating leases$579
 $24,259
    
Weighted Average Remaining Lease Term   
Operating leases6.5 years
 6.5 years
Weighted Average Discount Rate   
Operating leases4.4% 4.4%
    

Quarter EndedSix Months Ended
June 28,
2020		June 30,
2019		June 28,
2020		June 30,
2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$14,014  9,240  $25,616  18,814  
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$36,210  579  $100,424  24,259  
Weighted Average Remaining Lease Term
Operating leases6.4 years6.5 years6.4 years6.5 years
Weighted Average Discount Rate
Operating leases3.1 %4.4 %3.1 %4.4 %
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 June 30, 2019:
28, 2020:
June 28,
2020
June 30,
2019
2019 (excluding the six months ended June 30, 2019)$17,696
202033,907
2020 (excluding the six months ended June 28,2020)2020 (excluding the six months ended June 28,2020)$24,719  
202129,460
202146,383  
202227,161
202242,980  
202322,038
202335,261  
2024 and thereafter46,185
2024202424,220  
2025 and thereafter2025 and thereafter65,208  
Total future lease payments176,447
Total future lease payments238,771  
Less imputed interest23,961
Less imputed interest26,840  
Present value of future operating lease payments152,486
Present value of future operating lease payments211,931  
Less current portion of operating lease liabilities (1)
29,298
Less current portion of operating lease liabilities (1)
42,371  
Non-current operating lease liability (2)
123,188
Non-current operating lease liability (2)
169,560  
Operating lease right-of-use assets, net (3)
$135,189
Operating lease right-of-use assets, net (3)
$195,011  
(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.
(11)(13) Segment Reporting
Hasbro is a global play and entertainment company with a broad portfolio of brands and entertainment propertiescontent spanning toys, games, licensed products ranging from traditional to high-tech and digital, and film, television and televisionmusic entertainment. The Company's segments are (i) U.S. and Canada, (ii) International, (iii) Entertainment, Licensing and Digital, (iv) eOne, and (iv)(v) Global Operations.



 Following the eOne Acquisition on December 30, 2019, the eOne operating segment was added to the Company's existing reporting structure.
The U.S. and Canada segment includes the marketing and selling of action figures, arts and crafts and creative play products, electronic toys and related electronic interactive products, fashion and other dolls, infant products, play sets, preschool toys, plush products, sports action blasters and accessories, vehicles and toy-related specialty products, as well as traditional board games, and trading card and role-playing games primarily within the United States and Canada. Within the International


segment, the Company markets and sells both toy and game products in markets outside of the U.S. and Canada, primarily in the European, Asia Pacific, and Latin and South American regions. The Company's Entertainment, Licensing and Digital segment includes the Company's Wizards of the Coast digital gaming business, consumer products licensing, owned and licensed digital gaming, movie and television entertainment operations. The eOne segment engages in the development, acquisition, production, financing, distribution and sales of entertainment content and is comprised of all legacy eOne operations. These diversified offerings span across film, television and music production and sales, family programming, merchandising and licensing, and digital content. Over time, the Company plans to transition towards reflecting all of its entertainment operations in the eOne segment.  The Company also expects to shift the consumer product and digital licensing business and toy and game sales related to the eOne preschool brands to legacy Hasbro segments; including related toy and game operations into the Company's geographic commercial segments in late 2021 and 2022.
The Global Operations segment is responsible for sourcing finished products for the Company's U.S. and Canada and International segments. During the first quarter of 2019, the Company realigned its financial reporting segments to include all digital gaming businesses within the re-named Entertainment, Licensing and Digital reporting segment.  As a result of the realignment, U.S. and Canada and the former Entertainment and Licensing segment results for the quarter and six months ended July 1, 2018 have been restated to reflect the change.
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 significant accounting policies of the segments are the same as those referenced in Note 1.
Results shown for the quarter and six month periodsmonths ended June 30, 201928, 2020 are not necessarily representative of those which may be expected for the full year 2019,2020, nor were those of the comparable 20182019 periods representative of those actually experienced for the full year 2018.2019. Similarly, such results are not necessarily those which would be achieved were each segment an unaffiliated business enterprise.

Information by segment and a reconciliation to reported amounts for the quarter and six month periods ended June 30, 2019 and July 1, 2018 are as follows:
 Quarter Ended
 June 30, 2019 July 1, 2018
Net revenuesExternal Affiliate External Affiliate
U.S. and Canada$510,529
 2,996
 448,444
 2,596
International377,438
 145
 380,444
 226
Entertainment, Licensing and Digital96,506
 2,165
 75,539
 3,090
Global Operations  (a)64
 320,618
 31
 342,482
Corporate and Eliminations (b)—
 (325,924) —
 (348,394)
 $984,537
 —
 904,458
 —

 Six Months Ended
 June 30, 2019 July 1, 2018
Net revenuesExternal Affiliate External Affiliate
U.S. and Canada$868,380
 4,845
 802,357
 4,729
International660,087
 186
 668,389
 288
Entertainment, Licensing and Digital188,500
 4,140
 149,944
 6,666
Global Operations  (a)80
 550,043
 109
 595,802
Corporate and Eliminations (b)—
 (559,214) —
 (607,485)
 $1,717,047
 —
 1,620,799
 —





As a result of the realignment of the Company’s financial reporting segments, revenues of $10,888 and $21,272 for the quarterquarters and six months ended July 1, 2018, respectively, were reclassified from the U.S.June 28, 2020 and Canada segment to the Entertainment, Licensing and Digital segment to conform to current year presentation.June 30, 2019 are as follows:
Quarter Ended
Quarter Ended Six Months EndedJune 28, 2020June 30, 2019
Operating profit (loss)June 30,
2019		 July 1,
2018		 June 30,
2019		 July 1,
2018
Net revenuesNet revenuesExternalAffiliateExternalAffiliate
U.S. and Canada$106,577
 73,098
 $120,109
 $46,478
U.S. and Canada$359,720  3,724  $510,529  2,996  
International14,583
 173
 (15,828) (55,915)International249,812  —  377,438  145  
Entertainment, Licensing and Digital7,936
 21,760
 37,956
 38,903
Entertainment, Licensing and Digital89,825  838  96,506  2,165  
eOneeOne160,922  —  —  —  
Global Operations (a)(5,986) (9,978) (4,732) (7,802)Global Operations (a)—  272,213  64  320,618  
Corporate and Eliminations (b)5,223
 2,535
 26,955
 (14,495)Corporate and Eliminations (b)—  (276,775) —  (325,924) 
$128,333
 87,588
 $164,460
 $7,169
$860,279  —  $984,537  —  

As a result of the realignment of the Company’s financial reporting segments, operating profit of $3,134 and $6,370 for the quarter and six months ended July 1, 2018, respectively, were reclassified from the U.S. and Canada segment to the Entertainment, Licensing and Digital segment to conform to current year presentation.
Six Months Ended
June 28, 2020June 30, 2019
Net revenuesExternalAffiliateExternalAffiliate
U.S. and Canada$788,367  7,052  $868,380  4,845  
International500,215  —  660,087  186  
Entertainment, Licensing and Digital173,852  1,808  188,500  4,140  
eOne503,415  —  —  —  
Global Operations  (a)—  467,069  80  550,043  
Corporate and Eliminations (b)—  (475,929) —  (559,214) 
$1,965,849  —  $1,717,047  —  



Quarter EndedSix Months Ended
Total assetsJune 30,
2019		 July 1,
2018		 December 30,
2018
Operating profit (loss)Operating profit (loss)June 28,
2020		June 30,
2019		June 28,
2020		June 30,
2019
U.S. and Canada$2,845,806
 2,894,867
 2,898,816
U.S. and Canada$24,271  106,577  $96,051  120,109  
International2,093,725
 2,048,122
 2,229,053
International(24,900) 14,583  (51,591) (15,828) 
Entertainment, Licensing and Digital945,196
 812,757
 621,595
Entertainment, Licensing and Digital27,793  7,936  32,967  37,956  
eOneeOne(5,967) —  (39,048) —  
Global Operations (a)1,036,919
 3,689,721
 3,197,847
Global Operations (a)(5,945) (5,986) (1,296) (4,732) 
Corporate and Eliminations (b)(1,883,036) (4,331,611) (3,684,323)Corporate and Eliminations (b)(13,077) 5,223  (58,191) 26,955  
$5,038,610
 5,113,856
 5,262,988
$2,175  128,333  $(21,108) 164,460  
Total assetsJune 28,
2020		June 30,
2019		December 29,
2019
U.S. and Canada$3,470,896  2,845,806  3,244,950  
International2,052,708  2,093,725  2,482,170  
Entertainment, Licensing and Digital1,018,453  945,196  695,898  
eOne5,713,517  —  —  
Global Operations (a)3,944,699  1,036,919  3,334,190  
Corporate and Eliminations (b)(5,978,223) (1,883,036) (901,580) 
$10,222,050  5,038,610  8,855,628  
(a) The Global Operations segment derives substantially all of its revenues, and thus its operating results, from intersegment activities.
(b) Certain long-term assets, including property, plant and equipment, goodwill and other intangibles, which benefit multiple operating segments, are included in Corporate and Eliminations. Allocations of certain expenses related to these assets to 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 Eliminations because allocations are translated from the U.S. Dollar to local currency at budgeted rates when recorded. Corporate and Eliminations also includes the elimination of inter-company balance sheet amounts.

The following table represents consolidated International segment net revenues by major geographic region for the quarters and six month periodsmonths ended June 28, 2020 and June 30, 20192019:
Quarter EndedSix Months Ended
June 28,
2020		June 30,
2019		June 28,
2020		June 30,
2019
Europe$157,672  201,072  $319,921  354,451  
Latin America32,488  90,342  66,409  153,119  
Asia Pacific59,652  86,024  113,885  152,517  
Net revenues$249,812  377,438  $500,215  660,087  
As a result of the Company's acquisition of eOne, beginning in 2020, the Company's brand architecture reflects the addition of the eOne Entertainment portfolio which consists of legacy eOne film and July 1, 2018:TV revenues. Revenues related to eOne brands, including PEPPA PIG, PJ MASKS and RICKY ZOOM, are reported in the Emerging Brands portfolio.
 Quarter Ended Six Months Ended
 June 30,
2019		 July 1,
2018		 June 30,
2019		 July 1,
2018
Europe$201,072
 199,575
 $354,451
 355,137
Latin America90,342
 96,401
 153,119
 162,362
Asia Pacific86,024
 84,468
 152,517
 150,890
Net revenues$377,438
 380,444
 $660,087
 668,389




The following table presents consolidated net revenues by brand and entertainment portfolio for the quarters and six month periodsmonths ended June 28, 2020 and June 30, 2019 and July 1, 2018:2019:
 Quarter Ended Six Months Ended
 June 30,
2019		 July 1,
2018		 June 30,
2019		 July 1,
2018
Franchise Brands$576,715
 506,535
 $970,289
 $868,241
Partner Brands213,448
 208,005
 385,437
 408,597
Hasbro Gaming123,420
 134,275
 230,985
 239,502
Emerging Brands70,954
 55,643
 130,336
 104,459
Total$984,537
 904,458
 $1,717,047
 $1,620,799

Quarter EndedSix Months Ended
June 28,
2020		June 30,
2019		June 28,
2020		June 30,
2019
Franchise Brands$376,826  576,715  $773,323  970,289  
Partner Brands138,227  213,448  320,558  385,437  
Hasbro Gaming (1)
137,031  123,420  277,115  230,985  
Emerging Brands (2)
75,991  70,954  170,136  130,336  
TV/Film/Entertainment (3)
132,204  —  424,717  —  
Total$860,279  984,537  $1,965,849  1,717,047  
(1)Hasbro's total gaming category, which includes all gaming net revenues, both those reported in Hasbro Gaming and those reported elsewhere, most notably MAGIC: THE GATHERING and MONOPOLY, totaled $393,367$319,017 and $636,758$659,497 for the quarter and six months ended June 28, 2020, respectively. For the quarter and six months ended June 30, 2019, total gaming revenues were $393,367 and $636,758, respectively. For
(2) Emerging Brands portfolio balances for the quarter and six monthsmonth period ended July 1, 2018, total gamingJune 28, 2020 include eOne brands PEPPA PIG, PJ MASKS and RICKY ZOOM.
(3) TV/Film/Entertainment represents eOne revenues were $312,773 and $516,315, respectively.not allocated to the Emerging Brands portfolio.

(12)(14) Restructuring Actions
During 2018, the Company announced a comprehensive restructuring plan which consistsconsisted 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 the global consumer landscape, shopping behaviors and the retail environment continue to evolve, the Company continues to transform and re-imagine its business to make sure it has the right talent and capabilities to stay competitive. This includes adding new capabilities based on our understanding of the consumer and how our retailers are going to market, while also changing many of the ways we organize across our Brand Blueprint. As part of this process the Company took certain actions, which will continuecontinued 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 connection with the eOne Acquisition, in the first quartersix months of 2018,2020, the Company recorded a pre-tax severance expense of $17,349, primarily outside of the U.S., related to this 2018 restructuring program. During the fourth quarter of 2018, the Company recorded an additional $72,000 of pre-tax severanceand other employee charges related to the program.integration of eOne. Charges related to the eOne restructuring costs were recorded within acquisition and related charges on the Consolidated Statements of Operations for the quarter and six months ended June 28, 2020, and reported within Corporate and Eliminations.

In the second quarter of 2020, the Company recorded severance charges of $11,554 associated with cost-savings initiatives within the Company's commercial and Film and TV businesses. These charges were included within selling, distribution and administrationadministrative costs on the Consolidated StatementsStatement of Operations for the yearquarter ended December 30, 2018June 28, 2020, and reported within Corporate and Eliminations. No additional charges were taken in the first six months of 2019.

The detail of activity related to the programprograms for the six months ended June 28, 2020 is as follows:
Remaining amounts to be paid as of December 30, 2018$69,192
Payments made in first quarter of 2019(7,620)
Payments made in the second quarter of 2019(7,932)
Remaining amounts as of June 30, 2019$53,640
2018 Restructuring ProgrameOne Integration ProgramOtherTotal
Remaining amounts to be paid as of December 29, 2019$31,113  —  —  $31,113  
2020 restructuring charges—  19,482  11,554  31,036  
Payments made in the first six months of 2020(15,045) (5,908) —  (20,953) 
Remaining amounts as of June 28, 2020$16,068  13,574  11,554  $41,196  





Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
This Quarterly Report on Form 10-Q, including the following section entitled Management's Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements expressing management's current expectations, goals, objectives and similar matters. These forward-looking statements may include statements concerning concerning: the impact of, and actions and initiatives taken and planned to be taken to try and manage the negative impact of, the global coronavirus outbreak on our business, including the negative impact on supply of products and production of entertainment content, demand for our products and entertainment, our liquidity and our community; the expected adequacy of supply and operation of our manufacturing facilities; the ability to achieve our financial and business goals and objectives; the Company's product and entertainment plans,plans; anticipated product and entertainment performance, business opportunities performance; anticipated expenses; and strategies, financialworking capital and business goals, expectations for achieving the Company’s goals and objectives, anticipated expenses, cost savings and efficiency enhancing initiatives and other objectives, anticipated impact of, and any actions taken in response to, the imposition of tariffs in certain markets, and anticipated uses of cash.liquidity. See Item 1A, in Part II of this report and Item 1A, in Part I of the Annual Report on Form 10-K for the year ended December 30, 201829, 2019 (“20182019 Form 10-K”), for a discussion of factors which may cause the Company's actual results or experience to differ materially from that anticipated in these forward-looking statements. The Company undertakes no obligation to revise the forward-looking statements in this report after the date of the filing. Unless otherwise specifically indicated, all dollar or share amounts herein are expressed in millions of dollars or shares, except for per share amounts.
EXECUTIVE SUMMARY
Completion of Acquisition
On December 30, 2019, Hasbro, Inc. ("Hasbro" or the "Company") completed the acquisition of Entertainment One Ltd. ("eOne") for an aggregate purchase price of approximately $4.6 billion, comprised of $3.8 billion of cash consideration for shares outstanding and $0.8 billion related to the redemption of eOne’s outstanding senior secured notes and the payoff of eOne’s revolving credit facility. We financed the acquisition through a combination of debt and equity financings, including (i) the issuance of senior unsecured notes in an aggregate principal amount of $2.4 billion, (ii) the issuance of 10,592,106 shares of common stock at a public offering price of $95.00 per share and (iii) $1.0 billion in term loans. eOne's results of operations and financial position are included in the Company's consolidated financial statements and accompanying condensed footnotes since the date of acquisition. The addition of eOne accelerates the Company's brand blueprint strategy by expanding our brand portfolio with eOne's global preschool brands, adding proven TV and film expertise and executive leadership as well as by enhancing brand building capabilities and our storytelling capabilities to strengthen Hasbro brands.
For more information on the eOne Acquisition see Note 3, "Business Combination" to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
For purposes of identifying Hasbro activities that existed before the eOne Acquisition, in some instances, Hasbro may be referred to herein as legacy Hasbro. For purposes of identifying certain activities derived from eOne's historical business, in some instances these activities may be referred to herein as legacy eOne.
Hasbro, Inc. is a global play and entertainment company dedicatedcommitted to Creating the World's Best Play Experiences. The Company strives to do this through deep consumer engagement and the application of consumer insights, the use of immersive storytelling to build brands, product innovation and development of global business reach. Hasbro applies these principles to leverage its owned and controlled brands, including Franchise Brands BABY ALIVE, MAGIC: THE GATHERING, MONOPOLY, MY LITTLE PONY, NERF, PLAY-DOH and TRANSFORMERS, Emerging Brands, such as POWER RANGERS and LITTLEST PET SHOP, as well as the brands of our partners included in our Partner Brands portfolio.Entertainment Experiences. From toys, games and games,consumer products to television, movies, digital gaming, live action, music, and other formsvirtual reality experiences, Hasbro connects to global audiences by bringing to life great innovations, stories and brands and developing and delivering the very best content across established and inventive platforms. Hasbro’s iconic brands include MAGIC: THE GATHERING, MY LITTLE PONY, NERF, TRANSFORMERS, PLAY-DOH, MONOPOLY, BABY ALIVE, POWER RANGERS, and through the acquisition of digitaleOne, Hasbro expanded its portfolio with popular preschool brands including PEPPA PIG, PJ MASKS and RICKY ZOOM. In addition, Hasbro leverages its portfolio of premier partner brands. Through our global entertainment studio, we are building our brands worldwide through great storytelling and content on all screens, including content based on our children’s and family entertainment brands as well as offering the production and distribution of a comprehensive consumer products licensing program,broad spectrum of live action scripted and unscripted entertainment content geared toward all audiences. Hasbro fulfillsis committed to making the fundamental need for play and connectionworld a better place for children and their families around the world. The Company's entertainment labels, Allspark Picturesthrough corporate social responsibility and Allspark Animation, create entertainment-driven brand storytelling across mediums, including television, film, digital and more.philanthropy.
Each of these principles is executed globally in alignment with Hasbro's strategic plan is centered around its brand blueprint. AtUnder the center of thisbrand blueprint strategy, Hasbro re-imagines, re-invents and re-ignites its owned and controlled brands and imagines, invents and ignites new brands, through product innovation, immersive entertainment offerings, including television, film and motion pictures,music, digital gaming and a broad range of consumer products. As the global consumer landscape, shopping behaviors and the retail environmentand entertainment environments continue to evolve, we continuethe Company continues to transform and re-imagine ourreimagine its business strategy. This transformation includes changing many ofreexamining the ways we organizeHasbro organizes across ourits brand blueprint and re-shaping usthe Company to become a better equipped and adaptive, digitally-driven organization, including investing in the development of an omni-channel retail presence. More recently the Company has also focused onpresence and adding new capabilities through the on-boarding of new skill sets and talenttalent. More recently, to leadenhance its long-term competitive position the Company has identified and pursued key growth opportunities through strategic acquisitions, to excel in today’s converged retail environment based on Hasbro’s understanding of the consumeras a leading global play and how its retailers are going to market.entertainment company across all platforms.


Hasbro generates revenue and earns cash by developing, marketing and selling products based on global brands in a broad variety of consumer goods categories and distribution of television programming and other content based on the Company's properties, as well as through the out-licensing of rights for third parties to use its properties in connection with products, including digital media and games and other consumer products. Hasbro also leverages its competencies to develop and market products based on well-known licensed brands including, but not limited to, BEYBLADE, DISNEY PRINCESS and DISNEY FROZEN, DISNEY’S DESCENDANTS, MARVEL, SESAME STREET, STAR WARS, and DREAMWORKS’ TROLLS. MARVEL, STAR WARS, DISNEY PRINCESS, DISNEY FROZEN and DISNEY’S DESCENDANTS are owned by The Walt Disney Company. The eOne business also generates revenue and earnings from the production and distribution of a broad spectrum of television and film entertainment, as well as music production and distribution, that is not based on our children’s and family entertainment brands.
The Company's business is separated into threefour principal business segments: U.S. and Canada, International, and Entertainment, Licensing and Digital.Digital and, following the eOne Acquisition, the eOne operating segment was added to the Company's reporting structure. The U.S. and Canada segment markets and sells both toy and game products primarily in the United States and Canada. The International segment consists of the Company's European, Asia Pacific and Latin and South American toy and game marketing and sales operations. The Company's Entertainment, Licensing and Digital segment includes the Company's Wizards of the Coast digital gaming business, consumer products licensing, owned and licensed digital gaming, and movie and television entertainment operations. DuringThe eOne segment engages in the development, acquisition, production, financing, distribution and sales of entertainment content and is comprised of all legacy eOne operations. These diversified offerings span across film, television and music production and sales, family programming, merchandising and licensing, and digital content. Over time, the Company plans to transition towards reflecting all of its entertainment operations in the eOne segment.  The Company also expects to shift the consumer product and digital licensing business and toy and game sales related to the eOne preschool brands, to legacy Hasbro segments; including related toy and game operations into the Company's geographic commercial segments in late 2021 and 2022.
Coronavirus Outbreak
In the first quarter of 2019,2020, the Company realigned its financial reporting segments to include all digital gaming businesses withinoutbreak of the re-named Entertainment, Licensingcoronavirus disease (COVID-19) was recognized as a pandemic by the World Health Organization. The impact of the global outbreak of COVID-19 currently being experienced in markets in which Hasbro, our employees, consumers, customers, partners, licensees, suppliers and Digital reporting segment.manufacturers operate, has been significant and is reflected in our revenues, profitability and business operations overall. As a result of the realignment, U.S.preventative actions taken worldwide, such as restrictions on travel and Canadabusiness operations, temporary closures or limited reopenings of non-essential businesses, shelter-in-place and stay-at-home orders and other voluntary and government imposed restrictions, the outbreak has had a negative impact on economic conditions in all of our markets. These preventative actions although necessary, have led to market uncertainty and some economic disruption.
We have experienced disruptions in supply of products and production of entertainment content, negative impact on sales due to changes in consumer purchasing behavior and availability of product to consumers, including; due to retail store closures, limited reopenings of retail stores and limitations on the capacity of e-comm channels to supply additional products; delays or postponements of entertainment productions and releases of entertainment content both internally and by our partners; and challenges of working remotely. While we have developed and continue to develop plans to help mitigate the negative impact of the coronavirus to our business, the efforts will not prevent our business from being adversely affected, and the former Entertainmentlonger the outbreak continues or if the virus continues to reemerge or surge in areas in which we do business the more negative the impact on our business, revenues and Licensing segment resultsearnings, and the more limited our ability will be to try and make up for delayed or lost product development, production and sales in future periods.
During the first half of 2020, the Company's supply chain experienced lower than planned production levels in certain of its third-party manufacturing facilities across several geographies including, but not limited to, China, India and the United Sates, due to the impact of COVID-19. After operating at lower than planned production levels during the first quarter due to COVID-19, facilities in China began to reopen during the second quarter and have returned to planned operating capacity and production output for this time of year. Outside of China, manufacturing operated at varying levels during the first half depending on local government action and overall safety considerations. In response, the Company utilized its global supply chain and existing inventory to work to meet demand and the Company currently expects to make up for remaining lost production in the third quarter, to be well positioned for holiday demand later in the year, as nearly all of Hasbro's partner factories and warehouses were open and operating, heading into the third quarter. However, if manufacturing facilities are impacted by a resurgence in COVID-19, we may not be able to make up for the disruption in supply in the nearer term.
During the first half of 2020, as more of our consumers remained at home, we creatively found ways to accelerate our business online, expand omni-channel and skip the shopping cart to get our products into cars and homes. For example, we launched Bring Home the Fun, a global initiative created to further the Company’s purpose to make the world a better place for children


and their families. The initiative provides parents and caregivers resources to help keep kids occupied and engaged during extended time at home and indoors. Another example is the initiative our Wizards of the Coast team undertook to enable players to play MAGIC: THE GATHERING games while in-person play events are not happening.
Markets with more developed e-comm and omni-channel business operations performed better during the first half of 2020 than those markets that rely more heavily on physical stores for reaching consumers. Markets in Latin America, which have less advanced ecomm business and where retail store closures remain high, have been and are expected to continue to be challenged during 2020. The negative impact to future periods from store closures or limited reopenings remains unknown.
Beginning late in the first quarter and six month periods ended July 1, 2018continuing throughout the second quarter of 2020, production and delivery of television and film projects for Hasbro's eOne TV and Film business have been restateddelayed, negatively impacting the level and timing of revenues. For many months live-action productions have been shut down and the industry is still working to reflectresume them in a significant way. It is not clear when that will happen. The eOne team continues to develop new projects and work on animation production, which can be done remotely. The team now expects to deliver finished episodes and film projects later than initially planned. Additionally, several film release dates have moved to later in 2020, into 2021 and in some instances, releases are going straight to video on demand/electronic sell-through windows impacting the change.timing and level of anticipated revenues. As more people remain at home, content viewership remains high, which we believe bodes well for long-term brand engagement and the Company expects a robust 2021 entertainment slate for eOne productions and from our Partner Brands.
We believe we have sufficient liquidity and capital resources available at this time, including approximately $1.0 billion of cash on hand and $1.5 billion available under our revolving credit facility. We are in compliance with our covenants under our revolving credit facility and, while we do not currently foresee a need to borrow under the facility, we believe we would be able to access the facility for the foreseeable future.Our top three customers during the first half of 2020 were Walmart, Target and Amazon. During this time of uncertainty, however, we are managing our expenses to further preserve our liquidity and we are closely monitoring our customers’ health and collectability of receivables, with some customers having difficulty making payments or requesting extended payment terms at a time when retailers are experiencing challenges such as store closures and in some cases, bankruptcy filings.
The health and safety of Hasbro employees, stakeholders and communities is a top priority. In additionChina, Hasbro's offices reopened in late March when the COVID-19 outbreak there improved, following shutdowns earlier in the first quarter. Hasbro's global offices, outside of China, were closed in March due to these three primary segments, the Company's product sourcing operations are managed through its Global Operations segment.COVID-19 outbreak and only recently have begun to re-open on a limited, as needed basis as we continue to actively work on plans to safely bring workers back to our offices. The majority of our workforce has been able to work remotely in an effective manner since the closure and the timing of re-opening offices will be based on need as well as local governmental, health and safety guidelines.



The coronavirus outbreak continues to be fluid and uncertain, making it difficult to forecast the final impact it could have on our future operations.Please see Part II, Item 1A, Risk Factors, for further information.
Second quarter 20192020 highlights:
•Second quarter net revenues increased 9%of $860.3 million, including the 2020 acquisition of eOne, decreased 13% compared to $984.5 million from $904.5 million in the second quarter of 2018.2019. The decrease in net revenues included an unfavorable foreign currency translation of $15.8 million.
•Net revenues in the U.S. and Canada and Entertainment, Licensing and Digital segments increased 14% and 28%, respectively, while thesegment decreased 30% to $359.7 million; International segment net revenues decreased 1% during the second quarter34% to $249.8 million, including an unfavorable foreign currency translation impact of 2019 compared$12.4 million; Entertainment, Licensing and Digital segment net revenues decreased 7% to the second quarter of 2018. International$89.8 million; and eOne segment net revenues were unfavorably impacted by $20.1 million in foreign currency translation.$160.9 million.
•Net revenues from Franchise BrandsHasbro Gaming increased 14%,11%; Emerging Brands net revenues increased 28%,7%; Franchise Brands and Partner Brands increased 3%, while Hasbro Gamingboth decreased 35%; and TV, Film and Entertainment portfolio net revenues declined 8% duringwere $132.2 million and represented 15% of total net revenues in the second quarter of 2019 compared to2020.
•Operating profit was $2.2 million, or 0.3% of net revenue, in the second quarter of 2018.
Operating2020 compared to operating profit increased toof $128.3 million, or 13.0% of net revenue, in the second quarter of 2019 compared to2019.
•Second quarter 2020 operating profit was negatively impacted by acquisition and related expenses of $87.6$10.3 million ($8.5 million after-tax); $22.6 million ($17.9 million after-tax) of eOne acquired intangible asset amortization; and $11.6 million ($10.1 million after-tax) of restructuring charges associated with cost savings initiatives.
•The net loss attributable to Hasbro, Inc. of $33.9 million, or 9.7% of net revenue,$0.25 per diluted share, in the second quarter of 2018.
Net2020 compared to net earnings of $13.4 million, or $0.11 per diluted share, in the second quarter of 2019 compared to net earnings of $60.3 million, or $0.48 per diluted share, in the second quarter of 2018.2019.


•Second quarter 2019 net earnings included a non-cash charge of $110.8 million ($85.9 million after-tax), or $0.68 per diluted share, related to the Company's settlement of its U.S. defined benefit pension plan liability.

First half 20192020 highlights:
•Net revenues increased 6%14% to $1,717.0$1,965.8 million in first six months of 20192020, including the 2020 acquisition of eOne, compared to $1,620.8$1,717.0 million in the first six months of 2018.2019. The increase in net revenues included $27.5 million of unfavorable foreign currency translation.
•Net revenues in the U.S. and Canada andsegment decreased 9% to $788.4 million; International segment net revenues decreased 24% to $500.2 million; Entertainment, Licensing and Digital segments increased 8% and 26%, respectively, while International segment net revenues declined 1%.decreased 8% to $173.9 million; while eOne segment net revenues were $503.4 million in the first half of 2020. International segment net revenues were unfavorably impacted by $43.5$21.8 million in foreign currency translation.
•Net revenues from Emerging Brands increased 31%; Hasbro Gaming increased 20%; Franchise Brands, increased 12%, Emergingand Partner Brands net revenues increased 25%decreased 20% and 17%, while Partner Brandsrespectively; and Hasbro GamingTV Film and Entertainment portfolio net revenues declined by 6% and 4%, respectively, duringwere $424.7 million representing 22% of total net revenues in the first half of 20192020.
•Operating losses were $21.1 million, or 1.1% of net revenues, in the first six months of 2020 compared to the first halfoperating profit of 2018.
Operating profit was $164.5 million, or 9.6% of net revenues, in the first six months of 2019 compared2019.
•Operating profit in the first half of 2020 was negatively impacted by acquisition and related expenses of $160.0 million ($136.0 million after-tax); $47.6 million ($37.8 million after-tax) of eOne acquired intangible asset amortization; and $11.6 million ($10.1 million after-tax) of restructuring charges associated with cost savings initiatives.
•The net loss attributable to operating profitHasbro, Inc. of $7.2$103.6 million, or 0.4% of net revenues,$0.75 per diluted share, in the first six months of 2018.
Operating profit for the first six months of 2018 was negatively impacted by pre-tax expenses of $70.4 million related2020 compared to the Toys“R”Us bankruptcy and severance costs of $17.3 million associated with the Company's 2018 restructuring program.
Neta net earnings attributable to Hasbro, Inc. of $40.2 million, or $0.32 per diluted share, in the first half of 2019 compared to a net loss of $52.2 million, or $0.42 per diluted share, in the first six months of 2018.2019.
•Net earnings for the first six months of 2019 included a non-cash charge of $110.8 million ($85.9 million after-tax), or $0.68 per diluted share, related to the Company's settlement of its U.S. defined benefit pension plan liability. The net loss for the first six months of 2018 included the pre-tax expenses of $87.7 million relating to the Toys"R"Us bankruptcy and severance costs described above ($77.1 million after-tax), as well as income tax expense of $47.8 million related to guidance issued on U.S. tax reform in the first quarter of 2018.

The impact of changes in foreign currency exchange rates used to translate the consolidated statements of operations is quantified by translating the current period revenues at the prior period exchange rates and comparing this amount to the prior period reported revenues. The Company believes that the presentation of the impact of changes in exchange rates, which are beyond the Company’s control, is helpful to an investor’s understanding of the performance of the underlying business.
Amounts Returned to Shareholders
The Company is committed tohas a long history of returning excess cash to its shareholders through quarterly dividends and share repurchases. Hasbro increased themaintained its quarterly dividend rate from $0.63 per share toof $0.68 per share effective for the dividend paid in May 2019.2020and expects to maintain this rate for the remaining dividend payments in 2020. In addition to the dividend, the Company returnshistorically has returned cash through its share repurchase program. As part of this initiative, fromsince 2005, to 2018, the Company's Board of Directors (the "Board") adopted nine successive share repurchase authorizations with a cumulative authorized repurchase amount of $4,325.0 million. The ninth authorization was approved in May 2018 for $500 million. During the first half of 2019, Hasbro repurchased approximately 0.7 million shares at a total cost of $58.6 million and at an average price of $86.81 per share. As of June 30, 2019,28, 2020, the Company had $369.3$366.6 million remaining under these authorizations. Share repurchases are subject to market conditions, the availability of funds and other uses of funds. As a result of the financing activities related to the eOne Acquisition, the Company has suspended its current share repurchase program while it prioritizes deleveraging.




SUMMARY OF FINANCIAL PERFORMANCE
A summary of the results of operations is illustrated below for the quarter and six month periods ended June 28, 2020 and June 30, 2019 and July 1, 2018.2019.
Quarter EndedSix Months Ended
June 28, 2020June 30, 2019June 28, 2020June 30, 2019
Net revenues$860.3  $984.5  $1,965.8  $1,717.0  
Operating profit (loss)2.2  128.3  (21.1) 164.5  
(Loss) earnings before income taxes(43.7) 6.1  (115.6) 35.7  
Income tax benefit(10.8) (7.3) (14.9) (4.5) 
Net (loss) earnings(32.9) 13.4  (100.7) 40.2  
Net earnings attributable to noncontrolling interests1.0  —  2.8  —  
Net (loss) earnings attributable to Hasbro, Inc.(33.9) 13.4  (103.6) 40.2  
Diluted (loss) earnings per share(0.25) 0.11  (0.75) 0.32  
 Quarter Ended Six Months Ended
 June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018
Net revenues$984.5
 $904.5
 $1,717.0
 $1,620.8
Operating profit128.3
 87.6
 164.5
 7.2
Earnings (loss) before income taxes6.1
 68.1
 35.7
 (20.3)
Income tax expense (benefit)(7.3) 7.8
 (4.5) 31.9
Net earnings (loss)13.4
 60.3
 40.2
 (52.2)
Diluted earnings (loss) per share0.11
 0.48
 0.32
 (0.42)
RESULTS OF OPERATIONS – CONSOLIDATED

Second Quarter of 2020
The quarters ended June 28, 2020 and June 30, 2019 were each 13-week periods.
Consolidated net revenues for the second quarter of 2019 increased 9%2020 decreased $124.3 million, or 13% compared to the second quarter of 20182019 and includedreflect the inclusion of eOne revenues which represent 19% of consolidated net revenues for the quarter. Second quarter 2020 net revenues include an $15.8 million unfavorable impact of an unfavorable $20.7 millionfrom foreign currency translation as a result of weakerweakening currencies compared to the U.S. dollar, primarily in the European, Latin American, European and Asia Pacific markets in 20192020 compared to 2018.2019.
Operating profit for the second quarter of 20192020 was $128.3$2.2 million, or 13.0%0.3% of net revenues, compared to operating profit of $87.6$128.3 million, or 9.7%13.0% of net revenues, for the second quarter of 2018.2019. Operating profit results during the second quarter of 2019 included an unfavorable $3.12020 reflects the consolidation of eOne results of operations and was negatively impacted by acquisition and related costs of $10.3 million impact from foreign exchange translation. Operating profit in($8.5 million after-tax); $22.6 million ($17.9 million after-tax) of expenses related to eOne acquired intangible asset amortization; and restructuring charges associated with cost savings initiatives of $11.6 million ($10.1 million after-tax).
Net losses attributable to Hasbro, Inc. were $33.9 million for the second quarter of 2018 was negatively impacted by the loss2020 compared to net earnings of revenues associated with the Toys“R”Us liquidations in the U.S. and U.K.
The quarters ended June 30, 2019 and July 1, 2018 were each 13-week periods. Net earnings decreased to $13.4 million for the second quarter of 2019 compared2019.  The diluted loss per share attributable to net earnings of $60.3 millionHasbro, Inc. for the second quarter of 2018.  Diluted2020 was $0.25, compared to diluted earnings per share forof $0.11 in the second quarter of 2019 was $0.11, down from diluted earnings per shareand reflects the negative impact of $0.48 in the second quartereOne acquired intangible asset amortization, acquisition and related costs and restructuring charges associated with cost savings initiatives of 2018. Net earnings for the quarter ended June 30, 2019 included a non-cash charge, net of tax of $85.9 million, or $0.68$0.13 per diluted share, $0.06 per diluted share and $0.07 per diluted share, respectively.
As a result of the 2020 acquisition of eOne, the Company's brand architecture reflects the addition of the TV, Film and Entertainment brand portfolio which consists of legacy eOne film and TV revenues. Revenues related to eOne brands, including PEPPA PIG, PJ MASKS and RICKY ZOOM, are reported in the settlement of the Company's U.S. defined benefit pension plan.Emerging Brands portfolio.

The following table presents net revenues by brand and entertainment portfolio for the quarters ended June 28, 2020 and June 30, 20192019.
Quarter Ended
June 28, 2020June 30, 2019%
Change
Franchise Brands$376.8  576.7  -35 %
Partner Brands138.2  213.4  -35 %
Hasbro Gaming137.0  123.4  11 %
Emerging Brands76.0  71.0  7 %
TV, Film and Entertainment132.2  —  100 %
Total$860.3  984.5  -13 %

 and July 1, 2018.
 Quarter Ended
 June 30, 2019 July 1, 2018 %
Change
Franchise Brands$576,715
 506,535
 14 %
Partner Brands213,448
 208,005
 3 %
Hasbro Gaming123,420
 134,275
 (8)%
Emerging Brands70,954
 55,643
 28 %
Total$984,537
 904,458
 9 %

FRANCHISE BRANDS: Net revenues in the Franchise Brands portfolio increased 14%decreased 35% in the second quarter of 20192020 compared to the second quarter of 2018. Higher net2019. Net revenues from MAGIC: THE GATHERING, MONOPOLY and PLAY-DOHall of the Company's Franchise Brands products were partially offset by lower net revenues from MY LITTLE PONY, NERF and BABY ALIVE productsdeclined during the second quarter of 2019.2020.



PARTNER BRANDS: Net revenues from the Partner Brands portfolio increased 3%decreased 35% in the second quarter of 20192020 compared to the second quarter of 2018.2019.  Partner Brands net revenues are reliant on related entertainment, including television and movie releases. During the second quarter of 2020, the Company’s Partner Brands portfolio was supported by fourth quarter 2019 theatrical releases DISNEY’S FROZEN 2 in November and STAR WARS: THE RISE OF SKYWALKER in December, as well as through various distribution channels including home entertainment and streaming video. During the second quarter of 2019, the Company’s Partner Brands portfolio was supported by a strong lineup of theatrical releases fromincluding MARVEL’S AVENGERS: END GAME in April of 2019 and DISNEY’S ALADDIN in May of 2019. The Company’s 2020 Partner Brand entertainment releases include TROLLS WORLD TOUR, which was released in the premium video-on-demand format ALADDINin April, as a sequel to the 2016 film, TROLLS from DREAMWORKS and BLACK WIDOW from DISNEY'S MARVEL franchise expected to be in May. Net revenue increases from MARVEL products theaters in November, as well as netcontinuous entertainment provided by the subscription video on-demand streaming service, Disney+.
Net revenue declines from UGLYDOLLSMARVEL, BEY BLADE and OVERWATCHDISNEY PRINCESS products were partially offset by net revenue declinesincreases from DISNEY FROZEN, STAR WARS products, and to a lesser extent, BEYBLADE and DREAMWORKS’DREAMWORKS' TROLLS products during the second quarter of 2019.2020.
HASBRO GAMING: Net revenues in the Hasbro Gaming portfolio declined 8%increased 11% in the second quarter of 20192020 compared to the second quarter of 2018. Lower2019. Higher net revenues from PIE FACE, DUEL MASTERSclassic games including, JENGA and CONNECT 4 products were partially offset by lower net revenues from DON'T STEP IN IT and certain other Hasbro Gaming products were partially offset by higher net revenues from DUNGEONS & DRAGONS, YAHTZEE and CONNECT 4 products in the second quarter of 2019.2020.
Net revenues for Hasbro’s total gaming category, including the Hasbro Gaming portfolio as reported above and all other gaming revenue, most notably MAGIC: THE GATHERING and MONOPOLY, which are included in the Franchise Brands portfolio, totaled $393.4$319.0 million for the second quarter of 2019, an increase2020, a decrease of 26%19%, as compared to $312.8$393.4 million in the second quarter of 2018.2019. The decrease relates primarily to the timing of MAGIC: THE GATHERING product releases during the second quarter of 2020 compared to the same period in 2019.
EMERGING BRANDS: Net revenues from the Emerging Brands portfolio increased 28%7% during the second quarter of 20192020 compared to the second quarter of 2018.2019. Contributing to the net revenue increases duringwere the second quarterinclusion of 2019 were POWER RANGERS productsbrands acquired through the eOne Acquisition including PEPPA PIG and PJ MASKS, as well as net revenue increases from FURREAL FRIENDSEASY BAKE and PLAYSKOOLGI JOE products. These increases were partially offset by declines in LITTLEST PET SHOP, PLAYSKOOL and FURREAL FRIENDS products during the second quarter of 2019.2020.

TV, FILM and ENTERTAINMENT: The TV, Film and Entertainment portfolio includes eOne revenues not allocated to the Emerging Brands portfolio. Operations contributing to the TV, Film and Entertainment portfolio focus on high quality, premium film, television and music production and content rights around the world and selling this content globally.
During the second quarter of 2020, net revenues from the TV, Film and Entertainment portfolio were approximately 15% of total Company net revenues and included broadcast and licensing net revenues from key scripted deliveries including season two of THE ROOKIE, a television drama series currently airing on ABC. In addition to these offerings, TV, Film and Entertainment net revenues benefited from the Company's lineup of unscripted television programming and its library of subscription video on demand ("SVOD") content.
First Six Months of 2020
The six month periods ended June 28, 2020 and June 30, 2019 were each 26-week periods.
For the first six months of 2019,2020, consolidated net revenues increased 6%14% compared to the first six months of 2018.2019 and reflect the inclusion of eOne revenues which represent 26% of consolidated net revenues for the period. The net revenue increase in the first halfsix months of 20192020 included an unfavorable variance of $45.0$27.5 million as a result of foreign currency translation due to weaker currencies across the Company's international markets when compared to the first halfsix months of 2018.2019.
Operating profitThe operating loss for the first six months of 2019 increased2020 was $21.1 million, or 1.1% of net revenues, compared to an operating profit of $164.5 million, or 9.6% of net revenues, from $7.2 million, or 0.4% of net revenues, for the first six months of 2018. Operating profit in2019. The operating loss during the first halfsix months of 20182020 reflects the consolidation of eOne results of operations and was negatively impacted by the lossacquisition and related costs of revenues$160.1 million ($136.0 million after-tax); $47.6 million ($37.8 million after-tax) of expenses related to eOne acquired intangible asset amortization; and incremental bad debt expenserestructuring charges associated with cost savings initiatives of $11.6 million ($10.1 million after-tax).


The net loss attributable to Hasbro, Inc. was $103.6 million for the Toys“R”Us liquidationsfirst six months of 2020 compared to net earnings of $40.2 million for the first six months of 2019. The diluted net loss per share attributable to Hasbro, Inc. was $0.75 in the U.S.first six months of 2020, compared to diluted earnings per share of $0.32 in 2019. The net loss attributable to Hasbro, Inc. for the first six months of 2020 reflects the negative impact of acquisition related costs and U.K.,eOne acquired intangible asset amortization of $0.99 per diluted share and $0.28 per diluted share, respectively, as well as severance costsrestructuring charges associated with the Company’s 2018 restructuring program.
The six month periods ended June 30, 2019 and July 1, 2018 were each 26-week periods.cost savings initiatives of $0.07 per diluted share. Net earnings for the first six months of 2019 were $40.2 million compared to a net loss of $52.2 million for the first six months of 2018. Diluted earnings per share was $0.32 in the first half of 2019, up from a diluted loss per share of $0.42 in 2018. Net earnings for the six months ended June 30, 2019 included a non-cash, net of tax charge of $85.9 million, or $0.68 per diluted share, related to the settlement of the Company's U.S. defined benefit pension plan. The net loss in the first half of 2018 includes incremental bad debt expense and other costs, net of tax, of $61.4 million, or $0.49 per diluted share, related to Toys“R”Us, $15.7 million, or $0.12 per diluted share, of severance costs related to the Company's 2018 restructuring program, and tax expense of $47.8 million, or $0.38 per diluted share, related to U.S. tax reform and additional guidance issued in 2018.
The following table presents net revenues by product category for the first six months of 20192020 and 2018.2019.
Six Months EndedSix Months Ended
June 30, 2019 July 1, 2018 %
Change		June 28, 2020June 30, 2019%
Change
Franchise Brands$970,289
 868,241
 12 %Franchise Brands$773.3  970.3  -20 %
Partner Brands385,437
 408,597
 (6)%Partner Brands320.6  385.4  -17 %
Hasbro Gaming230,985
 239,502
 (4)%Hasbro Gaming277.1  231.0  20 %
Emerging Brands130,336
 104,459
 25 %Emerging Brands170.1  130.3  31 %
TV, Film and EntertainmentTV, Film and Entertainment424.7  —  100 %
Total$1,717,047
 1,620,799
 6 %Total$1,965.8  1,717.0  14 %
FRANCHISE BRANDS: Net revenues in the Franchise Brands portfolio increased 12%decreased 20% in the first six months of 20192020 compared to 2018.  Higher net2019.  Net revenues from MAGIC: THE GATHERING, PLAY-DOH, MONOPOLY and TRANSFORMERSsubstantially all of the Company's Franchise brands products were partially offset by lower net revenues from NERF, MY LITTLE PONY and BABY ALIVE products.declined during the first six months of 2020.



PARTNER BRANDS: Net revenues from the Partner Brands portfolio declined 6%decreased 17% during the first six months of 20192020 compared to 2018.2019. Partner Brands net revenues are reliant on related entertainment, including television and movie releases. During the first half of 2020, certain scheduled theatrical releases were delayed or postponed due to the closure or limited reopening of theaters as a result of the impact of COVID-19, which negatively impacted sales of the Company’s Partner Brands products. During the first six months of 2020, the Company’s Partner Brands portfolio was supported by fourth quarter 2019 theatrical releases DISNEY’S FROZEN 2 in November and STAR WARS: THE RISE OF SKYWALKER in December, as well as through various distribution channels including home entertainment and streaming video. During the first half of 2019, the Company’s Partner Brands portfolio was supported by theatrical releases from MARVEL’S AVENGERS: END GAME in April and DISNEY’S ALADDIN in May. In addition to thesethe 2019 films the Company’s 2019 Partner Brand theatrical releases include DISNEY’S FROZEN II expected in November2 and STAR WARS: THE RISE OF SKYWALKER, the Company’s 2020 Partner Brand entertainment releases include TROLLS WORLD TOUR, which was released in December. During the first six months of 2019,premium video-on-demand formatin April, asa sequel to the decrease was driven2016 film, TROLLS from DREAMWORKS and BLACK WIDOW from DISNEY'S MARVEL franchise expected to be in theaters in November, as well as continuous entertainment provided by lower net revenuesthe subscription video on-demand streaming service, Disney+.
Net revenue increases from DISNEY FROZEN and DREAMWORKS' TROLLS products as well as increases from STAR WARS and DISNEY FROZEN products, ahead of planned film releases in the second half of 2019 described above, as well aswere partially offset by net revenue declines from DREAMWORKS’ TROLLS products. These declines were partially offset by higher net revenues from MARVEL, products as well as net revenue contributions from the introduction of the Company's line of UGLY DOLLSDISNEY PRINCESS and OVERWATCHBEY BLADE products during the first six monthshalf of 2019 compared to the same period in 2018.2020.
HASBRO GAMING: Net revenues in the Hasbro Gaming portfolio decreased 4%increased 20% in the first six months of 20192020 compared to the first six months of 2018.2019. Increased net revenues from DUNGEONS & DRAGONS, JENGA and CONNECT 4 products were more thanpartially offset by lower net revenues from PIE FACEDON'T STEP IN IT and SPEAK OUT products.
Net revenues for Hasbro’s total gaming category, including the Hasbro Gaming portfolio as reported above and all other gaming revenue, most notably from MAGIC: THE GATHERING and MONOPOLY products, which are included in the Franchise Brands portfolio, increased to $659.5 million in the first six months of 2020 versus $636.8 million in the first six months of 2019 versus $516.3 million in the first six months of 2018.2019.
EMERGING BRANDS: Net revenues from the Emerging Brands portfolio grew 25%31% for the first six months of 20192020 compared to the first six months of 2018.2019. Net revenues fromContributing to the introduction of the Company's POWER RANGERS products, as well as net revenue increases from FURREAL FRIENDSin the first half of 2020 were the inclusion of brands acquired through the eOne Acquisition including PEPPA PIG and PLAYSKOOL products,PJ MASKS. These net revenue increases were partially offset by net revenue declines from LITTLEST PET SHOP, PLAYSKOOL and LOST KITTIES products.

TV, FILM and ENTERTAINMENT: Net revenues from the TV, Film and Entertainment portfolio were approximately 22% of total Company net revenues and included theatrical contributions from the Amblin Partners film 1917, released in December 2019 and broadcast and licensing net revenues from key scripted deliveries including season two of THE ROOKIE, a television


drama series currently airing on ABC. In addition to these offerings, net revenues benefited from the Company's lineup of unscripted television programming and its library of SVOD content.
SEGMENT RESULTS
Most of theThe Company's net revenues and operating profitprofits (losses) are primarily derived from its threefour principal business segments: the U.S. and Canada segment, the International segment, and the Entertainment, Licensing and Digital segment and, as a result of the 2020 eOne Acquisition, the eOne operating segment. The eOne segment was added to the Company's reporting structure in the first quarter of 2020 and is comprised of the legacy eOne business. The results of these operations are discussed in detail below.
As a result of the realignment of the Company’s financial reporting segments, 2018 net revenues and operating profit were reclassified from the U.S. and Canada segment to the Entertainment, Licensing and Digital segment to conform to current year presentation.
The table below presents net external revenues and operating profit for the Company’s U.S. and Canada segment and Entertainment, Licensing and Digital segment for each 2018 quarter and the 2018 fiscal year, restated for the reclassification.
 Quarter Ended 
Fiscal Year
Ended
 
April 1,
2018
 
July 1,
2018
 
Sept. 30,
2018
 
Dec. 30,
2018
 
Dec. 30,
2018
Net Revenues *
         
U.S. and Canada segment$353.9
 $448.4
 $912.2
 $661.1
 $2,375.7
Entertainment, Licensing and Digital segment74.4
 75.5
 96.8
 109.6
 356.3
          
Operating Profit (Loss) *
         
U.S. and Canada segment$(26.6) $73.1
 $223.1
 $100.7
 $370.2
Entertainment, Licensing and Digital segment17.1
 21.8
 37.1
 (46.9) 29.1





Second Quarter of 20192020
The following table presents net external revenues and operating profit (loss) data for the Company's three principal segments for the quarters ended June 28, 2020 and June 30, 2019 and July 1, 2018:
2019:
 Quarter Ended
 June 30, 2019 July 1, 2018 %
Change
Net Revenues *
     
U.S. and Canada segment$510.5
 $448.4
 14 %
International segment377.4
 380.4
 -1 %
Entertainment, Licensing and Digital segment96.5
 75.5
 28 %
      
Operating Profit *
     
U.S. and Canada segment$106.6
 $73.1
 46 %
International segment14.6
 0.2
 >100%
Entertainment, Licensing and Digital segment7.9
 21.8
 -64 %
*For the quarter ended July 1, 2018, revenues of $10.9 million, and operating profit of $3.1 million, were reclassified from the U.S. and Canada segment to the Entertainment, Licensing and Digital segment.
Quarter Ended
June 28, 2020June 30, 2019%
Change
Net Revenues
U.S. and Canada segment$359.7  $510.5  -30 %
International segment249.8  377.4  -34 %
Entertainment, Licensing and Digital segment89.8  96.5  -7 %
eOne segment160.9  —  100 %
Operating Profit (Loss)
U.S. and Canada segment$24.3  $106.6  -77 %
International segment(24.9) 14.6  >-100%
Entertainment, Licensing and Digital segment27.8  7.9  >100%
eOne segment(6.0) —  -100 %
U.S. and Canada Segment
The U.S. and Canada segment net revenues declined 30% for the second quarter of 2019 increased 14%2020 compared to the second quarter of 2018.2019, driven in part by disruptions to the business, as a result of the impact of the COVID-19 pandemic.  Net revenues grew inrevenue decreases from the Company's Franchise Brands, Partner Brands and Emerging Brands whileportfolios, were partially offset by higher net revenues from the Hasbro Gaming net revenues decreasedportfolio during the second quarter of 2019.2020.
InNet revenue declines were noted across the Company's Franchise Brands portfolio net revenue increases fromduring the second quarter; most notably in MAGIC: THE GATHERING PLAY-DOH and TRANSFORMERS products were partially offset by lower net revenues from NERF and BABY ALIVE products.NERF. In the Partner Brands portfolio, higher net revenues from MARVEL products as well as net revenue contributions from UGLYDOLLSSTAR WARS, DISNEY FROZEN and OVERWATCHDREAMWORKS' TROLLS products were partiallymore than offset by net revenue decreases from STAR WARSMARVEL products and to a lesser extent, BEY BLADE and DISNEY PRINCESS products during the second quarter of 2019.2020. In the Hasbro Gaming portfolio, higher net revenues from DUNGEONS & DRAGONS products were more than offset by decreased net revenues from DUEL MASTERS, as well as other Hasbro Gamingdelivered across many of the Company's games brands including JENGA, CONNECT 4, SORRY and TWISTER products. In the Emerging Brands portfolio, the addition oflower net revenues from the Company’s POWER RANGERS products, as well as net revenue increases fromand FURREAL FRIENDS and PLAYSKOOL products, were partially offset by net revenue declinescontributions from LITTLEST PET SHOP productsthe 2020 relaunch of the Company's GI JOE product line during the second quarter of 2019.2020.
U.S. and Canada segment operating profit for the second quarter of 20192020 was $106.6$24.3 million or 6.7% of segment net revenues, compared to segment operating profit of $73.1$106.6 million or 20.9% of segment net revenues, for the second quarter of 2018.2019.  The operating profit increasedecrease in the second quarter of 2020 was the result of increaseddriven by lower segment net revenues and lower administrative costsdescribed above, partially offset by higher intangible asset amortization costsreduced royalty expenses associated with the Power Rangers brand acquisition,lower Partner Brand sales, and higher shippinglower advertising, administrative and warehousing costs.marketing expense.


International Segment
International segment net revenues declined 1%34% in the second quarter of 2020 to $249.8 million from $377.4 million in the second quarter of 2019 from $380.4and included the impact of an unfavorable $12.4 million in the second quarter of 2018.currency translation. The following table presents net revenues by geographic region for the Company's International segment for the quarters ended June 28, 2020 and June 30, 2019 and July 1, 2018.
2019.
 Quarter Ended
 June 30, 2019 July 1, 2018 %
Change
Europe$201.1
 199.5
 1 %
Latin America90.3
 96.4
 -6 %
Asia Pacific86.0
 84.5
 2 %
Net revenues$377.4
 380.4
 -1 %



Quarter Ended
June 28, 2020June 30, 2019%
Change
Europe$157.7  201.1  -22 %
Latin America32.5  90.3  -64 %
Asia Pacific59.7  86.0  -31 %
Net revenues$249.8  377.4  -34 %
The decline in International segment net revenues during the second quarter of 20192020 was driven by anattributable to disruptions to the business related to the COVID-19 pandemic as well as the unfavorable foreign currency translation of $20.1$12.4 million. Unfavorable foreign currency translation impacted the Company's major geographic regions as follows: Europe - $3.5 million, related to the Company’s European, Latin AmericanAmerica - $6.7 million and Asia Pacific regions. Absent the impact of foreign exchange,- $2.2 million. International segment net revenues increased $17.1 million or 5%declined in all brand portfolios including Franchise Brands, Partner Brands, Hasbro Gaming and Emerging Brands during the second quarter of 2019.  International segment net revenues from Franchise Brands and Emerging Brands grew, Partner Brands net revenues were relatively flat, while net revenues from Hasbro Gaming declined during the second quarter of 20192020 compared to the second quarter of 2018.2019.  In the International segment, net revenues declined from substantially all of the Company's Franchise Brands portfolio, higher net revenues fromproducts during the second quarter, most notably NERF, PLAY-DOH and MAGIC: THE GATHERING and, to a lesser extent, MONOPOLY products, were partially offset by lower net revenues from MY LITTLE PONY, NERF and TRANSFORMERS products. In the Partner Brands portfolio, net revenue increasesdecreases from MARVEL, BEYBLADE and DISNEY PRINCESS products were partially offset by net revenue declines inincreases from DISNEY FROZEN, STAR WARS and BEYBLADEto a lesser extent, DREAMWORKS' TROLLS products. In the Hasbro Gaming portfolio, higher net revenue declined in PIE FACErevenues from JENGA products were more than offset by lower net revenues from certain other Hasbro Gaming products. In the Emerging Brands portfolio, contributions from POWER RANGERS products were partially offset by lower net revenues declined from PLAYSKOOL and LITTLEST PET SHOP products in the second quarter of 2019.2020.
International segment operating profit was $14.6losses were $24.9 million, or -10.0% of segment net revenues for the second quarter of 2019,2020, compared to operating profit of $0.2$14.6 million, or 3.9% of segment net revenues, for the second quarter of 2018. The increase in2019. International segment operating profitlosses during the second quarter of 2019 was2020 were the result of a more favorablelower sales and unfavorable product mix, partially offset by lower royalty expense as a result of lower partner brand sales and lower advertising and marketing costs partially offset by higher royalty expense and higher intangible asset amortization expense.as well as lower administrative costs as a result of global cost savings initiatives.
Entertainment, Licensing and Digital Segment
Entertainment, Licensing and Digital segment net revenues increased 28%declined 7% to $89.8 million for the second quarter of 2020, compared to $96.5 million for the second quarter of 2019, compared to $75.5 million for the second quarter of 2018. Revenue growth was2019. Net revenue declines were primarily driven by MAGIC: THE GATHERING ARENA, which went into open beta status in the fourth quarter of 2018, and to a lesser extent, by consumer product licensing netlower digital gaming revenues during the second quarter of 2019.2020 due to the closure of the Backflip business in the fourth quarter of 2019 and lower consumer product licensing revenues during the second quarter of 2020.
Entertainment, Licensing and Digital segment operating profit decreasedincreased to $7.9$27.8 million, or 30.9% of segment net revenues for the second quarter of 2019,2020, from $21.8$7.9 million, or 8.2% of segment net revenues for the second quarter of 2018. Overall, the decrease2019. The increase in Entertainment, Licensing and Digital segment operating profit was duedriven primarily to higherby lower program production expense and amortization and lower advertising costs during the second quarter of 2020 compared to 2019.
eOne Segment
During the second quarter of 2020, eOne segment net revenues were $160.9 million. The following table presents eOne segment net revenues by channel for the quarter ended June 28, 2020.
Three Months Ended
June 28, 2020
eOne Segment Net Revenues
          Film and TV$106.0 
          Family Brands29.0 
          Music and Other25.9 
Segment Total$160.9 


The COVID-19 outbreak had a significant and varied impact on the eOne segment during the second quarter of 2020. Specifically, certain scheduled productions have been delayed or postponed due to the shutdown of production work and the closure or limited reopening of studios. Theatrical releases have been delayed due to the closure or limited reopening of theaters, and in some cases, global film releases have moved from theaters to alternative media platforms such as streaming services.
During the second quarter of 2020, drivers of the eOne segment net revenues included: (i) broadcast and licensing revenues associated with internationally recognized brands, PEPPA PIG and PJ MASKS: (ii) broadcast and licensing contributions from key scripted deliveries including season two of THE ROOKIE, a television drama series currently airing on ABC; and (iii) the Company's strong lineup of unscripted television programming as well as increased advertising, developmentdemand for the Company's vast SVOD library. In addition to these entertainment driven revenues, the Company's music business benefited from both streaming and administrationpublishing revenues during the second quarter of 2020.
eOne segment operating losses were $6.0 million, or -3.7% of segment net revenues for the second quarter of 2020. This loss was driven by $22.6 million of incremental intangible amortization costs for MAGIC: THE GATHERING ARENA and other digital gaming initiatives.related to the intangible assets acquired in the eOne Acquisition.
Global Operations
The Global Operations segment operating loss of $5.9 million for the second quarter of 2020 compared to an operating loss of $6.0 million for the second quarter of 2019 compared to an operating loss of $10.02019.
Corporate and Eliminations
Operating losses in Corporate and Eliminations totaled $13.1 million for the second quarter of 2018. 
Corporate and Eliminations
The2020 compared to operating profit in Corporate and Eliminations totaledof $5.2 million for the second quarter of 2019 compared to operating profit2019. Operating losses in 2020 were driven primarily by $11.6 million of $2.5 million for the second quarter of 2018 driven by cost-savingcharges associated with cost-savings initiatives implemented as a result ofwithin the Company's 2018commercial and Film and TV businesses combined with charges related to the eOne Acquisition; including acquisition and integration costs of $4.0 million and restructuring program.

and related costs of $6.3 million, comprised of severance and retention costs.
First Six Months of 20192020
The following table presents net revenues and operating profit (loss) for the Company's three principal segments for each of the six monthsmonth periods ended June 28, 2020 and June 30, 2019 and July 1, 2018.2019.
 Six Months Ended
 June 30, 2019 July 1, 2018 %
Change
Net Revenues*     
U.S. and Canada segment$868.4
 $802.4
 8 %
International segment660.1
 668.4
 -1 %
Entertainment, Licensing and Digital segment188.5
 149.9
 26 %
     

Operating Profit *    

U.S. and Canada segment$120.1
 $46.5
 >100%
International segment(15.8) (55.9) 72 %
Entertainment, Licensing and Digital segment38.0
 38.9
 -2 %
*For the six months ended July 1, 2018, revenues of $21.3 million, and operating profit of $6.4 million, were reclassified from the U.S. and Canada segment to the Entertainment, Licensing and Digital segment.



Six Months Ended
June 28, 2020June 30, 2019%
Change
Net Revenues
U.S. and Canada segment$788.4  $868.4  -9 %
International segment500.2  660.1  -24 %
Entertainment, Licensing and Digital segment173.9  188.5  -8 %
eOne segment503.4  —  100 %
Operating Profit (Loss)
U.S. and Canada segment$96.1  $120.1  -20 %
International segment(51.6) (15.8) >-100%
Entertainment, Licensing and Digital segment33.0  38.0  -13 %
eOne segment(39.0) —  -100 %
U.S. and Canada Segment
The U.S. and Canada segment net revenues for the six months ended June 30, 2019 increased 8%28, 2020 decreased 9% compared to 2018.2019.  The net revenue declines in the first half of 2020 were driven in part by disruptions to the Company's business operations, as a result of the impact of COVID-19. In the first six months of 2019,2020, net revenue increasesdeclines in the Franchise Brands, Partner Brands and Emerging Brands portfolios were partially off-setoffset by lowerhigher net revenues in the Partner Brands and Hasbro Gaming portfolios.portfolio.


In the Franchise Brands portfolio, increases in net revenuesrevenue declines from PLAY-DOH, NERF and TRANSFORMERS products and, to a lesser extent, MAGIC: THE GATHERING PLAY DOH, TRANSFORMERS and MONOPOLY products, were partially offset by lowerhigher net revenues from NERF, MY LITTLE PONY and BABY ALIVEMONOPOLY products. In the Partner Brands portfolio, lower net revenues from STAR WARSMARVEL and DREAMWORKS’ TROLLSDISNEY PRINCESS products, as well as net revenue declines from the Company's UGLY DOLL and OVERWATCH products, were partially offset by net revenue contributionsincreases from the introduction of the Company's UGLYDOLLDISNEY FROZEN, DREAMWORKS’ TROLLS and OVERWATCHSTAR WARS products. In the Hasbro Gaming portfolio, higher net revenues were delivered across many brands in the portfolio, most notably from DUNGEONS & DRAGONS, JENGA, CONNECT 4, SORRY and DUEL MASTERS products were offset by lower net revenues from PIE FACE, SPEAK OUT and certain other Hasbro GamingTHE GAME OF LIFE products. In the Emerging Brands portfolio, net revenue contributions from the introduction of the Company's POWER RANGERS products, as well as net revenue increasesdeclines from FURREAL FRIENDS, POWER RANGERS and PLAYSKOOL products, were partially offset by net revenue decreasesrevenues contributions from LITTEST PET SHOP products.the 2020 relaunch of the Company's GI JOE product line.
U.S. and Canada segment operating profit for the six months ended June 30, 2019 increased28, 2020 decreased to $96.1 million, or 12.2% of segment net revenues, compared to $120.1 million, or 13.8% of segment net revenues, compared to $46.5 million, or 5.8% of segment net revenues, for the six months ended July 1, 2018.June 30, 2019. The operating profit in the first half of 2018 included expenses of $52.3 million related to the Toys“R”Us liquidation in the U.S. The increasedecrease in operating profit in the first halfsix months of 20192020 was driven by higherlower net revenues and favorable product mix partially offset by start-upreduced administrative costs as a result of cost-savings initiatives, lower royalty expenses driven by the associated with opening a new Midwestern U.S. warehousereduction in Partner Brands sales and higher intangible asset amortizationlower sales, marketing and advertising costs associated withduring the Power Rangers brand acquisition.first half of 2020.
International Segment
International segment net revenues decreased 1%24% to $500.2 million for the six months ended June 28, 2020 from $660.1 million for the six months ended June 30, 2019 and included an unfavorable $21.8 million impact from $668.4 million for the six months ended July 1, 2018.foreign currency exchange. The following table presents net revenues by geographic region for the Company's International segment for the six month periods ended June 28, 2020 and June 30, 20192019.
Six Months Ended
June 28, 2020June 30, 2019%
Change
Europe$319.9  354.5  -10 %
Latin America66.4  153.1  -57 %
Asia Pacific113.9  152.5  -25 %
Net revenues$500.2  660.1  -24 %
Foreign currency translation negatively impacted the major geographic regions as follows: Europe - $7.3 million, Latin America - $10.5 million and July 1, 2018.
 Six Months Ended
 June 30, 2019 July 1, 2018 %
Change
Europe$354.5
 355.1
 — %
Latin America153.1
 162.4
 -6 %
Asia Pacific152.5
 150.9
 1 %
Net revenues$660.1
 668.4
 -1 %
The decline inAsia Pacific - $4.0 million. International segment net revenues during the first half of 2019 reflects an unfavorable foreign currency translation of $43.5 million related to the Company’s European, Latin American and Asia Pacific regions. Absent the impact of foreign exchange, International segment net revenues increased $35.2 million or 5% during the first half of 2019.  International segment net revenues fromdeclined in all brand portfolios including Franchise Brands, Partner Brands, Hasbro Gaming and Emerging Brands grew while Partner Brands and Hasbro Gaming net revenues declined during the first six months of 20192020 compared to 2018.2019.  The declines in Franchise Brands were the result of lower sales from substantially all Franchise Brands products during the first half of 2020, most notably NERF, PLAY-DOH and TRANSFORMERS. In the FranchisePartner Brands portfolio, higher net revenues from MAGIC: THE GATHERING and MONOPOLY products were offset by lower net revenues from NERFMARVEL and MY LITTLE PONY products.  The declines in Partner Brands were driven by lower sales of STAR WARS,to a lesser extent, BEYBLADE and DISNEY PRINCESS and DISNEY FROZEN products were partially offset by higher net revenues from MARVELDISNEY FROZEN, DREAMWORKS’ TROLLS and STAR WARS products.  In the Hasbro Gaming portfolio, lower net revenues from PIE FACE and JENGAcertain other Hasbro Gaming products were partially offset by net revenue increases from CONNECT 4JENGA and certain other Hasbro GamingDUNGEONS & DRAGONS products. In the Emerging Brands portfolio, contributionsnet revenue declines from the introduction of the Company's POWER RANGERSLITTLEST PET SHOP and PLAYSKOOL products were partially offset by lower net revenuesrevenue increases from LITTLEST PET SHOPPOWER RANGERS products in the first six months of 2019.2020.
The International segment operating loss waslosses were $51.6 million for the first six months of 2020, compared to operating losses of $15.8 million for the first six months of 2019, compared to an2019. The increase in International segment operating loss of $55.9 millionlosses for the first six months of 2018. Operating profit for the first six months of 2018 includes $11.2 million of expenses related to the Toys“R”Us liquidation in the United Kingdom. The improvement in International segment operating results for the first six months of 20192020 was the result of lower administrative, advertising and product development costs as well as lower distribution costsnet revenues partially offset by higher intangible asset amortization costs.reduced advertising, sales and marketing costs, and administrative and royalty expenses.
Entertainment, Licensing and Digital Segment
Entertainment, Licensing and Digital segment net revenues for the six months ended June 30, 2019 increased 26%28, 2020 decreased 8% to $188.5$173.9 million from $149.9$188.5 million for the six months ended July 1, 2018. Revenue growth wasJune 30, 2019. The net revenue declines during the first half of 2020 were driven by lower digital gaming revenues due to the closure of the Backflip business in the fourth quarter of 2019, lower net revenues from MAGIC: THE GATHERING ARENA, the Company's free-to-play digital collectible card game due to the timing of product releases and higherlower consumer productsproduct licensing revenues.




Entertainment, Licensing and LicensingDigital segment operating profit remained relatively flat at $38.0was $33.0 million, or 20.1%19.0% of net revenues, for the six months ended June 30, 201928, 2020 down from $38.9$38.0 million, or 25.9%20.1% of segment net revenues, for the six months ended July 1, 2018.June 30, 2019. The changedecline in operating profit in the Entertainment, Licensing and Digital segment operating profit was driven by lower net revenues as well as asset impairment charges of $20.8 million in production assets driven by the increased revenues noted above, offset by higherchange in entertainment strategy as a result of the eOne Acquisition during the first quarter of 2020. Partially offsetting these negative impacts to operating profit were lower program production expenseexpenses and amortization costs as well as increasedlower advertising and development costs during the first half of 2020.
eOne Segment
During the first half of 2020, eOne segment net revenues were $503.4 million. The following table presents eOne segment net revenues by channel for the six months ended June 28, 2020.
Six Months Ended
June 28, 2020
eOne Segment Net Revenues
          Film and TV$365.5 
          Family Brands79.8 
          Music and Other58.1 
Segment Total$503.4 
The impact of the COVID-19 outbreak on the eOne segment during the first half of 2020 was felt most significantly during the second quarter of the year. Specifically, scheduled productions were and administrationcontinue to be delayed or postponed due to the shutdown of production work and the closure or limited reopening of studios. In addition, theatrical releases have been delayed due to the closure or limited reopening of theaters, and in some cases, global film releases were moved from theaters to alternative media platforms such as streaming services.
In the first half of 2020, drivers of the eOne segment net revenues included: (i) broadcast and licensing revenues associated with internationally recognized brands, PEPPA PIG and PJ MASKS, (ii) theatrical contributions from the Amblin Partners film 1917, released in December 2019, (iii) broadcast and licensing contributions from key scripted deliveries including season two of THE ROOKIE, a television drama series currently airing on ABC, the Company's strong lineup of unscripted television programming as well as the Company's SVOD library. In addition to these entertainment driven revenues, the Company's music business benefited from both strong streaming and publishing revenues during the first half of 2020.
eOne segment operating losses were $39.0 million, or -7.8% of segment net revenues for the first half of 2020. This loss was driven by $77.7 million of acquisition and integration costs, for MAGIC: THE GATHERING ARENAincluding $47.4 million of expense associated with the acceleration of eOne stock-based compensation and other digital gaming initiatives.$24.5 million of advisor fees settled at the closing of the acquisition. Also contributing to the loss is $47.6 million of incremental intangible amortization costs related to the intangible assets acquired in the eOne Acquisition.
Global Operations
The Global Operations segment operating loss of $1.3 million for the first six months of 2020 compares to an operating loss of $4.7 million for the first six months of 2019 compares to an operating loss of $7.8 million for the first six months of 2018.2019.
Corporate and Eliminations
Operating profitlosses in Corporate and Eliminations for the first six months of 2019 was $27.02020 were $58.2 million, compared to a lossoperating profit of $14.5$27.0 million for the first six months of 2018.2019. The Corporate and Eliminations operating loss in the first six monthshalf of 20182020 was driven primarily by $7charges related to the eOne Acquisition; including acquisition and integration costs of $22.0 million and restructuring and related costs of expenses$39.5 million, comprised of severance and retention costs, as well as impairment charges for certain definite-lived intangible assets driven by the change in strategy for the combined company’s entertainment assets. In addition to the charges associated with the Toys“R”Us liquidation and $17.3eOne Acquisition, the Company incurred $11.6 million of severance related tocharges associated with cost-savings initiatives within the Company’s 2018 restructuring plan. In the first half of 2019, operating profit benefited from cost reductions associated with the implementation of the Company’s 2018 restructuring program.commercial and Film and TV businesses.


OPERATING COSTS AND EXPENSES

Second Quarter 20192020
TheOverall, the Company's costs and expenses in the second quarter of 2020 increased compared to the second quarter of 2019 driven by the inclusion of eOne’s operations in the Company’s consolidated financial statements. Costs and expenses stated as percentages of net revenues, are illustrated below for the quarters ended June 28, 2020 and June 30, 2019 and July 1, 2018.2019.
Quarter EndedQuarter Ended
June 30, 2019 July 1, 2018June 28, 2020June 30, 2019
Cost of sales34.9% 37.4%Cost of sales29.4 %34.9 %
Program cost amortizationProgram cost amortization5.9  2.4  
Royalties7.2
 7.3
Royalties11.3  7.2  
Product development6.7
 6.6
Product development6.8  6.7  
Advertising9.4
 9.7
Advertising8.4  9.4  
Amortization of intangibles1.2
 0.5
Amortization of intangibles4.0  1.2  
Program production cost amortization2.4
 0.8
Selling, distribution and administration25.2
 28.0
Selling, distribution and administration32.7  25.2  
Acquisition and related costsAcquisition and related costs1.2  0.0  
Cost of sales for the second quarter of 20192020 was $343.7$253.2 million, or 34.9%29.4% of net revenues, compared to $338.3$343.7 million, or 37.4%34.9% of net revenues, for the second quarter of 2018.  Costs2019.  The decrease of cost of sales increased in dollars primarily duewas attributable to higherlower net revenues compared toduring the second quarter of 2018. As2020 compared to the same period in 2019. The decrease as a percentage of net revenues is primarily related to the inclusion of net revenues from eOne, which experiences lower costs of sales sold as a percentage of net sales. To a lesser extent, the cost of sales decrease as a percent of net revenues was driven by the decrease reflects a more favorable product mix inimpact of $6.4 million of unfavorable foreign exchange and improved inventory closeout rates during the second quarter of 20192020 as compared to 2018.2019.
Program cost amortization increased to $50.7 million, or 5.9% of net revenues, for the second quarter of 2020 from $23.5 million, or 2.4% of net revenues, for the second quarter of 2019. The increase in this expense both in dollars and as a percentage of net revenues is related to eOne, which experiences higher program cost amortization as a percentage of net sales. Program costs are capitalized as incurred and amortized using the individual-film-forecast method which matches costs to the related recognized revenue.
Royalty expense for the second quarter of 2019 was $71.12020 increased to $97.3 million, or 7.2%11.3% of net revenues, compared to $66.0$71.1 million, or 7.3%7.2% of net revenues, for the second quarter of 2018.  In the second quarter of 2019, the2019.  The increase in royalty expense was driven by net revenue increases, primarily from Partner Brand products. Royalty expense was consistentin dollars and as a percent of net revenues.revenues was driven by eOne which was partially offset by lower sales of Partner Brand products in the second quarter of 2020 as compared to the second quarter of 2019.
Product development expense for the second quarter of 20192020 was $65.6$58.3 million, or 6.7%6.8% of net revenues, compared to $59.9$65.6 million, or 6.6%6.7% of net revenues, for the second quarter of 2018.2019.  The increasedecrease in dollars was drivenprimarily related to lower spending as a result of global cost savings initiatives combined with savings related to the closure of the Backflip business in the fourth quarter of 2019, partially offset by increased investments in digital gaming, primarily related to MAGIC: THE GATHERING ARENA. tabletop gaming. Product development expense was consistent as a percent of net revenues.
Advertising expense for the second quarter of 20192020 was $92.8$72.4 million, or 9.4%8.4% of net revenues, compared to $87.6$92.8 million, or 9.7%9.4% of net revenues, for the second quarter of 2018.2019.  The advertising expense increasedecrease in dollars and as a percent of net revenues was driven by net revenue increases and higher costs associated withlower advertising levels across the Company’s digital and e-sports initiatives, primarily MAGIC: THE GATHERING ARENA. regions reflecting the current environment due to COVID-19 impacts.
Amortization of intangible assets wasincreased to $34.7 million, or 4.0% of net revenues, for the second quarter of 2020, compared to $11.8 million, or 1.2% of net revenues, for the second quarter of 2019, compared to $4.6 million, or 0.5% of net revenues, for the second quarter of 2018.2019.  The increase in dollars and as a percent of net revenues reflects amortizationis primarily related to the POWER RANGERS property rights acquired duringacquisition of eOne, which contributed $22.6 million to amortization. Excluding the intangible asset amortization associated with eOne, amortization of intangible assets was consistent with 2019.
For the second quarter of 2018.



Program production expense2020, the Company's selling, distribution and amortizationadministration expenses increased to $23.5$281.2 million, or 2.4%32.7% of net revenues, from $247.7 million, or 25.2% of net revenues, for the second quarter of 2019 from $7.32019. The increase in selling, distribution and administration expenses in dollars was driven primarily by the inclusion and consolidation of eOne's operations during 2020. In addition, the increase in selling, distribution and administration expenses reflects $11.6 million or 0.8% of net revenues, forseverance charges associated with cost-savings initiatives within the Company’s commercial and Film and TV businesses and increased


bad debt expense. These increases were partially offset by lower freight and warehousing expenses as a result of lower shipments and decreased general and administrative spending due to the Company’s ongoing cost-reduction efforts in the second quarter of 2018. Program production costs are capitalized2020 as incurred and amortized using the individual-film-forecast method.  The increase in dollars, and as a percent of net revenues, reflects expense relatedcompared to a film production asset during the second quarter of 2019.
ForDuring the second quarter of 2019, the Company's selling, distribution and administration expenses decreased to $247.7 million, or 25.2% of net revenues, from $253.2 million, or 28.0% of net revenues, for the second quarter of 2018. The decrease in selling, distribution and administration expenses was driven by cost-savings initiatives, lower compensation expense, lower depreciation expense as well as other general cost decreases in the second quarter of 2019.  These decreases were partially offset by increased expenses related to opening a new Midwestern U.S. warehouse, as well as expense increases in support of the Company’s Wizards of the Coast business. In addition,three months ended June 28, 2020, the Company had higher warehousingincurred $10.3 million of acquisition and related costs in connection with the second quartereOne Acquisition. These expenses comprised of 2019 as a result$4.0 million of proposed tariffs on its products in the U.S. which resulted in the Company importing products sooner than anticipated.

acquisition and integration costs, and $6.3 million of severance and retention costs.
First Six Months of 20192020
The Company's costs and expenses, stated as percentages of net revenues, are illustrated below for the six month periods ended June 28, 2020 and June 30, 2019 and July 1, 2018.
2019.
Six Months EndedSix Months Ended
June 30, 2019 July 1, 2018June 28, 2020June 30, 2019
Cost of sales35.2% 36.6%Cost of sales26.2 %35.2 %
Program cost amortizationProgram cost amortization9.3  1.8  
Royalties7.6
 8.4
Royalties10.7  7.6  
Product development7.1
 7.2
Product development5.7  7.1  
Advertising9.9
 9.6
Advertising8.9  9.9  
Amortization of intangibles1.4
 0.7
Amortization of intangibles3.6  1.4  
Program production cost amortization1.8
 1.2
Selling, distribution and administration27.5
 35.9
Selling, distribution and administration28.5  27.5  
Acquisition and related costsAcquisition and related costs8.1  —  
Cost of sales for the six months ended June 30, 2019 increased in dollars28, 2020 decreased to $515.9, million or 26.2% of net revenues, from $603.7 million, from $593.5 millionor 35.2% of net revenues for the six months ended July 1, 2018 but decreasedJune 30, 2019. The decrease as a percentage ofnet revenues is primarily related to the acquisition of eOne, which experiences lower cost of sales as a percentage of net revenues from 36.6% forsales as well as the impact of $10.3 million of unfavorable foreign exchange. The cost of sales decrease in dollars during the first six months of 20182020 was driven by lower volumes, partially offset by a less favorable brand mix from lower sales of Partner Brand products.
Program cost amortization increased in the first six months of 2020 to 35.2% for$182.8 million, or 9.3% of net revenues, from $30.1 million, or 1.8% of net revenues, in the first six months of 2019. Costs of sales increasedProgram production costs are capitalized as incurred and amortized using the individual-film-forecast method which matches costs to the related recognized revenue. The increase in dollars, primarily due to higher net revenues compared to the first six months of 2018. Asand as a percent of net revenues, the decrease reflectsis primarily related to eOne, which experiences higher program cost amortization as a more favorable product mix in the first halfpercentage of 2019 compared to 2018.net sales.
Royalty expense for the six months ended June 30, 201928, 2020 was $130.9$210.2 million, or 7.6%10.7% of net revenues, compared to $135.7$130.9 million, or 8.4%7.6% of net revenues, for the six months ended July 1, 2018.June 30, 2019. The decreaseincrease in royalty expense in dollars, and as a percent of net revenues, was driven primarily by overall declines in partner brand net revenuesthe inclusion of eOne operations during the first half of 2020, partially offset by lower sales of Partner Brand product during the first six months of 2020 as compared to the first half of 2019.
Product development expense for the six months ended June 30, 2019 increased28, 2020 decreased to $112.2 million, or 5.7% of net revenues, from $121.9 million, or 7.1% of net revenues, from $117.2 million, or 7.2% of net revenues for the six months ended July 1, 2018. The increase in dollars during the first six months of 2019 was driven by increased investments in digital gaming, primarily related to MAGIC: THE GATHERING ARENA.
Advertising expense for the six months ended June 30, 2019 was $169.4 million, or 9.9% of net revenues, compared to $155.6 million, or 9.6% of net revenues, for the six months ended July 1, 2018. The increase in advertising expense was primarily due to higher revenues in the first half of 2019 as well as higher costs related to the Company’s digital and e-sports initiatives, primarily MAGIC: THE GATHERING ARENA.
Amortization of intangibles was $23.6 million, or 1.4% of net revenues, for the six months ended June 30, 20192019. The decrease as a percent of net revenues was primarily related to eOne, which experiences lower product development expense as a percentage of net sales.The decrease in dollars during the first six months of 2020 was driven by lower spending as a result of global cost savings initiatives combined with lower investments in digital gaming, primarily related to the closure of the Company's Backflip business during the fourth quarter of 2019.
Advertising expense for the six months ended June 28, 2020 was $174.0 million, or 8.9% of net revenues, compared to $11.0$169.4 million, or 0.7%9.9% of net revenues, for the six months ended June 30, 2019. The advertising expense increase in dollars was driven by eOne advertising expenses and higher costs in support of the MAGIC: THE GATHERING tabletop set release during the first quarter of 2020, partially offset by reduced advertising levels globally, reflecting the current environment due to COVID-19 impacts.


Amortization of intangibles was $71.5 million, or 3.6% of net revenues, for the six months ended June 28, 2020 compared to $23.6 million, or 1.4% of net revenues, in the first six months of 2018. The increase reflects amortization related to the POWER RANGERS property rights acquired during the second quarter of 2018.



Program production expense and amortization increased in the first six months of 2019 to $30.1 million, or 1.8% of net revenues, from $19.3 million, or 1.2% of net revenues, in the first six months of 2018. Program production costs are capitalized as incurred and amortized using the individual-film-forecast method.2019. The increase in dollars and as a percent of net revenues reflects expenseis primarily related to a film productionthe acquisition of eOne, which contributed $47.6 million to amortization. Excluding the intangible asset offset by lower television programming amortization during the first halfassociated with eOne, amortization of intangible assets was consistent with 2019.
For the six months ended June 30, 2019,28, 2020, the Company's selling, distribution and administration expenses decreasedincreased to $560.3 million, or 28.5% of net revenues, from $473.0 million, or 27.5% of net revenues from $581.2 million or 35.9% of net revenues, for the six months ended July 1, 2018. In the first half of 2018, the Company’s selling, distribution and administration expenses included $60.3 million of bad debt and other expenses related to Toys“R”Us, as well as $17.3 million of severance costs related to the Company’s 2018 restructuring program.June 30, 2019. The decreaseincrease in selling, distribution and administration expenses was driven primarily by the inclusion and consolidation of eOne's operations during the first half of 2020 combined with $11.6 million of severance charges associated with cost-savings initiatives lower compensation expense, lower depreciation expense as well as other general cost decreases.  These decreases were partiallywithin the Company’s commercial and Film and TV businesses.This increase was offset by increasedlower freight and warehousing expenses related to opening a new Midwestern U.S. warehouse, higher warehousing costs in 2019 as a result of importing product earlier as a resultlower shipments during the first six months and decreased general and administrative spending due to the Company’s ongoing cost-reduction efforts.
During the first half 2020, the Company incurred $160.0 million of acquisition and related costs in connection with the eOne Acquisition. These expenses comprised of $99.7 million of acquisition and integration costs, primarily related to $47.4 million of expense associated with the acceleration of eOne stock-based compensation and $39.0 million of advisor fees settled at the closing of the proposed tariffsacquisition. Also included in the U.S.,acquisition and related costs were $60.4 million of restructuring and related costs including severance and retention costs of $19.5 million as well as expense increases$40.9 million in supportimpairment charges for certain definite-lived intangible and production assets. The impairment charges of $40.9 million were driven by the Company’s Wizards ofchange in strategy for the Coast business.combined company’s entertainment assets.
NON-OPERATING (INCOME) EXPENSE
Interest expense for the second quarter and first six months of 20192020 totaled $49.6 million and $104.3 million, respectively, compared to $22.0 million and $44.3 million, respectively, compared to $22.8 million and $45.6 million in the second quarter and first six months of 2018,2019, respectively. In connection with the financing of the eOne acquisition, the Company issued an aggregate of $2.4 billion of senior unsecured debt securities during November 2019 and in the first quarter of 2020, on the date of the closing, borrowed $1.0 billion in term loans provided by a term loan agreement. The decreaseincrease in interest expense for the second quarter and first six months primarilyof 2020 reflects interest related to these notes and other borrowings associated with the eOne business, partially offset by lower levelsaverage short-term borrowings during the first half of short-term borrowing in 2019 compared to 2018.2020.
Interest income was $6.0$1.0 million and $13.7$5.7 million for the second quarter and first six months of 2019,2020, respectively, compared to $6.3$6.0 million and $12.6$13.7 million in the second quarter and first six months of 2018,2019, respectively. HigherLower average interest rates in 20192020 compared to 20182019 contributed to the six month increase offset by lower levels of invested cash in 2019.decrease.
Other expense,income, net was $106.2$2.6 million and $98.1$4.1 million for the second quarter and first six months of 2019,2020, respectively, compared to other income,expense, net of $3.0$106.2 million and $5.6$98.1 million in the second quarter and first six months of 2018,2019, respectively. The declineincrease was driven by lower pension expense in 2020 due to the $110.8 million non-cash pension charge as a result of the settlement of the Company's U.S. pension plan liability during the second quarter of 2019. Offsetting this decline was an increase in other income, driven2019, offset by improved foreign exchange gains andcurrency losses in 2020 compared to foreign currency gains in 2019.
INCOME TAXES
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”).  The Tax Act made broad and complex changes to the U.S. tax code including, but not limited to, reducing the U.S. federal corporate tax rate and requiring a one-time tax on certain unrepatriated earnings of foreign subsidiaries.
On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) established a one-year measurement period to complete the accounting for the income tax effects of the Tax Act according to standards provided by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 740, Accounting for Income Taxes (ASC 740). An entity recognizes the impact of those amounts for which the accounting is complete. For the first quarter of 2018, the Company obtained additional information affecting the provisional amount initially recorded in the fourth quarter of 2017. As a result, the Company recorded a one-time tax expense of $47.8 million which reversed certain discrete benefits recorded in 2017 as well as increased our provisional deemed repatriation tax liability. December 22, 2018 marked the end of the measurement period for purposes of SAB 118. As such, the Company has completed its analysis based on legislative updates relating to the Tax Act.



Income tax benefit totaled $10.8 million on pre-tax loss of $43.7 million in the second quarter of 2020 compared to income tax benefit of $7.3 million on pre-tax earnings of $6.1 million in the second quarter of 2019 compared to income tax expense of $7.8 million on pre-tax earnings of $68.1 million in the second quarter of 2018.2019. For the six monthsix-month period, the income tax benefit totaled $14.9 million on pre-tax loss of $115.6 million in 2020 compared to income tax benefit of $4.5 million on pre-tax earnings of $35.7 million in 2019 compared to income tax expense of $31.9 million on pre-tax loss of $20.3 million in 2018.2019. Both periods, as well as the full year 2018,2019, were impacted by discrete tax events including the accrual of potential interest and penalties on uncertain tax positions. During the first six months of 2019,2020, favorable discrete tax adjustments were a net benefit of $31.3$24.0 million compared to a net expensebenefit of $30.9$31.3 million in the first six months of 2018.2019. The favorable discrete tax adjustments for the first six months of 2020 primarily relate to the costs related to the acquisition of eOne. The favorable discrete tax adjustments for the first six months of 2019 primarily relaterelated to the settlement of the U.S. defined benefitbenefits pension plan liability, excess tax benefits on share-based payments and the expiration of statutes of limitationlimitations for uncertain tax positions. The unfavorable discrete tax adjustments for the first six months of 2018 primarily related to changes in guidance on U.S. tax reform, which resulted in the reversal of a tax benefit recorded in 2017 and additional repatriation tax liability, partially offset by excess tax benefits on share-based payments and audit settlements. Absent discrete items, the adjusted tax rates for the first six months of 2020 and 2019 were 20.5% and 2018 were 18.3% and 17.4%, respectively. The increase in the adjusted tax rate of 18.3%20.5% for the first six months ended June 30, 2019of 2020 is primarily due to the mix of jurisdictions where the companyCompany earned its profits.profits and the impact of the eOne Acquisition.
The United Kingdom enacted the Finance Act of 2020 after receiving royal assent on July 22, 2020. Effective back to April 1, 2020, the new law maintains the corporate income tax rate at 19% instead of the planned reduction to 17% that was previously enacted in the UK Finance Act of 2016. Changes in tax laws and rates will impact recorded deferred tax assets and liabilities


and our effective tax rate in the future. The primary impact will come from the revaluation of Hasbro’s UK tax attributes, which will likely result in an increased tax provision of approximately $16.0 million in the third quarter of 2020.
OTHER INFORMATION
Brexit Referendum
On June 23, 2016, the United Kingdom (“UK”) voted in a referendum to leave the European Union (“EU”), commonly referred to as Brexit. The UK government triggered the formal two-year period to negotiate the terms of the UK’s exit on March 29, 2017. These events resulted in an immediate weakening of British pound sterling against the US dollar, and increased volatility in the foreign currency markets which continued into 2020. These fluctuations initially affected Hasbro’s financial results, although the impact was partially mitigated by the Company’s hedging strategy. On January 31, 2020, the UK formally withdrew from the EU, entering a transitional period which is currently expected to end on December 31, 2020. During this transitional period, EU law will continue to apply in the UK while providing time for the UK and EU to negotiate the details of their future relationship. Financial, trade and legal implications of the UK leaving the EU remain uncertain. The Company continues to closely monitor the negotiations and the impact to foreign currency markets, taking appropriate actions to support the Company’s long-term strategy and to mitigate risks in its operational and financial activities. However, the Company cannot predict the direction of Brexit-related developments nor the impact of those developments on our European operations and the economies of the markets in which they operate.
Business Seasonality and Shipments
Historically, the Company's revenue pattern of Hasbro’s legacy business has shown the second half of the year to be more significant to its overall business than the first half. The Company expects that this concentration will continue, particularly as more of its business has shifted to larger customers with order patterns concentrated in the second half of the year around the holiday season. The concentration of sales in the second half of the year increases the risk of (a) underproduction of popular items, (b) overproduction of less popular items, and (c) failure to achieve tight and compressed shipping schedules.
The Company’s business is characterized by customer order patterns which vary from year to year largely because of differences each year in the degree of consumer acceptance of product lines, product availability, marketing strategies and inventory policies of retailers, the dates of theatrical releases of major motion pictures for which the Company sells products, and changes in overall economic conditions. As a result, comparisons of the Company's unshipped orders on any date with those at the same date in a prior year are not necessarily indicative of the Company's expected sales for the year. Moreover, quick response inventory management practices result in fewer orders being placed significantly in advance of shipment and more orders being placed for immediate delivery. Although the Company may receive orders from customers in advance, it is a general industry practice that these orders are subject to amendment or cancellation by customers prior to shipment and, as such, the Company does not believe that these unshipped orders, at any given date, are indicative of future sales. Additionally, the impact of the COVID-19 outbreak to the Company's business seasonality and shipments remains uncertain. After operating at lower than planned production levels during most of the first quarter due to COVID-19, the Company's third-party manufacturing facilities in China are currently operating at planned capacity for this time of year. Manufacturing and warehouse partners outside of China operated at close to normal levels during much of the first quarter. Beginning in mid-March and into the second quarter, these locations were operating at varying levels of productivity depending on local government and safety considerations however the majority of manufacturing facilities are now up and running. The COVID-19 situation continues to be fluid, but we currently expect all manufacturing facilities to remain operational in the second half of 2020, based upon our understanding of local governments directions at this time. As production typically builds to peak levels during the summer months, the Company anticipates making up remaining lost production during the third quarter of 2020, unless a resurgence of COVID-19 cases were to cause further manufacturing shutdowns or restrictions, and to be well positioned to meet shipping schedule demands in the second half of the year. However, if manufacturing facilities are impacted by a resurgence in COVID-19, we may not be able to make up for the disruption in supply in the nearer term.
Accounting Pronouncement Updates
In FebruaryJune 2016, the FASB issuedFinancial Accounting Standards Update 2016-02 (ASU 2016-02), Leases (Topic 842), which requires lessees to recognize a right-of-use asset and a lease liability for virtually all leases. The liability is based on the present value of lease payments and the asset is based on the liability. For income statement purposes, a dual model was retained requiring leases to be either classified as operating or finance. Operating leases result in straight-line expense while finance leases result in a front-loaded expense pattern. Certain other quantitative and qualitative disclosures are also required. ASU 2016-02 is required for public companies for fiscal years beginning after December 15, 2018. ASU 2016-02 as originally issued required modified retrospective adoption. In July 2018, the FASB issued ASU 2018-11, which provides an alternative transition method in addition to the existing method by allowing entities to apply ASU 2016-02 as of the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted ASU-2016-02 on December 31, 2018 using the retrospective basis as provided in ASU 2018-11. No cumulative effect was recorded to retained earnings. The Company also elected certain practical expedients as provided under the standard. These included (i) the election not to reassess whether contracts existing at the adoption date contain a lease under the new definition of a lease under the standard; (ii) the election not to reassess the lease classification for existing leases as of the adoption date; (iii) the election not to reassess whether previously capitalized initial direct costs would qualify for capitalization under the standard; (iv) the election to use hindsight in determining the relevant lease terms for use in the capitalization of the lease liability; and (v) the election to use hindsight in reviewing the right-of-use assets for impairment. For all leases, the terms were evaluated, including extension and renewal options as well as the lease payments associated with the leases. As a result of the adoption of the standard, in the first quarter of 2019, the Company recorded right-of-use assets of $121.2 million and lease liabilities of $139.5 million. The Company’s results of operations were not impacted by this standard. The adoption of this standard did not have an impact on the Company’s cash flows. For further details, see Note 10 to the consolidated financial statements, which are included in Part I of this Form 10-Q.



In August 2017, the FASBBoard ("FASB") issued Accounting Standards Update No. 2017-122016-13 (ASU 2017-12),2016-13) Financial Instruments – Credit Losses (Topic 326): Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging ActivitiesMeasurement of Credit Losses on Financial Instruments. . The amendments expandin this update provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and refine hedge accounting for both nonfinancial and financial risk components and alignother commitments to extend credit held by a reporting entity at each reporting date. The standard update replaces the recognition and presentation of the effects of the hedging instrument and the underlying hedged item in the financial statements. The impact of the standard includes elimination of the requirement to separately measure and recognize hedge ineffectivenessincurred loss impairment methodology with a methodology that reflects expected credit losses and requires the presentationconsideration of fair value adjustmentsa broader range of reasonable and supportable information to hedging instruments to be included in the same income statement line as the hedged item.inform credit loss estimates. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2018,2019, and early adoption is was


permitted. The Company adopted ASU 2017-12the standard in the first quarter of 20192020 and the adoption of thisthe standard did not have a material impact on the Company’s results orits consolidated financial statements.
Recently IssuedIn August 2018, the FASB issued Accounting PronouncementsStandards Update No. 2018-13 (ASU 2018-13), Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, specifically related to disclosures surrounding Level 3 asset balances, fair value measurement methods, related gains and losses and fair value hierarchy transfers. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2019, and early adoption was permitted. The Company adopted the standard in the first quarter of 2020 and the adoption of the standard did not have a material impact on its consolidated financial statements.
In March 2019, the FASB issued Accounting Standards Update No. 2019-02 (ASU 2019-02) Entertainment—Films—Other Assets—FilmEntertainment-Films-Other Assets-Film Costs (Subtopic 926-20) and Entertainment—Broadcasters—Intangibles—GoodwillEntertainment-Broadcasters-Intangibles-Goodwill and Other (Subtopic 920-350) - : Improvements to Accounting for Costs of Films and License Agreements for Program Materials. The amendments in this update align cost capitalization of episodic television series production costs with that of film production cost capitalization. In addition, this update addresses impairment testing procedures with regard to film groups, when a film or license agreement is expected to be monetized with other films and/or license agreements.  The intention of this update is to align accounting treatment with changes in production and distribution models within the entertainment industry and to provide increased transparency of information provided to users of financial statements about produced and licensed content.  For public companies, this standard is effective for annual reporting periods beginning after December 15, 2019, and early adoption was permitted. The Company adopted the standard in the first quarter of 2020 and the adoption of the standard did not have a material impact on its consolidated financial statements.
Recently Issued Accounting Pronouncements
In August 2018, the FASB issued Accounting Standards Update No. 2018-14 (ASU 2018-14) Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans. The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2020, and early adoption is permitted. The standard relates to financial statement disclosure only and will not have an impact on the Company's consolidated statement of financial position, statement of operations or statement of cash flows.
In March of 2020, the FASB issued Accounting Standards Update No. 2020-04 (ASU 2020-04) Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update provide optional expedients and exceptions for applying generally accepted accounting principles ("GAAP") to contracts, hedging relationships, and other transactions, for a limited period of time, to ease the potential burden of recognizing the effects of reference rate reform on financial reporting. The amendments in this update apply to contracts, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued due to the global transition away from LIBOR and certain other interbank offered rates. An entity may elect to apply the amendments provided by this update beginning March 12, 2020 through December 31, 2022. The Company is currently evaluating this option as it relates to its contracts that reference LIBOR, as well as the impact of the standard andto the impact, if any, to itsCompany's consolidated financial statements.
Recent Securities and Exchange Commission Rulings
In August 2018, the U.S. Securities and Exchange Commission (“SEC”) issued a final ruling amending numerous SEC rules covering a diverse group of topics. One noteworthy rule change expands disclosure requirements related to changes in shareholders’ equity by extending to interim periods, the annual requirement of SEC Regulation S-X, Rule 3-04, of presenting changes in stockholders’ equity. An analysis of changes in stockholders’ equity in the form of a reconciliation is required for the current and comparative year-to-date interim periods effective for all filings submitted on or after November 5, 2018. As a result of the adoption of this ruling, the Company has included a statement of stockholders’ equity for the quarters and year-to-date periods ending June 30, 2019 and July 1, 2018, in Part I, Item 1 of this Form 10-Q.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically generated a significant amount of cash from operations. In the first six months of 20192020 and 20182019 the Company has primarily funded its operations and liquidity needs primarily through cash flows from operations, and when needed, used borrowings under its available lines of credit. In 2020, the Company’s eOne operating segment has used production financing to fund certain of its television and film productions which are arranged on an individual production basis by special purpose production subsidiaries.
The Company expects to continue to fund its working capital needs primarily through available cash and cash flows from operations as well as its production financing facilities and, when needed, by issuing commercial paper or borrowing under its revolving credit agreement. In the event that the Company is not able to issue commercial paper, the Company intends to utilize its available lines of credit. In addition, beginning in 2020 with the acquisition of eOne, the Company commenced funding certain of its television and film productions using production financing facilities which are secured by the assets and future revenues of the individual production subsidiaries. Under these facilities, the cash generated by the production may be restricted until the production financing is paid. The Company believes that the funds available to it, including cash expected to be generated from operations and funds available through its available lines of credit and commercial paper program are adequate


to meet its working capital needs over the next twelve months. However, unexpected events or circumstances such as material operating losses or increased capital or other expenditures or inability to otherwise access the commercial paper market, may reduce or eliminate the availability of external financial resources. In addition, significant disruptions to credit markets may also reduce or eliminate the availability of external financial resources. Although management believes the risk of nonperformance by the counterparties to the Company's financial facilities is not significant, in times of severe economic downturn in the credit markets it is possible that one or more sources of external financing may be unable or unwilling to provide funding to the Company.
During November of 2019, in conjunction with the Company's acquisition of eOne, the Company issued an aggregate of $2.4 billion of senior unsecured debt securities (collectively, the "Notes") consisting of the following tranches: $300 million of notes due 2022 (the "2022 Notes") that bear interest at a fixed rate of 2.60%; $500 million of notes due 2024 (the "2024 Notes") that bear interest at a fixed rate of 3.00%; $675 million of notes due 2026 (the "2026 Notes") that bear interest at a fixed rate of 3.55%; and $900 million of notes due 2029 (the "2029 Notes") that bear interest at a fixed rate of 3.90%. The interest rate payable on each series of the Notes will be subject to adjustment from time to time if either Moody’s or S&P (or a substitute rating agency therefor) downgrades (or downgrades and subsequently upgrades) the credit rating assigned to the Notes. Underwriting discount and fees of $20.0 million were deducted from the gross proceeds of the Notes. These costs are being amortized over the life of the Notes, which range from three to ten years. Prior to October 19, 2024 (in the case of the 2024 Notes), September 19, 2026 (in the case of the 2026 Notes), August 19, 2029 (in the case of the 2029 Notes) and at any time (in the case of the 2022 Notes), 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) 15 basis points (in the case of the 2022 Notes); (2) 25 basis points (in the case of the 2024 Notes); (3) 30 basis points (in the case of the 2026 Notes); and (4) 35 basis points (in the case of the 2029 Notes).  In addition, on and after (1) October 19, 2024 for the 2024 Notes; (2) September 19, 2026 for the 2026 Notes; and (3) 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 accrued and unpaid interest.
Of the Company’s long-term borrowings, the $300.0 million of 3.15% Notes mature in 2021. All of the Company’s other long-term borrowings have contractual maturities that occur subsequent to 2021 with the exception of certain of the Company’s production financing facilities.
In November of 2019, the Company completed an underwritten public offering of 10,592,106 shares of common stock, par value $0.50 per share, at a public offering price of $95.00 per share. Net proceeds from this public offering were approximately $975.2 million, after deducting underwriting discounts and commissions and offering expenses of approximately $31.1 million. The net proceeds were used to finance, in part, the acquisition of eOne and to pay related costs and expenses.
As of June 30, 2019,28, 2020, the Company's cash and cash equivalents totaled $1,151.0 million.$1,038.0 million, of which $71.9 million is restricted under the Company’s production financing facilities. Prior to 2017, deferred income taxes had not been provided on the majority of undistributed earnings of international subsidiaries as such earnings were considered indefinitely reinvested by the Company. The Tax Act provided significant changes to the U.S. tax system including the elimination of the ability to defer U.S. income tax on unrepatriated earnings by imposing a one-time mandatory deemed repatriation tax on undistributed foreign earnings. As of June 30, 2019,28, 2020, the Company has a total liability of $192.9 million related to this tax, $18.4$36.7 million is reflected in current liabilities while the remaining long-term payable related to the Tax Act of $174.5$156.2 million is presented within other liabilities, non-current on the Consolidated Balance Sheets. As permitted by the Tax Act, the Company will pay the transition tax in annual interest-free installments through 2025. As a result, the related earnings in foreign jurisdictions are available with greater investment flexibility. The majority of the Company’s cash and cash equivalents held outside of the United States as of June 30, 201928, 2020 is denominated in the U.S. dollar.



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


The table below outlines key financial information (in millions of dollars) pertaining to our consolidated balance sheets including the period-over-period changes.
June 28, 2020June 30, 2019% Change
June 30, 2019 July 1, 2018 
%
Change
Cash and cash equivalents$1,151.0
 1,159.1
 -1 %
Cash and cash equivalents (including restricted cash of $86.2 and $0)Cash and cash equivalents (including restricted cash of $86.2 and $0)$1,038.0  1,151.0  -10 %
Accounts receivable, net805.3
 739.3
 9 %Accounts receivable, net911.3  805.3  13 %
Inventories564.8
 610.2
 -7 %Inventories564.2  564.8  — %
Prepaid expenses and other current assets309.0
 319.0
 -3 %Prepaid expenses and other current assets672.2  309.0  >100%
Other assets665.2
 706.8
 -6 %Other assets1,329.1  665.2  100 %
Accounts payable and accrued liabilities1,059.9
 1,032.3
 3 %Accounts payable and accrued liabilities1,596.6  1,059.9  51 %
Other liabilities554.2
 600.3
 -8 %Other liabilities771.7  554.2  39 %
Accounts receivable increased 9%to $911.3 million at June 28, 2020, compared to $805.3 million at June 30, 2019, compared to $739.3 million at July 1, 2018.2019. Absent the $8.8 millionunfavorable foreign currency impact of foreign currency translation,$31.1 million, accounts receivable increased approximately 10%17%, or $137.2 million. The increase in accounts receivable during the first half of 2020 was driven primarily by the inclusion of eOne balances of $206.2 million. Partially offsetting these increases were lower accounts receivable balances across the Company's Latin American, U.S. and Canada and European regions due to lower revenues as a result of the impact of the COVID-19 pandemic during the six months ended June 28, 2020 compared to revenue growth, absent foreign currency, of 11%the same period in the second quarter of 2019.  Accounts receivable, net at July 1, 2018 included a $77.0 million allowance for doubtful accounts related to Toys“R”Us. Days sales outstanding increased from 74 days at June 30, 2019 to 96 days at June 28, 2020 as a result of 74decreased collections and payment term extensions, primarily in the Company's international markets, due to market disruptions caused by the COVID-19 pandemic.
Inventories remained flat at $564.2 million as of June 30, 2019 was consistent with days sales outstanding at July 1, 2018.
Inventories decreased 7%28, 2020 compared to $564.8 million at June 30, 2019 from $610.22019. Absent the unfavorable foreign currency impact of $28.0 million, at July 1, 2018. The decrease at June 30, 2019 reflects improved inventory management initiatives implemented across the Company's international markets offset byinventories increased 5% reflecting higher inventory levels in the U.SCompany's Latin American and European markets due to lower sales in the first half of 2020, and higher than normal inventory levels remaining from the fourth quarter of 2019 in Latin America. These increases were partially offset by lower inventory levels in U.S. and Canada as a result of lower shipments from China due to the proposed tariffs which resulted in the Company importing goods earlier than expected.impact of COVID-19.
Prepaid expenses and other current assets decreased 3%increased to $672.2 million at June 28, 2020 from $309.0 million at June 30, 2019 from $319.0 million at July 1, 2018.2019. The decreaseincrease was due to lowerhigher accrued royalty and licensing income, primarily attributable to accrued revenue balances associated with eOne's intellectual property of $194.3 million, higher accrued tax credits related to film and television production costs, the majority of which are attributable to eOne productions, higher prepaid advertisingtax balances as a result of lower earnings relative to estimated tax payments and higher prepaid royalty amounts due to the timingcurrent portion payments made in the first quarter of payments in 2019 compared to 20182020 for the extension of the Company’s Marvel and lower prepaid taxes, both value-added taxes and income taxes.Lucas agreements. These decreasesincreases were partially offset by higher accrued royalty income and higher prepaid royaltylower short-term investment balances as well as higher unrealized gains on foreign exchange contracts. In addition, as a result of the settlement of the Company's U.S. defined benefit pension plan, the Company had excess assets of approximately $19 million of which $8 million is recorded as a current asset and will be used to fund future Company contributions to the Company's 401(k) plan in the U.S.first half of 2020.
Other assets decreasedincreased to approximately 6% to$1,329.1 million at June 28, 2020 from $665.2 million at June 30, 2019 from $706.8 million at July 1, 2018.2019. The decreaseincrease was primarily due to lowereOne's investments in acquired content of $435.0 million, investments in film and television productions of $146.6 million and investments in development of $30.5 million. Also contributing to the increase are higher long-term accrued royalty income balances primarily driven by eOne, increased non-current royalty advances due to the non-current portion of payments made in the first quarter of 2020 related to certain of the Company’s partner brands as well as higher deferred tax asset balancesbalances. These increases were partially offset by lower capitalized television production costs in the legacy Hasbro business, primarily related to impairment charges recorded on certain production assets during the first quarter of 2020, lower capitalized film production costs in the legacy Hasbro business, as a result of a reclassificationhigher amortization of certain deferred taxfilm production assets to reduce the Company's transition tax liability,in 2020 and lower long-term receivable balances related to third-party production studio rebates and a multi-year digital distribution agreement for Hasbro television programming and lower capitalized movie production costs as a result of expense on certain production assets during the second half of 2018 and the first half of 2019. These decreases were partially offset by the above mentioned pension surplus as a result of the settlement of the Company's U.S. pension plan of which approximately $11 million is recorded in other assets, higher capitalized television production costs, net of production rebates and higher accrued royalty income balances in 2019.rebates.
Accounts payable and accrued liabilities increased 3% to $1,596.6 million at June 28, 2020 from $1,059.9 million at June 30, 2019 from $1,032.3 million at July 1, 2018. Increases include higher severance charges2019. The increase was primarily attributable to the acquisition of eOne and inclusion of significant accrued participation balances, deferred revenue balances primarily related to broadcast licensing obligations and the Company’s 2018 restructuring program, the Company’saddition of eOne's current lease liability balance of $29.3 millionand account payable balances. In addition, increases included inhigher accrued liabilitiesroyalty balances, higher accrued interest as thea result of higher debt levels in 2020 from the adoptionissuance of ASU 2016-02,notes in November 2019 and January 2020 and higher accrued advertising primarily relatedincome tax balances as a result of an extension provided to MAGIC: THE GATHERING ARENA.U.S. companies for transition tax installment payments. These increases were partially offset by the payment of remaining amountslower accrued advertising balances due to Saban Properties for the Power Rangers brand acquisition and lower accounts payable balanceslevels of advertising expense in the first halfsecond quarter of 2019.2020.




Other liabilities decreased 8%increased to $771.7 million at June 28, 2020 from $554.2 million at June 30, 2019 from $600.3 million at July 1, 2018.2019. The decrease reflects the reclassification of certainincrease was primarily driven by deferred tax assets to reduceliabilities recorded as a result of the transition taxeOne Acquisition accounting adjustments during the first quarter of 2020, higher long-term lease liability as well asbalances resulting from the 2019 installment payment, a decrease in the liability for uncertain tax positions reflecting changes in management judgmenteOne Acquisition, and lower long-term pensionhigher deferred revenue balances as a result of the settlementinclusion of eOne operations in the Company's consolidated financial statements beginning in the first quarter of 2020. In addition to these increases, there were higher long-term international pension balances due to the 2019 year-end actuarial valuations and higher reserves for uncertain tax positions. These increases were offset by a lower transition tax liability balance reflecting the reclassification of the Company's U.S. pension plan liability2020 installment payment.
Cash Flow
The following table summarizes the changes in 2019. These decreases were partially offset by the adoptionConsolidated Statement of ASU 2016-02Cash Flows, expressed in 2019 which requiresmillions of dollars, for the recognition of the long-term lease liability balances, which were $123.2 million as ofquarters ended June 28, 2020 and June 30, 2019.
Cash Flow
June 28, 2020June 30, 2019
Net cash provided by (used in)
Operating activities$258.3  $336.3  
Investing activities(4,454.8) (60.5) 
Financing activities678.5  (306.6) 
Net cash provided by operating activities in the first six months of 20192020 was $336.3$258.3 million compared to $240.8$336.3 million in the first six months of 2018.2019. The increase$77.9 million decrease in net cash flow fromprovided by operating activities was primarily attributable to the decrease in earnings before depreciation, intangible amortization and program cost amortization, and higher film and television production spend as a result of the inclusion of eOne operations primarily reflects higher earningsduring the first half of 2020 as well as royalty advances paid in the first half of 2019 as compared2020 related to the first halfextension of 2018.the Company’s Marvel and Lucas license agreements that were due to expire in 2020.
Net cash utilized byin investing activities was $4,454.8 million in the first six months of 2020 compared to $60.5 million in the first six months of 2019 compared2019.  The increase in 2020 reflects $4.4 billion of cash utilized to $223.8acquire eOne, net of cash acquired. As discussed in the Executive Summary, the cash used for the purchase of eOne consisted of the net proceeds from the issuance of an aggregate principal amount of $2.4 billion in senior secured notes, net proceeds $975.2 million from of the issuance of approximately 10.6 million shares of common stock and $1.0 billion in term loans drawn in the first quarter of 2020.
Additions to property, plant and equipment were $64.0 million in the first six months of 2018.  Additions2020 compared to property, plant and equipment were $58.2 million in the first six months of 2019 compared to $71.82019.
Net cash provided by financing activities was $678.5 million in the first six months of 2018. Cash utilized by investing activities in 2018 reflects the cash portion of the Power Rangers brand acquisition of $155.5 million.
Net2020 compared to net cash utilized by financing activities wasof $306.6 million, in the first six months of 2019 compared to $421.2 million2019. The increase in cash provided by financing activities was primarily driven by the proceeds from the drawdown of the Company's $1.0 billion in term loans. Also, in the first six monthsquarter of 2018. The decline in cash utilized in financing activities was driven by:
Repayments of short-term borrowings of $133.6 million in the first six months of 2018, compared to net proceeds of $3.1 million in 2019, due to lower short-term borrowings in the first half of 2019 compared to the first half of 2018.
Lower cash payments related to purchases of the Company's common stock of $58.6 million in the first six months of 2019 compared to $103.5 million in the first six months of 2018. At June 30, 2019,2020, the Company had $369.3drawdowns of $26.3 million remaining available under its current share repurchase authorization approved by the Boardand repayments of Directors.
Lower tax payments made$90.7 million related to tax authorities for which shares were withheld from employees’ share-based payment awards, of $11.9eOne production financing loans and paid $47.4 million in the first six months of 2019, compared to $54.7 million in 2018.
Partially offset by:
Higher dividends paid in the first six months of 2019 of $164.9 million compared to $149.5 million in the first six months of 2018 reflecting a higher dividend rate commencingassociated with the May 2019 dividend payments.redemption of eOne stock awards that were accelerated as a result of the acquisition as well as a $7.5 million payment for the Company's first installment towards the repayment of the $1.0 billion term loans described above.
During the first half of 2019, related to the 2018 Power Rangers brand acquisition, the Company paid $100.0 million to Saban Properties related to the 2018 POWER RANGERS acquisition which consisted of a $75.0 million deferred purchase price payment and $25.0 million releasereleased from escrow. There are no remainingCash payments due to Saban Properties related to the Power Rangers brand acquisition.purchases of the Company’s common stock were $58.6 million in the first half of 2019. There were no repurchases of the Company’s common stock in the first half of 2020 as the Company suspended the program while it prioritizes deleveraging. Dividends paid in the first half of 2020 totaled $186.2 million compared to $164.9 million in the first half of 2019 primarily reflecting the additional shares issued in the fourth quarter of 2019.
Sources and Uses of Cash
The Company has an agreement with a group of banks which provides for a commercial paper program (the "Program"). Under the Program, at the request of the Company and subject to market conditions, the banks may either purchase from the Company, or arrange for the sale by the Company, of unsecured commercial paper notes.  Under the Program theThe Company may issue notes from time to time up to an aggregate principal amount outstanding at any given time of $1,000.0 million. The maturities of the notes may vary but may not exceed 397 days.  The notes are sold under customary terms in the commercial paper market and are issued at a discount to par, or alternatively, sold at par and bear varying interest rates based on a fixed or floating rate basis.  The interest rates vary based on market conditions and the ratings assigned to the notes by the credit rating agencies at the time of issuance.  Subject to market conditions, the Company intends to utilize the Program as its primary short-term borrowing facility and does not intend to sell unsecured commercial paper notes in excess of the available amount under the revolving


credit agreement discussed below.  If, for any reason, the Company is unable to access the commercial paper market, the Company intends to use the revolving credit agreement to meet the Company's short-term liquidity needs.  At June 30, 2019,28, 2020, the Company had no outstanding borrowings related to the Program.



The Company has a second amended and restated revolving credit agreement with Bank of America, N.A., as administrative agent, swing line lender and a letter of credit issuer and lender and certain other financial institutions, as lenders thereto (the "Agreement""Amended Revolving Credit Agreement"), which provides itthe Company with commitments having a $1,100.0maximum aggregate principal amount of $1,500.0 million. The Amended Revolving Credit Agreement also provides for a potential additional incremental commitment increase of up to $500.0 million committed borrowing facility.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 also provides for a potential additional incremental commitment increase of up to $500.0 million.extends through September 20, 2024.  The Company was in compliance with all covenants as of and for the quarter ended June 30, 2019.28, 2020. The Company had no borrowings outstanding under its committed revolving credit facility atas of June 30, 2019.28, 2020. However, the Company had letters of credit outstanding under this facility as of June 30, 2019 of28, 2020 were approximately $2.2$2.7 million. Amounts available and unused under the committed line, as ofat June 30, 201928, 2020 were approximately $1,097.8 million.$1,497.3 million, inclusive of borrowings under the Company’s commercial paper program. The Company also has other uncommitted lines from various banks, of which approximately $27.6$19.3 million was utilized at June 30, 2019, including $14.928, 2020. Of the amount utilized under, or supported by, the uncommitted lines, approximately $6.4 million ofand $12.9 million represent outstanding short-term borrowings and letters of credit, respectively.

In September of 2019, the Company entered into a $1.0 billion Term Loan Agreement (the "Term Loan Agreement") with Bank of America N.A. (“Bank of America”), as administrative agent, and $12.7certain 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 outstanding borrowings.$600.0 million (the “Five-Year Tranche” and together with the Three-Year Tranche, the “Term Loan Facilities”). On December 30, 2019, the Company completed the acquisition of eOne and on that date, borrowed the full amount of $1.0 billion under the Term Loan Facilities. Loans under the Term Loan Facilities bear interest, at the Company’s option, at either the Eurocurrency Rate or the Base Rate, in each case plus a per annum applicable rate that fluctuates (1) in the case of the Three-Year Tranche, between 87.5 basis points and 175.0 basis points, in the case of loans priced at the Eurocurrency Rate, and between 0.0 basis points and 75.0 basis points, in the case of loans priced at the Base Rate, and (2) in the case of the Five-Year Tranche, 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 to the relevant rating agencies or a lack of ratings issued by such ratings agencies. Loans under the Five-Year Tranche require principal amortization payments, 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 eOne Acquisition, 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. The loans were drawn down on December 30, 2019 to fund the acquisition of eOne.
The Company has principal amounts of long-term debt at June 30, 201928, 2020 of $1,709.9 million,$5.2 billion, due at varying times from 2021 through 2044. As described above, the Company issued an aggregate of $2.4 billion of senior unsecured long-term debt securities in November 2019 and borrowed $1.0 billion under its term loan facilities on December 30, 2019 in connection with the financing of the eOne Acquisition. Of the total principal amount of long-term debt, $378.6 million is current at June 28, 2020 of which $300.0 million is related to the 3.15% 2021 Notes and $30.0 million is related to principal amortization of the 5-year term loans due December 2024. Additionally, the Company has outstanding production financing facilities at June 28, 2020 of $142.0 million of which $93.4 million is included in long-term debt and $48.6 million is reported as the current portion of long-term debt within the Company's consolidated financial statements, included in Item 1 of this Form10-Q.
The Company also had letters of credit and other similar instruments of approximately $17.1$15.6 million and purchase commitments of approximately $548.7$676.7 million outstanding at June 30, 2019.28, 2020.


Through the eOne Acquisition, the Company assumed eOne's existing future obligations for film and television content, future minimum contractual royalty payment obligations and operating lease commitments. Future payments required under these obligations, expressed in millions of dollars as of June 28, 2020, are as follows:
Remainder 20202021202220232024ThereafterTotal
Future film and television obligations$35.9  42.4  1.8  —  —  —  $80.1  
First-look commitments10.4  16.0  7.3  —  —  —  33.7  
Operating lease commitments32.4  14.3  11.6  10.5  9.3  23.0  101.1  
$78.7  72.7  20.7  10.5  9.3  23.0  $214.9  
Other contractual obligations and commercial commitments, as detailed in the Company's Annual Report on2019 Form 10-K, for the year ended December 30, 2018, did not materially change outside of commitments assumed as part of the eOne Acquisition and certain payments made in the normal course of business and as otherwise set forth in this report. The table of contractual obligations and commercial commitments, as detailed in the Company's Annual Report on2019 Form 10-K for the year ended December 30, 2018 does not include certain tax liabilities related to uncertain tax positions. See Note 3, "Business Combinations" to our consolidated financial statements, which is included in Part I of this Form 10-Q for contractual commitments assumed through the eOne Acquisition.
The Company believes that cash from operations, and, if necessary, its committed line of credit and other borrowing facilities, will allow the Company to meet its obligations over the next twelve months.
CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES
The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.  As such, management is required to make certain estimates, judgments and assumptions that it believes are reasonable based on the information available.  These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the periods presented.  The significant accounting policies which management believes are the most critical to aid in fully understanding and evaluating the Company's reported financial results include recoverability of goodwill, intangible assets, income taxes and income taxes.the valuation of the Company’s equity method investment in Discovery Family Channel. These critical accounting policies are the same as those detailed in the 20182019 Form 10-K.10-K with the exception of the use of estimates for business combinations in relation to the Company’s 2020 acquisition of eOne, which is detailed below.
Business Combinations. The Company accounts for business combination under FASB Accounting Standards Codification Topic 805, Business Combinations (“Topic 805”). Identifiable assets acquired, liabilities assumed and any noncontrolling interests in the acquiree are recognized and measured as of the acquisition date at fair value. Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred and any noncontrolling interests in the acquiree exceed the recognized basis of the identifiable assets acquired, net of assumed liabilities. Determining the fair value of assets acquired, liabilities assumed and noncontrolling interests requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items.
The Company's evaluation of the facts and circumstances available as of December 30, 2019, to assign fair values to assets acquired and liabilities assumed, including income tax related amounts are ongoing. As further analysis of assets including program rights, investment in films and television content, intangible assets, as well as deferred revenue, noncontrolling interests, tax and certain other liabilities is completed, additional information on the assets acquired and liabilities assumed may become available. A change in the information related to the net assets acquired may change the amount of the purchase price assigned to goodwill, and as a result, the preliminary fair values disclosed are subject to adjustment as additional information is obtained and valuations are completed. Provisional adjustments, if any, will be recognized during the reporting period in which the adjustments are determined. We expect to finalize the purchase price allocation as soon as practicable, but no later than one year from the acquisition date. For more information on the eOne Acquisition see Note 3, "Business Combinations" to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
FINANCIAL RISK MANAGEMENT
The Company is exposed to market risks attributable to fluctuations in foreign currency exchange rates, primarily as the result of sourcing products priced in U.S. dollars, Hong Kong dollars and Euros while marketing those products in more than twenty currencies. Results of operations may be affected primarily by changes in the value of the U.S. dollar, Hong Kong dollar, Euro,


British pound sterling, Canadian dollar, Brazilian real, Russian ruble and Mexican peso and, to a lesser extent, other currencies in Latin American and Asia Pacific countries.
To manage this exposure, the Company has hedged a portion of its forecasted foreign currency transactions for fiscal years 20192020 through 2022 using foreign exchange forward contracts. In addition, during the third quarter of 2019 the Company hedged a portion of its exposure to fluctuations in the British pound sterling in relation to the eOne Acquisition purchase price and other transaction related costs using a series of both foreign exchange forward and option contracts. These contracts did not qualify for hedge accounting and zero-cost collar options. 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. These contracts matured on December 30, 2019 (the closing date of the transaction) and net gains or losses recognized on these contracts in the first half of 2020 were immaterial.
The Company is also exposed to foreign currency risk with respect to its net cash and cash equivalents or short-term borrowing positions in currencies other than the U.S. dollar. The Company believes, however, that the on-going risk on the net exposure should not be material to its financial condition. In addition, the Company's revenues and costs have been, and will likely continue to be, affected by changes in foreign currency rates. A significant change in foreign exchange rates can materially impact the Company's revenues and earnings due to translation of foreign-denominated revenues and expenses. The Company does not hedge against translation impacts of foreign exchange. From time to time, affiliates of the Company may make or receive intercompany loans in currencies other than their functional currency. The Company manages this exposure at the time the loan is made by using foreign exchange contracts.  Other than as set forth above, the Company does not hedge foreign currency exposures.
The Company reflects all forward and option contracts at their fair value as an asset or liability on the consolidated balance sheets. The Company does not speculate in foreign currency exchange contracts. At June 30, 2019,28, 2020, these contracts had net unrealized gains of $22.7$26.1 million, of which $16.6$22.7 million of unrealized gains are recorded in prepaid expenses and other current assets, $8.0$6.3 million of unrealized gains are recorded in other assets and $1.9$2.9 million of unrealized losses are recorded in accrued liabilities. Included in accumulated other comprehensive loss at June 30, 201928, 2020 are deferred gains, net of tax, of $19.9$24.4 million, related to these derivatives.



At June 30, 2019,28, 2020, the Company had fixed rate long-term debt of $1,709.9 million.$5.2 billion. Of this long-term debt, $600 million represents the aggregate issuance of long-term debt in May 2014 which consists of $300 million of 3.15% Notes Due 2021 and $300 million of 5.10% Notes Due 2044.  Prior to the debt issuance, the Company entered into forward-starting interest rate swap agreements with a total notional value of $500 million to hedge the anticipated underlying U.S. Treasury interest rate. These interest rate swaps were matched with this debt issuance and were designated and effective as hedges of the change in future interest payments. At the date of debt issuance, the Company terminated these interest rate swap agreements and their fair value at the date of issuance was recorded in accumulated other comprehensive loss and is being amortized through the consolidated statements of operations using an effective interest rate method over the life of the related debt. Included in accumulated other comprehensive loss at June 30, 201928, 2020 are deferred losses, net of tax, of $18.6$17.2 million related to these derivatives.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The information required by this item is included in Part I, Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and is incorporated herein by reference.
Item 4. Controls and Procedures.
Evaluation of disclosure controls and procedures
The Company maintains disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of June 30, 2019.28, 2020. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective.
There


Changes in internal control over financial reporting
Except for the acquisition of eOne described below, there were no changes in the Company's internal control over financial reporting, as defined in Rule 13a-15(f) promulgated under the Exchange Act, during the quarter ended June 30, 201928, 2020 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

On December 30, 2019, the Company completed the acquisition of eOne. We are currently integrating eOne into our operations and internal control processes and, pursuant to the Securities and Exchange Commission’s guidance that an assessment of a recently acquired business may be omitted from the scope of an assessment in the year of acquisition, the scope of our assessment of the effectiveness of our internal controls over financial reporting at December 27, 2020 will not include eOne.




PART II. OTHER INFORMATION
Item 1.
Item 1. Legal Proceedings.
On or about September 28, 2018, a putative securities class action complaint was filed against the Company and certain of our officers and/or directors (the “Defendants”) in the U.S. District Court for the District of Rhode Island, on behalf of all purchasers of Hasbro common stock between April 24, 2017 and October 23, 2017, inclusive. The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, alleging that Defendants purportedly made materially false and misleading statements in connection with the financial condition of Toys“R”Us, Inc. and its impact on the Company, as well as the financial impact on the Company’s business of economic conditions in the United Kingdom and Brazil. Defendants deny liability and intend to vigorously defend the action.
The Company is currently party to certain other legal proceedings, none of which it believes to be material to its business or financial condition.
Item 1A.
Item 1A. Risk Factors.

In connection with information set forth in this Quarterly Report on Form 10-Q, the risk factors discussed under Item 1A. Risk Factors, in Part I of our Annual Report on2019 Form 10-K for the fiscal year ended December 30, 2018 (the “Annual Report”),and in our 2020 Form 10-Qs, should be considered, in additiontogether with the discussion below, which includes a supplement to our risk factors relating to the discussionimpact of the coronavirus on our business. The risks set forth below.  These risksin our 2019 Form 10-K, as supplemented by our 2020 Form 10-Qs, could materially and adversely affect our business, financial condition, and results of operations.
This Quarterly ReportThe global coronavirus outbreak or other similar outbreaks of communicable infections, diseases, or public health pandemics in the markets in which we and our employees, consumers, customers, partners, licensees, suppliers and manufacturers operate, could substantially harm our business.
The global outbreak of the coronavirus currently being experienced, and any other outbreaks of communicable infections, diseases or other adverse public health conditions in markets in which we, our employees, consumers, customers, partners, licensees, licensors, suppliers and manufacturers operate, could have a significant negative impact on our business, revenues and profitability. The occurrence of these types of events can result, and in the case of the coronavirus has resulted in, disruptions and damage to our business, caused by a number of factors:
•the negative impact to our ability to design, develop, manufacture and ship product as well as produce and distribute entertainment content;
•delays in entertainment content releases from our partners and licensors, or changes in release plans, that can adversely impact our product sales; examples of releases that have been delayed include Disney’s MULAN, MARVEL’S BLACK WIDOW and SONY PICTURES GHOSTBUSTERS AFTERLIFE;
•the negative impact on consumer purchasing behavior and availability of product to consumers, including due to retail store closures, limited reopenings, shelter at home instructions and limitations on the capacity of e-commerce;
•disruptions or restrictions on the ability of some of our employees, suppliers and manufacturers to work effectively, including due to illness, quarantines, government actions, and facility closures or other similar restrictions;
•temporary or permanent closures of, limited reopenings or other restrictions on businesses, such as retail stores, in which our products and/or the products or our licensees are sold, as well as studios and theaters in which or for which we produce and distribute entertainment content; and
•other negative effects of the coronavirus on our business, including increased risks of accounts receivable collection, delays in payment and negotiations with customers or licensees over payment terms or the ability to perform under contracts or licenses.
Although our principal manufacturers across the world are currently operating, during 2020 we have experienced and could experience further disruptions in supply of product, which has been and can be driven by: manufacturing and other work stoppages, factory and other business closings, slowdowns or delays, including in China, India and other places where a substantial portion of our manufacturing occurs; restrictions and limitations placed on workers and factories, including quarantines and other limitations on the ability to travel and return to work; and shortages or delays in production or shipment of products or raw materials. Even as facilities reopen or workers return to work, such reopenings and returns have been and we expect will continue to be measured and gradual so as to minimize the risk of further outbreaks of the virus, and that despite precautions further outbreaks may occur and result in future negative impacts.
Certain aspects of our entertainment business continue without significant disruption, such as development and pre-production work and our animation business.Other aspects of our entertainment business have been and continue to be adversely affected by the coronavirus. Specifically, scheduled productions have been delayed or postponed due to the shutdown of production work and the closure or limited reopening of studios, theatrical releases have been delayed due to the closure or limited reopening of theaters, and in some cases, global releases have moved to different media platforms, such as streaming services. During this time, we have seen increased interest in our content library as consumers increase watching content at home and we


continue to identify other innovative ways of making our content accessible to consumers.In the near term, this interest and these efforts are unlikely to offset declines in our entertainment business due the shutdown of production and closure and limited reopening of studios and theaters.
The negative impact to demand can be caused by delays in or reduced purchases from customers and consumers who may not be able to leave home or otherwise shop in a normal manner due to restrictions on or closure, either temporarily or permanently, of many retail stores and hobby stores in which our products are sold. Demand has been and may be further impacted due to consumers’ lower discretionary income due to reduced or limited work or unemployment, which has increased dramatically due to the coronavirus.
It is also a possibility that one or more countries may, in reaction to the coronavirus outbreak, place tariffs or other restrictions on products coming from China. As we discuss elsewhere in our risk factors, any tariffs or other restrictions, placed on products we source from China or another significant location for our global supply chain, and imported into significant markets for our products could harm our revenues and earnings.
Due the nature of our global business, we have experienced and expect to continue to experience fluctuations in our performance based on the progress of the country in controlling the coronavirus and the maturity of e-commerce in that jurisdiction.For example, we are currently experiencing difficulties in certain countries in Latin America, which is experiencing a spike in positive cases and does not have a robust e-commerce business.Further, countries that may currently be controlling the virus may suffer setbacks as markets, businesses, schools and communities reopen, thereby causing further restrictions or closures of retail stores, studios and production work, all of which could adversely impact our business.
Since mid-March, most of our workforce has been working remotely.Reopening of our offices has begun on a limited basis, and we continue to actively work on a plan to safely bring additional workers back to the office. While most of our workforce has been able to work remotely in an effective manner, certain employees whose job responsibilities require in person work, such as those whose job it is to go into retail stores or are involved in design or production work, have seen reduced productivity and, in some cases, have been furloughed or terminated.We regularly communicate and engage with our employees to minimize the disruption and stress of working remotely, provide flexibility and ensure that our employees are getting access to information and accommodations as we continue to plan for a successful and safe reentry to the workplace.
We believe we have sufficient liquidity and capital resources available at this time, including approximately $1.0 billion of cash on hand and $1.5 billion available under our revolving credit facility. We are in compliance with our covenants under our revolving credit facility and, while we do not currently foresee a need to borrow under the facility, we believe we would be able to access the facility for the foreseeable future.During this time of uncertainty, however, we are managing our expenses to further preserve our liquidity and we are closely monitoring our customers’ health and collectability of receivables, with some customers having difficulty making payments or requesting extended payment terms at a time when retailers are experiencing challenges and some have filed for bankruptcy.
While we have developed and continue to develop plans to help mitigate the negative impact of the coronavirus to our business, such as our Bring Home the Fun campaign, these efforts will not completely prevent our business from being adversely affected, and the longer the outbreak continues, the more negative the impact it will have on our business, revenues and earnings, and the more limited our ability will be to try and make up for delayed or lost product development, production and sales. 
The impact of coronavirus outbreak continues to be fluid and uncertain, making it difficult to forecast the final impact it could have on our future operations.  If our business experiences prolonged occurrence of adverse public health conditions due to the coronavirus or other similar outbreaks, we believe our business could be substantially harmed.
Forward Looking Statement Safe Harbor
Certain statements in this Form 10-Q containscontain "forward-looking statements,"statements" within the meaning of the Private Securities Litigation Reform Act of 1995, concerning management's expectations, goals, objectives, and similar matters.1995. These forward-looking statements, may include statements concerning the Company's product and entertainment plans, anticipated product and entertainment performance, business opportunities and strategies, financial and business goals, expectations for achieving the Company's goals and objectives, anticipated expenses, cost savings and efficiency enhancing initiatives and other objectives, anticipated impact of, and actions taken in response to, the imposition of tariffs in certain markets, and anticipated uses of cash. These statementswhich may be identified by the use of forward-looking words or phrases, such as "anticipate," "believe," "could," "expect," "intend," "look forward," "may," "planned," "potential," "should," "will,"include statements relating to: the impact of, and "would"actions and initiatives taken and planned to be taken, to try and manage the negative impact of the global coronavirus outbreak on our business, including the negative impact on supply of products and production of entertainment content, demand for our products and entertainment, our liquidity and our community; the expected adequacy of supply and operation of our manufacturing facilities; the ability to achieve our financial and business goals and objectives; the Company's product and entertainment plans, including anticipated entertainment production; anticipated product and entertainment performance; anticipated expenses; and working capital and liquidity. Our actual actions or any variations of words with similar meanings. These forward-looking statements are inherently subject to known and unknown risks and uncertainties.
The Company's actual results or experience may differ materially from those expected or anticipated in the forward-looking statements. Factorsstatements due to both known and unknown risks and uncertainties. For example, as described in the risk factor above, the global coronavirus outbreak has resulted, and may continue


to result, in significant disruptions in the markets in which maywe and our employees, consumers, customers, partners, licensees, suppliers and manufacturers operate. We have experienced, and expect to continue to experience, disruptions in supply of products and production of entertainment content, negative impact these forward-looking statements are includedon sales due to changes in consumer purchasing behavior and availability of product to consumers, including due to retail store closures, limited store reopenings and limitations on the capacity of e-commerce; delays or postponements of productions and releases of entertainment content both internally and by our Annual Report. In furtherance,partners; and not in limitation,challenges of working remotely. Our efforts to develop and execute plans to help mitigate the negative impact of the coronavirus to our business will not prevent our business from being adversely affected, and the longer the outbreak continues the more detailed discussion set forth innegative the Annual Report, specificimpact will be on our business, revenues, earnings and liquidity, and the more limited our ability will be to try and make up for delayed or lost product development, production and sales. Other factors that might cause such a difference include, but are not limited to:
the Company’s•our ability to successfully develop and grow its franchise and key partner brands, which constitute a substantial majority of the Company’s total revenues;
the Company's ability to successfully re-imagine, re-invent and re-ignite its existing brands, products and product lines, including through the use of immersive entertainment experiences and progressive technology integrating digital and analog play, to keep them fresh and relevant and to maintain and further their success;
the Company's ability to successfully design, develop, produce, introduce, market and sell innovative new brands, products, product lines and entertainment offerings in a timely and cost-effective manner, which achieve and sustain interest from retailers and consumers and keep pace with changes in consumer preferences and technology and the increasing sophistication of today’s children;
the Company's ability to offer products that (i) expand consumer demand for its product offerings and do not significantly compete with the Company's other existing product offerings and (ii) consumers want to purchase and select over competitors' products;
the success of the Company’s key partner brands, and the Company’s ability to maintain and extend solid relationships with its key partners;
successful brand and/or product introductions from competitors that capture market share and sales from the Company;
the Company's ability tomanufacture, source and ship products inon a timely, cost-effective and cost-effective mannerprofitable basis;
•rapidly changing consumer interests in the types of products and customers'entertainment we offer;
•the challenge of developing and consumers' acceptanceoffering products and purchasestorytelling experiences that are sought after by children, families and audiences given increasing technology and entertainment offerings available;
•our ability to develop and distribute engaging storytelling across media to drive brand awareness;
•our dependence on third party relationships, including with third party manufacturers, licensors of thosebrands, studios, content producers and entertainment distribution channels;
•our ability to successfully compete in the global play and entertainment industry, including with manufacturers, marketers, and sellers of toys and games, digital gaming products in quantities and at prices that will be sufficient to profitably recover the Company's costs for developing, marketingdigital media, as well as with film studios, television production companies and selling those products;independent distributors and content producers;



the Company’s•our ability to successfully evolve and transform itsour business and capabilities to address a changing global consumer landscape and retail environment, oneincluding changing inventory policies and practices of our customers;
•our ability to develop new and expanded areas of our business, such as through eOne, Wizards of the Coast, and our other entertainment, digital gaming and esports initiatives;
•risks associated with international operations, such as currency conversion, currency fluctuations, the imposition of tariffs, quotas, border adjustment taxes or other protectionist measures, and other challenges in the territories in which online shoppingwe operate;
•our ability to successfully implement actions to lessen the impact of potential and digital first marketing are becoming more and more critical and traditional retailers face challenges from disintermediation, and difficulties or delays the Company may experience in successfully implementing and developing new capabilities and making theenacted tariffs imposed on our products, including any changes to its business that are required to be successful under these changing marketplace conditions;our supply chain, inventory management, sales policies or pricing of our products;
recessions, other economic •downturns challengingin global and regional economic conditions unfavorable changes in exchange rates or economic uncertainty affectingimpacting one or more of the Company's significant markets including, without limitation, the U.K., Brazil and Russia,in which we sell products, which can negatively impact the financial health of the Company'sour retail customers and consumers, and which can result in lower employment levels, consumer disposable income, and consumer spending, including lower retailer inventories and spending, including lower spending on purchases of the Company'sour products;
currency fluctuations, including movements in foreign exchange rates, which can lower the Company's net revenues and earnings, and significantly impact the Company's costs;
•other economic and public health conditions or regulatory changes in the markets in which the Companywe and itsour customers, partners, licensees, suppliers and suppliersmanufacturers operate, which could create delays or increase the Company's costs, such as higher commodity prices, labor costs or higher transportation costs, or outbreaks of diseases;disease, such as the coronavirus, the occurrence of which could create work slowdowns, delays or shortages in production or shipment of products, increases in costs or delays in revenue;
other risks associated•the success of our key partner brands, including the ability to secure, maintain and extend agreements with international operations, including in emerging markets which have unique consumer preferences and business climates;
our key partners or the risk of delays, increased costs lack of consumer acceptance or other difficulties associated with the development and offeringany of our or our partners' entertainment,partners’ planned digital applications or media initiatives;
the risk that the market appeal of the Company's licensed products will be less than expected or that sales revenue generated by these products will be insufficient•fluctuations in our business due to cover the minimum guaranteed royalties or other commitments;seasonality;
•the concentration of the Company'sour customers, potentially increasing the negative impact to the Companyour business of difficulties including bankruptcies, experienced by any of the Company'sour customers or changes in their purchasing or selling patterns;
an adverse change in purchasing policies or promotional programs, or •the bankruptcy or other economic difficultieslack of success of one of our significant retailers, such as the bankruptcy of Toys“R”Us in the United States and Canada;
•the bankruptcy or other lack of success of one or more of our licensees and other business partners;
•risks relating to the Company's significant retailers comprising its relatively concentrated retail customer base, which could negatively impact the Company's revenues or bad debt exposure;
the impactuse of the bankruptcy of Toys“R”Us in the U.S., Canada and the U.K., and the subsequent liquidation of the Toys“R”Us business in the U.S. and the U.K., as well as the economic difficulty of Toys“R”Us in other markets, or the bankruptcy or lack of success of a smaller retail customer of the Company, such as Sears Holdings Corporation, any of which could negatively impact the Company’s revenues, result in lost sales to customers, create bad debt expense and create other challengesthird party manufacturers for the Company and its financial performance as the Company attempts to recapture this lost business through other customers or channels, and any inability or delaymanufacturing of the Company in recapturing all of the lost business;
uncertainty as to the future of the Toys“R”Us business elsewhere in the world, and associated reductions in sales to Toys“R”Us;
the Company's ability to generate sales during the second half of the year, particularly during the relatively brief holiday shopping season, which is the period in which the Company derives a substantial portion of its revenues and earnings;
the inventory policies of the Company's retail and e-commerce customers,our products, including potential decisions to lower their inventories, even if it results in lost sales, as well as the concentration of the Company's revenues in the second half of the year, which coupled with reliance by retailers on quick response inventory management techniques, increases the risk of underproduction of popular items, overproduction of less popular items and failure to achieve compressed shipping schedules;
the impact of retail inventory overhang in one or more of our key markets, which can reduce purchasesmanufacturing for many of our products from our customers and lower our revenues and profitability;
our ability to evolve our business quickly and efficiently to respond to the challenges of today’s converged retail environment;
work stoppages or disruptions which may impact the Company's ability to manufacture or deliver products in a timely and cost-effective manner;



concentration of manufacturing of the substantial majority of the Company's products by third party vendors in the People'sPeople’s Republic of China and the associated impact to the Company of social, economic or public health conditions and other factors affecting China, the movement of people and products into and out of China, the cost of producing products in China and the cost of exporting them to the Company's other markets or affecting the exchange rates for the Chinese Renminbi, including, without limitation, the potential application of tariffs or other trade restrictions to some or all of the goods manufactured for the Company in China and exported to other markets, which could significantly increase the price of the Company’s products and substantially harm sales if applied to any significant amount of the Company’s products;
theour ability of the Company to successfully diversify sourcing of itsour products to reduce reliance on sources of supply in China;
•our ability to attract and retain talented employees;
•our ability to realize the applicationbenefits of tariffscost-savings and efficiency and/or revenue enhancing initiatives, including initiatives to integrate eOne into our business;
•our ability to protect our assets and intellectual property, including as a result of infringement, theft, misappropriation, cyber-attacks or other trade restrictions impactingacts compromising the costintegrity of producing our assets or intellectual property;
•risks relating to the impairment and/or write-offs of products and importing them into markets around the world for sale,films and television programs we acquire and produce;


•risks relating to investments and acquisitions, such as our acquisition of eOne, which could significantly increase the price of the Company’s products and substantially harm sales;
the ability of the Companyrisks include: integration difficulties; inability to successfully implement actions to lessen the impact of tariffs imposed on our products, including any changes to our supply chain, sales policies or pricing of our products;
the ability of the Company to successfully develop, produce and distribute movies under its relationship with Paramount Pictures Corporation, and consumer interest in those movies and related merchandise;
consumer interest in and acceptance of programming and entertainment created by Hasbro Studios and/or Allspark Pictures, as well as products related to such programming and entertainment, and other factors impacting the financial performance of Hasbro Studios, Allspark Pictures and the Discovery Family Channel;
the ability to develop and distribute compelling entertainment, including television, movies and digital content, based on our brands, in a timely and financially profitable manner, and the success of that entertainment in driving consumer interest in and engagement with our brands;
the ability of the Company to hire and retain key officerspersonnel; diversion of management time and employees who are criticalresources; failure to achieve anticipated benefits or synergies of acquisitions or investments; and risks relating to the Company's success;additional indebtedness incurred in connection with a transaction;
the ability of the Company to successfully protect its intellectual property rights;
the costs of complying with product safety and consumer protection requirements worldwide, including •the risk that greater regulation in the future may increase such costs, may require changes in the Company's products and/or may impact the Company's ability to sell some products in particular markets in the absence of making changes to such products;
the risk that one of the Company's third-party manufacturers will not comply with applicable labor, consumer protection, product safety or other laws or regulations, or with aspects of the Company's Global Business Ethics Principles, and that such noncompliance will not be promptly detected, either of which could cause damage to the Company's reputation, harm sales of its products, result in product recalls and potentially create other liabilities for the Company;
the risk the Company will lose rights to a significant licensed property or properties, which will harm the Company's revenues and earnings;
the risk that the Company may face product recalls or product liability suits relating to products it manufacturesand costs associated with product safety regulations;
•changes in tax laws or distributesregulations, or the interpretation and application of such laws and regulations, which may have significant direct costscause us to the Company andalter tax reserves or make other changes which may also harm the reputation of the Company and its products, potentially harming future product sales;would significantly impact our reported financial results;
•the impact of competition on revenues, margins and other aspects of the Company's business, including the ability to offer Company products which consumers choose to buy instead of competitor’s products, the ability to secure, maintain and renew popular licenses and the ability to attract and retain employees;
the risk that anticipated benefits of acquisitions or investments may not occur or be delayed or reduced in their realization;
the risk that any litigation or arbitration disputesdecisions or governmentsettlement actions; and regulatory investigations could entail significant resources and expense and result in significant fines or other harm to the Company's business or reputation;
the Company's ability to maintain or obtain external financing on terms acceptable to it in order to meet working capital needs;
the risk that one or more of the counterparties to the Company's financing arrangements may experience financial difficulties or otherwise be unable or unwilling to allow the Company to access financing under such arrangements;



unforeseen circumstances, such as severe softness in or collapse of the retail and/or banking environment that may result in a significant decline in revenues and operating results of the Company, thereby causing the Company to be in non-compliance with its debt covenants and the Company being unable to utilize borrowings under its revolving credit facility, a circumstance likely to occur when operating shortfalls would result in the Company being in the greatest need of such supplementary borrowings;
market conditions, third party actions or approvals, the impact of competition and other factors that could delay or increase the cost of implementation of the Company's programs, or alter the Company's actions and reduce actual results;
the risk that the Company may be subject to governmental penalties, fines, sanctions or additional taxes for failure to comply with applicable laws or regulations in any of the markets in which it operates, or that governmental regulations or requirements will require changes in the manner in which the Company does business and/or increase the costs of doing business;
failure to operate our information systems and implement new technology effectively, as well as maintain the systems and processes designed to protect our electronic data and the data of our customers, consumers and employees, including the damage that could result from a breach of any of that data;
changes in, or different interpretations of, income tax laws and rules, and changes in our geographic operating results, may impact our effective tax rate;
the risk that the Company's reported goodwill may become impaired, requiring the Company to take a charge against its income;
changes in foreign exchange rates and other potential regulations, increased costs and/or economic uncertainty associated with the U.K. vote to leave the European Union (“EU”), commonly referred to as Brexit, may harm our sales and the profitability of our business in the U.K. and the EU; or
•other risks and uncertainties as are or may be detailed from time to time in the Company'sour public announcements and filings with the SEC such as filings on Forms 8-K, 10-Q and 10-K.filings.

The Company undertakesstatements contained herein are based on our current beliefs and expectations. We undertake no obligation to revisemake any revisions to the forward-looking statements contained in this Quarterly Report on Form 10-Q or to update them to reflect events or circumstances occurring after the date of the filing of this report.Form 10-Q.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
There were no share repurchases made in the first half of 2020. Following the Company’s acquisition of eOne, the Company suspended its share repurchase program while it prioritizes deleveraging. For further discussion related to the eOne Acquisition, see Note 3, "Business Combinations" to our consolidated financial statements, which are included in Part I, Item 1 of this Form 10-Q.
Item 2.PeriodUnregistered Sales(a) Total
Number of Equity Securities and Use
Shares (or
Units)
Purchased		(b)
Average
Price Paid
per Share
(or Unit)		(c) Total
Number of Proceeds.
Shares (or
Units)
Purchased
as Part of
Publicly
Announced
Plans or
Programs		(d)
Maximum 
Number (or
Approximate
Dollar 
Value) of
Shares (or
Units) that
May Yet Be 
Purchased
Under the
Plans or
Programs
April 2020
3/30/20 – 4/26/20— $— — $366,592,558 
May 2020
4/27/20 – 5/31/20— $— — $366,592,558 
June 2020
6/1/20 – 6/28/20— $— — $366,592,558 
Total— $— — $366,592,558 
Repurchases Made in the Quarter (in whole dollars and number of shares)
Period
(a) Total
Number of
Shares (or
Units)
Purchased
 
(b)
Average
Price Paid
per Share
(or Unit)
 
(c) Total
Number of
Shares (or
Units)
Purchased
as Part of
Publicly
Announced
Plans or
Programs
 
(d)
Maximum 
Number (or
Approximate
Dollar 
Value) of
Shares (or
Units) that
May Yet Be 
Purchased
Under the
Plans or
Programs
April 2019       
4/1/19 – 4/28/199,705
 $85.47
 9,705
 $377,965,985
May 2019       
4/29/19 – 6/2/1940,900
 $97.43
 40,900
 $373,980,915
June 2019       
6/3/19 – 6/30/1945,517
 $101.82
 45,517
 $369,346,163
Total96,122
 $98.31
 96,122
 $369,346,163



In May 2018, the Company announced that its Board of Directors authorized the repurchase of an additional $500 million of common stock. Purchases of the Company's common stock may be made from time to time, subject to market conditions. These shares may be repurchased in the open market or through privately negotiated transactions. The Company has no obligation to repurchase shares under this authorization and thethere is no expiration date. The timing, actual number, and value of the shares that are repurchased will depend on a number of factors, including the price of the Company's stock and the Company’s generation of, and uses for, cash. The Company may suspend or discontinue the program at any time and there is no expiration date.
Item 3.Defaults Upon Senior Securities.
Item 3. Defaults Upon Senior Securities.
None.
Item 4.Mine Safety Disclosures.
Item 4. Mine Safety Disclosures.
Not applicable.


Item 5.Other Information.
Item 5. Other Information.
None.




Item 6. Exhibits
Item 6.Exhibits
3.1
3.1 
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8 
31.1*
10.1*


10.2*
31.1**
31.2*
*
32.1*
*



32.2*
*
101.INS
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB
XBRL Taxonomy Extension Labels Linkbase Document
101.PRE 
XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF 
XBRL Taxonomy Extension Definition Linkbase Document
* Indicates management contract or compensatory plan, contract or arrangement
** Furnished herewith.

herewith




SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HASBRO, INC.
(Registrant)
HASBRO, INC.
(Registrant)
Date: July 31, 201930, 2020By:  /s/ Deborah Thomas
Deborah Thomas
Executive Vice President and

Chief Financial Officer

(Duly Authorized Officer and

Principal Financial Officer)